创新型领导

Exploring the effects of creative CEO leadership on innovation in

high-technology ?rms

Marianna Makri ?,Terri A.Scandura 1

Dept.of Management,University of Miami,Jenkins Building,414L,5250University Drive,Coral Gables,FL,33146,United States

a r t i c l e

i n f o a b s t r a c t This study introduces two dimensions of strategic leadership,termed operational and creative speci ?cally developed for top executives of high-technology ?rms.Creative leadership re ?ects a CEO's emphasis on developing social and human capital and investing in the ?rm's internal knowledge development.We contrast this with operational leadership which re ?ects a CEO's

ability to explore new paths of growth as well as exploit existing ones by rede ?ning and

extending the boundaries of the ?rm to new product and market domains.Hypotheses relating

these two dimensions of leadership with innovation quantity,innovation resonance and

novelty are tested using a sample of 77high-technology ?rms.

?2009Elsevier Inc.All rights reserved.

Keywords:

Strategy

Leadership

Innovation

CEO More than half of economic growth during 1945–2002is attributed to innovations within the high-technology sector (Leary,2002).For high-technology ?rms,innovation,organizational learning and the creation of new knowledge are vital for long-term survival and renewal because they have to deal with rapid and discontinuous change (Makri,Lane,&Gomez-Mejia,2006).As such,executive leaders are constantly challenged to leverage the intellectual capital of their ?rms.This scenario raises the question:how might creative leadership behaviors must executives of technology-intensive 2organizations balance in order to enhance innovation quantity,innovation quality and innovation novelty?

Although leadership and the in ?uence tactics leaders use affect follower's willingness to engage in creative ventures (Mumford,Scott,Gaddos,&Strange,2002),research in the area of leader in ?uence on creativity and innovation has been scarce (e.g.Cummings &Oldham,1997;Mumford et al.,2002;Tierney,Farmer,&Graen,1999).Most studies in strategic leadership that looked at this issue (e.g.Elenkov,Judge,&Wright,2005;Jung,Chow,&Wu,2003)have used the traditional conceptualizations of transactional and transformational leadership (e.g.Bass,1985)to capture CEO leadership characteristics.While these traditional conceptualizations can re ?ect the CEO's relationship with followers,the concept of strategic leadership in the context of high-technology ?rms calls for constructs re ?ective of the CEO's overall effectiveness in spearheading invention,innovation and commercialization.More speci ?cally,there is a need for re ?nement of the constructs that measure creative leadership to re ?ect the CEO's ability to create new knowledge as well as commercialize existing knowledge and derive pro ?t from it.In this study,we examine the relationship between innovation quantity,quality,and novelty and creative leadership.Because the innovation value chain involves idea generation (invention),idea development,and idea commercialization,effective leaders are those who can simultaneously explore and exploit,while at the same time can lead creatively and operationally.

The contribution of our research is twofold.First,we bridge the existing gap between creative leadership and organizational innovation (Bontis,Crossan,&Hulland,2002;Jung et al.,2003;Vera &Crossan,2004).While several studies examined the relationship between CEO leadership and ?rm performance,only a handful addressed the effects of leadership on innovation albeit using the traditional measures of transactional and transformational leadership (Elenkov &Manev,2005;Elenkov et al.,2005;Jung The Leadership Quarterly 21(2010)75–88

?Corresponding author.Tel.:+13052488586;fax:+13052483655.

E-mail addresses:mmakri@https://www.360docs.net/doc/11178080.html, (M.Makri),tscandura@https://www.360docs.net/doc/11178080.html, (T.A.Scandura).

1Tel.:+13052483746;fax:+13052483655.

2Consistent with much of the literature,we use the terms “high technology,”“technology intensive,”and “R&D-intensive ”

interchangeably.

1048-9843/$–see front matter ?2009Elsevier Inc.All rights reserved.

doi:

10.1016/j.leaqua.2009.10.006

Contents lists available at ScienceDirect

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76M.Makri,T.A.Scandura/The Leadership Quarterly21(2010)75–88

et al.,2003;Vera&Crossan,2004).Second,we develop a perspective on creative leadership that complements existing theories (e.g.personality theory,transformational/transactional leadership theory,visionary leadership theory,theory of cognitive complexity,social intelligence,and behavioral complexity,Cannella&Monroe,1997;Boal&Hooijberg,2000),while better representing the essence of strategic leadership for high-technology?rms.Simply put,the goal of this study is to attend to existing gaps in the literature between creative leadership and innovation using a sample of high technology,knowledge-intensive?rms to examine what leadership characteristics are signi?cant for executives in high-technology?rms.

Innovation and the associated scienti?c and technological knowledge it involves have increasingly become important features for value creation in many industries;R&D investments are one of the most important decisions that executives of high-technology?rms must make(Greve,1998).First,it is important to de?ne innovation.We espouse the1991OECD de?nition of innovation as:“an iterative process initiated by the perception of a new market and/or service opportunity for a technology-based invention which leads to development,production and marketing tasks striving for the commercial success of the invention”(Garcia&Calantone,2002;p.112).This de?nition suggests that the process of innovation starts with idea generation,then moves to idea development which involves the technological development of an invention and ends with the commercialization of that invention and the diffusion to end-users(Hansen&Birkinshaw,2007;Mumford et al.,2002).Stated differently,at the origin of the innovation value chain are inventions,and while innovations and inventions are related,they are not identical.The distinction is that innovation is a“process that begins with an invention,proceeds with the development of the invention and results in the introduction of a new product,process,or service to the marketplace(Edwards&Gordon,1984;p.1)”(Acs&Audretsch,2005). While innovation refers to the development and commercialization of an invention,invention refers to the act of creating something new(Ahuja&Lampert,2001).We adopt this conceptualization and suggest that innovation quantity,quality,and novelty will be the outcomes of this three-step innovation value chain.

We introduce two dimensions of strategic leadership,termed creative and operational,to suggest that an effective leader is one who is able to simultaneously invent,develop,and commercialize.More speci?cally,our conceptualization of operational leadership re?ects a CEO's ability to sense new market needs,develop new concepts for products and services,and increase the ?rm's knowledge diversity by diversifying into new products/markets via mergers,alliances,or acquisitions.Advances often emerge from the margins of a knowledge?eld(Kuhn,1970)thus a successful operational leader would be a good scout in terms of identifying important advances.Further,because organizations must exploit existing knowledge stocks as well as explore new knowledge paths,an effective operational leader plays a boundary spanning role.A high-technology?rm may produce a large number of inventions,but these may be of little value unless the CEO is able to push them through the pipeline,commercialize them,and derive a pro?t from them.As projects move to the development and implementation phase,an effective leader demonstrates operational skills in terms of securing resources,and communicating with external constituencies(e.g.FDA)to manage the project development cycle(Mumford et al.,2002).Put differently,a CEO who exhibits characteristics of operational leadership would have an external focus when it comes to innovation and would be skilled at communicating with the external environment and broadening the?rm's knowledge-creation opportunities by external knowledge acquisition.

Creative leaders,on the other hand,tend to be characterized by a focus on developing human and social capital as well as the ability to create a supportive environment within the organization(Mumford et al.,2002).They tend to focus on expanding the ?rm's existing knowledge stocks internally and they are skilled at stimulating creative staff intellectually,trusting and supporting them,and providing them latitude.Further,they promote individual initiative while promoting integration of group activities and teamwork(Mumford et al.,2002).Several studies support that an organization's climate for innovation is an important determinant of innovation(Bain,Mann,&Pirola-Merlo,2001;Jung et al.,2003;Scott&Bruce,1994).Hambrick,Black, and Fredrickson(1992)found that high-technology?rms bene?t from CEOs who are capable of fostering innovation by “catalyzing and exploiting the talents of the?rm's technical professionals…these[successful]CEOs are very collaborative,open-mined,and energetic.Even though these seem like universally ideal qualities for a CEO,they appear to be particularly important in the high-technology?rm which has to deal with rapid and discontinuous change,with value-creation hinging on a staff of high-grade technical professionals”(p.11).Similarly,in a series of case studies of Japanese high-technology?rms,Kodama(2005) found that the most important determinant of CEO success in those?rms is“building a knowledge-creation environment”(p.153).

The?rst step in the innovation value chain,idea generation,is distinct from the other two in that it is the most people-centered and internally-focused.In contrast,idea development and commercialization,involve facilitating development either by securing resources internally or acquiring them externally as well as expanding the?rm's reach to new markets.Being able to shift from new knowledge creation and exploration,to new knowledge application and exploitation highlights the challenge of leading effectively in high-technology?rms.Because of the synergistic bene?t between creative and operational leadership,there is a need to manage the balance between the two.Tushman and O'Reilly(1996)suggest that an ambidextrous?rm able to simultaneously explore and exploit,able to simultaneously invent and innovate,will outperform?rms that emphasize one at the expense of the other.Simply put,CEOs who are able to simultaneously focus on the external and internal environment,will be more effective leaders.

1.Theory development and hypotheses

There are various de?nitions of strategic leadership in management research.Strategic leadership has been de?ned as“a person's ability to anticipate,envision,maintain?exibility,think strategically,and work with others to initiate changes that will create a viable future for the organization”(Ireland&Hitt,1999;p.45).It has also been de?ned as the creation of an overall sense

of purpose and direction which guides integrated strategy formulation and implementation in ?rms (Shrivastava &Nachman,1989).Strategic leadership theory has focused largely on CEOs because they shape strategic decisions (Hambrick &Mason,1984;Zahra &Pearce,1989).CEOs are the central strategic decision makers and they have great power to affect the process of innovation by creating the organizational structure,processes,and culture that support innovation (Elenkov &Manev,2005).Strategic leadership theory claims that companies re ?ect their top management team and in particular,the chief executive of ?cer (Child,1972).Organizations are “re ?ections of the values and cognitive bases of powerful actors,”(Hambrick &Mason,1984:198)and CEOs have the ability to signi ?cantly in ?uence the direction of the ?rm.Some even suggest that the most important people in an organization are the CEO and the top management team formed by the CEO (Ireland &Hitt,1999).Since CEOs are the ones who have the ultimate responsibility of setting the strategic direction of the ?rm,they are involved in making decisions relating to diversi ?cation,mergers and acquisitions,alliances and joint ventures and they play an important role in creating a corporate environment that fosters or inhibits innovation (Daft,2002).

Only a few studies empirically examined the relationship between leadership behaviors and organizational innovation (e.g.,Amabile,1997;Elenkov et al.,2005;Howell &Avolio,1993;Jung et al.,2003).Elenkov et al.(2005)investigated the relationship between strategic leadership behaviors and product –market as well as administrative innovation and found a positive relationship between the two.Further,Jung et al.(2003)found transformational leadership to positively affect organizational innovation captured as the number of patents granted to the ?rm.While these studies are an important step towards explicating the relationship between strategic leadership and organizational innovation,they captured strategic leadership using Bass and Avolio's (1992)Multifactor Leadership Questionnaire (MLQ).While it is one of the most utilized sets of measures of all leadership studies (Lowe,Kroeck,&Sivasubramanian,1996)the MLQ does not capture the behaviors of a CEO which are most associated with the dimensions of the innovation value chain mentioned earlier.Also,the construct validity of this measure has been questioned (Tejeda,Scandura,&Pillai,2001)because it has not shown discriminant validity between the subscales in a number of studies.Multifactor leadership theory does not completely capture the unique challenges of a high-technology ?rm CEO.Further,the multifactor leadership questionnaire (MLQ)contains content that re ?ects relationships between leaders and members (e.g.,individualized consideration)that are less relevant to CEOs who in ?uence organizational members more broadly by creating a structure and a climate supportive of innovation.The role of the CEO in a high-technology ?rm is more related to the creation of a culture that supports innovation rather than with direct interactions with employees.As such,we introduce two new concepts of leadership (termed creative and operational)that consider the role of a high-technology ?rm CEO and examine their effects on innovation.The context for these leadership concepts is the role that science and technology play in innovation.

1.1.The role of science and technology in innovation

Science-based research initiatives are research projects aimed at the general advancement of knowledge that do not yet have speci ?c commercial objectives (Henard &McFayden,2005).Science is knowledge about the general characteristics and relationships of natural,social,and technological phenomena.It facilitates a better understanding of how technologies work,and it can help engineers screen different alternatives before actually testing them.Also,it can help extrapolate patterns or theories that could be applied to similar problems (Nightingale,1998).

Technology-based research initiatives on the other hand,revolve around the development of commercially successful products and involve exploiting,adapting,and combining what is known to respond to pressures from markets for products and services (Balmer &Sharp,1993;Clark,1987;Rip,1992).Put differently,technology involves an innovation process quite different from science.The process of technological development considers unexpected ?ndings as useless and when a solution to a technological problem is not evident,engineers work backwards from preconceived ends and evaluate potential starting points (means)until an optimal one is found (Nightingale,1998).Science-based research is associated with the process of invention while technology-based research is associated with the process of innovation.

Unlike technology,scienti ?c knowledge values unexpected ?ndings (Barnes &Edge,1982;Mulkay,1977).This unexpected branching of research streams can help engineers break out of their scenario thinking and the exploratory nature of science can lead to the development of new technologies by overturning the core design concepts underlying existing technologies (Henderson &Clark,1990).In sum,conducting science-based research internally can help ?rms more effectively evaluate the most recent technological advancements developed externally,which in turn increase the ef ?ciency of the ?rm's internal technology-based research (Cassiman et al.,2005;Cockburn &Henderson,1998).

While scienti ?c knowledge provides the base for advances in technological knowledge,technological knowledge advances also facilitate the further development and application of scienti ?c knowledge.The result is an on-going series of interactions in which science and technology are “dancing partners ”that evolve around each other yet follow different steps to do so (Rip,1992).As such,the interaction between technological and scienti ?c knowledge has a positive effect on the quality and quantity of innovations (Henard &McFayden,2005;Afuah,2003;Cohen &Levinthal,1990).

Because of the exploratory nature of scienti ?c research,new technologies can evolve (new knowledge content)which in turn creates opportunities for new areas of applicability (new knowledge context).New knowledge context can emerge when the ?rm diversi ?es internationally,into new markets or when it enters joint ventures.As such,new knowledge context can stimulate new knowledge content because it infuses the ?rm's knowledge base with new technologies that can be recombined in novel ways to generate new ideas.These ideas are discussed next.

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1.2.The role of creative and operational leadership in innovation

CEOs of high-technology?rms are responsible for making decisions regarding investments in innovation.A?rm's absorptive capacity,its ability to exploit new knowledge acquired externally or developed internally,depends on their in-house R&D capability(Cohen&Levinthal,1990).Such capability is very much affected by the characteristics of leaders heading those organizations.Thus,a CEO's leadership style is related to creativity and innovation and her skills affect people's willingness to engage in the success of creative ventures(Mumford et al.,2002).As Mumford et al.(2002)note,creative work is people-centered but it is also contextualized“with the success of creative ventures depending on an awareness of the capabilities of and pressures on extant socio-technical systems”(p.709).This suggests that in order to successfully invent and innovate,CEOs must have expertise in managing creative people internally,as well as communicating with the environment,and identifying new knowledge contexts and opportunities externally.

The arguments presented above regarding the interactive effects of science and technology on innovation suggest that for high-technology?rms,effective leadership calls for a CEO who is adept at fostering invention internally by catalyzing and supporting the talents of the?rm's technical professionals and encouraging science-based as well as technology-based initiatives.Effective leadership also calls for a CEO who can also simultaneously create opportunities for new knowledge creation and existing knowledge application by identifying and exploiting opportunities in the external environment.This highlights two important skills that a CEO should possess;one of a creative leader,who is people-centered and focuses on internal knowledge development and one of an operational leader,who is constantly on the lookout to identify and exploit new opportunities externally.

In terms of the?rst dimension of strategic leadership,the creative one,as Hitt and Ireland(2002)suggest,“the essence of strategic leadership is the effectuation of human capital and social capital in and for the?rm.Strategic leaders,thus,con?gure and leverage human and social capital to create value for the?rm…this type of leadership is critical for the?rm's survival and success”(p.15).Further,CEOs must create a climate that encourages exploration and risk taking.They need to be good at stimulating creative staff intellectually,trusting and supporting them,and providing them freedom(Mumford&Gustafson,1988;Amabile et al.,1996).They have to promote individual initiative while promoting integration of group activities and team work(Mumford et al.,2002).Put differently,in high-technology industries,CEOs play an important role in leveraging the?rm's internal resources and capabilities,especially human and social capital,and in creating a corporate environment that fosters invention and creates new knowledge content(Daft,2002).This ability is what we call creative leadership.

As ideas move from the idea generation phase to the development and implementation phase CEOs need to exhibit a different type of skill.Moving from invention to innovation involves more resources and interaction with a wider array of constituencies (Mumford et al.,2002).As such,CEOs must manage communication with external environmental agents such as government agencies.Because advances in technology often emerge from the margins of a knowledge?eld(Kuhn,1970),a successful CEO should be able to monitor,scout,and evaluate opportunities in the external environment.Further,leading a knowledge-intensive ?rm requires a CEO who is adept at expanding the?rm's knowledge domain not only internally(creative leadership)but also externally through diversi?cation via acquisitions,alliances,and joint ventures.Exploring diverse realms of knowledge can increase the probability that a radically different approach to problem solving will emerge(Fiol&Lyles,1985;Levinthal&March, 1993)and exposure to a new set of routines,new modes of reasoning,and challenges to existing cause–effect understandings is likely to help a?rm discover novel solutions to its problems.As Ahuja and Lampert(2001)put this:“…the irritant of new, imperfectly understood streams of knowledge can foster the pearls of insight”(p.527).This ability to extend the boundaries of the ?rm by venturing into new products/markets or change its boundaries to the international competitive arena thus creating new knowledge context is what we call operational leadership.

In sum,the role of a high-technology?rm CEO includes externally expanding knowledge depth and breadth by identifying new areas of knowledge application as well as new sources of knowledge acquisition,but also internally enhancing knowledge breadth and depth by nurturing and leveraging human and social capital.A CEO who exhibits characteristics of creative leadership would put an emphasis on nurturing new knowledge platforms internally by encouraging risk taking,intellectual stimulation,and freedom and by exhibiting support and trust.On the other hand,a CEO exhibiting characteristics of operational leadership would put an emphasis on playing a boundary spanning role by communicating with the external environment,identifying opportunities externally,and creating new knowledge contexts by extending existing product/market domains via mergers and acquisitions, alliances,or joint ventures.The effects of these two types of leadership on innovation outcomes are discussed next.

1.3.Creative leadership,operational leadership and innovation outcomes

For a?rm to be able to discover novel innovations it needs to open up to a new variety of contexts by extending into new products/markets.A CEO exhibiting operational leadership characteristics would be able to enhance innovation by introducing diverse knowledge.Such changes could include product or market diversi?cation,alliances,joint ventures,or mergers and acquisitions.To be able to expose the?rm to new knowledge domains an operational leader needs to?rst be able to identify those opportunities in the external environment whether that is the technological,political,economic,sociocultural,demographic,or legal environment.In addition to expanding the?rm's knowledge context,a CEO needs to be able to move new ideas from the conceptualization phase to the development and commercialization phases.As such,an operational CEO needs to exhibit competence in exerting in?uence over external environmental agents such as the press,consultants,governmental agents, suppliers,customers,and alliance partners.

On the other hand,CEOs exhibiting creative leadership characteristics would be more likely to invest in developing knowledge internally and as such,would be adept at managing creative people.Further,such CEOs would exhibit competence in intellectually stimulating employees,encouraging risk taking and experimentation,and creating a culture of innovation.Two key aspects of a high-technology ?rm's knowledge-creation environment that a CEO can in ?uence through policies and resource allocations are:the degree to which R&D staffers are encouraged to conduct basic science and the degree to which they conduct them in partnership with leading academic researchers.Zucker,Darby,and Armstrong (2002)found that ?rms whose researchers collaborate with star academic researchers increase the number and citation rates of their patents.Similarly,McMillan,Hamilton,and Deeds'(2000)study of R&D-intensive ?rms found a strong positive relationship between a culture supporting academic-style scienti ?c research and the number of patents a ?rm is granted.

As argued earlier,because of the relationship between science and technology,for ?rms to be successful,they need to simultaneously pursue science and technology-based research agendas.March (1991,p.71)stated that ?rms that invest in science to the exclusion of technology “suffer the costs of experimentation without gaining many of its bene ?ts.”Conversely,March (1991,p.71)also noted that a reverse orientation is likely to leave ?rms “trapped in suboptimal stable equilibrium,”where technology-based research yields productive results yet falls short of its potential because the groundwork for future innovation is not fully being developed.He therefore suggests that ?rms take a mixed research approach and we suggest that CEOs take a mixed leadership approach in terms of emphasizing knowledge investments internally as well as externally.Put differently,because of the interactive relationship between science and technology,an effective CEO is one who is able to simultaneously support a culture for developing science and technology-based research internally (human and social capital focus)as well as exploiting existing knowledge externally (entering new markets)or by expanding it by acquiring it from the market (pursuing acquisitions,alliances,or joint ventures).A simultaneous focus on internal knowledge development as well as external knowledge exploitation and acquisition can help the ?rm both exploit its exiting knowledge stock as well as enhance it by expanding its knowledge breadth.The iterative nature of innovation which involves a process of recombination (Fleming &Sorenson,2004),in which existing technological components are recon ?gured,or new ones are discovered suggests that ambidexterity in executive leadership would be associated with higher innovation quantity and quality.Formally stated:

Hypothesis 1.In high-technology ?rms,the interaction of creative and operational leadership will be positively related to innovation quantity.

Hypothesis 2.In high-technology ?rms,the interaction of creative and operational leadership will be positively related to innovation quality.

Science-based innovation is a challenging,time consuming,and uncertain process,one that is associated with a high probability of failure (Fleming &Sorenson,2004).Despite the risks associated with investments in science,science can help a ?rm break out of its existing technology trajectories to develop novel technologies (Ahuja &Lampert,2001;Makri et al.,2006).Earlier it was argued that creative leadership encourages risk taking and exploration which leads us to suggest that creative leadership characteristics would be associated investments in science.When CEOs emphasize operational leadership they would be comfortable with stretching the boundaries of the ?rm by diversifying into new products or markets by either exploring new areas of technology or exploiting existing ones.While we expect a positive relationship between investments in scienti ?c knowledge and operational as well as creative leadership,we expect that the former is more closely related with such investments because of its greater emphasis on the development on human capital and risk taking.Formally stated:

Hypothesis 3a.In high-technology ?rms,creative and operational leadership will be positively related to the use of science in innovation.

Hypothesis 3b.In high-technology ?rms,creative leadership will be more positively related to the use of science in innovation than operational leadership.

2.Methods

2.1.Sample and data collection

We test our hypotheses using a random sample of 773high-technology ?rms representing a variety of industries such as drugs and chemicals (21?rms),electronics (17?rms),and other manufacturing industries (39?rms)including metal,food and kindred products,and miscellaneous machinery.CHI Research Inc 4provided data on the number of U.S.patents granted annually to each

3

Information on this sample was purchased from CHI and due to budgetary constraints we could only purchase information on 77?rms.

4CHI Research Inc.,is the source of the patent analyses used in the National Science Foundation's bi-annual science and engineering reports.CHI Research was recently acquired by Thomson Scienti ?c's Delphion patent service.79

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?rm during1993–1995and2000as well as measures of key patent portfolio characteristics that were used as indicators of innovation resonance and use of science in innovation.Data on CEO pay were collected for1993–1995from the?rms'proxy statements.Firm performance,sales,and R&D spending data for the period1993–1995were downloaded from COMPUSTAT.The time period chosen for the study as well the number of?rms studied was restricted due to data availability.

2.2.Measures

2.2.1.Creative and operational leadership measures

To create measures for CEO creative and operational leadership characteristics,we examined CEO interviews during the time period1993–1995and then coded information pertaining to leadership style.This methodology was employed by Emrich,Brower, Feldman,and Garland(2001)and House,Spangler,and Woycke(1991)to examine the effects of executive-level leadership on organizational outcomes.Our source of data was https://www.360docs.net/doc/11178080.html,,a Dow Jones,and Reuter's company that includes?nancial analyst reports from9000magazines and newspapers worldwide.Factiva's collection of more than10,000sources includes the exclusive combination of The Wall Street Journal,the Financial Times,Dow Jones and Reuters newswires and the Associated Press,as well as Reuters Fundamentals.CEOs often need to provide information about the company to investment analysts thus these interviews are an appropriate tool for deriving leadership-related information.Our search using as keywords the name of the?rm,and the word‘CEO’in the headline yielded a total of300articles for the77?rms in our sample during the period of our study(1993–1995). This number re?ects all available articles via Factiva for these77?rms for the time period of the study that include the word CEO in the title.The authors read all300articles and assessed that they were all relevant to the study.The maximum number of articles per company was14and the minimum was1while the average was6.Due to this variance in the number of articles available for each?rm,we controlled for the number of words in each article.

The next step was to identify a potential set of items for the constructs of creative and operational leadership.These measures were composed by reference to theory(e.g.Hitt&Ireland,2002;Jung et al.,2003;Mumford et al.,2002;Tushman&O'Reilly, 1996)as well as expert advice by the two authors and a doctoral student.Because the generation of items is perhaps the most important part in developing good measures(Ford&Scandura,2007),we were very concerned with grounding our items in theory.As such,our instrument was revised by adding,revising,and deleting items based upon feedback from colleagues.This iterative process resulted in a6item questionnaire,tapping into creative and operational leadership dimensions.The points on the scale(0to3)correspond to a rating of how much the company's CEO exhibits certain behaviors(not at all,a little,moderately so,very much).

Our conceptualization of creative leadership re?ects a CEO's ability to encourage exploration and risk taking,and develop human and social capital(Mumford&Gustafson,1988;Mumford et al.,2002;Daft,2002).As such,the creative leadership scale includes the extent to which the CEO encourages risk taking and unconventional actions as well as the extent of emphasis on the development of human and social capital(see Appendix A).Operational leadership is conceptualized as the CEO's ability to move ideas from the generation phase to the development and implementation phase by identifying opportunities externally through scanning the technological,political,economic,sociocultural,demographic,and legal environments(Kuhn,1970)and then exploiting them by interacting with a wide array of constituencies(Mumford et al.,2002).Further,an effective CEO should be able to expand the?rm's knowledge domain not only internally(creative leadership)but also externally through diversi?cation via acquisitions,alliances,and joint ventures(Ahuja&Lampert,2001;Fleming&Sorenson,2004).As such,the operational leadership scale includes the extent to which the CEO emphasizes the company's opportunities,communicates competence in exerting in?uence over external environmental agents,and seeks to enhance the?rm's knowledge base via alliances,acquisitions,or joint ventures(see Appendix A).

We then distributed the300articles to three graduate students along with our6item questionnaire and provided them extensive explanations as well as examples of what each questionnaire item meant.We then asked them to read each article and rate each CEO's leadership behaviors based on our questionnaire.The data coding process took5months to complete and on a weekly basis the graduate students were asked to submit their work to the authors along with explanations as to why they coded information the way they did.Speci?cally,for each?rm,each article and each item,they were asked to show in a separate column, the information they were basing their coding on.The authors reviewed these ratings weekly,to ensure that the coders were consistent in their ratings.If for a certain questionnaire item no information was available in the articles,the raters were instructed to leave that blank.The?nal agreement score based on James,Demaree,&Wolf's(1984)rWG(J)inter-rater agreement of these three raters was0.89.

Note that the300articles re?ect a CEOs account of his own thoughts,attitudes,behaviors,and actions.While every CEO would like to present the company in the best possible light,we were able to identify differences in terms of whether the CEO was more concerned with the external environment of the?rm or whether she was more focused internally.Take for example the CEO of Lockheed Corp.The following excerpt re?ects the CEO's attitude towards developing human capital:

“I believe strongly that each of us has a fundamental self-development responsibility to build on the talents and skills we already have and to improve in those areas where we may not be as strong.Lockheed always has had the good fortune of recruiting skilled,dedicated people with talents in the many technical and non-technical disciplines that are vital to the corporation's continued success.We expect a lot of our people and,while the motivation to learn is an individual responsibility,the company recognizes an obligation to assist those who wish to develop their skills”Mr.Tellep,Lockheed Corp.,CEO.

2.2.2.Innovation performance measures

2.2.2.1.Innovation quantity.Innovation quantity has been used extensively to indicate innovation productivity (DeCarolis &Deeds,1999;Hall,Jaffe,&Trajtenberg,1999;Hitt,Hoskisson,Johnson,&Moesel,1996;Malerba &Orsenigo,1999;Mowery,Oxley,&Silverman,1998;Sorensen &Stuart,2000).We measured innovation quantity as the average number of patents granted to the ?rm during 1993–1995and the number of patents granted in 2000.

2.2.2.2.Innovation quality.Innovation quality is re ?ected in the extent to which a ?rm 's patents are cited by subsequent patents.Highly cited patents 5are considered more useful,of higher quality,and more likely to produce economic value for the inventing ?rm (Ahuja &Lampert,2001;DeCarolis &Deeds;1999;Deng,Lev,&Narin,2001;Rosenkopf &Nerkar,2001;Trajtenberg,1990a,b ).The more widely cited a ?rm 's patent portfolio,the more valuable its intellectual capital is (e.g.Hall,Jaffe,&Trajtenberg,2005).We measured innovation quality as the number of times a ?rm 's previous ?ve years of patents are cited in 2000.This count was converted to an index by dividing it by the average for all US patents that year from the same International Patent Classi ?cation (IPC)4-digit subclass.6Thus,a value of 1.0represents average citation frequency;a value of 2.0represents twice average citation frequency;and 0.25represents 25%of average citation frequency.Innovation resonance data was provided by CHI for 2000.

2.2.

3.Control variables

2.2.

3.1.CEO long-term incentives.Makri et al.(2006)found that there is a positive relationship between long-term CEO incentives and in ?uential innovations as well as the ?rm's ability to utilize scienti ?c knowledge effectively.They suggest that R&D-intensive ?rms should also reward executives for evidence of valued knowledge creation as re ?ected in innovation quality and use of science in innovation,and that ?rms that do so,perform better than ?rms that do not.Simply put,the percentage of a CEO's pay that is variable is a relevant control variable because variable pay affects the CEO's risk propensity and consequently her decisions relating to innovation.

That percentage was calculated as the ratio of CEO long-term pay divided by total pay.Long-term pay was estimated as the number of options granted to the CEO multiplied by 25%of their exercise price (Finkelstein &Boyd,1998;Lambert,Larcker,&Weigelt,1993)and total pay was calculated by adding CEO annual salary,bonus and long-term pay.The ratio of long-term pay to total pay was averaged for 1993–1995.

2.2.

3.2.Other.Several other measures were used as control variables.First,dummy variables were created to control for industry effects.Dummy variables for the drug/chemical and electronics industries were included in the analyses.As with many prior studies in the strategy literature,?rm performance was measured using return on assets (Ramanujam &Varadarajan,1986).Firm size was represented by the level of total assets with a logarithmic transformation to account for the skewness of the distribution.R&D intensity was calculated as R&D expenditures divided by sales (Balkin,Markman,&Gomez-Mejia,2000;Carpentar &Wade,2002;Milkovich,Gerhart,&Hannon,1991).This variable measures inputs into the innovation process and thus captures the extent of innovation opportunities within ?rms.

Building on the ?ndings of Balkin et al.(2000),the number of patents granted to a ?rm each year was included in the models as a control variable.CEO tenure was also controlled for as well as the number of words available from each ?rm's articles because the amount of information available from each CEO could bias results.Because our leadership measures were constructed using information from 1993to 1995,we used the same time period to calculate our control variables.Put differently,?rm performance,?rm size,R&D intensity,number of patents,as well as the ratio of long-term pay to total CEO pay were averaged for 1993–1995.

2.3.Data analysis

We used multivariate regression to test our hypotheses.Because innovation outcomes are likely to lag strategic decisions formulated and implemented in the time period 1993–1995,we incorporated a lag measure of ?ve years for evaluating innovation outcomes (Griliches,1990;Makri &Lane,2007a,b ).A lag will exist between the decision to use more science in innovation and the granting of patents that re ?ect this change in innovation processes.While we are uncertain as to the exact length of the decision-making lag,research on the U.S.patenting process suggests that the lag can vary from one to ?ve years (Makri &Lane,2007a,b;Pakes &Griliches,1984).

To test our hypotheses we use the following regression models:

Science =a 1Industry Controls +a 2Words +a 3CEO Tenure +a 4CEO LTP +a 5Assets +a 6ROA

+a 7R &D +a 8NPat +a 9Creative +a 10Operational

5

While not all important patents are highly cited and not all highly cited patents are important,several studies have shown that there is a strong positive relationship between patent impact and citations (e.g.Albert,Avery,Narin,&McAllister,1991).

6For those IPC subclasses with fewer than 10patents,the comparison ?gure was obtained by averaging all the patents in the US patent system for that year.81

M.Makri,T.A.Scandura /The Leadership Quarterly 21(2010)75–88

82M.Makri,T.A.Scandura/The Leadership Quarterly21(2010)75–88

Innovation Quality=a1Industry Controls+a2Words+a3CEO Tenure+a4CEO LTP+a5Assets+a6ROA

+a7R&D+a8NPat+a9Creative+a10Operational

Innovation Quantity=a1Industry Controls+a2Words+a3CEO Tenure+a4CEO LTP+a5Assets+a6ROA

+a7R&D+a8Creative+a9Operational

where

Science is the number of references in2000in the?rm's own patent applications to scienti?c papers

Innovation Quality is the innovation resonance in2000

Innovation Quantity is the number of patents granted to the?rm in2000

Industry Controls re?ect dummy variables for the drug/chemical and electronics industries

Words re?ects the total number of words for each?rms'articles

CEO tenure re?ects the number of years the executive has held his position in1995

ROA is the logarithm of the average?rm's reported return on assets during1993–1995

Assets is the logarithm of the average total assets of a?rm during1993–1995

R&D is the degree of investment in research and development(in millions of dollars)divided by sales.We used the average R&D/sales ratio during1993–1995

CEO LTP is the ratio of the average CEO long-term pay divided by total pay during1993–1995(logarithm)

NPat is average number of patents granted to the?rm during1993–1995.

3.Results

Table1presents the descriptive statistics and correlations for the study variables.On average,during1993–1995the?rms in our study spent17%of their sales on R&D and were granted an average of48patents.Further,they cited approximately3scienti?c references per patent and received one citation per patent.Correlations among the two leadership measures suggest that creative and operational leadership are moderately correlated at0.26(p b0.05).

Table2summarizes the analyses testing Hypothesis1.Hypothesis1posits that in high-technology?rms,the interaction of creative and operational leadership behaviors in1993–1995will be positively related to innovation quantity in2000.In Step1of our regression analysis we examine the effect of the control variables,while Step2shows the main effects of creative and operational leadership behaviors on innovation quantity.Step3shows the interactive effects of the two leadership variables and suggests a signi?cant positive relationship between creative and operational leadership and innovation quantity(p b0.05) strongly supporting Hypothesis1.Note that adjusted R-squared values increase signi?cantly when the interactive measures of leadership are entered into the equation(ΔR2=0.13)which suggests that our creative and operational leadership measures are meaningful predictors of innovation quantity.

Table1

Descriptive statistics and correlations(N=77).

Mean S.D.12345678910111314

0.250.43

1Drugs and

chemicals

2Electronics0.190.40?0.28*

3Others0.560.50?0.64**?0.56**

4Words4428.493924.84?0.07?0.050.11

5ROA(log) 2.070.63?0.080.11?0.010.06

6Total assets

6.63 2.120.13?0.12?0.020.22?0.17

(log)

7CEO LTP1146.61619.50.090.03?0.110.06?0.070.29

8CEO tenure 6.47.62?0.090.030.050.12?0.070.050.02

9R&D/sales0.170.830.0060.07?0.06?0.010.27*?0.32*0.13?0.11

5.80 2.28?0.140.040.090.41**0.01?0.030.13?0.20?0.05

10Operational

leadership

11Creative

3.88 2.93?0.03?0.020.030.35**0.070.010.04?0.060.140.26*

leadership

76.15116.10.05?0.190.110.33**?0.080.53**0.31*?0.040.090.150.22*

12Innovation

quantity

13Science 3.26 6.840.41**?0.17?0.220.090.180.220.190.060.18?0.0020.001*0.08

14Innovation

1.37 1.06?0.25*0.200.070.100.110.08?0.030.040.35**?0.010.130.17?0.10

quality

All the innovation indicators are reported for the year2000.

N=77;?p b0.10;*p b0.05;**p b0.01;***p b0.001.

To examine the interaction effect of operational and creative leadership on innovation quantity further,we plotted the results using the same method shown in Hitt,Bierman,Uhlenbruck,and Shimizu (2006).In the graph presented in Fig.1,we show the effects of operational leadership on innovation quantity for two levels of operational leadership,low and high (minus one standard deviation from the mean and plus one standard deviation from the mean respectively).We plotted innovation quantity regressed on different levels of creative leadership.As can be seen in Fig.1,the highest level of innovation quantity is achieved when both operational and creative leaderships are high.However,it is also worthy of note that innovation quantity is higher at all levels when operational leadership is high regardless of the level of creative leadership,which is in line with the idea that operational leadership is more closely related to innovation productivity.As suggested earlier,operational leadership is conceptualized as the CEO's ability to move ideas from the generation phase to the development phase which would be re ?ected in innovation quantity.

Table 3summarizes the analyses testing Hypothesis 2.Hypothesis 2suggests that in high-technology ?rms,the interaction of creative and operational leadership behaviors in 1993–1995will be positively related to innovation quality in 2000.In Step 1of our regression analysis we examine the effect of the control variables,while Step 2shows the main effects of creative and operational leadership indicators on innovation quality.Step 2,shows a marginally signi ?cant and positive relationship between creative leadership and innovation quality (p b 0.10)thus weakly supporting Hypothesis 2.Step 3,shows the interactive effects of the two leadership variables and suggests no relationship between creative and operational leadership and innovation quality thus providing no support for Hypothesis 2.

Table 4summarizes the analyses testing Hypotheses 3a and 3b .Hypothesis 3a suggests that in high-technology ?rms,creative and operational leadership behaviors in 1993–1995will be positively related to the use of science in innovation in 2000while Hypothesis 3b suggests that creative leadership behaviors in 1993–1995will be more positively related to the use of science in innovation in 2000than operational leadership behaviors.In Step 1of our regression analysis we examine the effect of the control variables,while Step 2shows the independent effects of creative and operational leadership indicators on use of science.As can be seen in Step 2,creative leadership behaviors are positively related to the use of science in innovation (p b 0.05)Comparing the beta coef ?cients of creative and operational leadership (β=0.41and β=?0.30respectively)using a Hotelling's (1947)T squared test

Table 2

Operational leadership,creative leadership and innovation quantity (Hypothesis 1).

Control variables

Innovation quantity (2000)Step 1

Step 2Step 3Standardized beta

Standardized beta Standardized beta Drugs/chemicals

?0.04?0.04?0.06Electronics

0.210.180.25Words

0.110.110.10CEO tenure

?0.23?0.20?0.24ROA (log)

0.180.150.23Total assets (log)

0.49**0.46**0.40*CEO LTP

0.240.240.29*R&D/sales (log)

0.170.170.19Creative leadership

?0.07?0.68*Operational leadership

0.16?0.69?Creative ×Operational

1.31*R 2

0.470.490.60Adj.R 2

0.300.270.40F

2.82*

2.22*

3.05**N =77.

?p b 0.10;*p b 0.05;**p b 0.01;***p b

0.001.Fig.1.Interaction effects of operational leadership,creative leadership and innovation quantity.

83M.Makri,T.A.Scandura /The Leadership Quarterly 21(2010)75–88

84M.Makri,T.A.Scandura/The Leadership Quarterly21(2010)75–88

Table3

Operational leadership,creative leadership and innovation quality(Hypothesis2).

Control variables Innovation quality(2000)

Step1Step2Step3

Standardized beta Standardized beta Standardized beta

Drugs/chemicals?0.09?0.07?0.08 Electronics0.34?0.43?0.47?Words0.230.230.21

CEO tenure0.06?0.04?0.05

ROA(log)0.160.220.26

Total assets(log)0.300.340.36

CEO LTP0.150.110.17 Number of patents?0.32?0.29?0.38

R&D/sales(log)0.50*0.420.40

Prior use of science0.55*0.54*?0.51?Operational leadership?0.29?0.60 Creative leadership0.19??0.03 Creative×Operational0.51

R20.480.530.54

Adj.R20.220.240.19

F 1.98* 2.13* 1.26?

N=77.

?p b0.10;*p b0.05;**p b0.01;***p b0.001.

(1947),the multivariate counterpart of the Student's t,is not meaningful in this case since operational leadership is not signi?cantly related to the use of science in innovation.Thus,Hypothesis3b is not supported.

4.Discussion

Most management scholars would agree that innovation is a key source of competitive advantage for high-technology?rms in particular because they have to deal with rapid and discontinuous change.In this study,we argue that CEOs of high-technology ?rms who are able to simultaneously focus on the external and internal environment,and on developing new knowledge as well as commercializing it,would be more effective leaders.We develop two dimensions of leadership and show that they are effective predictors of innovation quantity,quality,and novelty.Our conceptualization of operational leadership re?ects a CEO who has an external focus when it comes to innovation and who is skilled at communicating with the external environment and broadening the?rm's knowledge-creation opportunities.Our conceptualization of creative leadership re?ects a CEO's emphasis on developing social and human capital and on developing a supportive organizational culture that allows exploration and risk taking.Our approach to strategic leadership and innovation draws upon and integrates the leadership literature with strategic management approaches to innovation processes in high-technology?rms.It is one of few studies to examine the impact of leadership on organizational innovation and the only study that we know of that develops a measure of strategic leadership encompassing both creative and operational aspects of leadership.

Table4

Operational leadership,creative leadership and use of science in innovation(Hypotheses3a,and3b).

Control variables Use of science in innovation(2000)

Step1Step2

Standardized beta Standardized beta

Drugs/chemicals0.37*0.33 Electronics0.300.17

Words0.120.13

CEO tenure?0.090.05

ROA(log)0.230.14

Total assets(log)0.55*0.48*

CEO LTP0.210.25

R&D/sales(log)0.150.28 Number of patents?0.35?0.38 Operational leadership?0.30 Creative leadership0.41*

R20.450.56

Adj.R20.220.31

F 1.94* 2.20*

N=77.

?p b0.10;*p b0.05;**p b0.01;***p b0.001.

Our results support that creative and operational leadership while they do not independently affect innovation productivity,they do so interactively.Put differently,a CEO who is able to create new knowledge internally and also create new applications of this knowledge in the external market,would be more effective in in ?uencing innovation productivity.Further,our ?ndings suggest that while both types of leadership have a positive effect on innovation quantity,creative leadership is most important for enhancing innovation novelty and quality.Exploring new ideas,taking risks,and leveraging human and social capital are dimensions of leadership that enhance a ?rm's competence in pursuing basic research agendas (science)which in turn can lead to more in ?uential innovations (quality).

4.1.Implications for management research and practice

Future research should continue to examine the role that leadership plays in the process of innovation.We acknowledge the role of the top management team in leading innovation and suggest that future research examines the contribution of the team to the innovation process,particularly how congruence in the leadership styles of the CEO and the top management team is related to innovation quantity and quality.

While our study establishes a relationship between leadership and innovation,there are a number of key mediating processes that should be examined in future research.For example,the processes through which the leader in ?uences innovation could be examined.Survey research on the exploration –exploitation process is needed to determine the relationship between leadership and process as it relates to innovation outcomes.It would be expected that the effects of leadership would occur through the behaviors of R&D personnel.Also,organizational culture may mediate this relationship.A culture which supports experimentation and allows for employees to take risks without fear of retribution might contribute to the innovation process.The role of the CEO in developing such cultures of innovation is another area for future research.

Innovation is one of the keys to the long-term viability of organizations in many industries.Our research suggests that leaders at the top echelons of organizations may have a powerful in ?uence on the ability of organizations to adapt to environmental constraints and to take advantage of opportunities.This has implications for the selection of leaders in high-technology ?rms.As we see in this study,creative and operational leaderships are both important and relevant for different phases of the innovation process,but pursuing both requires a simultaneous focus on the internal and external environment,or at least a constant shift between the two (Casimir,2001).Because a constant shift strategy may not be always feasible,the CEO's selection of a Chief Technology Of ?cer is meaningful because a CTO who exhibits creative leadership characteristics can complement a CEO who is more operational.

Also,management succession plans should attend to developmental experiences of the top management team to ensure that these key aspects of strategic leadership are https://www.360docs.net/doc/11178080.html,anizations that have a cadre of top management talent which have both evolutionary and revolutionary leadership capabilities may be more effective in terms of developing streams of https://www.360docs.net/doc/11178080.html,anizational effectiveness in such environments is linked to the innovation process and leadership will play a key role.

Finally,this study sends practitioners and board of directors the message that it is important when evaluating CEOs of high-technology ?rms to consider rewarding them based on these two dimensions of leadership.As our results show,operational and creative leadership characteristics are effective predictors of innovation productivity and quality.As such,it is important that board of directors consider these behavioral characteristics when setting CEO pay in addition to considering ?nancial outcomes.Prior research has shown that it is crucial for ?rms to reward executives for supporting their ?rms'innovation efforts and suggested that an effective way to accomplish this is by rewarding executives using objective performance criteria in addition to behavioral indicators of innovation quality (Makri et al.,2006).Future research can further explore the relationship between creative and operational leadership,CEO pay,and innovation outcomes and examine how the compensation structure can enhance or wane the effects of leadership on innovation.

4.2.Study limitations

Several limitations are worth noting.First,we used patents for our measure of innovation quality and novelty (science).Yet not all innovations are patentable,and not all patentable inventions are patented.While some ?rms chose to patent aggressively,others opt for trade secrets in order protect their innovations.Secondly,while patents correlate well with new products (Comanor &Scherer,1969),not all are commercialized.Thus,innovation quality can only partially capture the novelty of a commercialized innovation and future research should consider the novelty of the commercialized products to enable a complete assessment of the impact of leadership on innovation.Third,the relevance of these ideas is likely to be limited to industries where patents are meaningful indicators of innovation.Further,we acknowledge that managerial responsibilities are rarely the exclusive domain of a single individual and an examination of organizational strategies is more meaningfully studied within the context of TMT characteristics (Hambrick &Mason,1984).Finally,we recognize that our leadership measures require further construct validation and we acknowledge the limitations involved with evaluating and categorizing CEO's leadership styles based on an average of six articles per ?rm.

4.3.Concluding remarks

The key to the future competitiveness of high-technology ?rms is the ability to innovate.Yet,we have only begun to understand the mechanisms though which ?rms create knowledge which results in innovation.Leadership at the top appears to 85

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86M.Makri,T.A.Scandura/The Leadership Quarterly21(2010)75–88

be an important antecedent of a?rm's ability to innovate because the CEO has an important impact on the development of the organizational vision and the strategies to attain that vision.This research supports the role of the CEO in leading streams of innovation in high-technology?rms.Future research should continue to examine the role of CEO leadership in creating an ambidextrous organization,one that is simultaneously able to explore and exploit.

Acknowledgements

We would like to thank the three graduate students Kyle Christman,Matthew Roesner,and Jamie Bigayer for assisting us with the data coding process.Also,we would like to thank Cecily Cooper,Ekin Pellegrini and Jeff Kerr for their valuable feedback during the early stages of the study.

Appendix A

A.1.Operational leadership

1.Emphasizes the company's opportunities(technological,political,economic,sociocultural,demographic,legal)

a.Not at all

b.A little

c.Moderately so

d.Very much

2.Emphasizes diversi?cation via alliances,acquisitions or joint ventures

a.Not at all

b.A little

c.Moderately so

d.Very much

https://www.360docs.net/doc/11178080.html,municates competence in exerting in?uence over external environmental agents(the press,consultants,government, suppliers,customers,alliance partners)

a.Not at all

b.A little

c.Moderately so

d.Very much

A.2.Creative leadership

1.Encourages risk taking and unconventional actions

a.Not at all

b.A little

c.Moderately so

d.Very much

2.Focuses on developing human capital(the individual capabilities,knowledge,skills and experience of a?rm's employees)

a.Not at all

b.A little

c.Moderately so

d.Very much

3.Focuses on developing social capital(the network of relationships that individuals have throughout the organization)

a.Not at all

b.A little

c.Moderately so

d.Very much

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