March 11, 2019
MUNCIE, Indiana — Companies placing a higher emphasis on their employees, as opposed to external social issues and stakeholders — such as shareholder and customers — may be more innovative and entrepreneurial, says a new study from Ball State University.
“Social reactiveness and innovation: The impact of stakeholder salience on corporate entrepreneurship” was published in a recent issue of the Journal of Small Business Strategy. Researchers examined 200 senior-level managers and developed a social proactiveness scale that examined a manager’s priorities toward internal and external issues.
A multi-university research team led by Mike Goldsby, executive director of the Institute for Entrepreneurship and Free Enterprise at Ball State, found that companies that place an emphasis on employees are more proactive on both internal and external issues, while those placing salience on stockholders are more are more proactive on internal social issues but not external social issues.
The data suggested that proactiveness related to internal social issues lead to greater innovation while proactiveness on external social issues is not related to innovation. Researchers also found that the results indicated that if a company seeks to be more innovative, it should strongly consider the interests of its employees in strategy and operations.
“In other words, take care of your employees and they’ll take care of you,” Goldsby said. “Employees will match commitment toward their organization based on the level of support their employing organizations have for them.”
He noted that conditions in the global business environment demand that established firms pursue innovation and relevancy in their markets if they are to stay in business. This strategic approach of support and revitalization is better known as corporate entrepreneurship.
Corporate entrepreneurship refers to the pursuit of innovation by established organizations and is a vital component of facilitating the exploiting of existing company resources or exploration of new opportunities, Goldsby said.
He said the also research indicates that innovation is the highest in firms that place a major emphasis on HR ethics – the equal treatment of employees, employee empowerment, legal ethical problems, code of conduct, general ethics, and valuing diversity.
“When internal innovation is a major outcome, firms are better able to respond to the market,” Goldsby said. “They were more agile, incorporate innovations better and update operations faster. These firms are able to come up with more products and services, and become a more agile and effective company.”
By Marc Ransford, Senior Communications Strategist