Previous empirical findings on the effect of employee-involved governance (EIG) on innovation are inconsistent and even contradictory. Based on an interactionist perspective of innovation, we propose that this effect is contingent on CEO change-oriented leadership (COL) and mediated by two distinct innovative processes: exploratory and exploitative innovations. Using multisource data from 161 enterprises, we demonstrated that EIG was positively (negatively) associated with innovative performance when CEO COL was higher (lower). The results also revealed that exploratory and exploitative innovations played different roles in mediating the effects of EIG on innovative performance depending on CEO COL. Specifically, exploratory innovation mediated that effect when CEO COL was high, but exploitative innovation did not. Theoretical and practical implications are discussed.
AbernathyW. J.ClarkK. B. (1985). Innovation: Mapping the winds of creative destruction. Research Policy, 14, 3-22.
2.
AcsZ. J.AudretschD. B. (1988). Innovation in large and small firms: An empirical analysis. The American Economic Review, 78, 678-690.
3.
AddisonJ. T.SchnabelC.WagnerJ. (2001). Works councils in Germany: Their effects on establishment performance. Oxford Economic Papers, 53, 659-694.
4.
AikenL. S.WestS. G.RenoR. R. (1991). Multiple regression: Testing and interpreting interactions. Newbury Park, CA: SAGE.
5.
AllenM.FunkL. (2008, June). Institutions and innovation: The role of German works councils in supporting radical change. Paper presented at the meeting of the 25th Celebration Conference on Entrepreneurship and Innovation-Organizations, Denmark, Copenhagen.
6.
AndriopoulosC.LewisM. W. (2009). Exploitation-exploration tensions and organizational ambidexterity: Managing paradoxes of innovation. Organization Science, 20, 696-717.
7.
Atuahene-GimaK. (2005). Resolving the capability-rigidity paradox in new product innovation. Journal of Marketing, 69, 61-83.
8.
AudretschD. B.von der SchulenburgJ. M. G. (1990). Union participation, innovation, and concentration: Results from a simultaneous model. Journal of Institutional and Theoretical Economics (JITE)/Zeitschrift für die gesamte Staatswissenschaft, 146, 298-313.
9.
BareghehA.RowleyJ.SambrookS. (2009). Towards a multidisciplinary definition of innovation. Management Decision, 47, 1323-1339.
10.
BarlingJ.WeberT.KellowayE. K. (1996). Effects of transformational leadership training on attitudinal and financial outcomes: A field experiment. Journal of Applied Psychology, 81, 827-832.
11.
BarryM.WilkinsonA. (2016). Pro-social or pro-management? A critique of the conception of employee voice as a pro-social behaviour within organizational behaviour. British Journal of Industrial Relations, 54, 261-284.
12.
BassB. M. (1985). Leadership and performance beyond expectations. New York, NY: Free Press.
13.
BellocF. (2012). Corporate governance and innovation: A survey. Journal of Economic Surveys, 26, 835-864.
14.
BennerM. J.TushmanM. L. (2003). Exploitation, exploration, and process management: The productivity dilemma revisited. Academy of Management Review, 28, 238-256.
15.
BiernackiP.WaldorfD. (1981). Snowball sampling: Problems and techniques of chain referral sampling. Sociological Methods & Research, 10, 141-163.
16.
BradleyD.KimI.TianX. (2016). Do unions affect innovation?Management Science, 63, 2251-2271.
17.
BrimeyerT.SilvaE. O.ByrneR. J. (2016). What do unions do? Media framing of the two-faces of labor. Journal of Labor and Society, 19, 517-532.
18.
BuddJ. W.GollanP. J.WilkinsonA. (2010). New approaches to employee voice and participation in organizations. Human Relations, 63, 303-310.
19.
ChenC. J.HuangJ. W. (2009). Strategic human resource practices and innovation performance—The mediating role of knowledge management capacity. Journal of Business Research, 62, 104-114.
20.
ChenG. Q.ZhouW. (2009). A study on the relationship among CEOs’ leadership behavior, organizational learning capability, and organizational performance. Science Research Management, 30, 148-154.
21.
ChenM. J. (2002). Transcending paradox: The Chinese “middle way” perspective. Asia Pacific Journal of Management, 19, 179-199.
22.
CleggH. A. (1960). A new approach to industrial democracy. Oxford, UK: Blackwell.
23.
CohenJ.CohenP.WestS. G.AikenL. S. (1983). Applied multiple regression/correlation analysis for the behavioral sciences. Mahwah, NJ: Lawrence Erlbaum.
24.
CollinsD. (1997). The ethical superiority and inevitability of participatory management as an organizational system. Organization Science, 8, 489-507.
25.
CongerJ. A.KanungoR. N. (1998). Charismatic leadership in organizations. Newbury Park, CA: SAGE.
26.
ConnollyR. A.HirschB. T.HirscheyM. (1986). Union rent seeking, intangible capital, and market value of the firm. The Review of Economics and Statistics, 68, 567-577.
27.
CottonJ. L.VollrathD. A.FroggattK. L.Lengnick-HallM. L.JenningsK. R. (1988). Employee participation: Diverse forms and different outcomes. Academy of Management Review, 13, 8-22.
28.
DavisE. M.LansburyR. D. (2013). Worker participation in decisions on technological change in Australia. In BamberG. J.LansburyR. D. (Eds.), New technology (Routledge Revivals): International perspectives on human resources and industrial relations (pp. 100-116). London, England: Routledge.
29.
DeetzS. (1992). Democracy in an age of corporate colonization: Developments in communication and the politics of everyday life. New York: State University of New York Press.
30.
de JongG.van WitteloostuijnA. (2004). Successful corporate democracy: Sustainable cooperation of capital and labor in the Dutch Breman Group. The Academy of Management Executive, 18, 54-66.
31.
DewarR. D.WhettenD. A.BojeD. (1980). An examination of the reliability and validity of the Aiken and Hage scales of centralization, formalization, and task routineness. Administrative Science Quarterly, 25, 120-128.
32.
De WinneS.SelsL. (2010). Interrelationships between human capital, HRM and innovation in Belgian start-ups aiming at an innovation strategy. The International Journal of Human Resource Management, 21, 1863-1883.
33.
DilgerA. (2006). Economic effects of co-determination. Scandinavian Journal of Economics, 95, 365-375.
34.
DragoR.WoodenM. (1994). Unions, innovation and investment: Australian evidence. Applied Economics, 26, 609-615.
35.
DriscollJ. W. (1978). Trust and participation in organizational decision making as predictors of satisfaction. Academy of Management Journal, 21, 44-56.
36.
EdwardsJ. R.LambertL. S. (2007). Methods for integrating moderation and mediation: A general analytical framework using moderated path analysis. Psychological Methods, 12, 1-22.
37.
FarndaleE.BrewsterC.PoutsmaE. (2008). Coordinated vs. liberal market HRM: The impact of institutionalization on multinational firms. The International Journal of Human Resource Management, 19, 2004-2023.
38.
FitzRoyF. R.KraftK. (1990). Innovation, rent-sharing and the organization of labor in the Federal Republic of Germany. Small Business Economics, 2, 95-103.
FornellC.LarckerD. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18, 39-50.
41.
FreemanR.MedoffJ. (1985). What do unions do? (1984). Maryland Law Review, 44, 926-938.
42.
GibsonC. B.BirkinshawJ. (2004). The antecedents, consequences, and mediating role of organizational ambidexterity. Academy of Management Journal, 47, 209-226.
43.
GilF.RicoR.AlcoverC. M.BarrasaA. (2005). Change-oriented leadership, satisfaction and performance in work groups: Effects of team climate and group potency. Journal of Managerial Psychology, 20, 312-328.
44.
GustavsenB.EngelstadP. H. (1986). The design of conferences and the evolving role of democratic dialogue in changing working life. Human Relations, 39, 101-116.
45.
GuthrieJ. P. (2001). High-involvement work practices, turnover, and productivity: Evidence from New Zealand. Academy of Management Journal, 44, 180-190.
46.
GuthrieJ. P.SpellC. S.NyamoriR. O. (2002). Correlates and consequences of high involvement work practices: The role of competitive strategy. International Journal of Human Resource Management, 13, 183-197.
47.
HageJ.AikenM. (1967). Relationship of centralization to other structural properties. Administrative Science Quarterly, 12, 72-92.
48.
HanT. S.ChiangH. H.ChangA. (2010). Employee participation in decision making, psychological ownership and knowledge sharing: Mediating role of organizational commitment in Taiwanese high-tech organizations. The International Journal of Human Resource Management, 21, 2218-2233.
49.
HanT. S.ChiuS. F. (2000). Industrial democracy and institutional environments: A comparison of Germany and Taiwan. Economic and Industrial Democracy, 21, 147-182.
50.
HarrisonJ. S.FreemanR. E. (2004). Is organizational democracy worth the effort?The Academy of Management Executive, 18, 49-53.
51.
HaterJ. J.BassB. M. (1988). Superiors’ evaluations and subordinates’ perceptions of transformational and transactional leadership. Journal of Applied Psychology, 73, 695-702.
52.
HeZ. L.WongP. K. (2004). Exploration vs. exploitation: An empirical test of the ambidexterity hypothesis. Organization Science, 15, 481-494.
53.
HendersonR. M.ClarkK. B. (1990). Architectural innovation: The reconfiguration of existing product technologies and the failure of established firms. Administrative Science Quarterly, 35, 9-30.
54.
HirschB. T. (1990). Innovative activity, productivity growth, and firm performance: Are labor unions a spur or a deterrent?Advances in Applied Micro-Economics, 5, 69-104.
55.
HirschB. T.LinkA. N. (1987). Labor union effects on innovative activity. Journal of Labor Research, 8, 323-332.
56.
HuangX.Van de VliertE.Van der VegtG. (2005). Breaking the silence culture: Stimulation of participation and employee opinion withholding cross-nationally. Management and Organization Review, 1, 459-482.
57.
HumborstadS. I. W. (2014). When industrial democracy and empowerment go hand-in-hand: A co-power approach. Economic and Industrial Democracy, 35, 391-411.
58.
JansenJ. J.Van Den BoschF. A.VolberdaH. W. (2006). Exploratory innovation, exploitative innovation, and performance: Effects of organizational antecedents and environmental moderators. Management Science, 52, 1661-1674.
59.
KleinknechtR. H. (2015). Employee participation in corporate governance: Implications for company resilience. European Journal of Industrial Relations, 21, 57-72.
60.
KotterJ. P. (1995). Leading change: Why transformation efforts fail. Harvard Business Review, 73, 56-67.
61.
KotterJ. P. (2001). What leaders really do. Harvard Business Review, 79, 1-12.
62.
KraftK.StankJ.DewenterR. (2009). Co-determination and innovation. Cambridge Journal of Economics, 35, 145-172.
63.
LaneR. E. (1985). From political to industrial democracy?Polity, 17, 623-648.
64.
LiuD.GongY.ZhouJ.HuangJ. C. (2017). Human resource systems, employee creativity, and firm innovation: The moderating role of firm ownership. Academy of Management Journal, 60, 1164-1188.
65.
LubatkinM. H.SimsekZ.LingY.VeigaJ. F. (2006). Ambidexterity and performance in small-to medium-sized firms: The pivotal role of top management team behavioral integration. Journal of Management, 32, 646-672.
66.
MachinS.WadhwaniS. (1991). The effects of unions on investment and innovation: Evidence from WIRS. The Economic Journal, 101, 324-330.
67.
MacKinnonD. P.LockwoodC. M.WilliamsJ. (2004). Confidence limits for the indirect effect: Distribution of the product and resampling methods. Multivariate Behavioral Research, 39, 99-128.
68.
MarchJ. G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2, 71-87.
69.
McLaganP. A.NelC. (1995). The age of participation: New governance for the workplace and the world. San Francisco, CA: Berrett-Koehler Publishers.
70.
MichieJ.SheehanM. (2003). Labor market deregulation, “flexibility” and innovation. Cambridge Journal of Economics, 27, 123-143.
71.
MuellerV.RosenbuschN.BauschA. (2013). Success patterns of exploratory and exploitative innovation: A meta-analysis of the influence of institutional factors. Journal of Management, 39, 1606-1636.
72.
Müller-JentschW. (2008). Industrial democracy: Historical development and current challenges. Management Revue, 19, 260-273.
73.
NemanichL. A.VeraD. (2009). Transformational leadership and ambidexterity in the context of an acquisition. The Leadership Quarterly, 20, 19-33.
74.
OzerM.ZhangW. (2015). The effects of geographic and network ties on exploitative and exploratory product innovation. Strategic Management Journal, 36, 1105-1114.
75.
PengM. W.HeathP. S. (1996). The growth of the firm in planned economies in transition: Institutions, organizations, and strategic choice. Academy of Management Review, 21, 492-528.
76.
PhelpsC. C. (2010). A longitudinal study of the influence of alliance network structure and composition on firm exploratory innovation. Academy of Management Journal, 53, 890-913.
77.
PosnerB. Z.KouzesJ. M. (2012). The leadership challenge: How to make extraordinary things happen in organizations. San Francisco, CA: Jossey-Bass.
78.
ReshefY.BemmelsB.WolfeR. A. (1993). The effect of unionization on workplace innovation. Economic and Industrial Democracy, 14, 109-131.
79.
RogersS. (2004). Philippine politics and the rule of law. Journal of Democracy, 15, 111-125.
80.
SearleR. H.BallK. S. (2003). Supporting innovation through HR policy: Evidence from the UK. Creativity and Innovation Management, 12, 50-62.
81.
ShamirB.HouseR. J.ArthurM. B. (1993). The motivational effects of charismatic leadership: A self-concept based theory. Organization Science, 4, 577-594.
82.
ShawJ. D.DineenB. R.FangR.VellellaR. F. (2009). Employee-organization exchange relationships, HRM practices, and quit rates of good and poor performers. Academy of Management Journal, 52, 1016-1033.
83.
SirénC.PatelP. C.WincentJ. (2016). How do harmonious passion and obsessive passion moderate the influence of a CEO’s change-oriented leadership on company performance?The Leadership Quarterly, 27, 653-670.
84.
SlappendelC. (1996). Perspectives on innovation in organizations. Organization Studies, 17, 107-129.
85.
Stepan-NorrisJ. (1997). The making of union democracy. Social Forces, 76, 475-510.
86.
Van de VenA. H. (1986). Central problems in the management of innovation. Management Science, 32, 590-607.
87.
van EverdingenY. M.WaartsE. (2003). The effect of national culture on the adoption of innovations. Marketing Letters, 14, 217-232.
88.
VenusM.JohnsonR. E.ZhangS.WangX. H.LanajK. (2018). Seeing the big picture: A within-person examination of leader construal level and vision communication. Journal of Management, 45(7), 2666-2684.
89.
WangC. L.RafiqM. (2014). Ambidextrous organizational culture, contextual ambidexterity and new product innovation: A comparative study of UK and Chinese high-tech firms. British Journal of Management, 25, 58-76.
90.
WangF. B.ChenJ. X.YangY. (2012). An analysis of the effect of the explorative and exploitative innovations and their balance. Management World, 3, 96-112.
91.
WangH.TsuiA. S.XinK. R. (2011). CEO leadership behaviors, organizational performance, and employees’ attitudes. The Leadership Quarterly, 22, 92-105.
92.
WangT.ZhaoB.ThornhillS. (2015). Pay dispersion and organizational innovation: The mediation effects of employee participation and voluntary turnover. Human Relations, 68, 1155-1181.
93.
WangZ.ZangZ. (2005). Strategic human resources, innovation and entrepreneurship fit: A cross-regional comparative model. International Journal of Manpower, 26, 544-559.
94.
WilkinsonA.TownsendK.BurgessJ. (2013). Reassessing employee involvement and participation: Atrophy, reinvigoration and patchwork in Australian workplaces. Journal of Industrial Relations, 55, 583-600.
95.
WoodmanR. W.SawyerJ. E.GriffinR. W. (1993). Toward a theory of organizational creativity. Academy of Management Review, 18, 293-321.
96.
YuklG. (1999). An evaluative essay on current conceptions of effective leadership. European Journal of Work and Organizational Psychology, 8, 33-48.
97.
YuklG. (2008). How leaders influence organizational effectiveness. The Leadership Quarterly, 19, 708-722.
98.
YuklG.GordonA.TaberT. (2002). A hierarchical taxonomy of leadership behavior: Integrating a half century of behavior research. Journal of Leadership & Organizational Studies, 9, 15-32.
99.
YuklG.MahsudR. (2010). Why flexible and adaptive leadership is essential. Consulting Psychology Journal: Practice and Research, 62, 81-93.
100.
ZahraS. A.IrelandR. D.HittM. A. (2000). International expansion by new venture firms: International diversity, mode of market entry, technological learning, and performance. Academy of Management Journal, 43, 925-950.
101.
ZhangY.WaldmanD. A.HanY. L.LiX. B. (2015). Paradoxical leader behaviors in people management: Antecedents and consequences. Academy of Management Journal, 58, 538-566.
102.
ZhouY.FanX.SonJ. (2019). How and when matter: Exploring the interaction effects of high-performance work systems, employee participation, and human capital on organizational innovation. Human Resource Management, 58, 253-268. doi:10.1002/hrm.21950
103.
ZhouY.HongY.LiuJ. (2013). Internal commitment or external collaboration? The impact of human resource management systems on firm innovation and performance. Human Resource Management, 52, 263-288.
104.
ZhuZ. H.ChenJ. (2008). The synergy and dynamic between explorative learning and exploitative learning: An empirical study. Science Research Management, 29, 1-9.
