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Creative climate and learningorganization factors: their

contribution towards innovationMeriam Ismail

Private Education Department, Ministry of Higher Education, Malaysia

Abstract

Purpose The purpose of this study is to explore the effects of two independent variables, creativeclimate and learning organization, on innovation separately and simultaneously.

Design/methodology/approach The methodology used was multiple regression analysisexecuted on the data collected. Apart from that, the study also used T-tests to compare the means

of variables between the randomly selected local organization and MNCs. ANOVA was also conductedto compare the means of the variables between three different employee categories of job levels,namely the top, middle/lower management and supporting staff.

Findings The results indicated that both learning culture and creative climate contributed 58.5percent to the explanation of the observed variances in the innovation construct. The learningorganization culture separately was found to have a significantly stronger relationship withinnovation (r 0.733) than did the organizational creative climate (r 0.473). This implied a largercontribution from the learning organization variable towards innovation. The findings also showedthat there were no significant differences in the mean scores (P. 0.05) among the three organizationaljob levels included, namely the top management, middle/lower management and staff, in the membersperceptions of innovation, creative climate and learning culture. The study also found no significantdifferences in the mean scores (P. 0.05) among the small, medium, large and very largeorganizational population sizes in the members perceptions on innovation, creative climate and

learning culture.Originality/value The study involved a sample of 18 private organizations selected at randomfrom a list of 165 organizations across various core businesses. The instrument used for innovation isdeveloped by the researcher, validated by post hoc factor analysis involving 259 respondents.

Keywords Creative thinking, Working practices, Learning organizations, Strategic leadership

Paper type Research paper

IntroductionHaving a creative working climate (or environment) within an organization whichrelates to a suitable working culture facilitating an environment that will enhanceorganizational power is an idea that has been put forward during the middle 1980s and

late 1990s by several scholars such as, Ekvall et al. (1983), Ekvall andTangeberg-Anderson (1986), Zain (1995), Zain and Rickards (1996) and Amabile andConti (1999). Organizational climate is regarded as an attribute of the organization, aconglomerate of attitudes, feelings and behaviors which characterize life inorganizations and exists independently of the perceptions and understandings of themembers of the organizations (Ekvall, 1996, p. 105). It is conceived as an organizationalreality in an objective sense. Creativity on the other hand, is a thinking process whichhelps generate ideas (Majaro, 1992).

The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at

www.emeraldinsight.com/researchregister www.emeraldinsight.com/0143-7739.htm

Creative climateand organization

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Received November 2003Revised July 2005

Accepted July 2005

Leadership & Organization

Development Journal

Vol. 26 No. 8, 2005

pp. 639-654

q Emerald Group Publishing Limited

0143-7739

DOI 10.1108/01437730510633719


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Research on innovation has also identified a number of human, social and culturalfactors which are crucial for effective operation of innovation at the organizationallevel (OECD, 1997). These factors according to OECD (1997) are mostly centeredaround learning; it is learning by organizations as a whole (diffusion of knowledge to a

broad range of key individuals within them) which is critical to an organizationsinnovative capabilities. By the end of the 1990s, the idea of learning at theorganizational level and knowledge management had been closely linked to innovation(Argyris and Schon, 1978; Drucker, 1988; Garvin, 1993; Nonaka and Takeuchi, 1995;Watkins and Marsick, 1996). This stream of research, also called theneo-Schumpeterian approach, stems from earlier scholars such as Polyanyi (1966)and Nonaka (1991) who view innovation in terms of an interaction between marketopportunities and the organizations knowledge base and capabilities. A learningorganization is a system in the organization that is capable of changes that requiremembers to act upon the change and which needs learning to do so. It is one in whichlearning and work are integrated in an ongoing and systematic fashion to supportcontinuous improvement; this learning will have to occur at all levels within anorganization, individual, group, organization and global (Watkins, 1996, p. 91).

Innovation on the other hand is the process of creating commercial products (orservices) from inventions. It includes both technological and non-technologicalinnovation. The non-technological innovation discussed in the present study is focusedon organizational innovation. It is included together with technological innovation (TI)since organizational innovation occurs as part of TI, according to Damanpour andEvans cited by Van de Ven and Angle (1989).

Objective of the studyThe general objective of the present study was to determine the levels of creativeclimate factors and learning organization factors based on the perceptions of theemployees from participating organizations, to observe their relationships andexamine any contribution of those factors to the explanation of the observed variancesin innovation within the organizations concerned. These included local organizationsand multinational corporations (MNCs).

Definition of termsTechnological innovation comprises of implemented technologically new products andprocesses and significant technological improvements in products and processes(OECD, 1997, p. 47). The term implemented here means introduced on the market(product/service innovation) or used within a production process (process innovation).The sub factors within this TI component are related to technology transfer (which

includes technology assimilation) and diffusion of innovation which facilitate TI.Technological transfer is the transmission of technology from those who possess it tothose who do not (within an organization). It involves the acquisition of technologicalknowledge or know-how generated by one group or institution to be embodied in theoperations of the recipient organization. The technology could be tangible goods orprocesses such as component parts or machinery or intangible know-how such asadvance knowledge of road building techniques and must be embodied into theoperations of the recipient organization.

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Technology assimilation is the acquisition, absorption and adaptation oftechnologies developed (through R&D or otherwise) outside of the firm (Wong et al.,1999). Diffusion is the way TI is spread through market or market channels, includingdifferent regions and to different industries/market and organizations (OECD, 1997). It

gives TI economic value. Hence, TI in this study is assessed by technology transfer anddiffusion factors.

Organizational innovation is a managerial innovation which includes theimplementation of advanced management techniques such as the quality assuranceprogram, International Standard for Organization (ISO 9000) or basic elements of TQMwithin the organization for the purpose of developing significant improvement in theproduction or delivery of goods or services (OECD, 1997, pp. 54-5). The basic pillars ofTQM are:

. satisfying the customer;

. effective management system/process such as ISO 9000 program;

. teamwork practice; and

. improvement tools for continuous improvement.

The component is being assessed by statements in the questionnaire relating to the ISO9000 program implementation and its procedures. Justifiably, also for ease of use, theterm innovation which is widely referred to in this paper includes the two majorconstructs of innovation namely TI and organizational innovation.

Statement of the problemIt is widely acknowledged despite achieving considerable success economically,innovation practices in Malaysian private organizations still remain relativelyunder-researched (Zain and Rickards, 1996; MASTIC, 1996). This statement is also

supported by Sta. Maria (2000) and Khairuddin (1999). Axtell et al. (2000) contend thatthere is a large literature on creativity in general, but little relating to innovation per se.Even though there has been a huge volume of research on innovation, with 3,085publications on the diffusion of innovation out of which 2,297 are empirical works(Rogers, 1983), surprisingly, good models and principles on innovation have yet to bedeveloped (Zairi, 1994). Thus the present study addresses the need for more work onlinking creative climate factors in order to analyze their influence on innovation withinthe Malaysian organizational context.

MethodologyThis particular study aimed to explore the effects of two independent variables,creative climate and learning culture on innovation separately and simultaneously.

With that, a multiple regression analysis was executed on the data collected. Thisanalysis also made it possible to identify which individual factors of the independentvariables have significant influence on innovation. Apart from multiple regressionanalysis, the study used T-test to compare the means of the variables between therandomly selected local organization and MNCs. The study also used analysis ofvariance (ANOVA) in an attempt to compare the means of the variables between thethree different employee categories of job levels within the organizations concerned,namely the top management, middle/lower management, and supporting staff.


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SampleEighteen sample organizations were obtained through random selection from a list of165 private organizations within the city of Kuala Lumpur which had acquired ISO9000 series. The respondents comprised of employees having at least an A-level or

equivalent academic qualification were selected through convenient sampling by theorganizations representatives. A total of 467 employees from three major levels ofemployment namely top/senior management, middle/lower management/supervisory,and the technical/administrative support staff were selected. Usable responses wereobtained from 259 respondents (56.5 percent).

Research instrumentA self report questionnaire was used for this study which consisted of four componentsections. The first section which included a total of 50 items, contained statementsregarding respondents perceptions of organizational creative climate factors.The second section contained items measuring the perceptions of respondents to thelearning culture dimensions. There were 43 items covering the seven dimensions.The third section contained items measuring the respondents perceptions of the extentof innovation construct. This construct contained a total of 32 items. Finally the fourthsection sought biographical information from respondents.

The section measuring organizational climate factors was the creative climatequestionnaire (CCQ) developed by Ekvall et al. (1983). The ten factors of the CCQ were:

(1) challenge/motivation;

(2) freedom;

(3) idea support;

(4) liveliness/dynamism;

(5) playfulness/humour;

(6) debates;

(7) trust/openness;

(8) conflicts;

(9) risk taking; and

(10) idea time.

The items consisted of statements which required respondents to determine the degreeto which the statements were true of the organizational creative climate occurring intheir organization. The four-point scale representing each statement was from 0 to 3. The0 represented a degree equivalent to not at all applicable, the 1 representedapplicable to some extent, the 2 represented fairly applicable and the 3

represented applicable to a high degree. The CCQ was selected for usage in this casestudy over other instruments because of the range of factors covering creative climatewithin an organization, both stimulating and hampering innovation. It was also selectedbecause the factors were said to explain effects on productivity, job satisfaction, profit,quality, innovation, and well-being which in turn would give performance impact on theorganizational resources both human and non-human (Ekvall, 1996). The CCQ has alsopreviously been applied in research both in Europe and Asia, in particular in a studyinvolving Swedish, German and Spanish organizations.

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The section measuring learning organization dimensions used the dimensions oflearning organization questionnaire (DLOQ) developed by Watkins and Marsick(1996). The seven dimensions of learning organization with the relevant items were:

(1) continuous learning;

(2) dialogue and inquiry;

(3) team learning;

(4) embedded systems;

(5) empowerment;

(6) system connections; and

(7) provide leadership.

In total there were 43 items for the seven dimensions. Within this, the instrumentrequires the respondent to determine the degree to which the statement reflects theapproach practiced in the organization. Each statement was measured on a scale of

1-6 ranging from 1 representing almost never to 6 representing almost always.The DLOQ was selected for usage in this study because it had been widely used ininnovation research in Malaysia and in the USA besides other parts of the world. It hasproved to be a reliable measure of learning culture.

The third section focused on innovation and contained two main constructs namely:

(1) TI (technological transfer, and diffusion of innovation); and

(2) organizational innovation focusing on basic elements of TQM and qualityassurance program such as ISO 9000 certification.

There were 32 items to cover the two constructs. The 32 items on the two constructs ofTI (24 items) and organizational innovations (8 items) were developed for this study

based on the guidelines provided by OECD (1997) and MASTIC (1996).The statementsrequired the respondents to determine the degree to which a statement is true. All theitems used rating scales on a continuum of 1-6.

The final part of the questionnaire contained biographical information on therespondents. This included gender, age in years, job category, education background,tenure of service with the organization, and the length of organization establishment inyears and total organization population size. This section contained eight items.

MeasuresThe following presents reliability estimates for each of the ten factors of the CCQ andeach of the seven dimensions of the DLOQ based on the pilot tests. The originalestimates of the CCQ were determined by Ekvall (1996). The Cronbach as for each of

the CCQ factors obtained from the pilot test in the present research werechallenge/motivation (0.78), freedom (0.68), idea support (0.83), liveliness/dynamism(0.76), playfulness/humour (0.74), debates (0.78), trust/openness (0.55), risk taking(0.68), idea time (0.72), and conflicts (0.61). The overall reliability for 50 items of theCCQ was 0.94. The reliability estimates for the seven DLOQ dimensions werecontinuous learning (0.83), dialogue/inquiry (0.89), team learning (0.87), embeddedsystems (0.81), systems connection (0.88), empowerment (0.90), and strategicleadership (0.92). The overall reliability of the learning organization variable


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was 0.97. The overall reliability estimate for the overall innovation was 0.98. The threeconstructs have proved consistently reliable with all the scales above the recommended0.70 (Nunally, 1978).

Post hoc factor analysis for the innovation itemsTo test whether the 32 items were appropriately constructed and used in the studybased on the reliability indices of the pilot test as well as based on the validation by thetwo experts, a post hoc factor analysis was conducted on the items using the overallrespondents (N 259) responses to the instrument. The results of the analysis usingthe rotation method, Varimax with Kaiser Normalization are presented in Appendix.The factor analysis shows that the items were categorized into three componentswhere 13 items in component 1 were related to technology transfer followed by11 items in component 2, closely related to diffusion of innovation. These 24 itemsappropriately came into the TI category as was earlier decided. Finally, the last eightitems which fell into component 3 were justifiably representing organizational

innovation.

AnalysisThe analysis procedures conducted were in line with the research questions beingposed. Before the data were analyzed, an exploratory data analysis EDA wasconducted. From the EDA it was found that both assumptions of normality andhomogeneity of variance were met for all the three variables. Following this,collinearity diagnostics were conducted to examine whether the two independentpredictor variables, organizational climate for creativity and learning organizationdimensions were highly correlated. In examining the data for collinearity for N 259,the analysis revealed that the two predictor variables have low collinearity (r, 0.45).

The research questions posed are as such:

RQ1. How does each of the ten factors of the creative climate variable relate withthe innovation construct in the sampled organizations?

RQ2. How does each of the seven dimensions of the learning organization variablerelate with the innovation construct in the sampled organizations?

RQ3. How do the differences in the members perceptions on creative climate, thelearning organization culture and innovation, among the employees comparebetween the local organizations and the MNCs?

RQ4. What are the differences in the members perceptions on creative climate,learning culture and innovation among the three levels of employee groups in

the sampled organizations?RQ5. Is there any difference in the members perceptions on creative climate,

learning organization culture and innovation between small, medium, largeand very large sized organizations within the sampled organizations?

RQ6. To what extent do the factors of both creative climate and learningorganization variables jointly explain members perceptions on the observedvariances in innovation in the sampled organizations?

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RQ7. How much of the observed variances in the overall innovation construct areexplained by the highly predictive factors identified under the reduced modeland how good is the reduced model compared to the full model?

RQ8. How do the factors from the creative climate, learning organization culturejointly explain observed variances in the members perceptions on innovationin the local organizations?

RQ9. How do the factors from the creative climate, learning organization culturejointly explain observed variances in the members perceptions on innovationin the MNCs?

FindingsThe sampled organizations vary according to core businesses (from manufacturing,telecommunication, finance and insurance, consulting, property developer, educationservices, and engineering), population size and status. Thirteen organizations were

locally owned (and registered) while the rest were MNCs (Japanese, French, US andBritish owned). Three organizations were small sized with 100 or less total employees,one large with the number of employees between 1,000 but less than 1,999 people andone very large sized with more than 2,000 employees. The remained were mediumsized with more than 100 but less than 1,000 employees.

From the total 259 respondents, 52.5 percent were males while 47.5 percent females.While in the foreign MNCs organizations, 39 or 49.4 percent were males and 40 or 50.6percent were females; the respondents from the local organizations, 97 or 53.9 percentwere male while 83 or 46.1 percent were female. Out of the sampled population of 259,less than 1 percent or only 2 persons of the respondents were more than 51 years of agewhile the remainder were below 50 years old. In addition almost half of the totalrespondents (46.3 percent) were those whose tenure of work were less than five years.

More than half of the total respondents (52.1 percent) have acquired bachelors degreesand above.

Relationship between creative climate and innovationFrom the correlation analysis carried out, it was observed that each of the ten factors ofthe creative climate variable shared a significant (p , 0.05) but low relationship withinnovation (r, 0.4), with the factor Challenge having the strongest relationship(r 0.475). The overall relationship of the creative climate variable was r 0.473.When the factors are regressed with innovation it was found that about 35 percentsignificant contribution on innovation was accounted for by the creative climatefactors alone. This address RQ1.

Relationship between learning organization dimensions and innovationIn addressing RQ2, it was found that all of the seven dimensions have significantmoderate (r. 0.5) to high ( r. 0.7) relationships with innovation. When thedimensions of the learning organization were regressed with innovation, it wasobserved that about 57 percent of the contribution towards innovation were accountedfor by the learning dimensions. As a check and balance, a post hoc factor analysis usingthe rotation Varimax was conducted involving 43 items of the learning organizationvariable (seven dimensions) and 32 items (three constructs) of the innovation construct


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to observe whether the high correlation between the two variables (r 0.733) hadanything to do with the items of either variables are actually similar in nature. Thefactor analysis showed that the 32 items of the innovation construct were grouped intotwo components, undoubtedly, TI (technology transfer and diffusion of innovation)

and organizational innovation. While the 43 items of the learning organization variablefell into another seven components but each component having different number ofitems (details of the analysis are provided in Appendix).

A similar factor analysis was conducted involving the 50 items of the CCQ and the 32items of the innovation questionnaire and the findings showed that the 50 items of theCCQ fell into different components from the two components of the innovation items. Atthe same time all the 93 items (43 of LO and 50 of the CCQ variables) were again analyzedusing factor analysis in order to observe the grouping of the items, whether they either ofthe 93 items share similarities. The findings from the analysis using rotation Varimaxwith Kaiser Normalization showed that 43 items were grouped into one large componentwhile the 50 items of the CCQ were grouped into another different large component.Thus, it can be inferred from the findings that the 43 LO items and the 50 CCQ items didnot share similarities and were not highly correlated with each other.

Comparing creative climate, learning culture and innovation between local organizationsand MNCsThree T-test analyses were conducted to compare the members perceptions oforganizational creative climate between local organizations and MNCs, membersperceptions of learning organization between local organizations and MNCs, and themembers perceptions of innovation between the local organizations and MNCs. Theresults showed that there was no significant difference in perceptions of creativeclimate (P 0.266). Similarly no significant differences were observed in membersperceptions on learning culture (P 0.753) as well as innovation (P 0.934) between

the local organizations and MNCs. This give indications that the creative climate, thelearning culture and innovation in the local organizations were more or less the samewith those in the MNCs. This addresses RQ3.

Comparing creative climate, learning culture and innovation among the threeorganizational job levels and organizational sizeTwo ANOVAs were conducted. One was to determine any significant differencesamong the three groups of employee job levels, i.e. top, middle and staff in theirperceptions of creative climate, learning culture and innovation. The other analysiswas carried out to determine any significant differences in members perceptions ofcreative climate, learning culture and innovation among the small, medium, large andvery largely populated organizations.

Findings from the analyses revealed that there were no significant differencesamong the three employee job levels in creative climate (P 0.545), in the learningorganization (P 0.267) and in innovation (P 0.793). Similarly, there were nosignificant differences among the small, medium, large and very large sizedorganizations in creative climate (P 0.332), in learning culture (P 0.347) and ininnovation (P 0.703). Results from the ANOVAs indicated that the creative climate,learning culture and innovation were equally perceived by the three groups whichindicated that all employees share similar ideas on creative climate, learning culture

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and innovation in each organization. Similarly, all employees in either the small,medium, large or very large sized organizations seemed to perceive creative climate,learning culture and innovation similarly in their organizations. This explanationaddresses RQ4 and RQ5, respectively.

Interaction of creative climate and learning culture factors on overall organizationsIn addressing RQ6-RQ9, multiple regression analyses were conducted. A regressionanalysis was conducted involving both sets of the independent variable and their17 factors together to determine the joint contribution of both variables on the observedvariances in innovation.

The analysis revealed that the 17 factors together have significant contribution of58.5 percent (R2 0.585, F 19.980, P 0.000) to the observed variances ininnovation. This addresses RQ6. The results are shown in Tables I and II.

Three factors from the learning organization were identified as the factors havinghigh predictive powers. This result was obtained by conducting stepwise multipleregression analysis. A similar result was obtained when a forward multiple regression

was conducted where the three factors identified in hierarchical order were EmbeddedSystems (b 6.120, P 0.000), Systems Connection (b 0.313, P 0.000), andContinuous Learning (b 0.125, P 0.035). With this finding, the regressionequation for the full model is obtained. Using the stepwise multiple regression results,the equation of the model obtained is:

Innovation 29:370 2:055Embedded system 1:608System Connection

0:622Continuous learning:

In determining whether the reduced model is as good as the full model, the three factorswith high predictive powers together with the ten factors of the creative climate were

regressed with innovation variable. The findings showed that the 13 factorscontributed as much as 58.0 percent (R2 0.580, F 26.005, P 0.000) to theexplanation of the observed variances in innovation. A test was conducted to confirmthat the reduced model was almost as good as the full model. This addresses RQ7.

Model R R2 Adjusted R2Std. error ofthe estimate

Factors from both sets of CCQ and LO variables 0.765 0.585 0.556 19.76

Note: Model summary of the multiple regression analysis of both sets of the independent variables,creative climate and learning organization with innovation Table I.

Model Sum of squares Df Mean square F Sig.

CCQ and LO factors Regression 132616.6 17 7800.979 19.980 0.000Residual 94096.553 241 390.442Total 226713.2 258

Table II.ANOVA creativeclimate factors and

learning organizationdimensions with

innovation


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Interaction of creative climate and learning culture factors on local organizations andMNCsA third regression analysis followed by the fourth regression were conducted todetermine the extent of the joint contribution of both sets of the independent variables

to the explanation of the observed variances in innovation for the 13 localorganizations and for the five MNCs, respectively. It was found that 60.2 percent(R2 0.602, F 14.427, P 0.000) of the factors have significant contribution to theexplanation in the observed variances in innovation for the local organizations and 67.6percent (R2 0.676, F 7.476, P 0.000) to the explanation for the MNCs. Thefindings are shown in Tables III-VI, respectively.

The factors Systems Connection (b 0.045, P 0.000) followed by EmbeddedSystems (b 2.961, P 0.004) were identified as having high predictive powers oninnovation for the localorganizations, while Strategic Leadership (b 0.422, P 0.007)followed by Team Learning (b 0.338, P 0.044) were identified to be highlypredictive of innovation for the MNCs. Additionally, there were two creative climatefactors as well, namely Challenge (b 0.302, P 0.037) and Debates (b 0.287,P 0.046). It is interesting to note that none of the creative climate factors have influenceon innovation in the local organization but in the MNCs the situation was more balanced.

Model R R 2 Adjusted R2Std. error ofthe estimate


Note: Model summary of the multiple regression analysis of both sets of the independent variables,creative climate and learning organization with innovation in the local organizationsTable III.



Table IV.

ANOVA-creative climatefactors and learningorganization dimensionswith innovation (localorganizations)



Table VI.ANOVA creativeclimate factors andlearning organizationdimensions withinnovation in MNCs

Model R R2 Adjusted R2Std. error ofthe estimate


Note: Model summary of the multiple regression analysis of both sets of the independent variables,

creative climate and learning organization with innovation in the MNCsTable V.

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The MNCs provided a challenging climate for their members and this suggests that theMNCs provided sufficient scope for members to generate novel solutions and the membersin return, respond positively towards this environment (Ekvall, 1996). The members wereintrinsically rewarded by their need to seek achievements. A climate of Debateswas also

present where the MNCs were practicing the exchanging of ideas verbally or otherwiseand interact into conversations more often among individual members or teams (Ekvall,1996). This climate of Debates is expected to have a positive influence on TeamLearning and this was obviously so, as shown by the results above. In other words aclimate of Debates seemed to occur concurrently with the presence of Team Learningwhich involved mastering the practices of dialogue and discussions. This is a commonfeature for innovation. This addresses RQ8and RQ9.

ConclusionsThe results reported above show that there were no differences observed in membersperceptions of creative climate, learning organization culture and innovation betweenMNCs and local organizations. Additionally there were no differences in participants

perceptions of creative climate, learning organization culture and innovation amongthe three job levels in the sampled organizations. Finally, there were no differences inparticipants perceptions on creative climate, learning organization culture andinnovation among the small, medium, large and very large sized organizations.

In summary, it canbe concluded that forthis particular study,the learningorganizationvariable with its seven dimensions makes a more significant contribution towardsexplaining innovation than the ten factors of the organizational creative climate. However,there was a considerable amount of significant contribution from the creative climatefactors towards innovation, about 35 percent when the multiple regression analysis wasdone separately involving just the climatic factors. This showed that there was a certainamount of creativity present within participants which contributed to innovation. Thiscreativeness was mostly generated by having a challenging environment (challenge) and a

climate of trust and openness (trust) present in the organizations. A climate of challengeandmotivation provides emotional involvement of the members of theorganizationsin theoperations and goals as what Ekvall (1996)has described. Giving employees opportunitiesto find and solve challenging problems and implement solutions intrinsically rewardstheir need for achievement. A climate of trust and openness provides emotional safety inrelationships where everyone in the organization dares to put forward ideas and opinionsin the presence of high level of trust (Ekvall, 1996).

The learning dimensions of Embedded Systems, Systems Connection andContinuous Learning were also identified as having significant predictive powers oninnovation activities occurring within the organization as compared to the other fourlearning factors. Embedded Systems means a systematic effort implemented by theorganizations to capture the intellectual capital of the individuals in a permanent

manner and is best done by capturing learning in the organizational memory (Watkins,1996). By embedding knowledge and information into the organizational memory is totake actions (without restructuring the norms) on any detection of errors, or any matchor mismatch identified by the individuals in the organization (Argyris and Schon, 1978)for the improvement of the organizations core business. Systems connection meansscanning the organizations markets in the internal and external environments and beable to adjust the working systems within the organization (make necessary changes)to suit with the inside and outside requirements. Continuous learning means putting


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emphasis on continuous individual learning of employees to upgrade their skills inorder to perform better at the tasks at hand.

The two creative climate factors Challenge and Debates and two learningfactors which were Strategic Leadership and Team Learning have considerable

significant influences on innovation in the MNCs, while only the learning organizationfactors of Embedded Systems and Systems Connection have significant influenceson innovation in the local organizations. The local organizations were in generallacking in the presence of creative climate compared to the MNCs.

Discussions and recommendationThe findings reflect the lack of influence of the eight organizational creative climatefactors (besides challenge and trust/openness) on innovation in the sampledorganizations (particularly in the local organizations), and the lack of influence offour other learning dimensions (besides embedded systems, systems connection andcontinuous learning) on innovation among employees in the organization. There wasno influence of creative climate factors on the local organizations which indicated thatthe 13 local organizations did not precipitate the necessary creativity in individualemployees which was necessary for generating innovation. This suggests that the localorganizations should be looking into ways of improving organizational climate whichwould encourage more creativity among employees by emphasizing the ten creativeclimate factors. Changing the climate to one which is creative, is one of the mostdifficult task to do for top management according to Majaro (1988) and Roffe (1999).However, the local organizations should make efforts towards it.

Although the learning culture seemed to be contributing substantially towards theinnovation in the organizations, the organizations should be improving learning on theseareas: by giving emphasis in giving more empowerment to its members, and byencouraging dialogue and inquiry to occur among the members. It is argued that the present

study can be developed further by examining the effects of the two sets of independentvariables on separate innovation constructs, TI and organizational innovation.

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Mensch, G. (1979), Statement in technology (translation), in Rickard, T. (Ed.), StimulatingInnovation, Frances Pinter (Publishers), London, p. 15.

Mohanty, R.P. (1999), Value innovation perspective in Indian organizations, Participation andEmpowerment: An International Journal, Vol. 7 No. 4, pp. 1-10.

Nonaka, I. (1994), A dynamic theory of organizational knowledge creation, OrganizationScience, Vol. 5 No. 1, pp. 14-37.

Appendix 1

Technological innovation Organizational innovationItems Factor 1 Factor 2 Factor 3

Technological transfer (assimilation)1. Absorpcap5 0.790 0.204 0.2302. Absorpcap6 0.728 0.265 0.3583. Absorpcap4 0.727 0.377 0.109

4. Absorpcap9 0.723 0.396 0.1975. Absorpcap2 0.722 0.250 0.3476. Absorpcap8 0.715 9.207E-02 0.3017. Absorpcap10 0.701 0.392 0.1608. Absorpcap3 0.678 0.184 0.3879. Absorpcap7 0.677 0.311 0.325

10.Absorpcap14 0.669 0.285 0.32211.Absorpcap11 0.666 0.280 0.25612.Absorpcap1 0.653 9.702E-02 0.41613.Absorpcap13 0.577 0.486 0.323Diffusion of innovation14.Diffussion3 0.259 0.786 0.17015.Diffussion2 3.683E-02 0.780 9.114E-02

16.Absorpcap17 0.136 0.751 0.24217.Diffussion1 .279 0.744 0.23918.Absorpcap19 0.338 0.642 0.29419.Absorpcap16 0.200 0.624 0.19220.Diffussion5 0.406 0.614 0.34621.Absorpcap18 0.392 0.607 0.23822.Diffussion4 .379 0.585 0.36323.Absorpcap12 0.402 0.566 0.22524.Absorpcap15 0.436 0.548 0.255Organizational innovation25.ISO2 0.284 0.264 0.82326.ISO3 0.308 0.216 0.81927.ISO1 0.283 0.305 0.79428.ISO7 0.271 0.209 0.791

29.ISO6 0.384 0.201 0.77630.ISO8 0.317 0.277 0.75931.ISO4 0.277 0.349 0.74932.ISO5 0.333 0.437 0.520Eigenvalue 17.121 2.284 1.978Cumulative percent variance 53.502 7.139 6.182

Notes: N=259; Extraction method: principal component analysis; rotation method: Varimax withKaiser Normalization

Table AI.Results of post hoc factoranalysis of the innovationconstruct

LODJ26,8

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Table AII.Results of the post hoc

factor analysis forlearning organization

(LO) and innovationitems (N 259)

Appendix 2 Creative climateand organization

factors

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Table AII.

LODJ26,8

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