Innovative Behaviour, Trust and Perceived Workplace Performance

TLDR: In this article, the authors provide a theory of innovative work behavior at individual and team levels and explain how desirable performance returns occur for individuals and teams, based on theories of social exchange, enactment and trust.

Abstract: Building on theories of social exchange, enactment and trust, we provide a theorization of innovative work behaviour at the individual (IB) and team (IBT) levels and explain how desirable performance returns occur for individuals and teams. We further propose that horizontal (between team members) and vertical (between teams and their supervisor) team trust moderate the relationship between IBT and team performance. The results, based on surveys conducted at two points in time in a large insurance company in the Netherlands, show that employees’ IB is positively associated with perceived workplace performance at the individual and team levels and that the effects vary based on the forms of trust at play. Our findings offer important new knowledge about the consequences of entrepreneurship and innovation in the workplace and the significant role that trust plays in enabling such behaviour to promote perceived workplace performance, particularly in the vital financial services sector.

Figures

Table 3 Correlations

Figure 1 Plot of the Interaction Effects of Trust (Vertical and Horizontal) on Perceived Team Performance under Low and High Levels of IBT

Table 2 Indices for Aggregation of Items and Descriptive Statistics for Aggregated Constructs when Individuals are nested within Teams

Table 6 Comparison of Slopes of the Perceived Performance Effect by the Combination of Trust Forms

Table 1 Constructs, Items, Descriptive Statistics and Reliabilities on the Individual Level

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Citation for published item:
Hughes, M. and Rigtering, J.P.C. and Covin, J.G. and Bouncken, R.B. and Kraus, S. (2018) 'Innovative
behaviour, trust and perceived workplace performance.', British journal of management., 29 (4). pp. 750-768.
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https://doi.org/10.1111/1467-8551.12305
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This is the accepted version of the following article: Hughes, M., Rigtering, J.P.C., Covin, J.G., Bouncken, R.B. Kraus,
S. (2018). Innovative Behaviour, Trust and Perceived Workplace Performance. British Journal of Management 29(4):
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INNOVATIVE BEHAVIOUR, TRUST AND PERCEIVED WORKPLACE
PERFORMANCE
PRE-PRINT VERSION OF
Hughes, M./Rigtering, C./Covin, J./Bouncken, R./Kraus, S. (2018): Innovative Behaviour,
Trust and Perceived Workplace Performance, British Journal of Management, vol. 29, no. 4,
750-768.
ABSTRACT
Building on theories of social exchange, enactment, and trust, we provide a theorization of
innovative work behaviour at the individual (IB) and team (IB
T
) levels and explain how desirable
performance returns occur for individuals and teams. We further propose that horizontal
(between team members) and vertical (between teams and their supervisor) team trust moderate
the relationship between IB
T
and team performance. The results based on surveys conducted at
two points in time in a large insurance company in the Netherlands show that employees’ IB is
positively associated with perceived workplace performance at the individual and team levels
and that the effects vary based on the forms of trust at play. Our findings offer important new
knowledge about the consequences of entrepreneurship and innovation in the workplace and the
significant role that trust plays in enabling such behaviour to promote perceived workplace
performance, particularly in the vital financial services sector.
Keywords
Innovative behaviour, corporate entrepreneurship, innovation, innovativeness, trust, perceived
workplace performance, social exchange theory, enactment theory, teams, multi-level model

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INTRODUCTION
Conditions in the global business environment demand that established firms pursue growth via
innovation and entrepreneurship. Such a strategy denotes a continuous and consistent reliance on
innovative behaviour across organizational levels (Bednall et al., 2018; Ireland, Covin and
Kuratko, 2009). However, most studies of firm entrepreneurship focus only on the
entrepreneurial and innovative behaviours and dispositions of top managers or firm owners (e.g.,
Covin and Slevin, 1989; Sieger, Zellweger and Aquino, 2013), neglecting that organizational
members across all organizational levels can potentially contribute to entrepreneurship and
innovation within a firm (Ireland et al., 2009; Mustafa, Martin and Hughes, 2016; Wales,
Monsen and McKelvie, 2011). Innovative behaviour
1
(IB) by employees is considered to be of
crucial importance for continuous innovation, improvement and corporate entrepreneurship (De
Jong and Den Hartog, 2010; Sharma and Chrisman, 1999; Van de Ven, 1986; Van de Ven and
Engelman, 2004). Yet, innovation is a risky endeavour (Farr and Ford, 1990; Van de Ven, 1986;
Yuan and Woodman, 2010) meaning that the performance benefits resulting from IB in terms of
personal and career success are often unclear to the employee. Exhibiting innovative behaviour
therefore represents a form of entrepreneurial risk-taking on the part of the individual employee.
Job characteristics are an important antecedent of IB as higher level employees, managers,
and R&D workers have different opportunities to exhibit IB, are expected to behave in more
innovative ways, and have more opportunities to diversify the risks associated with IB (Hornsby
et al., 2009; Jansen, 2000; Oldham and Cummings, 1996). Still, within the confines of their
defined roles, lower-level employees and non-R&D workers can deploy IB in such a way that it
may manifest in improved workplace performance. Regrettably, we know little of the manner in
which IB impacts an employees’ perception of their own or their team’s workplace performance.
Addressing this knowledge gap will lend insight regarding factors that condition the outcomes of
1
Following Yuan and Woodman (2010), we define innovative behaviour as an employee’s intentional
introduction or application of new ideas, products, processes and procedures to his or her work role, work unit
or organization.

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individuals’ use of IB separately and in team settings (Hornsby et al., 2009; Mustafa et al., 2016;
Scott and Bruce, 1994; Yuan and Woodman, 2010).
We use social exchange theory (Blau, 1964; Emerson, 1976; Homans, 1958, 1974) to
explain under which conditions non-managerial employees will deploy IB in pursuit of
perceived workplace performance. Perceived workplace performance captures an individual’s
perception of the level of exhibited workplace performance, which is affected by the
prevailing performance standards within a firm (Bommer et al., 1995; Lance et al., 2010;
Lance et al., 2008). Such perceptions of work performance are important as employees will
only deploy IB when they intuitively expect that favourable performance outcomes will occur
(Drazin, Glynn and Kazanjian, 1999; Van Eerde and Thierry, 1996; Vroom, 1964; Yuan and
Woodman, 2010), and, under social exchange theory, when IB is valued by their managers
(Emerson, 1976; Homans, 1958, 1974). Employees are not expected to automatically use IB
as its use, due to the risks associated with innovative and entrepreneurial actions, creates
uncertainty about whether performance will greatly improve. We use enactment theory
(Weick, 1988, 1995, 2001) to resolve this contradiction, to anticipate how performance might
come about, and to anticipate how trust strengthens the IB–perceived performance
relationship when employees operate within teams. We address two questions: (1) To what
extent does IB at the individual and team levels affect perceived individual and team
workplace performance? (2) Does trust moderate the effects of IB within teams on their
perceived team workplace performance?
We contribute to innovative work behaviour, management and entrepreneurship research in
three ways. First, we focus on the IB of lower-level employees and the work teams in which they
participate, giving primacy to under-represented groups in research on innovative and
entrepreneurial organizations. Scant empirical research is dedicated to whether first-level
managers and non-managerial employees contribute to innovation within firms. This is despite

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several calls to better understand, theoretically and empirically, the manner in which individuals
might contribute to innovation and the entrepreneurship of firms (De Clercq, Dimov and
Thongpapanl, 2010; Wales et al., 2011).
Second, current empirical work at the employee level focuses on how organizations can
stimulate innovative behaviour amongst their personnel (e.g., De Jong, Parker, Wennekers and
Wu, 2015; Scott and Bruce, 1994), taking for granted that a strong focus on IB at all
organizational levels is desirable. At the firm level, meta-analytical results (Rauch et al., 2009)
and comparative research (Rigtering et al., 2013) indeed suggest that innovativeness and firm
level entrepreneurship generate superior returns regardless of the industry in which a firm
operates. However, whether favourable performance returns occur at other organizational levels
and in departments in which IB is not automatically called upon is unknown.
Third, our empirical research was conducted within the front office and operations
department of a major insurance company in the Netherlands. This setting enables us to study IB
when perceived (team) performance does not necessitate an innovative approach. In such
settings, trust gains in importance as team members rely on co-workers and supervisors to
migrate the uncertainty stemming from the deployment of IB. We offer a theoretical contribution
by locating IB in this debate and reveal the complex interaction effect between two forms of trust
that are absent from theoretical and conceptual treatments to date. The financial service sector is
an interesting case for management, entrepreneurship and innovation researchers because it has
been confronted by complex events that blur industry boundaries and by the entry of new
competitors using a raft of new technologies previously unseen in the industry, both of which are
causing rapid change (Jansen, Van Den Bosch and Volberda, 2006; Setia, Venkatesh and
Joglekar, 2013). Innovation in financial services firms is increasingly required to develop better
and more trustful customer relations (Nüesch, Puschmann and Alt, 2012) and improve firm

Frequently asked questions

Q1. What are the contributions in this paper?

Building on theories of social exchange, enactment, and trust, the authors provide a theorization of innovative work behaviour at the individual ( IB ) and team ( IBT ) levels and explain how desirable performance returns occur for individuals and teams. The authors further propose that horizontal ( between team members ) and vertical ( between teams and their supervisor ) team trust moderate the relationship between IBT and team performance. 

Q2. What are the future works in this paper?

Their study has several noteworthy limitations and future research directions. This creates opportunities for future studies as the relationship between IB and firm-level entrepreneurial orientation ( EO ) might be bidirectional. Further multi-level research, comparing an aggregation model to a diffusion model, is essential. Future researchers might investigate whether phenomena such as trust increase the likelihood that those with low entrepreneurial self-efficacy will exhibit IB. 

Q3. What is the role of team norms in achieving positive outcomes?

Team norms can act as a form of social control that directs the IB of team members towards particular organizational outcomes (Chiaburu and Harrison, 2008; Ozer, 2011). 

Q4. What is the effect of vertical trust on a team’s perceived workplace performance?

When the supervisor and subordinates are contained within the same team, vertical trustmay strengthen the moderating effect of horizontal trust on a team’s perceived workplace performance. 

Q5. What is the role of the supervisor in the relationship between IBT and team workplace performance?

An individual team member must have confidence in the support of their supervisor because these individuals have influence over resource allocation, performance evaluation and reward. 

Q6. Why does the supervisor fade in importance?

Because using IB and IBT is often discretionary and subject to tougher social sanctions in a team context, the supervisor can fade in importance. 

Q7. What are the indicators for evaluating performance?

Objective performance indicators examined longitudinally might be ideal, and performance metrics beyond workplace or task performance may also help. 

Q8. What is the effect of vertical trust on perceived team performance?

At the team level, risk-taking occurs because the horizontal trust creates an environment in which employees are more likely to share their ideas (Chiaburu and Harrison, 2008; Ensher et al., 2001), but the effects of such a positive team climate can only be maximized if the likelihood that failures are heavily penalized is reduced through verticaltrust (Dirks and Ferrin, 2001). 

Q9. What is the meaning of pooled constrained emergence?

Pooled constrained emergence asserts that there are processes that partially constrain the emergence of a collective phenomenon leading to restricted variability within teams. 

Q10. Why does the IB theory see the individual as taking actions to providemeaning to this new experience?

Because the behaviour is novel and innovative , enactment theory sees the individual as taking actions to providemeaning to this new experience (sensemaking) (Weick, 1995), to influence the perception of others (sensegiving) (Gioia and Chittipeddi, 1991), to influence others to use similar behaviours (sensegiving to the team as part of negotiation), to process social information and experience for collective sensemaking (Barnett et al., 2012), so as to individually and collectively improve workplace performance. 

Q11. What is the reason for the drop in response rate?

A response rate of over 50% is still widely regarded as sufficient for analytical purposes (Babbie, 2004) and the drop in response rate is most likely the result of the low willingness of respondents to fill in questionnaires in general (see Dillman, 1978). 

Q12. What are the main reasons for the churn rate?

these activities and their performance are vital to the customer experience and necessary for financial service sector firms to overcome competition and technologies that have led to large customer churn rates. 

Q13. Why did the survey not include a unique respondent number?

due to Company privacy regulations, the survey could not include a unique respondent number and could not be merged at the individual level. 

Q14. What is the effect of IBT on perceived team workplace performance?

Hypothesis 5: IBT, horizontal trust, and vertical trust have a positive three-way interaction effect on perceived team workplace performance; specifically, the relationship between IBT and perceived team workplace performance is most positive when vertical trust and horizontal trust are both high. 

Q15. What is the definition of a common method bias?

A common method bias might be a threat to the validity of the research when a single factor explains more than 50 percent of the variance in the data (Podsakoff et al., 2003). 

Q16. What is the effect of IB on the performance of a team?

IB may impact the performance of teams when individual initiatives change work (procedures) or introduce innovations that may improve the way several employees perform their duties.