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Management Innovation pp 75–90Cite as

Managing Risk-Taking to Enhance Innovation in Organizations

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Abstract

Scholars have proposed that taking risks is a key factor to explain innovation performance in organizations. However, the relationship between risk taking and innovation performance is generally examined from two unconnected perspectives. From a managerial perspective, entrepreneurial orientation and leadership theories are invoked to justify a positive relationship between risk taking and innovation. From an employees’ viewpoint, creativity theories suggest that a risk-taking climate influences innovative and creative behaviors. This study examines the possibility of a connection between managers’ risk-taking propensity, employees’ risk-taking climate, and innovation performance from both a theoretical and an empirical point of view. To do so, we draw on a dataset of 182 firms from the Spanish and Italian ceramic tile industry.

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Acknowledgments

The authors are grateful for the finance received by the Spanish Ministry of Science and Innovation (ECO2011-28706, ECO2011-28749 and ECO2011-29863) to carry out this research. Moreover, acknowledgements are due to CSIC for funding Ana García-Granero and Óscar Llopis research grant (JAE-Predoc del Programa «Junta para la Ampliación de Estudios») co-financed by the ESF.

Author information

Authors and Affiliations

  1. INGENIO (CSIC, Universitat Politècnica de València), Valencia, Spain

    Oscar Llopis, Ana García-Granero & Anabel Fernández-Mesa

  2. Faculty of Economics, Business Department, University of Valencia, Valencia, Spain

    Oscar Llopis, Ana García-Granero, Anabel Fernández-Mesa & Joaquín Alegre

Authors
  1. Oscar Llopis
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  2. Ana García-Granero
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  3. Anabel Fernández-Mesa
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  4. Joaquín Alegre
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Corresponding author

Correspondence to Oscar Llopis .

Editor information

Editors and Affiliations

  1. Department of Business Organization, Polytechnic University of Valencia, Valencia, Spain

    José-Luis Hervás-Oliver

  2. Department of Business Organization, Polytechnic University of Valencia, Valencia, Spain

    Marta Peris-Ortiz

Annex

Annex

6.1.1 Questionnaire

Managerial risk-taking

Please rate your firm’s strategic posture scale (Covin and Slevin 1989)

Totally agree with the left column

Totally agree with the right column

1

2

3

4

5

6

7

SP1. A strong proclivity for low-risk projects (with normal and certain rates of return)

1-2-3-4-5-6-7

A strong proclivity for high-risk projects (with chances of very high returns)

In general, the top managers of my firm believe that…

SP2. Owing to the nature of the environment, it is best to explore it gradually via timid incremental behavior

1-2-3-4-5-6-7

Owing to the nature of the environment, bold, wide-ranging acts are necessary to achieve the firm’s objectives

When confronted with decision-making situations involving uncertainty, my firm…

SP3. Typically adopts a cautious, “wait-and-see” posture in order to minimize the probability of making costly decisions

1-2-3-4-5-6-7

Typically adopts a bold, aggressive posture in order to maximize the probability of exploiting potential opportunities

Risk-taking climate

Could you please assess the importance of the following items in your organization?

Item

Literature source

ER1. Initiative often receives a favorable response here, so people feel encouraged to generate new ideas.

Isaaksen, Lauer and Ekvall (1999) and Amabile, Conti, Coon, Lazenby and Herron (1996)

ER2. People are encouraged to take risks in this organization.

ER3. People here often venture into unknown territory.

ER4. People here receive support and encouragement when presenting new ideas.

ER5. Ideas that still have not been tested are usually presented.

Innovation Performance Measurement Scale

Please state your firm performance compared to that of your competitors over the last 3 years with regard to the following items

Dimension

Item

Literature source

Product innovation effectiveness

PT1. Replacement of products being phased out

OECD (2005), Brown and Eisenhardt (1995), and Chiesa et al. (1996)

PT2. Extension of product range within main product field through new products

PT3. Extension of product range outside main product field

PT4. Development of environment-friendly products

PT5. Market share evolution

PT6. Opening of new markets abroad

PT7. Opening of new domestic target groups

Process innovation effectiveness

PS1. Improvement of production flexibility

PS2. Reduction of production costs by cutting labor cost per unit

PS3. Reduction of production costs by cutting material consumption

PS4. Reduction of production costs by cutting energy consumption

PS5. Reduction of production costs by cutting rejected production rate

PS6. Reduction of production costs by cutting design costs

PS7. Reduction of production costs by cutting production cycle

PS8. Improvement of product quality

PS9. Improvement of labor conditions

PS10. Reduction of environmental damage

Project innovation efficiency

EF1. Average innovation project development time

EF2. Average number of innovation project working hours

EF3. Average cost per innovation project

EF4. Degree of overall satisfaction with innovation project efficiency

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Llopis, O., García-Granero, A., Fernández-Mesa, A., Alegre, J. (2014). Managing Risk-Taking to Enhance Innovation in Organizations. In: Hervás-Oliver, JL., Peris-Ortiz, M. (eds) Management Innovation. Springer Proceedings in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-03134-7_6

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