Faculty of Social Sciences and Business Studies Department of Business
Employee-driven innovation in strategic planning from middle manager perspective
Multiple-case study of engineering industry companies
Master’s thesis Olli Markkanen (255918)
23.4.2020
UNIVERSITY OF EASTERN FINLAND
Faculty of Social Sciences and Business Studies, Department of Business Innovation Management
MARKKANEN OLLI: Employee-driven innovation in strategic planning from middle manager perspective: Multiple-case study of engineering industry companies
Master ́s thesis, 60p
Instructor: University lecturer, D.Sc (Econ.) Esa Hiltunen April 2020
Key words: participatory innovation, employee-driven innovation, innovation capability, strategic planning, participation in strategy
The purpose of this study is to examine how employee-driven innovation could unfold in strategic planning of engineering industry companies by the view of middle managers. Recent literature has acknowledged the importance of participation in strategy and how employee- driven innovation could unfold and benefit the organisation, but it lacks studies in how employee-driven innovation could unfold in strategic planning of the company. The study contributes in the discussions of employee participation in strategy and employee-driven innovation and synthesises them to provide views of how employee-driven innovation could be utilized in companies’ strategic planning.
The synthesis of employee-driven innovation, innovation capability, strategic planning and employee participation in strategy constitutes the theoretical framework. On the basis of the theoretical discussion and empirical findings, the objective of the study is to form a synthesis that serves as a model of how employee-driven innovation could unfold in strategic planning.
The model provides introductory understanding of the topic, ideas for future research and managerial implications of how organisations could develop their employee-driven innovation practises.
The qualitative multiple-case study approach is applied to conduct the empirical study. Five different sized engineering companies are studied by interviewing middle managers using semi- structured interviews as a method of data collection. The data is analyzed using qualitative content analysis, and rhetorical discourse analysis is used to examine participation discourses.
The view of middle managers is chosen for this study, as they are seen as strategy agents between management and employee levels, thus providing views of strategy from multiple perspectives.
The study acknowledges the importance of innovation capability in enabling employee-driven innovation in the organization and proposes that employees’ direct and indirect participation channels are essential for employee-driven innovation to unfold in strategic planning. The results show that through employees’ participation channels strategical ideas from employees have the possibility to reach the company’s management, whether the ideas pass restrictive barriers. The company management may utilize the strategical ideas of the employees, thus employees may participate in strategic planning indirectly. The main contribution of the study is the synthesis of the discussions of participation in strategy and employee-driven innovation, and examining the phenomena through content and discourses. The study provides important understanding of opportunities and barriers for employee-driven innovation in strategy and forms basis for future research.
ITÄ-SUOMEN YLIOPISTO
Yhteiskuntatieteiden ja kauppatieteiden tiedekunta, Kauppatieteiden laitos Innovaatiojohtaminen
MARKKANEN OLLI: Työntekijälähtöinen innovaatio yrityksen strategisessa suunnittelussa keskijohdon näkökulmasta: monitapaustutkimus insinöörialojen yrityksistä
Pro-gradu tutkielma, 60s
Ohjaaja: Yliopiston lehtori, KTT Esa Hiltunen Huhtikuu 2020
Avainsanat: osallistava innovaatio, työntekijälähtöinen innovaatio, innovaatiokyvykkyys, strateginen suunnittelu, strategiaan osallistuminen
Tämän tutkimuksen tarkoituksena oli selvittää, miten työntekijälähtöinen innovaatio voisi kehkeytyä insinööri-yritysten strategisessa suunnittelussa keskijohdon näkökulmasta katsottuna. Aikaisempi tutkimus tunnistaa työntekjöiden osallistamisen tärkeyden strategiaan ja kuinka työntekijälähtöinen innovaatio voi yleisesti kehkeytyä organisaatiossa, mutta aiempi tutkimus ei ole tarkastellut miten työntekijälähtöinen innovaatio voisi kehkeytyä organisaation strategisessa suunnittelussa. Tämä tutkimus osallistuu keskusteluihin työntekijöiden osallistumisesta strategiaan sekä työntekijälähtöisestä innovaatiosta ja täten luo näkemystä miten työntekijälähtöinen innovaatio voi kehkeytyä organisaation strategisessa suunnittelussa.
Työntekijälähtöinen innovaatio, innovaatiokyvykkyys, strateginen suunnittelu sekä henkilöstön osallistuminen strategiaan muodostavat tutkimuksen teoreettisen viitekehyksen.
Teoreettisen viitekehyksen sekä empiirisen tiedon pohjalta tutkimuksen tavoitteena on muodostaa synteesi, joka palvelee mallina työntekijälähtöisen innovaation kehkeytymisessä strategisessa suunnittelussa. Mallin tarkoituksena on tarjota alustavaa ymmärrystä ja näkemystä tutkimuksen aiheeseen, jatkotutkimus ideoita sekä käytännön suosituksia työntekijälähtöisen innovaatiotoiminnan kehittämiseen.
Empiirisessa tutkimuksessa sovellettiin laadullista usean tapauksen tapaustutkimusta. Viisi eri kokoista insinöörialojen yritystä tutkittiin haastattelemalla keskijohdon edustajia käyttämällä puolistrukturoitua haastattelua aineiston keräämisen menetelmänä. Aineisto analysoitiin käyttämällä laadullista sisällön analyysia sekä retorista diskurssianalyysia, jota käytettiin osallistumisdiskurssien tarkasteluun. Keskijohdon näkemys on valittu tutkimuksen näkökulmaksi, sillä keskijohdon nähdään toimivan strategia-agentteina työntekijöiden ja johdon välillä, mahdollistaen näkemyksiä strategiasta useista näkökulmista.
Tutkimus tunnustaa organisaation innovaatiokyvykkyyden olevan tärkeää työntekijälähtöisen innovaation kehkeytymisessä ja osoittaa työntekijöiden osallistavien kanavien olevan keskeisiä työntekijälähtöisen innovaation kehkeytymisessä strategisessa suunnittelussa. Tulokset osoittavat, että osallistavien kanavien voidaan nähdä mahdollistavan työntekijöiden strategisten ideoiden kulkeutumisen organisaation johdolle, mikäli ne läpäisevät etenemistä estävät esteet.
Organisaation johdon on mahdollista hyödyntää työntekijöiden strategisia ideoita, jolloin työntekijät osallistuisi strategiaan epäsuorasti. Tutkimuksen merkittävin kontribuutio on työntekijälähtöinen innovaatiotoiminta sekä strategiatyö keskustelujen synteesi ja lähestyminen ilmiötä sekä sisällön että puhetapojen näkökulmasta. Tutkimus antaa näkemystä työntekijälähtöisen innovaation mahdollisuuksista ja esteistä strategisessa suunnittelussa sekä luo pohjaa tulevalle tutkimukselle.
ACKNOWLEDGEMENTS
I want to thank my supervisor Esa Hiltunen for guiding me through this thesis and providing me golden advices. His encouragement helped me to conduct a study I was wishing for.
Also, I have to thank my family, Vera and Karla, who have taken plenty of energy from me but on the contrary given me back so much more throughout my studies and life.
Last but not the least, thank you to my parents who have always supported, encouraged and believed in me whatever I have done.
Studying this degree and living in Kuopio has been a great journey, and now it is good to move forward.
Olli Markkanen
1 INTRODUCTION ... 7
1.1 Employee innovativeness in strategic planning ... 7
1.2 The purpose of the study ... 8
1.3 Key concepts of the study ... 10
1.4 Structure of the thesis ... 11
2 LITERATURE REVIEW ... 13
2.1 Participatory innovation ... 13
2.1.1 Employee-driven innovation ... 14
2.1.2 Employee engagement ... 16
2.2 Innovation capability ... 17
2.3 Strategic planning and participation in strategy ... 19
2.4 Theoretical framework ... 21
3 METHODOLOGY ... 25
3.1 Research approach ... 25
3.2 Cases ... 25
3.2.1 Case A ... 26
3.2.2 Case B ... 26
3.2.3 Case C ... 27
3.2.4 Case D ... 27
3.2.5 Case E ... 28
3.3 Data collection ... 28
3.4 Data analysis ... 29
3.5 Ethical considerations ... 30
4 EMPIRICAL ANALYSIS AND RESULTS ... 31
4.1 Strategy and innovation ... 31
4.2 Employee-driven innovation ... 33
4.2.1 Emergence of employee-driven innovation ... 33
4.2.2 Enabling employee-driven innovation ... 35
4.2.3 Barriers to employee-driven innovation ... 37
4.3 Participation in strategic planning ... 38
4.3.1 Strategic planning ... 38
4.3.2 Employee innovativeness in strategic planning ... 39
4.3.3 Participation of employees in strategic planning ... 41
4.4 Summary of the key findings ... 42
5 CONCLUSIONS AND DISCUSSION ... 46
5.1 Summary of the study ... 46
5.2 Discussion of the key results ... 46
5.2.1 Enabling factors of employee-driven innovation ... 47
5.2.2 Participation of employees in strategic planning ... 48
5.2.3 Utilization of employee-driven innovation in strategic planning ... 50
5.3 Key contributions of the study ... 51
5.4 Managerial implications ... 53
5.5 Evaluation of the study and future research ... 54
REFERENCES ... 56
1 INTRODUCTION
1.1 Employee innovativeness in strategic planning
Creativity in business strategies has long been recognized as crucial for companies’s competitiveness, and therefore it is important for companies to create and sustain innovative and effective strategies (Baden-Fuller & Pitt, 1996). Traditionally organization’s management has been responsible for developing strategies leaving employees outside of the strategic planning processes, but recently organizations and researchers have given more emphasis on including its employees in decision-making. For example, Friis and Koch (2015) argue that strategy formulation is not only a creative sensemaking task for higher managerial levels, and that participating employees in strategy formulation could add inspiration to strategy creation.
Similarly, research in employee-driven innovation is increasing (Ellström, 2010; Høyrup, 2010; Kesting and Ulhøi, 2010). Kesting and Ulhøi (2010) refers employee-driven innovation to the generation and implementation of new innovations originating from a single employee or the joint efforts of two or more employees who are not specifically assigned to that task.
Thus, innovations may emerge from anywhere in the organization. Kesting and Ulhøi (2010) argue that there are at least two main benefits of employee participation in decision-making:
idea generation and increase in employee satisfaction and identification with a company’s activities. However, innovations may not emerge without innovation capability, which has has been central topic in the innovation management research recently (Saunila & Ukko, 2012).
Literature of participation in strategy suggests that lack of participation easily leads to poorly developed strategies (for eg. Floyd & Woolridge, 2000). Despite previous literature has acknowledged the importance of participation of employees in strategy and employees’
innovative capabilities, research in how employees are participating in strategy and how their innovativeness could be utilized is lacking. Therefore, it is needed to search for approaches in how employees may enable their innovativeness for the strategic planning of organizations.
Research in how employees may participate in innovation processes provides beneficial understanding of how employees may have their ideas heard, and therefore participate in strategical issues as well.
Including employees in strategic planning and decision-making is seen important and there are several studies of employee-driven innovation and its potential benefits for a company, but the
literature lacks research in how employees innovativeness could unfold and be effectively utilized in strategic planning. Employees may possess beneficial innovative resources for the company’s strategies, but obtaining that innovativeness in to use may not be straightforward task. Strategy work is not generally included in employees regular work, so the challenges are evident. The questions to consider are how employees could participate in the strategic planning and if they are participating, how the company could ensure that their innovative resources are utilized effectively. Understanding how employee-driven innovation could unfold in organizations strategic planning would provide beneficial insights for research and practise.
1.2 The purpose of the study
Based on the gap in the literature, the purpose of this study is to examine how employee-driven innovation could unfold in strategic planning in engineering industry companies. The focus in engineering industry raises from my personal interests, but engineering companies are also generally considered to be rather traditional and hierarchical, including employees, middle- managers and management. I have chosen to approach the topic from middle-managers perspective, as engineering industry companies provide rather fruitful context as the hierarchical divide is relatively clear. The topic is new and there are no studies specifically related to this topic, so this study aims to provide introduction and evoke interest for future research. Therefore, as the topic is new distinct organisational structures helps to understand the topic, as the context is not that complex. I have chosen the perspective of middle-managers, as they operate between employees and management, thus providing comprehensive view of employee-driven innovation and strategic planning and therefore fruitful basis for future research.
I aim to find how companies may benefit from the innovativeness of its employees in strategic planning, how the innovativeness could be enabled and how it may actualize in companies’
strategic planning. I also aim to contribute in previous literature of employee-driven innovation and employee participation in strategic planning, and provide managerial implications that could provide understanding and ideas how companies may gain benefits by utilizing their employees’ innovativeness in strategic planning.
Based on the purpose and aims of this study, I have formulated the following main research question and two sub-questions to help answering the main research question:
Main research question:
MQ: How employee-driven innovation could unfold in strategic planning in engineering industry companies by the view of middle managers?
Sub-questions:
SQ: How employee-driven innovation could be enabled in the case companies?
SQ: How employees could participate in strategic planning in the case companies?
To understand how employee-driven innovation could unfold in strategic planning, it is important to consider how employee-driven innovation is being enabled in organisations in general. The other main discussion is the participation of employees in strategic planning, as it is evident that participation is crucial in contributing in the formulation of strategies. In this study I aim to integrate these discussions to gain an overall view of how employees innovativeness could be utilized in the formulation of innovative strategies.
I critically review the literature of participatory innovation, employee-driven innovation, innovation capability, strategic planning and participation in strategy to form a theoretical framework. As the topic of the study is new and the purpose is to gain general understanding of it, I argue that studying multiple cases would provide more broad understanding than studying a single case. Therefore the approach of this study is extensive case study, where several cases are been studied in order to find generalizable results. The data from the cases is being gathered by semi-structured interviews and analyzed by qualitative content analysis, and rhetorical discourse analysis is used to examine participation discourses. I create a synthesis based on the theoretical framework and empirical findings, which aims to answer the research questions and provide managerial implications.
1.3 Key concepts of the study
The key concepts in this study are: participatory innovation, employee-driven innovation, innovation capability and strategic planning. The theoretical base of the study is wide, but based on the literature, I argue that these concepts are central in understanding how employee- driven innovation could be utilized in strategic planning. I briefly introduce the main concepts and how they are being defined for this study.
Participatory innovation serves as a concept, which describes the nature of innovation as a process which includes certain participants. There is no shared understanding of the concept in the literature, but in this study the concept is drawn from the concepts of innovation (Baregheh, Rowley & Sambrook, 2009; Žižlavský, 2013; Kesting & Ulhøi, 2010) and open innovation (Chesbrough, 2003). Therefore, in this study participatory innovation is understood as an innovation, which emergers though participation of certain participants.
Employee-driven innovation refers to the generation and implementation of innovative ideas originating from a single employee or group of employees (Kesting & Ulhøi, 2010). As described earlier, in participatory innovation the innovation emerges in participation, and in the case of employee-driven innovation employees are the participants. Research in employee- driven innovation assumes that organizations’ employees have capabilities to think creatively and are able to contribute to innovation and change (Amundsen, Aasen, Gressgård & Hansen, 2014). Therefore, employees could be seen to possess innovativeness that companies could utilize. Employee engagement could be defined as an individual employee’s cognitive, emotional and behavioural state directed towards desired organizational outcomes (Shuck &
Wollard, 2010). Slåtten and Mehmetoglu (2011) have found that employee engagement is closely linked to employees’ innovative behaviour. Employee engagement could be essential in enabling employee-driven innovation and therefore important concept in this study.
Innovation capability is seen as ’potential’ which refers to the factors that make it possible for the firm to create innovations (Saunila & Ukko, 2012). They define innovation capability to consist of three elements influencing an organization’s capability to manage innovation: (1) innovation potential consists of factors that affect the present state of innovation capability, (2) innovation processes are systems and activities that assist organizations to utilize their innovation potential and therefore enable innovations and (3) the results of innovation activities are, e.g. product/service innovations, and process innovations.
Strategic planning is defined as more or less formalized, periodic process that provides a structured approach to strategy formulation, implementation and control. The purpose of strategic planning is to incluence an organization’s strategic direction for a given period and to coordinate and integrate deliberate as well as emerging strategic decisions. (Wolf & Floyd, 2017). The main interest of this study is strategy formulation, which is seen to be at the core of strategic planning.
1.4 Structure of the thesis
In chapter 2 the literature of participatory innovation, employee-driven innovation, employee engagement, innovation capability and strategic planning is being discussed. I discuss how employee-driven innovation relates to participatory innovation, what is understood as employee-driven innovation and what is considered to be its benefits and restrictions for an organisation. Employee engagement is being discussed, as it is seen to be related to employee- driven innovation. I discuss how strategic planning is being understood, and how participation and employees are seen in relation to organisations’ strategy. I also discuss what is understood as innovation capability, and how it may enable innovation in organisations. Based on the literature, theoretical framework of the study is being formed by linking the literature of participatory innovation, employee-driven innovation, employee engagement, strategic planning and innovation capability.
In chapter 3 the methodology of the study is being presented. I express the extensive case study approach and why it is suitable in this study. The case companies of the study are being presented and the interviewees from those companies, and I express why those cases were being selected. I also argue why semi-structured interviews, qualitative content analysis and rhetorical discourse analysis are suitable for this study.
In chapter 4 the empirical results are being presented. At first, the understandings of strategy and innovation are being analysed. Then I analyze employee-driven innovation in organisations, how it emerges, how it is being enabled and what are barriers for its emergence.
Third, I analyze participation in strategic planning, how strategic planning is conducted, how employee innovativeness in strategic planning is seen and how employees may participate in strategic planning. Finally I summarize the key findings.
In chapter 5 I discuss the key results of empirical findings in relation to the theoretical framework I formed. I will form a synthesis of empirical findings and theoretical framework and create an model of how employee-driven innovation could be utilisized in strategic planning. I also discuss the main contributions, give suggestions for future research and propose what are the managerial implications of the study.
2 LITERATURE REVIEW 2.1 Participatory innovation
Innovation has become crucial for companies in order to survive in todays world of business.
Customer demands, marketplaces, business structures and dynamics are constantly changing due to for example technologic development and globalization. Creating something new and unique has become important in order to gain competitive edge. But how innovation is understood, defined and used in practise and literature has not been compatible, as innovation is likely to be classified in various different ways. In the literature, innovation has been defined by several authors, which has lead to a situation where clear definition of innovation is lacking (Baregheh, Rowley & Sambrook, 2009). In their conceptual paper, Baregheh et al. (2009) have proposed integrative definition of organizational innovation. They have identified six different attributes of innovation to base their definition on: (1) Nature of innovation, (2) Type of innovation, (3) Stages of innovation, (4) Social context, (5) Means of innovation and (6) Aim of innovation. They define innovation in the following way: ”Innovation is the multi-stage process whereby organizations transform ideas into new/improved products, service or processes, in order to advance, compete and differentiate themselves successfully in their marketplace”. Multi-stage process refers to the process nature of innovation, which is highlighted in most of the definitions of innovation. Similarly, Žižlavský (2013) states that successful innovations are the results of a series of management, business, marketing, technological, organizational and other types of activities. He also argues that innovation process should be a key process in a company, in order to ensure long-term development and elimination or mitigation of inefficiencies in its business processes.
As the definition of innovation as a process suggests, innovation involves several different stages and activites which happen in certain social context. The social context refers to any social entity, system or group of people involved in the innovation process or environmental factors affecting it (Baregheh et al. 2009), which leads the discussion to the parties involved in innovation processes. Kesting and Ulhøi (2010) states that innovations are the outcome of dynamic, continual series of social interactions involving different kind of individuals. It is evident that innovations do not happen without people, but the question is who are participating to the innovation process and why. As the definitions of innovation suggests, different parties can and should be participating. Open innovation further discusses the participative nature of innovations. Chesbrough (2003) has introduced open innovation by suggesting, that firms can
and should use external ideas as well as internal ideas, and internal as well as external paths to market, as they look to advance their innovations. Chesbrough and Bogers (2014) has later defined open innovation as a ”distributed innovation process based on purposively managed knowledge flows across organizational boundaries”. Thus, the ideas and knowledge needed could be gathered from different sources. Firms outer sources may be for example customers, consultants or governments, and inner sources may include for example employees, managers and departments. When some of these parties are included in a innovation process, it could be argued that it is participating in the innovation process. Participatory innovation could be so understood as an innovation, which emerges through participation of certain participants.
2.1.1 Employee-driven innovation
In participatory innovation certain participants are seen central in the innovation processes. In this study I am interested of employees participation in innovation, which has been gaining interest in recent years (Ellström, 2010; Høyrup, 2010; Kesting & Ulhøi, 2010). Tonnessen (2005) argues company's ability to continuous innovation to be dependant on the participation and involvement of employees at different levels, thus supporting the participatory view of innovation. Research on employee-driven innovation assumes that organizations’ employees have capabilities to think creatively and are able to contribute to innovation and change (Amundsen et al. 2014). Kesting and Ulhøi (2010) suggest that employee-driven innovation refers to the generation and implementation of innovative ideas originating from a single employee or group of employees. The employees in this regard are ’regular’ employees and they are not specifically assigned for developing new ideas. The employees are for example shop-floor workers, professionals or middle managers. The idea of employee-driven innovation is based on the assumption that employees have hidden abilities for innovation (Ford, 2001; Cohen, March & Olsen, 1972). This approach implies that employees could be perceived as innovation resources for the organization. Kesting and Ulhøi (2010) posits that employee- driven innovation is embedded in everyday critical and reflective experiences and work practices, which are triggered in social interaction and exchange.
Kesting and Ulhøi (2010) argue that deliberate planning and decision-making are the opportunity for humans to act purposefully. They also acknowledge that some intuitive sense for attractive business opportunities has its place. Companys and McMullen (2007) argue that
managers do make intensive use of their opportunities, specifically in the case of innovations.
To use their opportunities, these are often preceded by intensive discussions, explorations and planning procedures, which are shaped by decisions (Howells, 2005; Hansen & Birkinshaw, 2007). Based on these, Kesting and Ulhøi (2010) sets their key conceptual assumption: ”For
“ordinary” employees, to drive innovations largely means participating in those organizational decision-making procedures by which innovations are triggered and determined”. Tonnessen (2005) suggests that employees may participate in innovation at different company levels both directly and indirectly. Direct participation may take place in: (1) immediate work situations, (2) through proposing improvements through management, (3) planning of specific work, (4) improvement projects, (5) innovation team and (6) company-wide innovation arenas such as conferences. Different forms of direct participation should be supported and co-ordinated with chosen employee’s representatives for indirect participation.
Kesting and Ulhøi (2010) suggest that the main benefits for employee-driven innovation comes from the ideas employees may be able to generate. These three factors in particular enable employees to come up with new ideas: (1) Employees have in-depth and context dependent operational knowledge, which might be critical to the identification of an attractive new business opportunity (Henderson & McAdam, 2001), (2) Employees are potentially creative individuals (Kirzner, 1997) and there are typically more employees than managers, which means that they constitute a considerable creative potential, and (3) Employees may have relevant network of contacts outside the organization. Thus, employees may be capable of seeing things that managers are not. However, Kesting and Ulhøi (2010) argue that there are at least two main benefits of employee participation in decision-making. First, they could generate additional information, enable their tacit knowledge in to use, and they may see things the management cannot. Second, participation could increase employee satisfaction and identification with a company’s activities. This may also be important means of attracting and maintaining highly skilled people.
There are factors that may restric employee-driven innovation such as time and resources. There might not be enough time for employees to generate ideas during their working tasks. Possible resources are for example strategic information, which regular employees do not posses. If innovative behaviour is not appreciated nor rewarded, employees may not have motivation to generate new ideas. Employees may also have cognitive biases as they are bounded by their
routines. Final decision-making authority concerning innovations should be kept in the hands of managers to ensure consistency in decisions. (Kesting & Ulhøi, 2010).
To conclude, literature acknowledges the importance of employee-driven innovation and the benefits it may provide for companies. It is based on the assumption that employees have hidden abilities for innovation (Ford, 2001; Cohen et al., 1972). To enable employee-driven innovation, due to its nature participation of employees is seen essential (Tonnessen, 2005;
Kesting & Ulhøi, 2010). If an organisation utilizes employee-driven innovation, it is evident that it would provide competitive advantage, for example through continuous innovation or even strategical improvements. There may be barriers to employee-driven innovation, which restrict the employee-driven innovation to unfold.
2.1.2 Employee engagement
When I further considered factors which may enable or restrict employee-driven innovation, I found that employee engagement could be seen essential in determining whether the employee- driven innovation could unfold in an organisation. According to Shuck and Wollard (2010), employee engagement could be defined as an individual employee’s cognitive, emotional and behavioural state directed towards desired organizational outcomes. Engaged employees exhibit attentiveness and mental absorption in their work and displey a deep, emotional connection towards their workforce (Wagner & Harter, 2006). Employee engagement may provide competitive advantage, as it may solve organizational problems (Macey, Scheider &
Barbera, 2009). Engaged employees could provide benefits such as increased efficiency, managerial efficacy, higher level of customer satisfaction, higher productivity and lower turnover rates. Employee engagement could be considered to have three facets: (1) Intellectual engagement – thinking intensively about the job and continuous improvement in it, (2) Affective engagement – feeling positive about their job, and (3) Social engagement – ready to take opportunities to discuss the matters of improvement in work with others. (Alfres, Sen &
Yilmaz, 2010). Gupta and Sharma (2016) underlines that employee engagement is a two-way process. In order to engage employees, the organization needs to put additional effort. As a return, the employees willingly acts towards organizational goals and according their values.
In their study, Slåtten and Mehmetoglu (2011) have found the employee engagement is closely linked to employees’ innovative behaviour. They suggest that positive state of mind, which is one of the consequenses of engagement, broadens a person’s thought-action repertory. They also argue that company’s strategy is worthless if it is not implemented in the heads of organization’s members, and that strategic attention would be able to stimulate employee engagements and innovative behaviour. Gupta and Sharma (2016) argue that sense of feeling valued and involved is key driver of engagement. Sparrow (2013) argues that employees who are engaged with the company, will deliver enhanced and long-term value. But this to happen, managers should understand and be committed to increase employees engagement.
As defined in the discussion of employee-driven innovation, participation is essential in enabling employee-driven innovation (Tonnessen, 2005; Kesting & Ulhøi, 2010). I would argue based on the literature of employee engagement, that merely participation may not be enough in enabling employee-driven innovation. Employee engagement could be seen closely related to employees innovative behaviour and willingness to exploit it for the use of the organisation.
2.2 Innovation capability
When searching for factors that may enable employee-driven innovation in organisations, I found the concept of innovation capability important in providing the foundation for employee innovativeness, participation in innovation and employee engagement. Literature includes several definitions of innovation capability.
Lawson and Samson (2001) suggests, that innovation capability is a theoretical framework that describes the actions that can improve the success of innovation activities. Narcizo, Canen and Tammela (2017) highlights three aspects in the definitions of innovation capability. The first is that innovation capability is an asset or organizational property (Akman & Yilmaz, 2008;
Francis, 2000; Guan & Ma, 2003). The second aspect is that innovation capability is an organizational process, practice or high-level organizational routine (Essman, 2009;
Esterhuizen, Schutte & Du Toit, 2012). The third aspect is the idea of ’potential’, as proposed by Saunila and Ukko (2012). Narcizo, Canen and Tammela (2017) propose that the definition of the innovation capability as potential integrates all the relevant aspects present in other definitions. Thus, the definitions of innovation capability often concentrate on defining factors
shared by innovative organizations. These factors are the dimensions that form an organisation’s capability to innovate.
The idea of innovation capability as ’potential’ is presented by Saunila and Ukko (2012).
Innovation potential refers to the factors that make it possible for the firm to create innovations.
They define innovation capability to consist of three elements influencing an organization’s capability to manage innovation. The concept of innovation capability includes these three following elements:
1. Innovation potential consists of factors that affect the present state of innovation capability.
The factors reflect the potential that organizations have to produce innovations. These factors are presented below.
2. Innovation processes are systems and activities that assist organizations to utilize their innovation potential and therefore enable innovations. They are the way systems and activities are carried out.
3. The results of innovation activities are, e.g. product/service innovations, and process innovations.
They propose that the factors that form the innovation potential in an organization can be divided into five categories: (1) leadership and decision-making processes, (2) organizational structures and communication, (3) collaboration and external links, (4) organizational culture and climate, (5) individual creativity and know-how. In their later study, Saunila, Pekkola and Ukko (2014) also proposed the importance of work wellbeing, regeneration and employees’
individual activity in building innovation potential. They also added that participatory style of leadership is required.
To conclude, innovation capability could provide basis for the company to create innovations.
Innovation capability as ’potential’ suggests that the factors mentioned earlier determines the propability of the emergence of innovations in the company. These factors are clearly linked to employees innovativeness, participation and engagement, thus determining how employees’
innovative resources are being utilized and enabled. If organization lacks some of these factors, it could create difficulties for the unfolding of employee-driven innovation.
2.3 Strategic planning and participation in strategy
The other essential discussion in this thesis in addition to employee-driven innovation is strategy and participation in strategy. My main interest is in strategic planning and more specifically in strategy formulation. To gain comprehensive view of the discussion, I reviewed literature of strategic planning and how participation is being seen.
There are several overlapping and consistent definitions of strategic planning in the literature.
In their study, Wolf and Floyd (2017) has conducted review of strategic planning literature from year 1980 to 2013. Based on their review, they define strategic planning to be ”more or less formalized, periodic process that provides a structured approach to strategy formulation, implementation, and control. The purpose of strategic planning is to incluence an organization’s strategic direction for a given period and to coordinate and integrate deliberate as well as emerging strategic decisions. Strategic planning comprises a range of different activities designed to fulfill this purpose (such as strategy reviews, meetings, generation of strategic plans, etc.)”. Strategic planning could be thought to be preparing for the future, to organize direction and to mobilize action. When a group of key stakeholders commit to strategic planning, it provides an opportunity to reflect on the changing external environment and organization’s position in it. Strategies and actions could be designed to reach organization’s mission and vision. (Klag & Manglay, 2014).
In their review, Wolf and Floyd (2017) have found that strategic plans as outcomes of strategic planning processes have been conceptualized as tools used to negotiate and make sense of strategy. They outline that critical theorists argue that strategy plans are used more for symbolic reasons and that the process has little to do with actually exploiting strategy tools for the benefit of the organization. Wolf and Floyd (2017) have found three trends on the role of actors in strategic planning. First, since 1990s, research has shifted away from the simplistic view of strategic planning being the responsibility of top management and that responsibility for the implementation is left for rest of the organization. In the recent literature scholars take into account a diversity of actors in strategic planning. Second, research has identified a role shift and new responsibilites for middle- and lower-level actors. Quality of decisions and efficiency of implementation of strategies are seen to benefit from decentralized planning. Third, research has been more interested in how organization’s members could contribute and be integrated in strategic planning.
Therefore, strategic planning literature considers strategic planning as a process, which purpose is to guide the company into desired outcomes. It also emphasizes its participatory nature, as planning is comprehended to be conducted in participation. Traditionally the planning has been understood to be mainly managers responsibility, but recently it has been more interested in including other participants. The participation of employees is rather new research topic, and therefore I haven’t found more specific literature of it.
In attempt to gain knowledge and understanding of employee participation in strategy, I reviewed literature of strategy-as-practise, which has become a distinctive approach for studying strategic management, organizational decision-making, and managerial work. It can be regarded as an alternative to the mainstream strategy research, as it focuses more in comprehensive in-depth analysis of strategy practises which takes place in organisations.
Strategy-as-practise research includes various themes, such as strategizing methods in different settings, formal strategic practises, sensemaking in strategizing, discursive practises of strategy, roles and identities in strategizing, tools and techniques of strategy, and power of strategy.
(Golsorkhi, Rouleau, Seidl, &Vaara, 2010). Whittington (2006) proposes an framework that links together three elements which could be regarderd as building blocks of strategizing (strategy as practise): (1) practioners (who are doing the strategy work), (2) praxis (situated doing of strategy) and (3) practises (the routinized types of behaviour drawn upon in the concrete doing of strategy).
Participation is a central issue in strategy-as-practise research that examines the activities of multiple actors and the practices they draw upon in strategy work (Mantere, 2008). Friis and Koch (2015) argues that strategy formulation is not only a creative sensemaking task for higher managerial levels, and that participating employees in strategy formulation could add inspiration to strategy creation. Kesting and Ulhøi (2010) sets their key conceptual assumption:
”For “ordinary” employees, to drive innovations largely means participating in those organizational decision-making procedures by which innovations are triggered and determined.
As previous literature has discussed, this usually is the issue as top-management posses the main responsibility of decision-making and strategizing. Even with the growing attention to wider constituents in the strategising process, yet there is still very little consideration of employees (McCabe, 2010). While there is no consensus on the degree to which organizational members should participate in strategy formulation, most scholars agree that a lack of participation easily leads to poorly developed strategies (Floyd & Wooldridge 2000),
dissatisfaction among those who are excluded (Westley 1990), and consequent difficulties in implementation (Mintzberg 1994).
Despite the growing interest of the benefits employees’ participation may offer, there is not many research in how employees may participate. Based on the strategy-as-practise research, strategic planning is conducted by participants, in some situated doing of strategy and through the routinized types of behaviour drawn upon in the concrete doing of strategy. Therefore, I would argue that employees could somehow participate by being included in these three components. I aim to provide more knowledge into this gap by my empirical research.
2.4 Theoretical framework
In this sub-chapter, I will form a theoretical framework based on the literature discussed above.
I analyze and discuss the linkages between theoretical findings and form a synthesis. I will combine the theoretical findings to form understanding of utilizing employee-driven innovation in strategic planning. The main purpose is to focus on aspects that are related to my research questions. The framework was utilized for the gathering of empirical data, and it will be assessed and developed based on the empirical findings.
The literature of employee-driven innovation widely recognizes the possible benefits it may provide for an organization. Employees are assumed to possess hidden abilities of innovation, which implies that employees could be perceived as innovation resources for organizations.
These resources have capabilities to think creatively and to be able to contribute to innovation and change. Why employee-driven innovation could be highly beneficial is because employees for example possess in-depth and context dependent operational knowledge, there are more employees than managers in organizations and employees may have relevant networks.
Employees could so see things that managers are not able to. The employee-driven innovation to unfold, employee participation is seen important, as employees could participate to innovation directly or indirectly (Tonnessen, 2005). But what may underlie below the employee-driven innovation in an organisation, is its innovation capability. Saunila and Ukko (2012) suggests the innovation capability to be ’potential’ which consists of factors which reflect the potential that organisations have to produce innovations. The direct or indirect employee participation in innovation to happen, these factors could be seen to have an important
role: (1) leadership and decision-making processes, (2) organizational structures and communication, (3) collaboration and external links, (4) organizational culture and climate, (5) individual creativity and know-how. In their later study (Saunila, Pekkola & Ukko, 2014), they also propose that work wellbeing, regeneration and employees’ individual activity are important. Kesting and Ulhøi (2010) proposes that employee-driven innovation is embedded in everyday critical and reflective experiences and work practices, which are triggered in social interaction and exchange. Thus, it could be assumed that for employee-driven innovation to unfold in an organisation, the factors above and interaction are crucial to enable its triggering.
Participation channels are closely related to enabling innovations to unfold and proceed further.
Strategic planning could be defined as formalized, periodic process that provides a structured approach to strategy formulation, implementation and control. Traditionally strategic planning has been seen as organisations’ top-managements responsibility, but recently literature has been more interested in diversity of actors in strategic planning. (Wolf & Floyd, 2017). Distinctive approach from this kind is strategy-as-practise, which focuses in comprehensive in-depth analysis of strategy practises which takes place in organizations. Strategy-as-practise approach considers participation as central issue in strategy work. Thus, for employee-driven innovation to unfold in strategic planning the participation of employees could be seen as central issue.
Research of employee participation in strategy is although lacking, so it is needed to consider alternative approaches how employees may participate.
Important factors for employee-driven innovation are resources and time (Kesting & Ulhøi, 2010). Regular employees do not possess resources such as strategic information or time to generate ideas during their working tasks. Kesting and Ulhøi (2010) also states that employees may not have motivation to generate ideas if not being rewarded, and that employees may possess cognitive biases as they are bounded by their routines. Based on the literature, for employee-driven innovation to unfold in strategic planning, the issue of employee participation in strategic planning and employees resources could be seen central.
Figure 1. Employee innovativeness in strategic planning
The theoretical framework is linking the discussion above (Figure 1). Innovation capability could be seen to form basis for employee-driven innovation by providing innovation capability factors described above. In addition to innovation capability factors, employee-driven innovation to unfold participation and resources could be seen crucial. Participation is also seen crucial in the strategy-as-practise literature, thus linking the employee-driven innovation discussion in to strategy by indicating that participation is the key to utilize employees innovative resources. The link between strategic planning and employee-driven innovation is rather weak based on the theory as it has not been studied. In addition to participation, for employee-driven innovation to unfold in strategic planning it could be assumed that employees should possess adequate resources and that their actions are being managed towards relevant direction as employee-driven innovation literature suggests resources, motivation and time to be crucial. Similarly strategy literature argues that these factors are important in strategy making.
The theoretical framework and the link between strategic planning and employee-driven innovation should be further studied. Previous literature has discussed employee-driven innovation and narrowly employee participation in strategic planning, but the literature lacks
Employee innovativeness
in strategic planning Innovation
capability
Innovation capability
factors
Employee- driven innovation
Participation
Strategic planning
Resource view
studies of how employee-driven innovation could actualize in organisations strategic planning and so provide competitive advantage. I am aiming to shed light into that gap by interviewing five middle managers from different companies in engineering industries. The importance of middle managers as strategy practioners has been widely recognized in the recent research (Lavarda, Canet-Giner & Peris-Bonet. 2010; Floyd & Woolridge, 2000). Lavarda et al. (2010) suggests that middle managers develop a very important role in the integrative strategy process, acting as an agent between top and bottom levels, and so intercede and change organisation directions. Floyd and Woolridge (2000) propose that activities of middle managers and their attention to emerging trends largely determine how organisations renewal occurs. As the middle managers act as agents between bottom and up levels, it could be assumed that they possess views of strategy formulation. Also, their work usually is rather operational and they are working with employees, so they may be able to recognise employees innovativeness and possibilites and restrictions for the utilization of it. I am only interested in strategic planning, not in all the phases what strategy work may include. Engineering industries are traditionally considered as traditional and rather hierarchical but on the verge of changes in their centralized decision-making, so I am anticipating that focusing on those industries would provide fruitful findings.
To conclude, I am focusing on how employee-driven innovation could unfold in strategic planning, how employee-driven innovation could be enabled and how employees could participate in strategic planning. The synthesis above provides understanding of how employee- driven innovation could unfold in strategic planning, but also reveals gaps which are needed to study in attempt to gain more comprehensive view. Innovation capability could be seen important in providing basis for employee-driven innovation, as the the innovation capability factors are clearly related to employees innovativeness and to possibilities of its emergence.
Participation could be seen as the main triggering factor of the innovation ’potential’, which may be conducted directly or indirectly. Literature recognizes barriers for employee-driven innovation, which should be tackled to enable the employee-driven innovation to unfold.
Similarly as the literature of employee-driven innovation, literature of strategy recognizes participation as an crucial factor. The literature although lacks knowledge how employees may participate in strategy and therefore enable their innovativeness in to use. I aim to provide knowledge in to that gap by interviewing middle-managers from different sized engineering companies. In the final chapter, I will introduce the synthesis of the theoretical framework and empirical knowledge.
3 METHODOLOGY 3.1 Research approach
Case study approach is widely used in business research, as it has the ability to present complex and hard-to grasp issues in accessible, vivid, personal and down-to-earth format. In case study, a central feature is the construction of ’the case’ or several ’cases’, as its purpose is to understand the case, solve the case and investigate the case in relation to its contexts. (Eriksson
& Kovalainen, 2008). Also, Tellis (1997) presents that common to various definitions of case study research is the emphasis on the production of detailed and holistic knowledge, which is based on the analysis of multiple empirical sources rich in context. Eriksson and Kovalainen (2008) reminds that business researcher makes the case ‘a case’ by carrying out the research:
they transform the object of study into an object of interpretation and understanding and by doing this also define the boundaries of the case.
In this thesis, studying multiple cases and developing new theoretical constructs are seen interesting and central in answering the research questions. The topic is new, so I would argue that from different cases more interesting and wider range of findings could be made to form introductory underestanding of it. Therefore, common patterns, mechanisms and properties are being focused. Thus, the type of this study is extensive case study, as Eriksson & Kovalainen (2008) describe extensive case study to aim at elaboration, testing or generation of generalizable theoretical constructs by comparing (replicating) a number of cases. The different cases will be treated as instruments in exploring the phenomena and developing theoretical propositions. The main focus in this study is finding similarities in cases, but interesting or notable differences are also being covered.
3.2 Cases
I selected five cases in order to gain adequate level of data from different contexts. When selecting the companies, their industry, organization structure and interviewees position had to be taken into consideration. In this study, the focus is in engineering industry companies and middle managers perspectives, so narrowing the criteria to the following was required:
1. Engineering company operating in Finland 2. Interviewee works in middle manager position
3. The companies should represent different-sized organisations
The companies in this study represent large, medium and small sized organizations. Two of the companies could be defined as large, one as medium and two as small sized. Studying different sized companies provide more variety of views, but still retain similarities to some extent as they are operating in similar kind of industries and with similar organizational structures.
The companies and interviewees will be introduced in the following sub-chapters. The cases are anonymous to protect the companies’ and interviewees’ vulnerable information.
3.2.1 Case A
Company A is a large industrial company providing technical services for power and communication networks. They deliver comprehensive range of solutions, such as project deliveries, maintenance and upgrade services. In Finland, its turnover is 150-300 million euros.
The interviewee from Company A is working as a manager with responsibilites related to large customer projects. Main duties are managing of quotation procedures, initiating projects and communication with customers. The interviewee reports directly to business line director.
3.2.2 Case B
Company B is a large global industrial company operating mainly in robotics, power, heavy electrical equipment and automation. They have several business lines in these areas, but in this case the business line is industrial automation and more specifically marine business line. In 2018, its turnover globally was about 28 billion dollars. In Finland, their turnover was about 2 billion euros.
The interviewee from Company B is working in the marine industry under industrial automation division. His main responsibility is the procurement of certain product category globally
working as a manager. He also belongs to supply chain management team. The interviewee reports directly to director of procurement.
3.2.3 Case C
Company C is a middle sized industrial company operating in the process piping industry. It provides manufacturing and maintenance services for the needs of its customers. The company mainly operates in Finland. The turnover of the company was about 30 million euros in 2018, and they had about 150 employees. The company is part of group, which total turnover in 2019 was about 60 million euros.
The interviewee from Company C is responsible of managing projects in customers’ premises and depending of the project he has 20-100 subordinates. The interviewee has comprehensive experience from operational positions in engineering industries, especially from the process piping industry.
3.2.4 Case D
Company D is a small sized engineering and consultancy company operating in the building services industry. The main business of the company is to provide electrical planning and supervision, IT-system design and consultancy services. Their customers are mainly in Finland.
In 2018, their turnover was about 1 millon euros and they had 15 employees.
The interviewee from Company D is responsible of managing projects, and he has responsibilities in quality related issues and in IT-system designing. He is also part of the company management team. The interviewee has plenty of responsibility in operational but also in managerial tasks.
3.2.5 Case E
Company E is a small sized industrial company operating in the logistics industry. Its main business is to design and manufacture superstructures for bulk cargo transport. Their customers are mainly from Finland. In 2018 their turnover was about 8 million euros and they had 40 employees.
The main responsibility of the interviewee from Company E is to ensure that the company meets its required level of quality in its operations. He works as manager between different departments of the company. He also has responsibilites in software development and warehouse management. The interviewee reports to the management of the company.
3.3 Data collection
I gathered the data by using semi-structured interviews, because it allows to respond more suitably to both ’what’ and ’how’ research questions. The interviews with the interviewees were guided so that the discussion covered the most important topics and issues of the study, but also provided flexibility for unexpected discussions and findings. Also, using semi-structured interviews the data was compareable between different cases, as the material gathered was somewhat systematic, comprehensive and similar to some extent. The tone of interviews was fairly conversational and informal. (Eriksson & Kovalainen, 2008).
Silverman (2003) provides a typology of interview studies, which are positivist, emotionalist and constructionalist. In this study, the research questions were more or less positivist and emotionalist. More positivistic questions attempted to find ’facts’, which in the case of my research were suitable for example in finding practical ways of participating employees in strategic planning. Emotionalist questions seek to focus in interviewee’s experiences, coming up with findings of their perceptions, conceptions and viewpoints.
The interviews were recorded and transcribed into written format. Each interview lasted 40-60 minutes, and four of those were conducted using Skype and one face to face. Interviewing language was Finnish.
3.4 Data analysis
The data gathered from interviews was analyzed using qualitative content analysis and rhetorical discourse analysis. Eriksson and Kovalainen (2015) presents that qualitative content analysis focuses on the content emphasising in ’what is said’ and ’what is done’ in the data.
They also state that in addition to the focus on the content, qualitative content analysis is interested in the contextual meaning of the data with an emphasis on ’how something is said and done’ and ’why in this particular way’. One purpose of qualitative content analysis is also to produce holistic and factual description, which provides the ’big picture’ about the phenomenom under study. Another purpose is to produce a detailed, rich and nuanced interpretation of the contextual meanings of the data. This type of analysis suits the purposes of this study, as focusing on the content of the interviews provides views how employee-driven innovation is unfolding in the case organisation, how strategic planning is being made and how employee-driven innovation is emerging in the organisations strategic planning. Furthermore, analysing the data from the perspective of how something is said and done provides deeper understanding of how employee-driven innovation in strategic planning is being seen and understood by the middle managers and how it may be unfolding behind their concsious understanding of the topic.
The analysis followed the categorization principles suggested by Eriksson and Kovalainen (2015). The analysis started by going through the data several times to get an overall understanding of it. When adequate level of understanding was reached, I started selecting coding units. Sentences were chosen as units of analysis, as they are small, easily definable and easy to classify. To gain more variety of perspectives, also actors and actions were being used as coding units. The next step was to develop a coding scheme including all coding categories, which I derived from theory and data. Then I started the actual coding and generated new categories and revised the original ones. Once the data was categorized into codes, I started analysing the categories and searched for patterns and relationships between them. Closely related categories were merged in order to provide a description of the bigger picture. After the categorization was completed, I used interpretation in attempt to answer the main questions of the research.
In addition to qualitative content analysis, I examined discourses of how middle managers speak about employee-driven innovation and employee participation in strategy in order to gain understanding of how actors, their positions, capabilities and roles are created through their use of language. The main focus is in participation discourse. In this study, I define discourse as the way an issue or a topic is spoken of, and that a discourse produces ’truth’ about objects that they speak of (Carabine, 2001). As an method of analysis, discourse analysis serves more as an umbrella term including several different analysis styles. These different styles share two assumptions in common: (1) that language would not neutrally reflect or describe the world, and (2) a belief in the importance of discourses in constructing our social world. (Gill, 2000).
Discourse analysis is interested in examining how actors make things understandable by their use of language. The main focus of interest is what kind of definitions are being used in different settings and what kind of realities are being created. (Jokinen, Juhila & Suoninen, 2016). I am specifically interested in the use of language of how middle managers asserts and argues their views of employee employee-driven innovation and participation in strategy. Therefore the style of analysis could be defined as rhetorical discourse analysis, which I used to gain deeper understanding of how employee-driven innovation and participation in strategy is seen and how employee-driven innovation could unfold in the organisations strategic planning.
3.5 Ethical considerations
I have considered ethical issues related to this study and followed good scientific practise throughout the thesis. Relevant ethical considerations in this empirical study are participants anonymity, privacy and confedentiality (Eriksson & Kovalainen, 2008). I have been careful in protecting interviewees vulnerable information and ensuring the anonymity, as interviewees names or identities itself are not considered important in studying the topic of the study. The data gathered is stored safely, and I am the only person to see the data. Before the interviews, I introduced the purpose of this study, asked for permission to record the interview and explained how the data is being gathered and how it is being handled. I also asked if the interviewee wanted to see the description of its case before publishing this thesis. The language used in the interviews was Finnish, which then had to be translated in English for the analysis and presentation of the data. I was careful and exact in translating the data, so that the meanings remained as similar as possible.
4 EMPIRICAL ANALYSIS AND RESULTS 4.1 Strategy and innovation
The concepts of strategy and innovation are central in this study. Therefore, it was needed to examine how the middle managers understood those concepts, as due to their complexity they might be considered in different ways. Understanding how the interviewee understod the concept was also seen important for the proceeding of the interview, so that the interview could proceed depending of the different understandings of the concepts.
Strategy
In general, the interviewees defined strategy similarly. Strategy was seen as a plan, which purpose is to help the company to reach its goals. The purpose of the strategy was also seen as a guiding force towards the company vision and as large frames to integrate the actions of different departments. In all of the interviews, the interviewee described that forming strategy is the responsibility of the company’s management and that it is sort of a plan, thus supporting traditional views of strategic management. Example of definition of strategy (Case A, large company):
”Strategy is… When we go above my level to the CEO… responsibility of that management level to guide the company, set frames what the departments should be doing, what are the core businesses and in what we want to be focusing on”
Other definition (Case E, small company):
”Strategy in general is a plan to reach some goal. And if we are discussing about business strategy, in many cases strategy includes how we make business, how we get employees, how we purchase, how we keep good customers and what are our values”
When considering the participation discourse, the middle managers spoke about strategy as something shared, but did not specify who ’we’ are. Thus, strategy is seen to be participative, but who are participating in strategy is not evident. Participants in strategy formulation are seen to be members of the company management, which refers to traditional views of strategy as something shared and conducted by a small group of participants.
What was interesting to notice was that Case D and E (small companies) were the only ones to mention values to be part of strategy when first started discussing about it. Also, in few of the cases the interviewee mentioned implementation of the strategy, and that in addition to formulating strategy it is as well responsibility of the management team.
Innovation
When discussing about innovation, what was similar in all of the cases was that the interviewees described innovation as development work. They viewed innovation to be a process, rather than the outcome of the process. These findings support the view of innovation as a process (e.g Baregheh et al., 2009) They all also described that the purpose of innovation is to improve the organisations competitiveness. Example of definition of innovation (Case B, large company):
”Well, innovation means developing something… Innovation may be developing some product, service, software or anything. Basically developing of new product product model, process or development of anything… If you work in some large company, then innovation may mean that we improve some existing processes”
Other example (Case D, small company):
”Innovation means that some old process or procedure is being developed or that something totally new is being developed what has not existed before”
There were not any notable differences in interviewees understanding of the concept of innovation. Innovation was seen to be more or less development of something already existing (e.g processes, products and services) or developing something new inside the company, and so the ’innovators’ or ’developers’ were seen to be working inside the company. When the discussions went further, similarly the interviewees emphasized the development coming from inside the organisation. The interviewees therefore did not mention innovation to be distributed outside the organisation, which leads to view of innovation as ’intrinsic’ when compared to the concept of open innovation. (e.g Chesbrough 2003). Example (Case B, large company):
”We have for example own R&D department, which purpose is to develop new products to markets and develop existing products further… If somebody in the
