Management Innovation in Focus: The Role of Knowledge Exchange, Organizational Size, and IT System Development and Utilization

• Date: 01 September 2013
• Author: Miha Škerlavaj,Matej Černe,Marko Jaklič
• Published date: 01 September 2013
• DOI: http://doi.org/10.1111/emre.12013

Management Innovation in Focus: The Role

of Knowledge Exchange, Organizational Size,

and IT System Development and Utilization

Matej C

ˇerne1,2,Marko Jaklicˇ1,2 and Miha Škerlavaj1,2,3

1The Centre of Excellence for Biosensors, Instrumentation and Process control COBIK, Solkan, Slovenia

2Faculty of Economics, University of Ljubljana, Ljubljana, Slovenia

3BI Norwegian Business School, Oslo, Norway

This study aims to examine the correlates of management innovation at the organizational level. We propose that

internal knowledge exchange acts as a crucial predictor of management innovation. To fine-tune the link between

knowledge exchange and management innovation, we examine the mediating explanatory mechanism of IT system

development and utilization, as well as the moderating boundary role of organizational size. In an attempt to find

generalizable patterns across cultures, we test the model using mediated and moderated hierarchical regression

analysis on data gathered from 604 firms in three countries: Slovenia, Spain, and South Korea. The results in all

three samples indicate that knowledge exchange is an important correlate of management innovation. In addition,

our study provides evidence that knowledge exchange results in management innovation through developed and

utilized IT systems that enable information and knowledge to flow within an organization. We also find that the

relationship between knowledge exchange and management innovation is hindered by firms’ size.

Keywords: management innovation; knowledge exchange; organizational size; IT system development and

utilization

Introduction

What drives the firms to engage in innovative activities

has drawn the researchers’ and practitioners’ attention

for decades. After the literature was for a long time

predominantly focused on technological innovation and

its facilitators, non-technological forms of innovation

have started to receive their deserved attention in the last

decade or so (e.g., Avlonitis et al., 2001; Sanidas, 2004;

Armbruster et al., 2008). However, as the empirical

research regarding specific non-technological types of

innovation is at its early stages, we know little about

their particular drivers and correlates.

Management or managerial innovation is one of the

types of non-technological innovation that has recently

gained a lot of wind in the literature (e.g., Birkinshaw

et al., 2008; Walker et al., 2011; Damanpour and

Aravind, 2012). European Management Review even

recently devoted a special issue to this timely and impor-

tant matter (Vol. 10, Iss. 1). Management innovation is

defined as ‘new approaches in knowledge for perform-

ing the work of management and new processes

that produce changes in the organization’s strategy,struc-

ture, administrative processes, and systems’(Damanpour

and Aravind, 2012: 12). It has been conceptualized or

empirically linked to outcomes beneficial to firms’

success (e.g., Hamel, 2006; Walker et al., 2011; C

ˇerne

et al., 2013). This is why examining what might predict

or facilitate management innovation is highly relevant.

The knowledge and capabilities-based views have

largely extended resource-based reasoning by suggest-

ing that knowledge is the primary resource underlying

new value creation, heterogeneity, and competitive

advantage (Grant, 1996; Kogut and Zander, 2003). Inno-

vation that is closely linked to new value creation is

a social construct, dependent on collaboration and

information sharing, as well as on combining diverse

knowledge to come up with novel ideas that ultimately

get implemented (Hage and Hollingsworth, 2000;

Taylor and Greve, 2006; Liao et al., 2007). This is par-

ticularly true for non-technological innovation types,

and previous empirical research (Mol and Birkinshaw,

2009) responded by looking at how the existence of

internal knowledge sources correlates with management

Correspondence: Miha Škerlavaj, Department of Management and

Organization, Faculty of Economics, University of Ljubljana, Ljubljana,

Slovenia, SI-1000. E-mail: miha.skerlavaj@ef.uni-lj.si

European Management Review, Vol. 10, 153–166 (2013)

DOI: 10.1111/emre.12013

© 2013 European Academy of Management