Boss, Cut Me Some Slack: Employee-Initiated Innovation and Execution Task Time Constraints

• In Event: Topics in Management Accounting

Abstract

Prior literature in motivating innovation has largely ignored the problem of motivating innovation in the presence of multiple existing execution tasks - a typical problem in real-world organizations. Looking inside the “black box” of a firm, this paper examines the conditions under which relaxing time constraints on execution tasks is associated with a higher probability of employees initiating bottom-up innovations. Using archival data from a software company, I find that relaxing the time constraints on execution tasks is significantly associated with a higher probability of self-initiated innovation at the employee level after controlling for project and individual characteristics. This effect is more positive: (1) when agency costs are low; (2) when relational contracts between employees and their supervisor are stronger due to higher perceived credibility; (3) when employees have a pre-existing preference for innovation. I find no statistically significant association between relaxing time constraints on execution tasks and self-initiated innovation in the absence of the above conditions. Together, these findings suggest the important role of informal management control mechanisms in facilitating innovation.

Author

• Xin Li, Harvard University Business School