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Management Decision

Organizational support for intrapreneurship and its interaction with human capital to
enhance innovative performance
Lutfihak Alpkan Cagri Bulut Gurhan Gunday Gunduz Ulusoy Kemal Kilic
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Lutfihak Alpkan Cagri Bulut Gurhan Gunday Gunduz Ulusoy Kemal Kilic, (2010),"Organizational support for
intrapreneurship and its interaction with human capital to enhance innovative performance", Management
Decision, Vol. 48 Iss 5 pp. 732 - 755
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Domingo Ribeiro Soriano, J. Augusto Felício, Ricardo Rodrigues, Vítor R. Caldeirinha, (2012),"The effect
of intrapreneurship on corporate performance", Management Decision, Vol. 50 Iss 10 pp. 1717-1738 http://
Jasna Auer Antoncic, Bostjan Antoncic, (2011),"Employee satisfaction, intrapreneurship and firm
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48,5 Organizational support for
intrapreneurship and its
interaction with human capital to
enhance innovative performance
Lutfihak Alpkan
Department of Management, Gebze Institute of Technology, Kocaeli, Turkey
Cagri Bulut
Faculty of Economics and Administrative Sciences, Yasar University,
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Izmir, Turkey
Gurhan Gunday
Turkish Institute for Industrial Management (TUBITAK TUSSIDE),
Kocaeli, Turkey, and
Gunduz Ulusoy and Kemal Kilic
Faculty of Engineering and Natural Sciences, Sabanci University,
Istanbul, Turkey

Purpose – The main purpose of this paper is to investigate the direct and interactive effects of
organizational support and human capital on the innovative performance of companies. Individual
effects of the organizational support dimensions, namely: management support for generating and
developing new business ideas, allocation of free time, convenient organizational structures
concerning, in particular, decentralization level or decision-making autonomy, appropriate use of
incentives and rewards, and tolerance for trial-and-errors or failures in cases of creative undertakings
or risky project implementations, are also to be investigated.
Design/methodology/approach – The study develops and tests a theoretical research model
where the organizational support dimensions are the independent variables, innovative performance is
the dependent variable, and the human capital has a moderating role in this relationship, via a
questionnaire study covering 184 manufacturing firms in Turkey.
Findings – Among the individual direct effects of the dimensions of organizational support,
management support for idea development and tolerance for risk taking are found to exert positive
effects on innovative performance. Availability of a performance based reward system and free time
have no impact on innovativeness, while work discretion has a negative one. As for the role of human
capital (HC), it is found to be an important driver of innovative performance especially when the OS is
limited. However, when the levels of both HC and OS are high, innovative performance does not
increase any further.
Originality/value – Two distinct research streams, namely organizational support literature and
human capital literature, have already focused on their individual impacts on the innovative
performance. However, a combination of these separate streams was not tried before. The paper
Management Decision discusses and investigates what will happen when both positive drivers interact with each other.
Vol. 48 No. 5, 2010 Moreover, it also investigates how organizational support and human capital are complementary.
pp. 732-755
q Emerald Group Publishing Limited Keywords Organizational development, Human capital, Turkey, Innovation
DOI 10.1108/00251741011043902 Paper type Research paper
1. Introduction Organizational
Human Capital (HC) and Organizational Support (OS) for intrapreneurial activities support for
have become important yet separate areas of management research for the last three
decades. Organizational supportive environment, as an internal climate factor, on one intrapreneurship
hand is described as a facilitator for organizations to spur organizational
entrepreneurial activities (e.g. Miller and Friesen, 1982; Schuler, 1986; Kuratko et al.,
1990, 2005; Zahra and Covin, 1995; Antoncic and Hisrich, 2001; Hornsby et al., 2002; 733
Dess et al., 2003). On the other hand, HC as a core competence is described as one of the
main indicators of organizational learning (e.g. Bantel and Jackson, 1989; Edvinsson
and Malone, 1997; Hitt et al., 2001; Skaggs and Youndt, 2004). Hence it is worth to
investigate their combined effect on the innovative performance while both possess the
ability to contribute separately to the organizational capabilities from different aspects.
For instance on one hand the organizational support for intrapreneurship – that can be
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defined as a suitable organizational setting where intrapreneurs may easily access to

necessary organizational resources and conditions to develop and implement
innovative ideas and projects – can encourage and enable the overall organizational
innovativeness. And on the other hand the human capital – that is the sum of the
individual knowledge, skills and abilities of the organizational human resources –
constitutes a necessary knowledge basis for the quality of the individual
entrepreneurial and innovative efforts. The costs and also the performance impacts
of all these resources and efforts are very critical for the organizational managers while
the scholars at the era of knowledge economy suggest them to craft strategies and
structures to be both innovative and efficient at the same time (e.g. March, 1991, Raisch
and Birkinshaw, 2008). Those managers who listen to these suggestions may wonder if
the investments done simultaneously to the betterment of the human capital and to the
provision of organizational supports would create synergetic effects or if improving
only one at a time is more beneficial especially when the organizational slack resources
are limited.
Reviewing the related literature, we observe that empirical studies on the interaction
between OS for intrapreneurial activities and the quality of HC, and their combined
impact on innovative performance, seem to be surprisingly rare. Most studies
investigated separately the individual effects of OS and HC on organizational
performance. Considering the rarity of empirical studies investigating the combined
effects of the quality of HC and organizational support mechanisms for intrapreneurial
activities, our basic research question in this empirical study is as follows: “Is HC a
moderator in the OS – innovative performance relationship?”.
The motivation behind this empirical study is to try to discover an interaction or
complementation between the intensity of the organizational support provided to the
human resources and the quality of those human resources who are supported. In the
recent literature, the innovative performance impacts of various types of
organizational support mechanisms (e.g. Hornsby et al., 2009) are studied separately
from the perceived quality of the human capital that receives this support. Moreover,
two distinct research streams in the innovative performance literature confirm
separately the positive impacts of HC and OS on this performance. In this study,
therefore, we try to discuss and investigate what will happen when both positive
drivers interact with each other. On one hand, we may automatically purport that this
interaction would lead to a further increase in the innovative performance since both
MD are already significant antecedents of it, and their combination would create a synergy.
48,5 However, on the other hand, beside this possibility of synergy, we may also argue that
a further increase in the innovative performance cannot come out automatically and
immediately when such an interaction occurs. Beyond interaction, a complementary
nature of this relationship may also exist in such a way that when one driver is rather
lower the other one may complement its impact on innovative performance.
734 This study has five sections. The introduction precedes the second section where we
briefly discuss the theoretical framework and develop hypotheses about the
relationships among OS, HC and innovative performance of the organizations. The
third section explains the research methods employed in the data collection and
analysis processes, and the fourth section exhibits the findings of our empirical study.
Finally, in the fifth section, conclusions and implications are forwarded.
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2. Theoretical framework and hypotheses

2.1 The effects of organizational support factors for intrapreneurial activities on
innovative performance
The necessity of creating an inner environment that is conducive to internal
entrepreneurship and individual commitment to sustainable corporate innovativeness
has already been mentioned in the past literature (e.g. Rothwell, 1975). An
organization-wide entrepreneurial spirit to cope with and benefit from rapidly
changing marketplace conditions would be possible only if a suitable internal support
climate is established, where intrapreneurs engage in opportunity-seeking
entrepreneurial behaviors, as in the case of independent entrepreneurs discovering
important challenges and opportunities (Slevin and Covin, 1990; Zahra, 1991; Barringer
and Bluedorn, 1999; Jeong et al., 2006). When these efforts are supported and
coordinated by managers, these endeavors will result in sustainable competitive
advantages through innovation in the form of new products, services, and processes, or
in a combination of the three (Quinn, 1985; Brentani, 2001; Hornsby et al., 2002). The
growing body of literature, (e.g. Kuratko et al., 2004; Kuratko et al., 2005; Subramanian,
2005), also proposes that innovative performance is one of the desired outcomes of this
supportive environment for intrapreneurial activities.
A suitable organizational milieu for the intrapreneurial activities to flourish
necessitates a set of organizational policies, processes, and characteristics whereby
organizations try to actualize their appropriate managerial practices and required
behavioral patterns for pioneering innovative ideas in their products, operational and
managerial processes, structures, and markets. The literature on how to establish a
suitable internal environment for intrapreneurship seems to be based on several
organizational arrangements or managerial tools; namely:
(1) Management support for generating and developing new business ideas.
(2) Allocation of free time.
(3) Convenient organizational structures concerning, in particular, decentralization
level or decision-making autonomy.
(4) Appropriate use of incentives and rewards.
(5) Tolerance for trial-and-errors or failures in cases of creative undertakings or
risky project implementations (e.g. Kuratko et al., 1990, 1992, 2004, 2005;
Hornsby et al., 1999, 2002).
Table I summarizes these five factors and their definitions. Thus, in this section, we Organizational
will briefly discuss some potential associations of OS factors to innovative support for
The first factor, management support for generating new and creative ideas and intrapreneurship
projects, is essential for awaking entrepreneurial spirit within an organization
(Kuratko and Montagno, 1989). Management support is important because it indicates
the willingness of the managers to facilitate, promote and institutionalize the 735
entrepreneurial spirit and activity within the organization’s systems and processes
(Hornsby et al., 2002) which would encourage the intrapreneurs to engage in innovative
efforts. These institutionalized support mechanisms may also contribute to the
formalization and coordination of the separate individual suggestions or efforts and
increase accordingly the efficiency of the organizational innovative efforts and
projects. Management support for problem solving and conflict resolution in the
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intrapreneurship process is required in the idea generation, development, and

particularly implementation (project execution) stages of the ideas (Damanpour, 1991).
Management support therefore will positively influence a corporation’s entrepreneurial
behavior and enhance potential intrapreneurs’ perceived trustworthiness to their
corporations in terms of detecting opportunities and willingness to develop novel or
useful ideas and or projects and to take risks to actualize them (Stevenson and Jarillo,
1990). Therefore, our first hypothesis is as follows:
H1. The greater the management support in organizations, the higher their
innovative performance.
The second factor is the allocation of free time to employees for innovative initiatives.
Time availability refers to the sufficiency of time to work on developing novel ideas
and implementing projects (Brazeal, 1993; Fry, 1987; Schuler, 1986, Pinchot, 1985;
Kuratko et al., 1990). Other resources such as information, labor, equipment etc. are the

Factors Definitions Citations

Management support for Encouragement of entrepreneurial Pinchot, 1985; Damanpour, 1991;

idea generation idea generation and development Stevenson and Jarillo, 1990;
Hornsby et al., 1993; Kanter, 1996;
Sundbo, 1999
Allocation of free time Provision of sufficient time to work Burgelman, 1984; Kanter, 1985;
on developing novelties without Sathe, 1985; Fry, 1987; Damanpour,
any burden of routine workload 1991; Slevin and Covin, 1990;
Bamber et al., 2002
Work discretion Decision making initiative of the Sathe, 1985; Quinn, 1985; Antoncic
staff about their work and Hisrich, 2001; Drucker, 1985;
Burgelman, 1983; Zahra, 1991
Performance based reward Availability of a performance Souder, 1981; Fry, 1987; Cissell,
system based reward system encouraging 1987; Sykes and Block, 1989;
innovativeness Kuratko et al., 2005
Tolerance for risk taking Recognizing risk taking Stopford and Baden-Fuller, 1994;
intrapreneurs even if they fail and Quinn, 1985; Kanter, 1996; Table I.
encouraging them to implement Lumpkin and Dess, 1996, 2001 Five theoretical factors
their novel proposals and projects of OS
MD inputs of the research and development activities. However, most of the enthusiastic
intrapreneurs make their pioneering steps to actualize their idealized projects in their
48,5 spare times (Ende et al., 2003). Thus availability of free time for employees is a critical
factor for their both daily routines and intrapreneurial ideas and activities, i.e. time to
imagine, observe, experiment and develop (e.g. Pinchot, 1985; Fry, 1987). Delivery of
free time inevitably encourages employees to take risks for putting their novel ideas
736 into practice (e.g. Burgelman, 1984; Fry, 1987; Sundbo, 1999; Hornsby et al., 2002).
Therefore, our second hypothesis is formulated as follows:
H2. The greater the allocation of free time in organizations, the higher their
innovative performance.
The third factor is the work discretion or convenience of the organizational structure,
concerning especially decentralization level or decision-making autonomy for lower
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level managers and employees. OS for an effective intrapreneurial climate should

involve autonomy and flexibility particularly in strategy making (Mintzberg, 1973;
Khandwalla, 1973; Burgelman, 1983, 1984; Slevin and Covin, 1990; Covin and Slevin,
1989; Barringer and Bluedorn, 1999; Honig, 2001). Work discretion is concerned with
the degree of autonomy of the employees to make decisions regarding their work
(Slevin and Covin, 1990; Lober, 1998; Kuratko et al., 1992; Hornsby et al., 2002) and to
implement them in order to realize their novel ideas (Lumpkin and Dess, 1996, 2001).
Autonomy extends to decentralization of decision-making power to those who will
actually carry through the work. It also represents employees’ degree of initiative on
their formal work and implementing improvement efforts or resolving problems
(Souder, 1974; Tatikonda and Rosenthal, 2000). Powerful, i.e. autonomous employees or
managers can think, act, and afford to risk more for innovative consequences, and they
can afford to allow others’ freedom (Kanter, 1977). Performance enhancing role of
flexible or autonomous decision-making is confirmed also by recent empirical studies
(e.g. Alpkan et al., 2007). Moreover, in a recent study on Russian firms, Gurkov (2009)
indicate that it is the rigidity of the existing organizational structures that really slows
down both the innovative process and the implementation of its results. Therefore, our
third hypothesis is as follows:
H3. The greater the work discretion in organizations, the higher their innovative
The fourth factor is the appropriate use of rewards in cases of success. If the
management tries to convince the employees to act like intrapreneurs, it must also be
willing to pay them as entrepreneurs (Thornberry, 2003). If the employees have a high
level of trust in the reward system of their organization, hoping that organizational
success will turn to be beneficial to all parties, then both their commitment to
innovation (e.g. Morrison and Robinson, 1997; Chandler et al., 2000; Bulut and Alpkan,
2006) and their willingness to assume the risks associated with the intrapreneurial
activity (e.g. Kuratko et al., 1990) will also be higher. Thus, organizational support
should be enriched with a performance based reward system for creating a suitable
internal environment (Souder, 1981; Fry, 1987; Hornsby et al., 2002). Therefore, our
fourth hypothesis is stated as follows:
H4. The greater the performance based reward system in organizations, the
higher their innovative performance.
The fifth dimension is tolerance for risk taking and failure. Individual intrapreneurs’ Organizational
willingness to take risks and top managers’ risk permissiveness to allow and support for
encourage them to be more innovative necessitate a more tolerant understanding
behind managerial reactions towards those intrapreneurs whose projects fail especially intrapreneurship
in turbulent markets (e.g. Stopford and Baden-Fuller, 1994; Hornsby et al., 1999, 2002;
Alpkan and Kaya, 2004). Conservative and risk-averse attitudes of the managers will
cause the lack of confidence on the side of the employees’ intrapreneurial potential; and 737
their frustration will reduce innovative approaches and undertakings (Gupta et al.,
2004). Thanks to the attitudes and behaviors of the managers for creating a supportive
internal environment, intrapreneurs will expect that some failures resulting from
actions taken in good faith, will not be harshly punished but should be tolerated
(Macmillan et al., 1986; Lumpkin and Dess, 1996). So our fifth hypothesis is formulated
as follows:
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H5. The greater the tolerance for risk taking in organizations, the higher their
innovative performance.

2.2 The impact of human capital on innovative performance

Contingency research tries to identify the contingency factor or factors to which each
particular aspect of organizational structure needs to fit, by comparing various
organizations with different contingencies and structures, since the contingency theory
states that there is no single organizational setting that is highly effective for all the
organizations (Donaldson, 1996). For instance, Galbraith (1973) states that there is no
one best way to organize and that any way of organizing is not equally effective; and
Scott (1992) assert that the best way to organize depends on the nature of the
environment to which it relates. Thus, remedies or suggestions that best work in one
setting may fail in another. Following these basic assumptions of the contingency
theory and considering our research question related to the interactions among HC, OS,
and innovative performance, we discuss the moderating role of the HC. The
accumulation of all the societal, organizational and personal investments for schooling,
education, and training manifested at the individual level in the form of improved skills
and performance, at the organizational level in the form of increased profitability, and
at the societal level in the form of societal benefits is labeled as the HC (Schultz, 1961;
Mincer, 1962; Psacharopoulos and Woodhall, 1985; Nafukho et al., 2004). In the
organizational context, Joia (2000) defines the concept of HC as the sum of the expertise
and skills of the employees of an organization. Dakhli and De Clercq (2004) argue that
HC is embodied in the people’s skills, knowledge, and expertise that can be improved
especially by education and work experience. Hence, those people, who are better
educated, have more extensive work experience, and invest more time, energy, and
resources in honing their skills, are better able to secure higher benefits for themselves
and for the society.
Hitt et al. (2001) claim that HC with tacit knowledge, being an important component
of intangible resources, is more likely to produce a competitive advantage than
tangible resources, by attributing the performance differences across the firms to the
variance in the firms’ resources and capabilities according to the resource-based view
of the firm. They also emphasize the necessity to spend money for the development of
human resources especially in the form of training, transfer, and retention costs.
According to Petty and Gutherie (2000) among the various categories of intellectual
MD capital, HC should be regarded as the most valuable asset, and the money spent on
48,5 human resources to improve efficiency and productivity should not be seen and
reported as a cost, but as an investment – particularly by those enterprises relying
heavily on the knowledge and skills of their staff.
Recent empirical evidence confirms the HC-performance relationship. For instance,
Bontis et al. (2007) find a general support for this relationship in Egyptian software
738 companies. Shrader and Siegel’s (2007) empirical study on high-tech ventures imply
that for small, technology-based new ventures, HC, in the form of technological
experience, appears to be the most important determinant of the success of a
differentiation strategy. Similarly, Cater and Cater (2009) report that a differentiation
advantage is positively affected by HC. Again, in a more recent study, Federico et al.
(2009) find that HC contributes to the internationalization performance of young firms
in Latin America. Following the previously mentioned descriptive and empirical
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studies, we may deduce that HC is one of the important drivers of various aspects of
firm performance.
As for the direct effects of HC on innovative performance, an earlier empirical study
conducted by Bantel and Jackson (1989) indicates the importance of HC, and reveals
that more innovative organizations are managed by well-educated teams, who are
diverse with respect to their functional areas of expertise. According to the recent
empirical studies on different cultures around the world, investments made to improve
the HC seem to provide an increase in the organizational innovativeness. For instance,
Dakhli and De Clercq (2004) find strong support for the positive relationship between
HC and innovation in their study of secondary data on the cross-country differences of
innovativeness. They attribute this relationship to the knowledge-intensive nature of
both variables, namely HC and innovation.
Based on an empirical study conducted in Denmark, Anker (2006) indicates the
importance of updating the skills of the employees especially in the high-tech sectors
and concludes that HC increases the ability to innovate. Wu et al. (2007) in a more
recent empirical study in Taiwan confirm that HC has a positive effect on innovative
performance; Marvel and Lumpkin (2007) find similarly a positive association between
radical innovations done by the technology entrepreneurs operating within
university-affiliated incubators and their level of HC measured in the form of formal
education and knowledge of technology. Finally, Allen et al. (2007) conclude that HC
increases entrepreneurial research activities leading to new patents.
Based on the previous literature discussion, we propose the following hypothesis:
H6. The greater the level of HC in organizations, the higher their innovative

2.3 The moderating role of human capital

HC in the form of the knowledge, skills, and abilities of the employees can
contribute to the organizational competencies and performance by reducing the
risks and increasing the returns from investments done in innovation and venturing
(e.g. Hayton, 2005; Hayton and Kelley, 2006). Therefore, beside its direct effect on
firm performance, HC as a precious resource may also exert a facilitator role in the
attempts to form a suitable climate to produce higher organizational performance.
Findings of past studies emphasize this positive role of HC. For instance, Edelman
et al. (2002) underlining that a firm’s strategy should be in line with its resources
find in a study on US SMEs that only those high-tech firms with appropriate Organizational
human resources should be seeking innovative performance goals. Hitt et al. (2001) support for
mentioning that firm resources and strategy interact to produce positive returns,
conclude that HC moderates the strategy and performance relationship. Similarly, intrapreneurship
Selvarajan et al. (2007) confirm this moderator role in a different setting. Hayton and
Zahra (2005) find in an empirical study on high technology new ventures in the
USA that the relationship between venturing activities and innovation is moderated 739
by the HC diversity of the top management teams. More specifically, Subramaniam
and Youndt (2005) claim that the HC interacting with social capital increases radical
innovative capability.
Similar interaction effects of HC together with entrepreneurship are mentioned not
only in the organizational innovativeness literature but also in the regional
development studies. Beginning a discussion on what the appropriate policies are to
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foster local growth in the face of globalization; Taylor and Plummer (2003) highlight
the role of entrepreneurship and HC in promoting regional economic growth. In a
follow up empirical study (Plummer and Taylor, 2004), they reveal that HC with an
enterprise culture is a very significant driver for regional economic growth.
The previous literature on HC, leads us to purport that HC may play a similar
moderator role in the relationship between OS and innovative performance. In this
context, we may argue that since a high quality pool of knowledge, skills, and abilities
of the employees that an organization possesses, is among the important drivers of new
idea generation and implementation, provision of a higher amount of support to this
HC, in terms of time, rewards, good managerial relations, discretionary power, etc.,
would create a better milieu for innovativeness. In other words, if organizations with
higher quality HC support their HC with higher amount of time allocations, managerial
encouragements, tolerance, discretion, rewards, etc. their innovative performance
would be much more increased. Following this argumentation, we develop the
following hypothesis:
H7a. The greater the HC in organizations, the stronger the influence of OS on
innovative performance.
However, on the other hand, since both HC and OS are already hypothesized to be
increasing innovative performance separately, the combination of them is not
certain to create any further synergetic increase in this performance immediately.
Instead, HC and OS may be complementary to each other. For instance, when HC is
low, we may argue that there is still some place for increasing innovative
performance through OS. In other words, in those organizations where knowledge,
skills, and abilities of the employees are relatively lower, the innovative
performance may also be lower accordingly; at this situation, the provision of
better organizational mechanisms to encourage intrapreneurial activities may
recover the deficiency caused by lower levels of HC and increase the innovative
performance significantly. Following this contradictory argumentation, we develop
an alternative hypothesis to H7a:
H7b. The lower the HC in organizations, the stronger the influence of OS on
innovative performance.
The eight hypotheses of this study are displayed together in Figure 1.

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Figure 1.
The theoretical model and

3. Method and findings

3.1 Measurement
To assess the OS factors, we adapted the items developed and used in the studies of
Kuratko et al. (1990, 1992) and Hornsby et al. (2002) to our survey. The measurement of
HC was taken from the study of Subramaniam and Youndt (2005). As for the construct
of innovative performance, we employed a scale consisting of items adapted from the
earlier studies of Antoncic and Hisrich (2001), Neely and Hii (1998), Meeus and
Oerlemans (2000) and Hagedoorn and Cloodt (2003). All items have been translated and
adapted to Turkish and then translated back to English by using the
translation-and-back translation process proposed by Ronen and Shenkar (1985). All
items were measured on a five point Likert scale, where “1 ¼ strongly disagree” and
“5 ¼ strongly agree”.

3.2 Sample
To test the hypotheses, the unit of analysis is selected as the individual manufacturing
firm in the context of a developing country. Data are collected via questionnaire forms
in the most industrialized region of Turkey, the northern Marmara region. This region
not only generates nearly 30 per cent of Turkish GNP (TUIK, 2001), but, more Organizational
interestingly, most of the innovation, quality improvement, and international trade support for
activities are done by the firms located there[1]. The firms are selected randomly from
the database of the Union of Chambers and Commodity Exchange (TOBB), and from intrapreneurship
the chambers of industry located in the cities of Istanbul, Kocaeli, Sakarya, Tekirdag,
and Cerkezkoy. Out of 1674 questionnaires distributed, 184 useable forms are returned
producing a response rate of about 11 per cent. 741
Responding firms in our resulting sample are distributed among six main business
sectors, namely automotive (20.1 per cent), textile (19.6 per cent), metal goods (19 per
cent), chemicals (17.9 per cent), machinery (15.2 per cent), and electrical home
appliances (8.2 per cent) industries. Responses are given by top managers (CEOs,
general managers, and owners: 33 per cent), and middle managers (plant managers and
functional managers: 67 per cent). As for the firm size, 25.5 per cent of the firms
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responding are small firms employing less than 50 employees, 48.2 per cent of them are
medium sized firms employing between 50-250 employees, and 26.2 of them are large
firms employing more than 250 employees.

3.3 Factor analyses and correlation tests

All scales were initially submitted to exploratory factor analysis with varimax rotation
and then confirmatory factor analysis to explore and confirm the latent factor structure
of the innovative performance, HC and OS factors’ scales in the Turkish context. The
factor analyses (EFA and CFA) produced totally seven factors as anticipated; five
factors for OS, one for HC and one for innovative performance, as shown in Tables II
and III, with a total variance explanation (TVE) of 69.85 per cent, and a cut point of
1.129 eigenvalue. Cronbach’s alpha (a) scores of all the factors are all above 0.70 –
ranging from 0.72 to 0.92. This indicates that internal consistency levels of our
variables are sufficiently reliable (Nunnally, 1967). Regarding to the results of the
previous statistical tests for validity and reliability, we assumed that our factors are
sufficiently valid and reliable to test our hypotheses. Accordingly, we produced seven
constructs to be used in the further tests, namely, Innovative performance, Human
capital, Managerial support, Tolerance for risk taking, Work discretion, Allocation of
free time, and Performance-based reward system.
Table IV shows the means and one-to-one associations among the variables. It is
seen that Innovative performance is significantly and positively linked to HC and to
most of the dimensions of OS with the exception of Work discretion and Allocation of
free time. Considering the means of the variables, all seem moderate ranging between 3
to 4; on a scale from 1 to 5, while the mean of the Managerial support construct is the
highest (3.91), and that of the Tolerance for risk taking construct is the lowest (3.11).

3.4 Hypothesis tests

To test our hypotheses we used multiple regression analyses (see Table V). In step 1,
we conducted a regression analysis, where the dimensions of the OS constitute the
independent variables and the innovative performance is the dependent variable. Our
rationale that the five dimensions of the OS reinforce the organizational innovative
performance is partially supported. On the one hand, H1 proposing that the greater the
management support in organizations, the higher their innovative performance
(b : 0:318; p , 0:01), and H5 claiming that the greater the tolerance for risk taking in
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Table II.

factor analysis
Results of the exploratory
Item statements and factors F1 F2 F3 F4 F5 F6 F7

Factor 1: Performance-based reward system

The rewards that employees received or will receive are dependent on
their work on the job 0.811
Employees will be appreciated by their managers’ if they perform very
well 0.802
Employees from every level will be rewarded, if they innovate 0.791
Employees with innovative and successful projects will be highly
rewarded 0.791
Managers increase employee’s job responsibilities if they perform well 0.756
Factor 2: Human capital
Our human resources are very intelligent and creative 0.853
Our human resources are very talented 0.772
Our human resources are specialized on their jobs 0.739
Our human resources are producing new ideas and knowledge 0.707
Our human resources are best performers 0.691
Factor 3: Innovative performance
Percentage of new products in the existing product portfolio 0.864
Number of new product and service projects 0.864
Ability to introduce new products and services to the market before
competitors 0.772
Innovations introduced for work processes and methods 0.649
Quality of new products and services introduced 0.582
Factor 4: Management support for idea generation
The development of new and innovative ideas are encouraged 0.793
Senior managers encourage innovators to bend rules and rigid
procedures in order to keep promising ideas on track 0.753
Developing one’s own ideas is encouraged for the improvement of the
corporation 0.710
Upper management is aware and very receptive to ideas and
suggestions 0.640
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Item statements and factors F1 F2 F3 F4 F5 F6 F7

Factor 5: Tolerance for risk taking

There are several options within the organization for individuals to get
financial support to actualize their innovative projects 0.741
Money is often available to get new project ideas off the ground 0.698
The term risk taker is considered a positive attribute for people in our
organization 0.611
Individual risk takers are often recognized for their willingness to
champion new projects, whether eventually successful or not 0.570
Factor 6: Allocation of free time
Our employees always seem to have plenty of time to get everything
done 0.872
Our employees have enough time to spend for developing new ideas 0.813
Our employees’ workloads do not prevent them to conduct innovative
projects. 0.798
Factor 7: Work discretion
Our employees have the freedom to implement different work methods
for doing major and routine tasks from day to day 0.838
It is basically the employees’ own responsibility to decide how their
jobs get done 0.726
This organization provides the employees with the freedom to use
their own judgment and methods 0.635
Variance explained % 14.65 10.94 10.63 9.84 8.54 8.45 6.79
Cronbach’s alpha (a) 0.92 0.85 0.83 0.88 0.78 0.87 0.72
Notes: Extraction method: principal component analysis. Rotation method: varimax. Total variance explained: 69.85 per cent
support for


Table II.
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Table III.

Descriptives and
Variables Mean SD (1) (2) (3) (4) (5) (6)

Management support 3.91 0.75

Allocation of free time 3.21 0.95 0.324 * *
Work discretion 3.24 0.83 0.361 * * 0.358 * *
Performance based reward system 3.67 0.92 0.643 * * 0.413 * * 0.353 * *
Tolerance for risk taking 3.11 0.82 0.601 * * 0.407 * * 0.412 * * 0.585 * *
Human capital 3.61 0.66 0.341 * * 0.229 * * 0.155 * 0.328 * * 0.302 * *
Innovative performance 3.74 0.66 0.391 * * 0.032 0.012 0.283 * * 0.280 * * 0.230 * *
Notes: *p , 0.05; * *p , 0.01
Dependent variable: innovative performance
Independent variables Step 1 Step 2 Step 3 Step 4 Step 5 support for
Organizational support factors
Management support 0.318 * *
Allocation of free time 20.122
Work discretion 20.169 * 745
Performance based reward system 0.064
Tolerance for risk taking 0.202 *
Organizational support 0.212 * * 0.357 * * 0.077
Human capital 0.153 *
Organizational support £ human capital 20.132
R2 0.203 0.092 0.108 0.128 0.006 Table IV.
F 8.944 * * 9.053 * * 7.181 * * 14.059 * * 0.486 Results of the regression
analyses for OS, HC and
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Notes: *p , 0.05; * *p , 0.01; standardized regression coefficients are displayed innovative performance

Organizational support
Low High Difference Table V.
Human capital n Mean n Mean Mean t p Mean scores of
innovative performance
Low 52 3.4885 46 3.8609 0.3725 2.855 0.005 under different
High 34 3.8000 50 3.8630 0.0630 0.443 0.659 contingencies

organizations, the higher their innovative performance (b : 0:202; p , 0:05), are

supported. On the other hand, the H2, H3, and H4 – claiming respectively that
allocation of free time, work discretion, and effective reward system increase
innovative performance – are not supported.
In step 2, we conducted a regression analysis, where the OS – as the sum of its five
constituting dimensions – and the HC are the independent variables and the
innovative performance is the dependent variable. This time, as an integrated single
construct, OS is found to have a significant impact on innovative performance
(b : 0:212; p , 0:01). As for the other independent variable, HC, it is also found to be
effective on innovative performance (b : 0:153; p , 0:05), thereby providing support
for H6.
In step 3, we used moderated regression analysis to test H7a and H7b. Before
calculating the regression coefficients, in order to minimize the effects of any
multicollinearity among the variables comprising our interaction terms, we centered
(mean ¼ 0) our HC variable. The results of our moderated regression analysis show
that the OS-HC interaction produces not only a negative but insignificant impact on
innovative performance. Thus, none of our alternative hypotheses purporting that “the
greater or the lower the HC in organizations, the stronger the influence of OS on
innovative performance” is not approved.
In steps 4 and 5, we conducted two more regression analyses in order to clarify this
finding about the insignificant but still negative moderating effect of HC by splitting
the general data into two data sets from the mean of HC. In step 4, we calculated the
impact of OS on innovative performance only for those organizations, where HC is
MD below average. It is found that OS has a strong and positive effect on innovative
48,5 performance (b : 0:357; p , 0:01), when HC is below average. The size of this effect
found in the split data is greater than that found employing the general data
(b : 0:212; p , 0:01). In step 5, we calculated the impact of OS on innovative
performance but this time only for those organizations, where HC is above average. A
significant association is not found. Step 5 only served to confirm the results of step 3.
746 In order to elaborate on the findings of step 4, and provide some indirect significant
support for H7b, we split the general data set into four categories of possible
contingencies related to the higher and lower levels of both OS and HC. Then we
calculated the average innovative performance for each category as reported in
Table V. It is clearly shown that when only one of these two antecedents of innovative
performance, namely OS or HC, is already high, an increase in the other one does not
contribute to the innovative performance significantly. On the other hand, however,
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when both OS and HC are low, innovative performance is very low and then an
increase in any one of its drivers OS or HC seems to exert a positive impact on
innovative performance.

4. Results
4.1 Discussion
Our empirical findings reveal that HC and OS – especially its dimensions of
managerial support and tolerance for risk taking – exert significant and positive
impacts on innovative performance. However, the interaction between HC and OS does
not produce higher innovative performance. On the one hand, when HC is low, OS
increases innovative performance more. On the other hand, when both are high, a
further significant increase in innovative performance seems not to be possible within
the same period. It appears that the existence of some other resources or antecedents is
necessary beyond the interaction of HC and OS to reach a relatively higher level of
innovativeness. A plausible explanation for this may be related to the existence of a
local and or temporary ceiling for innovative performance in the short run. These
findings imply in general that considering the interaction between innovative
performance, OS, and HC, a positive or negative moderator role of HC in the
OS-performance relation is not supported as opposed to our related hypotheses. In this
concern, it is rather possible for us to argue that OS and HC, which are separately
found to be the positive drivers of innovative performance, can complement each other
in such a way that when one is lower the other one increases performance on its own,
and vice a versa; but when both are high a further increase is not observed.
Considering the individual impacts of OS dimensions on innovative performance,
we find that, first, the performance-based reward system, which is significantly
correlated to innovative performance, is ineffective on it when regressed together with
the two significant drivers of innovativeness, namely support and tolerance. Second,
work discretion, which is not significantly correlated to innovative performance, is
found to be negatively effective on it when regressed together with the other
dimensions of OS, probably because of the overshadowing effects of management
support and tolerance for risk taking as the strongest drivers of innovativeness.
As for the links to the literature, our findings are in some extent parallel with
similar findings of different research models tested in the recent literature. For
instance, Antoncic and Zorn (2004) find causal links between organizational support
and types of product and technological innovations; and Hornsby et al. (2009) find Organizational
correlation between top management support and the number of innovative ideas support for
implemented. Moreover, Eisenberger et al.’s (1990) study findings indicate that
organizational support leading to the employee perception of being valued and intrapreneurship
cared about by the organization is positively related to innovation on behalf of the
organization in the absence of anticipated direct reward or personal recognition. In
this concern, Dess et al. (2008) suggest that tolerance for failure in innovation 747
projects is among the sound organizational practices while some others may be
indeed counterproductive. They claim accordingly that decision-making autonomy
given to the volunteers who are overzealous about and overly attached to new
technologies and products can make poor decisions about which projects to pursue
or drop. Even if the decision-making autonomy is given not to all the volunteers but
only to the strong players whose primary experience is related to the company’s
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core business, viable ideas and projects may still be dismissed just because they do
not appear to fit with the core business. Dess et al. (2008) suggest accordingly that
firms should build an organizational mechanism to decide which innovation projects
are likely to bear fruits and which should be cast aside. Another seemingly sound
but probably counterproductive practice is a reward system that is based on
achievements in innovation projects, since it may lead the brightest and most
ambitious players to avoid innovation projects with uncertain outcomes. In case
where uncertainty leads to failure, managers in an organizational climate of support
and tolerance should celebrate all the efforts spend for experimentation and risk
taking instead of condemning failure and thus motivate the intrapreneurs to
re-engage in the efforts of developing new ideas and projects.

4.2 Managerial implications

As a managerial implication, it is possible to suggest that if in an organization the
innovative performance is low, then either the quality of human resources or the level
of the organizational support provided to these human resources should be increased.
There is no place to invest in both at the same time and to reap their fruits in the short
run. If, for example, strategists in an organization find it difficult to increase HC
considering the internal and external recruitment pool of this organization, they should
try to establish an internal climate, where especially managerial support and tolerance
for risk taking are high. Nevertheless, if HC is above average considering the industry
in which they operate, we can assume that their innovative performance is already
high, and it should not be expected to increase it significantly with the help of any
increase in OS. Therefore, a major jump in innovative performance, which is already
relatively high, is not possible in the short run; but in the long run, we can expect that
balanced and incremental advancements in both the quality of the human resources
and the organizational support provided to them may still help to increase innovative
Another managerial implication may be related to the direct and combined effects of
each dimension of the OS. On one hand, considering the one-to-one correlations,
support, tolerance, and reward are found-to-be-related to innovativeness, while work
discretion and time allocation are not. On the other hand, considering the combined
effects of all the OS factors, managerial support and tolerance for risk taking have still
exerted significant effects on innovativeness, but some other relations are changing.
MD Thus, we can suggest that top managers prioritizing on innovativeness should
48,5 invest to build such an organizational milieu where first, support and tolerance exist to
a large extend. Every employee should feel and know that if they behave like
intrapreneurs and develop viable but still risky ideas for innovation and
entrepreneurship, they will be supported in their firms, their proposals will be
listened to, they will be encouraged for implementing their ideas with necessary
748 emotional, physical and monetary assistance, and even if their ideas and projects fail
they will not be punished or humiliated. Fears of loneliness and failure seem to be
important burdens on the way to start and implement innovative projects even if some
clever ideas come to mind. An internal environment promising support and tolerance
will be a good remedy for these fears. In brief, we can suggest that organizations
should spend less time and money on rewards and empowerment, and more on
recruiting and training managers to be supportive and hold a philosophy that failure is
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a stepping-stone to success.
As for the cultural implications, one should note that Turkey, which is developing
economically[2] and integrating with the global economy, undergoes also a cultural
transition period towards the internalization of western values. For instance, Aycan
and Pasa (2003) indicate that almost 80% of the business organizations in Turkey were
established after 1980, which marks the liberalization movement and the beginning of
the era of globalization for Turkey. As in many other developing countries,
uncertainties and lack of and/or improper use of resources are experienced in this era
(e.g. Kanungo and Jaeger, 1990). Adoption of liberal economy and increasing
industrialization on the one hand, limited resources and developmental opportunities
on the other, led especially younger Turkish generations to abandon “traditional
values” such as humility, sharing and equality, respect to authority and family and
adopt more western values such as competition, achievement, and promotion of
self-interest (Aycan and Pasa, 2003).
This transition is more common for the richer and highly developed western regions
of Turkey – especially İstanbul and its surroundings – where most of the foreign
direct investments, biggest national firms, prestigious universities and highly
educated people of the nation are located. This region therefore constitutes also our
sample; and our findings and managerial implications on the human capital and
organizational climate can be generalized to other developing and even developed
nations accordingly.

4.3 Limitations and further research implications

In our cross-sectional empirical study, we have some limitations; the recovery of them
may open new avenues for further studies. For instance, our theoretical model was
proposing some direct and moderating effects among HC, OS and innovativeness. All
the variables in the model are measured through the perceptions of single respondents
representing their firms, at the same point in time. In later studies, the model may be
enlarged with some control variables, e.g. firm size and age, and other similar
organizational drivers of innovativeness, e.g. social and organizational capital; more
than one respondent may be contacted on the organizational level; some rational
indicators of innovativeness collected from other sources, for instance number of
officially approved patents or new product announcements, and also different aspects
of innovativeness, e.g. radical vs incremental or process vs product, may be used for
measuring the innovative performance; a longitudinal study to discover the long term Organizational
effects of climate on innovativeness may be conducted; mediating effects of OS factors support for
among each other, and moderating role of external environmental factors, e.g. market
dynamism, may be explored; and this extended model may be tested over a larger intrapreneurship
number of respondents covering a larger number of regions and industries.
Cross-cultural studies, comparing different national cultural settings, are still needed to
discover the effects of national and organizational cultural variances on the HC, OS, 749
and innovative performance relations.

4.4 Conclusion
We have endeavored to explore and assess internal organizational climate factors for
effective OS in Turkey’s most industrialized northern Marmara region. Our empirical
study reveals that an internal supportive environment providing especially
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management support and tolerance for risk taking to their intrapreneurs, and a high
quality HC will contribute to the innovative performance. Moreover, when HC is of low
quality, the OS is still influencing positively innovative performance. However, when
HC is of higher quality, the impact of OS on innovative performance is slowing down or
even disappearing – perhaps with innovative performance reaching a temporary
ceiling – since a higher HC has already increased innovative performance

1. Marmara region of Turkey has the biggest share (about 75 per cent) in the Turkish exports
during 2004-2006, while most of this is the share of Istanbul and its surroundings according
to the interview done with the Turkish Minister responsible from the international trade
Kursad Tuzmen (Turkey-Europe Foundation’s web page, available at: www.
2. For instance just before the breaking out of the recent global recession in 2008, the
international trade volume of Turkey was about 270 billion US dollars (Turkish Export
Promotion Center’s web page, available at: And the trade volume
between Turkey and EU countries was about 100 billion euro while Turkish exports to EU
countries were about 47 billion euro; it means that EU is the most important export
destination for Turkey which also became EU’s seventh biggest trade partner after China,
USA, Russia, Japan, Switzerland and Norway (Republic of Turkey, Prime Ministry
Secretariat General for EU Affairs’ web page, available at: and www.

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Further reading
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selected firms in The Netherlands and the USA”, Entrepreneurship & Regional
Development, Vol. 14, pp. 67-87.

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