role of psychological empowerment, work

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Management of innovation: role of psychological empowerment, work engagement and turnover intention in the Indian context Jyotsna Bhatnagar

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Post Graduate Programme in HR, Human Resource Management Area, Management Development Institute, Sukhrali, Gurgaon, India Available online: 07 Feb 2012

To cite this article: Jyotsna Bhatnagar (2012): Management of innovation: role of psychological empowerment, work engagement and turnover intention in the Indian context, The International Journal of Human Resource Management, 23:5, 928-951 To link to this article: http://dx.doi.org/10.1080/09585192.2012.651313

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The International Journal of Human Resource Management, Vol. 23, No. 5, March 2012, 928–951

Management of innovation: role of psychological empowerment, work engagement and turnover intention in the Indian context Jyotsna Bhatnagar*

Downloaded by [Management Development Institute] at 04:48 16 February 2012

Post Graduate Programme in HR, Human Resource Management Area, Management Development Institute, Sukhrali, Gurgaon, India The current study, while examining the fields of psychological empowerment, work engagement and innovation, found that psychological empowerment affected work engagement and led to high innovation and lower turnover intention. Psychological empowerment was found to have strong predictive power on work engagement and innovation. The sample respondents were 291 managers from the Indian industrial sectors of pharmaceutical, heavy engineering, IT, electronics and aeronautics engineering. Results of structural equation model revealed work engagement as a strong mediator between psychological empowerment and innovation. The current study provides strong empirical relationship among constructs of psychological empowerment, work engagement, innovation and turnover intention. The theoretical implications to multi-level research are drawn in the study and practical implications are discussed. Keywords: management of innovation; mediating effect; multi-level research; psychological empowerment; structural equation model; work engagement

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Introduction

It has been noted that a significant need of innovation has emerged in the recession hit period (2008 –2009), in uncertain markets, where innovation is the only source of competitive advantage (Wolter and Veloso 2008; Scheck and Glader 2008; Dervitsiotis 2010; Di Minin, Frattini and Piccaluga 2010). Disruptive value innovation changed the paradigm (Immelt, Govindrajan and Trimble 2009) of doing business in India and in the global context. Chakravorti (2010, p. 81) has reiterated the point where he found that extreme adversity has cultivated innovation, for instance, 18 of the 30 firms on Dow Jones industrial index were set up during industrial downturns. Furthermore, the Kauffman index of entrepreneurial activity reflected that the rate of new business creation was higher during the deepest part of the 2009 recession, than it had been in previous years. Application for the Federation of Indian Chambers of Commerce and Industry (FICCI) and Department of Science & Technology (DST) – Lockheed Martin India Innovation growth programme has grown to 915 from 102 between 2007 and 2001 – a major jump in 5 years. Most of these innovations have reached the market (Jaiswal 2011). In India, value innovation (Kim and Mauborgne 2005) slowed down the surviving economy (Economic indicators, as per Ministry of Labour, Government of India, Labour Bureau, Chandigarh 2009). Indian chief executive officers (CEOs) are sensitive to labour cost issues, but they did not perceive the immediate or long-term competitiveness based on labour costs. Instead they perceived competitiveness and firm goals as moving up the value chain and

*Email: [email protected] ISSN 0958-5192 print/ISSN 1466-4399 online q 2012 Taylor & Francis http://dx.doi.org/10.1080/09585192.2012.651313 http://www.tandfonline.com

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doing so was based on innovation and superior execution (Cappelli, Singh, Singh and Useem 2010, p. 62).


Need and context of the study Yuan and Woodman (2010) state that in the field of innovation, research evidence regarding the intermediate psychological processes that would explain how and why different individual and contextual antecedents affect innovative behaviour remains inconclusive and underdeveloped (West and Farr 1989; Shalley, Zhou and Oldham 2004). Much work in the innovation field has focused on individual efforts towards innovation and its antecedents. More recently, innovation research has started to pay attention to socio-political processes (Dean 1987; Dyer and Page 1988; Wolfe 1994) that sheds light on how innovation is actually carried out in the real world rather than how it should be done. There is sparse literature linking how innovation implementation happens in the workplace and its linkage to workplace attitudes and psychological processes. The current study focuses on the contextual causes of innovation, an area where research is underdeveloped and inconclusive (Yuan and Woodman 2010). The contextual process of psychological empowerment, mediated by more engaged talent, may lead to innovation and the result in low turnover intention is the basic premise of the current study. While examining the research in the fields of empowerment and innovation, the seminal work of Spreitzer (1995) states that conceptually innovative behaviour is a consequence of psychological empowerment. More recently, research of Huijun and Wei (2010) found that psychological empowerment is related to service innovation. Yet the recent McKinsey (2007) global survey reported that finding the right people and aligning them for innovation is the greatest struggle for top management, and people in organizations are engaged to innovation but in varying degrees. Hence, work engagement may appear as a mediator between psychological empowerment and innovation. On the other hand, Macey and Schneider (2008) in their seminal paper explicated the likely conceptual linkage between psychological empowerment and engagement process. They state that using Spreitzer’s (1995) conceptualization leads to slipperiness between the two terms, and psychological empowerment may be an antecedent to work engagement (Macey and Schneider 2008, p. 10). This conceptual linkage needs to be empirically tested, which the current study proposes. More recently, the study of Zhang and Bartol (2010) linked the constructs of empowering leadership and employee creativity and investigated the influence of psychological empowerment, intrinsic motivation and creative process engagement. While, research study of Huijun and Wei (2010) on domestic service enterprise demonstrates that organization support and emotional labour, psychological empowerment, learning commitment and internal social capital are the key variables which significantly affect employee’s service orientation and service innovation. Furthermore, there are no studies to the knowledge of the researcher which weave the four constructs of psychological empowerment, work engagement, innovation and turnover intention into a single study. Most of the studies on innovation (exception being Cooke and Saini 2010) were investigated in the western context. Independent studies and studies using one of these constructs as mediator or moderator are present, in which the literature review will exemplify. The current study becomes important in the backdrop of recession and economic slowdown when controls are important for survival. It holds important implications for the psychological empowerment and innovation process, where psychological empowerment in controlled, slowed down economic context may be endangered. This may lead to an disengagement and a high turnover intention and this disengagement may not lead to an


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increase in innovation. Given this contradiction in context and process this study was designed, and data were collected in 2009, when the Indian economy was in a state of economic slowdown (Ministry of Labour, Government of India, Labour Bureau, Chandigarh 2009). India has been liberalizing its economic policies and its economy has done well and the World Bank forecasts that by 2020, India could become the world’s fourth largest economy (Budhwar and Varma 2010). This is not surprising, given that India offers several unique features that are very attractive to multinational organizations (MNCs) – a highly skilled and educated workforce, a rapidly growing middle class and an English-speaking populace (Varma, Pichler and Srinivas 2005). Furthermore, the study becomes significant for the managerial cadre of the Indian industry. Specially when a manager in India would like to shift to innovative, cost-effective, efficient and metricdriven system, he has to struggle with archaic rules within this business context and finds that the navigation within the system is still based on the traditional ways of doing things and on knowing the right people in the system (Bhatnagar and Som 2010) Yet, to date, research involving Indian organizational behaviour remains scarce (e.g. Budhwar and Bhatnagar 2009; cf. Mellahi, Budhwar and Baibing 2010), and this study becomes important as it links organizational behaviour variables of psychological empowerment and employee engagement to innovation and turnover intention. The research objectives of the paper are twofold. The first objective of the current study is to establish the empirical linkage of psychological empowerment, work engagement, innovation and turnover intention. The second objective of the study is to establish work engagement as a mediator between psychological empowerment and innovation and low turnover intention. Such an investigation will be of interest to the field of organizational behaviour and human resource management (HRM), as it would establish the relationship of these variables to work engagement, and these have not been taken up by earlier research. This is followed by the next section that focuses on the theoretical framework of these constructs and the research hypotheses, measures and methodology. The penultimate section deals with the results and discussion. The paper concludes with the practical and theoretical implications of the findings and significance of the study about Indian organizations. Theoretical framework and hypotheses Psychological empowerment and work engagement Empowerment literature is divided into three thrust areas, namely structural empowerment, which states empowerment in decision-making, motivational empowerment and leadership empowerment (Menon 2001, p. 155). While studies have examined the construct of psychological empowerment from a variety of research perspectives, these have mostly used a variation of Spreitzer’s (1992) work. These include the mediation roles of empowerment (Liden, Wayne and Sparrowe 2000), psychological empowerment and customer service (Peccei and Rosenthal 2001). Later, Morrell and Willkinson (2002) added that empowerment proves to be a more insidious mechanism for control and there may be control loss. Traditional control systems (supervisors) may be replaced by more sophisticated measuring systems or management may monitor team performance so that peer pressure acts as a controlling force. Mills and Ungson (2003) define control loss as the slippage that takes place in control when subordinates may not understand what they are supposed to do or may not choose to do what is expected of them. Robbins, Crino and Fredendall (2002) propose that psychological empowerment reflects the ongoing ebb and flow of peoples’ perceptions and attitudes about their work environment (both local



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and broader organization context) in relation to themselves (Bhatnagar 2007). Spreitzer (1992) related psychological empowerment to organizational variables such as socio-political support and participative climate. Later, Spreitzer, Kizilos and Nason (1997) related psychological empowerment to work satisfaction, stress and effectiveness. Laschinger, Finegan, Shamian and Wilk (2001) found evidence to suggest that psychological empowerment is an intervening variable between structural empowerment and employee effectiveness. Menon (2001) expounded through his research about employee-centred psychological processes of empowerment and presented an integrated approach towards empowerment in a North American context. Seibert, Silver and Randolph (2004) reported in their research that the empowerment climate was empirically distinct from psychological empowerment and positively related to manager ratings of work-unit performance. In India, Bhatnagar (2007) focused on the level of psychological empowerment of Indian managers, and found that it is at the moderate level and a predictor of organizational commitment. Researchers have linked psychological empowerment to a variety of outcomes, including organizational commitment (Spreitzer 1995; Kraimer, Seibert and Liden 1999) job satisfaction and job strain (Spreitzer et al. 1997; cf. Laschinger, Finegan, Shamian and Wilk 2004). Moving to employee engagement, Kahn (1990) found that workers were more engaged in situations that offered them more psychological meaningfulness and psychological safety, especially when they were more psychologically available (cf. Saks 2008). Research reveals that organizations that provide a workplace culture with the psychological conditions of meaningfulness (job enrichment, work-role fit), safety (supportive manager and co-workers) and availability (in terms of resources available) are more likely to have engaged employees (May, Gilson and Harter 2004). Furthermore, Avery, McKay and Wilson (2007) reported from their research, which examined 901 individuals employed in the UK, that satisfaction at work with one’s co-workers, related significantly to engagement. Moreover, perceived age similarity was associated with higher levels of engagement among older workers. In addition to job resources, studies have shown that personal resources or psychological capital (Psy Cap) can be important predictors of work engagement. Xanthopoulou, Bakker, Demerouti and Schaufeli (2007) examined the role of different versions of Psy Cap, the three personal resources (selfefficacy, organizational-based self-esteem and optimism) in predicting work engagement (cf. Bakker and Leiter 2010). In a longitudinal study of a representative sample of Finnish dentists, Hakanen, Bakker and Demerouti (2005) found that job resources including craftsmanship (the possibility to work with one’s hands), professional contacts (interacting with colleagues), and long-term and immediate results of work (e.g. seeing the good results of treatment) influenced future work engagement, which, in turn, predicted organizational commitment (cf. Bakker, Albrecht and Leiter 2010). Bakker and Xanthopoulou (2009) in their study of 62 dyads of employees examined the crossover effect of work engagement. Results confirmed the crossover of daily work engagement from an employee (the actor) to his or her colleague (the partner), but only on days when employees within a dyad interacted more frequently than usual. Furthermore, Attridge (2009) in their review of work engagement literature found that work engagement can be improved through adopting certain workplace behavioural health practices that address supervisory communication, job design, resource support, working conditions, corporate culture and leadership style. On the basis of theories about the motivational potential of job resources, Bakker and Bal (2010) found from a sample of 54 Dutch teachers that teachers’ weekly job resources are positively related to their weekly work engagement level, and that weekly work engagement level is predictive of


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weekly performance level. More recently, Dollard and Bakker (2010) constructed a model of workplace psychosocial safety climate (PSC) to explain the origins of job demands – resources (JD –R), worker psychological health and employee engagement in a sample of Australian education workers. PSC predicted change in individual psychological health problems (psychological distress and emotional exhaustion) through its relationship with individual job demands (work pressure and emotional demands). PSC moderated the relationship between emotional demands and emotional exhaustion. PSC predicted change in employee engagement through its relationship with skill discretion. It is evident from the above literature review that sparse research has utilized the lens of psychological empowerment to predict work engagement. Psychological empowerment has been treated within both 2D and 4D frameworks. Within the 2D framework, Mathieu et al. (2006, p. 10) stated that conceptual empowerment is the experience of authority and responsibility which might be considered as an antecedent or a condition of engagement (Macey and Schneider 2008). Spreitzer (1995) suggested that outcomes of empowerment include effort, persistence, initiative and behavioural engagement (Macey and Schneider 2008, p. 10). Based on the above literature review, it is posited thus: Hypothesis 1:

Psychological empowerment will increase work engagement and will be a predictor of work engagement.

Work engagement and innovation Work engagement is often defined as ‘ . . . a positive, fulfilling, work related state of mind that is characterized by vigor, dedication, and absorption’ (Schaufeli, Salanova, Gonza´lezRoma´ and Bakker 2002, p. 74; Schaufeli and Bakker 2010). They state, engagement as – high energy, resilience, a willingness to invest effort on the job, the ability to not be easily fatigued and persistence in the face of difficulties. Engagement is a positive experience in itself (Schaufeli et al. 2002) and has positive consequences for the organization. Dvir, Eden, Avolio and Shamir (2002, p. 737) defined active engagement in terms of ‘high levels of activity, initiative, and responsibility’. Another theoretical approach to engagement is the physical, psychological, social or organizational features of JD – R model (Demerouti, Bakker, Nachreiner and Schaufeli 2001). Furthermore, engaged employees do not work hard because of a strong and irresistible inner drive, but for them, working is fun (Gorgievski, Bakker and Schaufeli 2010). Previous studies have consistently shown that job resources such as social support from colleagues and supervisors, performance feedback, skill variety, autonomy and learning opportunities are positively associated with work engagement (Schaufeli and Salanova 2007; Bakker and Demerouti 2008). Mauno, Kinnunen and Ruokolainen (2007) used a 2-year, longitudinal design to investigate work engagement and its antecedents, and found job resources predicted work engagement. Recently, Bakker and Demerouti (2008) examined a literature review on work engagement, where qualitative and quantitative studies on work engagement were reviewed to uncover the manifestation of engagement, and revealed the antecedents and consequences of work engagement. Engaged workers are more creative, more productive and more willing to go the extra mile. Recent research has shown that engagement is related to bottom line outcomes such as job performance (Halbesleben and Wheeler 2008; Bakker and Bal 2010), client satisfaction (Salanova, Agut and Peiro 2005) and financial returns (Xanthopoulou, Bakker, Demerouti and Schaufeli 2009; cf. Bakker et al. 2010). Recently, Bakker, Albrecht and Leiter (2011b) concluded that engaged employees take care of their own work engagement by proactively shaping their work environment. As a



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result, engaged employees do not only make full use of the available job resources, but they also create their own resources to stay engaged. Bakker, Albrecht and Leiter (2011a) in their position paper on work engagement reflect on the state of play regarding work engagement. They found that a climate for engagement will influence individual and organizational outcomes. Climate for engagement refers to the shared perceptions of the work environment – it indicates whether the environment is challenging and resourceful, and consequently facilitates work engagement at the group and individual level. Schaufeli and Salanova (2011) state that nature of the task at hand is an important determinant of whether we experience work engagement or not. As is evident, from the preceding discussion, the research on innovation as an outcome/consequence of work engagement is sparse. Let us examine the literature on innovation to trace the linkage to psychological empowerment and work engagement. Dervitsiotis (2010) points out that in order to assess the innovation system’s capability we must identify the key system variables that determine a firm’s innovation effectiveness, the results from successful innovations, and the relationships that connect them. Achieving a high level of innovation capability is the only one necessary condition. This is also difficult to replicate and institutionalize and has been recognized as a constraint. Most of the literature on innovation over the past five decades has investigated the need to understand not only the factors necessary for it to occur, but how they influence the innovation process and when and where they are required and in what order. These are the areas where there is sparse literature (Wolfe 1994; Damanpour 2001; Damanpour and Schneider 2006). Hamel and Breen (2007) have re-classified innovation into operational innovation, product innovation, strategy innovation and management innovation, while Wolter and Veloso (2008) state that innovation is incremental (or component), modular, architectural and radical (cf. Henderson and Clark 1990). A broad body of research has generated growing interest in identifying how companies can improve their innovative activity and what internal and external factors have positive effects on such behaviour (Damanpour 1991; Galunic and Rodan 1998; Zhou 2006). More recently, Gopalakrishnan, Kessler and Scillitoe (2010) provide a broad overview of the organizational innovation literature to distil five fundamental themes: what is innovation, why is it important, where it comes from, who engages in it and how it is executed? A relatively under-researched form of innovation is management innovation and particularly the processes through which it occurs (Birkinshaw, Hamel and Mol 2008). Lopez-Cabrales, Pe´rez-lun˜o and Cabrera (2009, p. 486) state that ‘When a firm is described as innovative (innovation as an organizational capability), it generally means that it develops or frequently adopts products, services, programs, or innovative ideas (innovation as discrete elements) that need a series of stages (innovation as a process) to be sources of competitive advantage.’ Furthermore, based on a systematic review of literature published over the past 27 years, Crossan and Apaydin (2010) have synthesized various research perspectives into a comprehensive multi-dimensional framework of organizational innovation – linking leadership to innovation as a process, and to innovation as an outcome. The current study attempts to measure innovation from this perspective and analyses the innovative processes that the firm adopts, as an outcome, and how this process is affected by engaged employees who are psychologically empowered. In a recent field study with 230 employees of a government agency in the Netherlands, Pieterse, Knippenberg, Schippers and Stam (2010) demonstrate that transformational leadership is positively related to innovative behaviour only when psychological empowerment is high, whereas transactional leadership has a negative relationship with innovative behaviour, but only under these conditions. They state that follower’s psychological empowerment


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moderates the relationship of transformational and transactional leadership with follower’s innovative behaviour. Yuan and Woodman (2010, p. 323) state that a variety of factors have been studied as important antecedents to individuals’ innovation, such as organization culture and climate (e.g. Scott and Bruce 1994) relationship with their supervisors (e.g. Janssen and Van Yperen 2004), job characteristics (e.g. Oldham and Cummings 1996), social/group context (e.g. Munton and West 1995) and individual differences (e.g. Bunce and West 1995). Furthermore, important predictors for innovative behaviour at work were found to be psychological empowerment but only as a set of cognitions essential for intrinsic motivation (Spreitzer 1995); the determination to succeed (Amabile 1988; Howell and Higgins 1990); an orientation towards learning, self-efficacy and creative self-efficacy (Axtell, Holman, Unsworth, Wall and Waterson 2000; Tierney and Farmer 2002) as well as personal initiative (Frese and Zapf 1994). Additionally, extrinsic motivation has been shown to have a positive relationship with creativity although on a smaller scope (Harrison, Neff, Schwall and Zhao 2006; cf. Anderson and Gasteiger 2007). As is evident from the above literature review that there are sparse and almost no studies linking firm-level innovation and work engagement (for exception, see the work of Huhtala and Parzefall 2007), where employee engagement was conceptually linked with innovation as a consequence. They developed a conceptual framework to advance theoretical understanding of the relationship between job-related demands and resources, employee well-being and innovativeness. In conditions characterized by too high levels of demands, employees may suffer from burnout. When job resources are high, they are likely to feel engaged with their work. Burnout in turn can be seen as an inhibitor of innovativeness, and work engagement as an antecedent to innovativeness, mediating the effects of resources and demands at work on innovativeness, hence creating a basis for thick value innovation (Haque 2009) which needs internal and external engagement of a higher order than many of us have in our businesses today as we exit the recession (Haque 2009). Based on this literature, it is posited: Hypothesis 2:

Work engagement will increase innovativeness and innovation will be a consequence of work engagement.

Turnover intention Turnover continues to be a topic of interest among management researchers. Shaw, Delery, Jenkins and Gupta (1998) report over 1500 studies on the subject. There is no indication that there has been a decrease in the study of turnover in the past 24 years (Trevor 2001). Highlighting turnover intention as a key element in the modelling of employee turnover behaviour, Egan, Yang and Bartlett (2004) state that scholars have determined that behavioural intentions are the single best predictor of turnover. Overall, turnover intention has emerged as the strongest precursor to turnover. Van Schalkwyk, Du Toit, Bothma and Rothmann (2010) in their study state that intention to leave is related to actual turnover (see Firth, Mellor, Moore and Loquet 2004; McCarthy, Tyrrell and Lehane 2007). Bakker, Demerouti and Schaufeli (2003) examined the predictive validity of the JD –R model for self-reported absenteeism and turnover intentions in their study on 477 employees working in the call centre of a Dutch telecom company. Energy-driven process and job demands (i.e. work pressure, computer problems, emotional demands and changes in tasks) were the most important predictors of health problems, which, in turn, were related to sickness absence (short duration and long-term absence). In the second



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motivation-driven process, job resources (i.e. social support, supervisory coaching, and performance feedback and time control) were the only predictors of involvement, which, in turn, was related to turnover intentions. Recent study suggested that perceptions of a strong organizational identity, organizational identification and organizational commitment may influence employees’ turnover intention in unique ways, depending on their hierarchical level within the organization (Cole and Bruch 2006). A number of research studies have shown work engagement to be positively associated with intent to remain with one’s organization (e.g. Harter, Schmidt and Hayes 2002; Schaufeli and Bakker 2004). De Lange, De Witte and Notelaers (2008) in a two-wave (16-month lag) Belgian panel study tested hypotheses on the relations between job resources, work engagement and actual turnover across time. They found that low work engagement, low job autonomy and low departmental resources predicted actual transfer to another company. Furthermore, for employees who stay, termed as stayers, positive effects of job autonomy on work engagement, and also reversed causal effects, were reported. More recently, Van Schalkwyk et al. (2010) explored the relationship among job insecurity, leadership empowerment behaviour, employee engagement and intention to leave in a petrochemical laboratory in South Africa. Based on the above review of literature, it is posited that: Hypothesis 3:

High work engagement will result in lower turnover intention.

Mediating role of work engagement Employee and work engagement have been found to have mediating effects (Schaufeli and Bakker 2004; Richardsen, Bruke and Martinussen 2006; Saks 2006; Salanova and Schaufeli 2008; Balducci, Schaufeli and Fraccaroli 2010; Aggarwal, Thakore and Bhargava 2010; Biswas and Bhatnagar 2011; Chughtai and Buckley 2011). Schaufeli and Bakker (2004) in their research study found engagement to mediate the relationship between job resources and turnover intentions. In a study by Saks (2006), job and organizational engagement fully mediated the relationships between its antecedents (such as job characteristics, perceived supervisory support, rewards and recognition, procedural justice and distributive justice) and organizational commitment, intention to quit and organizational citizenship behaviour (OCB) individual and partially mediated the relationship with other outcomes (job satisfaction and OCB organization). Richardsen et al. (2006) found that work engagement partially mediated the effects of individual characteristics, JD – R on organizational commitment and self-efficacy. Salanova and Schaufeli (2008) found that work engagement fully mediated the relationship between job resources (variety, control and feedback) and proactive behaviour. In a recent research, Balducci et al. (2010) extended the JD – R model by including both counterproductive work behaviour as a behavioural stress reaction and job-related effect as a mediator in both processes. In a sample of public-sector employees, they found job demands (workload, role conflict and interpersonal demands) were associated with abuse/hostility, whereas job resources (decision authority, social support and promotion prospects) were associated with work engagement. Furthermore, job-related negative effect mediated the relationship between job demands and abuse/hostility, whereas job-related positive effect mediated the relationship between job resources and work engagement. Aggarwal et al. 2010 examined that social exchange relationships have an effect on innovative work behaviour. They report that the direct relationship between psychological contract breach and innovativeness was not mediated by work engagement. The study found that work

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J. Bhatnagar The path model associating the latent constructs Innovation H2 Psychological empowerment

H1

Work engagement H3


H4

Lower turnover intention

Figure 1. The path model associating the latent constructs.

engagement fully mediated leader member exchange and partially mediated the effects of perceived organizational support on innovative behaviour at work. Chughtai and Buckley (2011) highlighted the role of organizational identification and work engagement in explaining the linkage between trust in the principal and the three outcome variables, namely in-role job performance, OCB and learning goal orientation. They found that organizational identification and work engagement fully mediated the relationship between trust and in-role job performance, but only partially mediated the effects of trust on OCB and learning goal orientation. More recently, Biswas and Bhatnagar (2011) explored a latent variable model in an Indian context, in which person –organization (P– O) fit and perceived organizational support emerged as antecedents of organizational commitment and job satisfaction. Employee engagement emerged as a strong mediator between these variables. Examining the varied results, reported by literature on work engagement, it is posited thus: Hypothesis 4:

Work engagement will mediate the relationship between psychological empowerment, innovation and turnover intention and will lead to decrease in turnover intention.

For the purpose of assessing the mediating role of work engagement between psychological empowerment as the antecedent and innovation and lower turnover intention as the consequences, we propose to test the path model presented in Figure 1. Furthermore, we put forward Hypothesis 4 (presented above) which we conjecture as representative of the entire path model. Research design To carry out the current study, survey research design has been used. In the first step, five organizations that were in R&D domain were chosen from India. These organizations represented sectors of pharmaceutical, heavy engineering, IT, electronics and aeronautics engineering. In the second step, out of these five industrial organizations, 350 managers were randomly selected to fill in the questionnaires. About 291 complete questionnaires were returned to the researcher. The remaining 59 questionnaires were either incomplete or the managers refused to oblige. The response rate to the survey was 83.14%. The scope of the study has been limited to Indian managers. Respondents reported an average age of 35.9 years and the sample consisted of respondents from a fairly well-distributed age group varying between 21 and 57 years. The average tenure was 4.2 years [standard deviation (SD) ¼ 1.6; for demographic details of the sample refer Table 1].


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Table 1. Demographic details of the sample.


% of respondents Age groups , 30 31 – 9 40 – 9 50 – 9 60 and above Gender Male Female Education Below graduation Graduation or equivalent

30.16 38.75 17.82 12.18 1.09 79.7 20.3 1.7 52.9

Measures For measuring psychological empowerment, the psychological empowerment scale (Spreitzer 1995) was administered. This is a 12-item scale, divided into four components of meaning, competence, self-determination and impact, and is based on Likert’s six-point scale, where 1 ¼ strongly disagree and 6 ¼ strongly agree. Cronbach a for the entire scale was 0.81. For measuring work engagement, the 17-item scale (Schaufeli et al. 2002) was administered, using a seven-point Likert scale, where 1 ¼ ‘never’ and 7 ¼ ‘always’. The work engagement scale measures the six items of vigour (e.g. ‘At my work, I feel bursting with energy’), five items of dedication (e.g. ‘To me, my job is challenging’) and six items of absorption (e.g. ‘I feel happy when I am working intensely’). The three dimensions of engagement were combined additively to create an overall scale of engagement. High scores on all three dimensions indicate high engagement. (Cronbach a of this scale was 0.93.) Measurement of innovations was done by administering a 10-item scale (Medina and Ruffin 2009) which was based on a seven-point Likert scale. It consisted of sub-variables: analysis of innovativeness (Hurley and Hult 1998), analysis of innovation as the quest for new products or improvements in management processes (Han, Kim and Srivastava 1998; Kumar, Scheer and Kotler 2000), analysis of effective implementation of innovations (Va´zquez, Santos and Alvarez 2001) or their application in project management and analysis of the varying degree of novelty of the innovation within the firm and within the market (Sandvik and Sandvik 2003). Cronbach a for the innovative scale was 0.77. The turnover intention scale was a three-item scale (O’Driscoll Michael and Beehr Terry 1994) based on a seven-point Likert scale (Cronbach a of 0.91). Refer to Table 2 for univariate and bivariate analyses of the variables. Results and discussion Descriptive statistics and correlation Means, SDs, internal reliabilities and inter-correlations among the variables are reported in Table 2. All measures reflected high internal reliabilities, with a ranging from 0.70 to 0.93. Interestingly, for the mean value of the mediating variable, work engagement is the highest (5.27), followed by the mean value of psychological empowerment (4.85) which also has the lowest SD (0.58). Mean value (4.27) and SD (0.74) for innovation was also in the expected direction. Furthermore, correlation coefficients range from 2 0.09 to 0.81 and were significant at 0.01 level. The pattern of correlation was consistent with the

4.85 5.27 4.27 3.40 35.02 1.29 4.21

1. Psychological empowerment 2. Work engagement 3. Innovation 4. Turnover intention 5. Age 6. Gender 7. Experience

0.58 0.85 0.74 1.68 8.91 0.40 1.67

SD

1 (0.81) 0.55** 0.37** 20.20** 0.38** 0.08 0.29**

Notes. N ¼ 291. a reliabilities are reported on the diagonal. **p # 0.01.

Mean

Variables

Table 2. Means, SDs, a reliabilities and inter-correlations among variables.

(0.93) 0.28** 20.09** 0.81** 0.07 20.09**

2

(0.77) 0.15** 0.12** 0.02 0.15**

3

(0.91) 20.43** 0.23** 20.32**

4


0.38** 0.68**

5

2 0.27**

6

7

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hypothesized relationships. Additionally, work engagement had statistically significant positive relationship with innovation (0.28, p # 0.01) and negative relationship with turnover intention (2 0.09, p # 0.01), respectively. Interestingly, the correlation coefficient between psychological empowerment and turnover intention was also in the expected direction (2 0.20, p # 0.01). The standardized regression estimates (represented by b) presented in Table 3 permitted the examination of the direct association between the constructs. It may be noted that the level of significance is based on the critical ratio (CR) of the regression estimate (Byrne 2001). Thus, when CR values are $ 2.58, it indicates a 99% level of significance. However, when CR values are $ 1.96 but , 2.58, it indicates a 95% level of significance. Accordingly, psychological empowerment regressed significantly and positively on work engagement (b ¼ 0.65, CR ¼ 7.90, p # 0.01). Psychological empowerment emerged as a powerful predictor of work engagement. Further work engagement regressed significantly and positively on innovation (b ¼ 0.28, CR ¼ 5.03, p # 0.01). This is consistent with Hypotheses 1 and 2. Furthermore, work engagement (b ¼ 2 0.09, CR ¼ 1.96, p # 0.05) was associated significantly and negatively to turnover intention. Hypothesis 3 was accepted. Although the objective of the study was to accept or reject a latent variable model and as such regression analysis along with structural equation modelling (SEM) might appear redundant, yet it was felt necessary to include a mention of the regression results since it clarified the marginal association between the constructs (Biswas and Bhatnagar 2011). To assess the degree to which psychological empowerment and work engagement were related to innovation and turnover intention and whether work engagement mediated this relationship, SEM (Bentler 2005) with analysis of moment structures (AMOS) (version 17.0; Arbuckle and Wothke 1999) was used to test LVM. The benefit of SEM is that it offers a concurrent test of an entire system of variables in a hypothesized model and thus facilitates assessment of the extent to which the model is consistent with the data (Byrne 1994). A mediator is instrumental in accounting for the influence of the independent variable on the dependent variable (Cohen, Cohen, West and Aiken 2003). To test the mediation of employee engagement, the study followed the suggestion of Wood, Goodman, Beckmann and Cook (2008) and applied SEM procedures using the maximum likelihood estimation algorithm. However, conceptually the procedure of testing mediation using SEM is similar to Baron and Kenny’s (1986) approach, in that two competing models are considered, namely Models 1 and 2. Model 1 includes the potential mediator, that is, employee engagement in this case, whereas Model 2 constrains the potential mediator and examines the direct relation between the predictor and the criterion variables. As per literature (Byrne 2001), values of 1.00 # normed x 2 # 3.00 and goodness-of-fit index (GFI) $ 0.90 are considered to be representative of a well-fitting model. In the current study, the x2 value was 2.02. In addition, the study also reports the comparative fix index (CFI; Bentler 1990) Jo¨reskog– So¨rbom’s GFI, the root mean square error of approximation (RMSEA; Steiger 1990) to gauge model fit. These indices indicate the extent to which a research model provides an improved overall fit relative to a null model or independence model in which the correlations among observed variables are assumed to be zero. In the current study, the CFI is 0.987, while GFI is 0.98. The CFI and the GFI have been considered the best approximations of the population value for a single model, with values $ 0.90 considered indicative of good fit (Medsker, Williams and Holahan 1994). The RMSEA is a measure of the average standardized residual per degree of freedom; a favourable value is # 0.08 and values # 0.10 are considered ‘fair’ (Browne and Cudeck

1.330 0.246 20.200

b 0.168 0.246 0.112

Standard error

Unstandardized coefficients

0.652 0.281 2 0.099

Standardized coefficients b 7.90 5.03 2 1.96

CR

0.000 0.000 0.000

Probability

Hypothesis 1 accepted Hypothesis 2 accepted Hypothesis 3 accepted

Remarks

Notes: N ¼ 291; the CR is the commonly recommended basis for testing statistical significance of SEM components, where CR values beyond ^ 2.58 establish significance at p # 0.01 level.

Psychological empowerment ! work engagement Work engagement ! innovation Work engagement ! lower turnover intention

Table 3. Regression estimates.


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1989). The RMSEA in the current study is 0.06. Hu and Bentler (1999) suggest that a value close to 0.95 is reflective of good fit for Tucker –Lewis index (TLI) and CFI. Refer to Table 4 for the model fit values. The values of the competing model without the mediator reflect poor fit, thereby proving Hypothesis 4. While the results of the first three hypotheses are important and add to the literature, the key contribution of this study is to psychological empowerment, work engagement and the innovation literatures, by examining and confirming work engagement as a mediating mechanism through which psychological empowerment affects innovation. Judge, Fryxell and Dooley (1997) describe successful innovation as chaos within guidelines; in other words, top management prescribes a set of strategic goals, but allows employees great freedom within the context of the goals. Management should also believe in employees and encourage them to be more innovative by allowing them more freedom, in other words empowering them instead of controlling them (Judge et al. 1997, p. 76; cf. Tuan and Venkatesh 2010, p. 148). Managers experiencing higher level of psychological empowerment are better able to respond to the innovative processes within their firms. The study contributes to the contextual processes needed for the innovative processes of the firm, and supports the earlier work of Janssen and Van Yperen 2004 which found that intrinsic psychological processes and attitudes affect the innovation process within a firm. The findings of the current study support the research of Dobni (2010) and Birkinshaw, Bessant and Delbridge (2007). Innovative organizations understand that it is the people who, through the way they think and act, allow the organization to be innovative (Dobni 2010). Employees in these organizations have essentially created networks and competencies that support innovative behaviours (Birkinshaw et al. 2007). Furthermore, the findings of the current study support the research of King, De Chermont, West, Dawson and Hebl (2007), which extended the JD–R model, and found that organizational climate for innovation alleviated the negative effects of work demands on organizational performance in healthcare organizations. The findings are congruent with those of past research studies (Bakker et al. 2011b, pp. 21– 22), which argue that there is a need to pay more attention to the broader contextual organizational factors that impact engagement. They also argue that as we progress our understanding of the importance of work engagement in organizational contexts, the study of engagement needs to proceed from well-established psychological theories. Results of the current study support psychological empowerment and work engagement linkage and prove the psychological empowerment to be a strong predictor of work engagement. The current study further supports the findings reported by a recent annual Work Trends report 2010, which sampled 29,000 employees across the world on work engagement and found India to be ranking number one (71%) in engagement as opposed to Japan (38%) which was the lowest. ‘The findings show that companies with highest level of employee engagement and best leadership will recover from the economic downturn faster and emerge stronger’ (Wiley 2010). The results support the study of Gregory, Albritton and Osmonbekov (2010), which suggests that psychologically empowered workers feel their work contributions are meaningful and feel powerful in their ability to shape the organization. The current results demonstrate that individuals who feel psychologically empowered are more engaged and they are more likely to relate to innovation processes that their firms’ follow for institutionalizing innovation at the work place. These individuals would reflect a lower turnover intention and are likely to be loyal to the organization. This is a contribution of the current study. Furthermore, the results support the findings of empirical research on work engagement, which reports that high levels of engagement lead to enhanced organizational commitment, increased job satisfaction, lower absenteeism and turnover rates, improved

fit indices

0.986 0.847

GFI

0.945 0.708

AGFI 0.247 0.444

PGFI

Absolute fit indices

0.987 0.675

CFI 0.976 0.661

NFI

IFI 0.988 0.678

CFIs

0.962 0.557

TLI 56.106 175.252

AIC

57.298 175.746

Browne– Cudeck criteria

2.02 14.114

Normed x2

Parsimony in assessment of LVM

0.06 0.21

0.193

RMSEA ECVI

Notes: GFI, goodness-of-fit index; AGFI, adjusted goodness-of-fit index; PGFI, Parsimony goodness-of-fit index; CFIs, comparative fit indices; NFI, normed fit index; RFI, relative fit index; IFI, incremental fit index; TLI, Tucker–Lewis index; RMSEA, root mean square error of approximation; AIC, Akaike information criteria; ECVI, expected cross-validation index.

Proposed LVM 1 LVM 2 without mediator

LVM

Table 4. Fit indices.


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health and well-being, more extra role behaviours, higher performance and a greater exhibition of personal initiative, proactive behaviour and learning motivation (Schaufeli and Salanova 2007; Salanova, Schaufeli, Xanthopoulou and Bakker 2010). Conclusion, theoretical and practical implications This study is an important contributor to the field of empowerment, engagement and innovation literature. It is one of the few studies where all the four variables of psychological empowerment, work engagement, innovation and turnover intention are investigated in a single study. Furthermore, the study investigated cross-level research, where it was found that individual managers expressed perceptions about the innovative capability of the firm through firm’s processes, product and competitor behaviour. Klein et al. (1994, p. 98) argue that ‘ . . . levels issues pervade organizational theory and research. No construct is level free. Every construct is tied to one or more organizational levels or entities, i.e. individuals, dyads, groups, organizations, industries, markets and so on. To examine organizational phenomena is thus to encounter levels issues. It is clear that in the organizational sciences ‘micro phenomena are embedded in macro contexts and that macro phenomena often emerge through the interaction and dynamics of lower-level elements’ (Kozlowski and Klein 2000, p. 7). This is supported by the work of Rousseau (1985, p. 2). A multiple-level model of empowerment that specifies effects on important work-unit and individual outcomes was developed and tested by Seibert et al. (2004). They used macro-level variable of empowering climate to predict individual-level variable and contributed to empowerment theory building research. The current study though looks at individual level of analysis, but at the innovation level, measures individual managers’ perception of their firms’ innovative processes and product innovation. Cross-level research is contribution of the study, which is an area where work is required as pointed out by Schnake and Dumler (2003) and Klein et al. (1994, p. 198). This study also fills in the gap of innovation research as pointed out by Anderson, De Dreu and Nijstad (2004) that innovation must be studied as an independent variable, across cultures, within a multi-level framework, by using meta-analysis and triangulation. The current study looks at innovation within a multi-level framework, and fills the gap between macro and micro approaches to human capital and innovation. It supports what Kozlowski and Klein (2000, p. 55) describe ‘a phenomenon (as) emergent when it originates in the cognition, affect and behaviours, or other characteristics of individuals, is amplified by their interactions, and manifests as a higher level collective phenomenon’ (cf. Ployhart and Moliterno 2011, p. 128). The level of theory represents the level (e.g. individual, firm, business unit, etc.) at which a construct or process is expected to operate or exist, whereas the level of measurement represents the level at which the construct or process is measured (Kozlowski and Klein 2000). The current study supports the theoretical position of multi-level theory and the human capital model. The latter model provides new insights into how strategically valuable human capital resources have their origins in the psychological attributes of individuals and are transformed through unit-level processes (Ployhart and Moliterno 2011). Practical implications for building in psychological empowerment and engagement through work processes and job resources hold important implications for organizational job design stream. Building in these processes to release innovative behaviour of the firm is an important insight for managers and the firms which are involved in institutionalizing innovation at the work place, and where all types of innovation is an important work activity. There are important implications for managing the innovative capability of the


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firm along with psychological attitudes and processes in the work place, which support innovative capability of the firm. Managers must enhance human resource (HR) processes and culture in the workplace which enhances psychological empowerment and leads to higher work engagement. Thus organizations in innovation and innovative activity have to build in psychological empowerment in their processes and release engagement in their work climate. Similarly, managers in innovative firms can measure the psychological empowerment and work engagement processes and innovation capability and find the gaps if any and address these gaps in their work systems and processes. The findings support the research of Dobni (2010), who states that managers can attempt to adjust or change their innovation culture to suit the context if indeed there is a perceived gap between actual and desired orientations. The research result of the negative relationship between work engagement and turnover intention is in consonance with the research findings of studies in the engagement and turnover intention literature. Yet this finding has an important implication for HR practitioners. HR interventions are needed to increase employee engagement in the workplace and also to control turnover intention. This is in consonance with what earlier researchers had reiterated in their research. Huselid (1995) demonstrated that HRM practices affect labour turnover, productivity and organizational performance, and there is evidence that the volume of human resource development (HRD) is negatively related to voluntary labour turnover (Lynch and Black 1998; Bartlett, Lawler, Bae, Chen and Wan 2001). The findings of the study draw important implications for retention literature – the managers who are psychologically empowered and engaged would perceive the innovative capability of the firm and appreciate innovative processes of the firm and would be likely to remain loyal to the organization, exhibiting lower turnover intention.

Limitation of the study and area for future research This research has some limitations. Due to scope of the study, the researcher could not investigate related variables of trust, leader member exchange, P– O fit and perceived organizational support as antecedents to innovative behaviour. Future studies may conduct follow-up studies on specific industries that are known for innovation (i.e. high technology and science, biotechnology and pharmaceutical industries; Dobni 2010). Furthermore, there may be more moderators and mediators amongst these variables which could emerge in the psychological empowerment, work engagement and innovation relationship, which future studies may examine. Firm performance and firm turnover may be important consequences of innovative capability of the firm, which future studies may investigate.

Acknowledgements The author thanks the anonymous reviewers of the earlier manuscript of this research paper. The comments and suggestions improved the quality of presentation of the manuscript.

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