Performance‐based rewards and innovative behaviors

• Author: Xiaobei Li,Sut I. Wong,Ricardo Rodrigues,Rita Cunha,Karin Sanders,Helen Shipton,Anders Dysvik,Frances Jorgensen,Yvonne Van Rossenberg
• Published date: 01 November 2018
• Date: 01 November 2018
• DOI: http://doi.org/10.1002/hrm.21918

ORIGINAL ARTICLE

Performance-based rewards and innovative behaviors

Karin Sanders

1

| Frances Jorgensen

2†

| Helen Shipton

3†

| Yvonne Van Rossenberg

4

|

Rita Cunha

5

| Xiaobei Li

6

| Ricardo Rodrigues

7

| Sut I. Wong

8

| Anders Dysvik

9

1

School of Management, UNSW Business

School, Sydney, Australia

2

Faculty of Management, Royal Roads

University, Vancouver, Canada

3

Nottingham Business School, Nottingham

Trent University, Nottingham, UK

4

SHRM at the Institute for Management

Research, Nijmegen School of Management,

Radboud University, Nijmegen, the

Netherlands

5

Nova School of Business and Economics,

Universidade Nova de Lisboa, Lisbon, Portugal

6

Graduate School of China, Sungkyunkwan

University, Seoul, South Korea

7

King's College London, London, UK

8

Department of Communication and Culture,

BI Norwegian Business School, Oslo, Norway

9

Department of Leadership and Organizational

Behaviour, BI Norwegian Business School,

Oslo, Norway

Correspondence

Xiaobei Li, GSC Office, International Building,

25-2, Sungkyunkwan-Ro, Jongno-gu, Seoul

03063, South Korea.

Email: xiaobeili99@163.com

This study investigates the effects of two internal factors, performance-based rewards and

employee perceptions of human resource (HR) strength, and one external factor, country-level

uncertainty avoidance, on employee innovative behaviors. Drawing on situational strength the-

ory, we first hypothesize performance-based rewards will positively relate to innovative behav-

iors, and second, this relationship is stronger when employees understand the wider Human

Resource Management (HRM) system as intended by management, referred to as HR strength.

Finally, we assess the effect of uncertainty avoidance on the relationship between

performance-based rewards and innovative behaviors. Three-level data from 1,598 employees

and 186 managers in 29 organizations across 10 countries showed both employee perceptions

of HR strength and uncertainty avoidance of a country that differentially influence the relation-

ship between performance-based rewards and innovative behaviors. However, a significant rela-

tionship between performance-based rewards and innovative behaviors was not found. This

study offers novel insights into how organizations can use internal factors in a systematic man-

ner to promote innovative behaviors in their workplace, and highlights the limitations of sustain-

ing innovative behaviors in countries characterized by high levels of uncertainty avoidance.

KEYWORDS

HR strength, innovative behavior, performance-based rewards, uncertainty avoidance

1|INTRODUCTION

Employee innovative behaviors are recognized as a major contributor

to organizational innovation, leveraging the propensity of firms to sur-

vive in dynamic and challenging contexts (Shalley, Gilson, & Blum,

2009). Innovative behaviors manifest not only as a propensity to gen-

erate and implement new and creative ideas (De Jong & Den Hartog,

2010; Janssen, 2000; Scott & Bruce, 1994) but also to evaluate their

feasibility. Given the importance of innovative behavior for organiza-

tions, practitioners and scholars try to answer the question how to

enhance this way of working. However, we are still at an early stage

of understanding the role that human resource management (HRM)

(Sanders & Lin, 2015; Shipton, Sanders, Bednall, Lin, & Escriba-Carda,

2016) might play in fostering innovative behaviors, especially given

the multilevel dynamics that innovation entails (Gupta, Tesluk, & Tay-

lor, 2007; Shipton, Sparrow, Budhwar, & Brown, 2017). Hence,

research in this area is important and timely.

In this study, we draw on situational strength theory (Meyer,

Dalal, & Hermida, 2010; Mischel, 1968), which provides a powerful

theoretical lens for understanding what factors evoke innovative

behavior, to investigate relationships between financial and nonfinan-

cial performance-based rewards, employee perceptions of HR

strength, and the uncertainty avoidance of the country within which

an organization operates. Situational strength theory comprises four

underlying facets: consequences,clarity,constraints, and consistency

(Meyer et al., 2010). We argue financial and nonfinancial

performance-based rewards signal the consequences that will occur

where innovative behaviors are exhibited. In addition, we also con-

sider how employee perceptions of HR strength defined as the degree

to which employees understand HRM as intended by management

†

These authors contributed equally to this article.

DOI: 10.1002/hrm.21918

Hum Resour Manage. 2018;57:1455–1468. wileyonlinelibrary.com/journal/hrm © 2018 Wiley Periodicals, Inc. 1455