BUS603: Managing People

We hypothesized that organizational trust mediates the relationship between EOR and innovative behavior. However, there are some contextual variables that will strengthen the effect of organizational trust on innovative behavior. Woodman stated that researchers needed to consider the interactive effect between individual characteristics (e.g., cognitive style, ability, personality, internal motivation, etc.) and external environmental factors (e.g., organizational climate, task characteristics, etc.) on innovative behavior. Scholars often view organizational climate as a moderating construct that can influence the relationship between individual psychological states and innovative behavior. Organizational climate refers to a series of perceptions of the employee, and is relevant to organization's policies, practices and procedures of rewards, and also of support and expectations. It is a perceptive construct, which can allow organizations to obtain desirable outcomes through providing employees with meaningful environments. Recent literature focused on specific aspects of organizations (e.g., innovative climate) to investigate the impact of these climates on innovative behavior.

Innovative climate refers to employees' perception of organizational practice, procedures and actions in place to promote the generation and implementation of new and useful ideas. Employees' creative ideas will often be supported, and even rewarded, when organizational innovative climate is strong. Liu, Loi, and Lam's empirical study found that when employees trusted their organization, they would identify with the organization and, in turn, they would be willing to put more effort into their jobs. Therefore, organizations with strong innovative climate are more likely to emphasize generating and implementing new useful ideas. If employees trust in their organizations, they tend to think and act according to their perceptions of the expectations of their organizations. Namely, they will consider the requirements of organizational innovation, propose new and useful ideas, and put in more effort to implement these ideas. This means that employees will put more effort toward innovative activities required by organization with a strong innovative climate. They will also perceive the importance of innovation in organization and be more committed to engage in innovative activities. Therefore, we predict the following hypothesis:

H5: Innovative climate moderates the relationship between organizational trust and innovative behavior such that when the innovative climate is stronger, the relationship between organizational trust and innovative behavior is stronger; conversely, when the innovative climate is weaker, the relationship between organizational trust and innovation is weaker.