Individual and contextual determinants of innovation performance: A micro-foundations perspective

Abstract: Concurrent increase in the degree of competition and access to information makes it both a challenge and necessity for firms to develop their ability to sense, seize and exploit knowledge-based advantages. Since absorptive capacity reflects an organization's ability to extract innovative ideas from its environment, it plays a critical role in fostering intrapreneurship and innovative performance within existing firms. In this paper, we adopt micro-foundations perspective and study how goal orientations of employees affect their individual-level absorptive capacity, which would in turn shape collective innovative performance. Furthermore, we examine conditions under which individuals' absorptive capacities can efficiently aggregate and leads to increased collective innovation performance. We tested our theoretical model using an original dataset collected from 648 knowledge workers from 126 functional areas. Our analysis show that individuals' learning and prove orientation are important predictors of their absorptive capacity, and that individuals' aggregate absorptive capacity would lead to positive innovation outcomes especially when their activities are highly coordinated.