The organizational climate for psychological safety: Associations with SMEs' innovation capabilities and innovation performance

Abstract This paper conceptualizes psychological safety as an organizational level phenomenon, and proposes that an organizational climate for psychological safety is positively related to SMEs' innovation performance and innovation capabilities. These hypotheses are tested on data from Norwegian SMEs. The results demonstrate that psychological safety is positively associated with SMEs' innovation performance, and positively related to product-, process-, service-, and business model innovation capabilities. Furthermore, an organizational climate for psychological safety is particularly important for enhancing a firm’s radical innovative capability, while environmental dynamism is found to moderate the effect of psychological safety. The results support the relevance of psychological safety at the firm level of analysis.