Learning process analysis of absorptive capacity on organisational innovation: the influence of leadership styles

Abstract

The research in this thesis investigates the learning processes of absorptive capacity (AC) as an element within organisation innovation. An analysis of leadership ‘styles’ is undertaken and factors for effective innovation adoption are considered. It is apparent that AC has been well researched in recent years but there is evidence that little attention has been given into important influences such as leadership. Consequently, AC is determined to involve managerial learning through three processes. These include: (1) exploratory learning as an ability to value and acquire external knowledge, (2) transformative learning to assimilate this knowledge, and (3) exploitative learning to use knowledge for innovation. However, there is little known about interventions of AC learning towards innovation and the effects of top and middle managers’ leadership styles on these processes. Therefore, the research initially attempts to investigate the relationship between AC, innovation, and leadership styles with a view to exploring valuable theoretical insights into the learning processes involved. A conceptual model is formulated which suggests a relationship between the learning processes of AC with different stages of innovation adoption. In this respect, the role of managers is investigated through attention to ‘transformational’ and ‘transactional’ leadership styles where the former changes employees’ values for achieving common goals and the latter encourages exiting practices. The methodology adopted involved a qualitative strategy with data collected through three substantive case studies from research sites in Iran. In total 31 Semi-structured interviews were conducted with respondents to explore the learning processes of AC and leadership styles on innovation. Secondary documents and non-participant observations provided further insights by triangulating the data. Data was analysed in two stages (i) a description of each case was reported (ii) a thematic analysis was used in order to compare the case companies collectively. The findings supported the effects of the learning processes of AC on innovation adoption. It was also found that the leadership behaviours of top and middle managers change from transformational to transactional leadership styles during the exploitative learning process. The influence of top managers’ knowledge, middle managers’ intention, and trust in middle managers also emerged as important constructs in the learning processes. The research contributed to the learning processes of AC and the influence of managerial leadership styles by adding new insights to organisational theory. The results will also be of value to practitioners by providing prescriptive analysis when using external knowledge effectively for adopting innovation. Keywords: Absorptive capacity, learning processes, innovation, and leadership styles