Empirical research on the dimensions division of organizational innovation in the manufacturing enterprise

Introduction

In 2020, the new coronavirus has rapidly erupted globally. China was the first country to achieve basic control of the pandemic. It is foreseeable that Chinese manufacturing companies will put forward urgent needs for remote collaborative task management, project management, workflow management and other software. In order to adapt to the environment of information technology and big data, manufacturing companies must carry out organizational innovation.

In the scientific literature, the concept of innovation originated from the Austrian economist Schumpeter (1933). In his view, innovation not only refers to scientific and technological inventions, but more importantly refers to the introduction of this scientific and technological invention into enterprises to form new production competence, thereby obtaining potential profits and promoting social and economic development [1] (Ruttan, 1961). Limited to historical conditions, Schumpeter's main concern is innovation related to technology, and organizational innovation is not the core content of his innovation theory [2] (Xiaoyan Huang, 2022).

Later, Damanpour defined that organizational innovation as the organization adopts a new idea or new behaviour [3] (Damanpour, 1991). Pongpisutsopa, et al. believed that organizational innovation is the introduction of something new to an organization such as an idea, product, method, service, process, technology, or strategy [4] (Pongpisutsopa, Thammaboosadee, Chuckpaiwong, 2020). Yang Bin and Chen Shijun proposed that organizational innovation is the process of adjusting and changing the organizational structure and management methods adapt to changes in the external environment and internal conditions of the organization, thereby improving the effectiveness of organizational activities [5] (Yang Bin, Chen Shijun, 2007). Zhang Meili pointed that organizational innovation includes elements such as corporate structure, system, strategy and culture, and most companies fail to coordinate and match organizational innovation and technological innovation [6] (Zhang Meili, 2015).

A systematic analysis of the methods by which different authors define the concept of "organizational innovation" reveals that except for a few scholars who believe that organizational innovation is equivalent to innovation in organizational structure, most scholars define organizational process innovation and organizational cultural innovation as the content of organizational innovation.

Compared with Chinese and foreign research, this paper believes that the existing research on organizational innovation has the following defects and deficiencies:

(1) Due to the lack of a unified definition and classification of organizational innovation. At present, enterprises still lack a more systematic theoretical system of organizational innovation. In particular, the following fundamental question was not answered: What are the dimensions for organizational innovation in manufacturing companies?

(2) Lack of a scale for organizational innovation of manufacturing enterprises. According to the literature, there are some scales of organizational structure and organizational culture, but scales of organizational cultural innovation, information technology innovation, process innovation, and organizational structural innovation are extremely lacking.

(3) Some scholars list information technology innovation as one of the content of organizational innovation. However, there is a lack of research on organizational innovation from the perspective of innovative applications of big data. The information technology innovation proposed in this research includes innovative applications of big data.

This paper firstly sorts out organizational innovation theory and on this basis, proposes the main dimensions of organizational innovation, and then conducts an empirical study on the division of organizational innovation dimensions in manufacturing enterprises.

Dimensions division of organizational innovation

1. Organizational cultural innovation is one of the dimensions of organizational innovation.

Xu Qingrui believes that cultural innovation is an innovative value, which not only enables enterprises to tolerate failure in development, but also helps encourage employees to dare to carry out innovative behaviours [7] (Xu Qingrui, Jia Fuhui, Xie Zhangshu, Zheng Gang, 2004). Once an enterprise has established an innovative culture, it will also guide the organization to carry out structural and institutional innovation. When Li Fei studied cultural innovation, they found that it cannot only stimulate the internal innovative thoughts and behaviours of employees, but also help enterprises to carry out a series of other innovative activities [8] (Li Fei, 2012).

Sheng Honghua believes that cultural innovation is an innovative spirit and values of the enterprise itself, which is gradually reflected and formed in the management activities of the enterprise [9] (Sheng Honghua, 2019). Wang Junpeng and Jing Rui believe that an innovative culture is an ideology and business philosophy that is gradually formed in the process of an organization formulating an innovation strategy that is in line with its own development according to its goals. It permeates all aspects of corporate management and operation [10] (Wang Junpeng, Jing Rui, 2020).

Although the abovementioned scholars have different understandings of cultural innovation, they all reflect the common characteristics of cultural innovation. On the one hand, it can stimulate employees' innovative thinking and innovative activities, and enhance their cohesion; on the other hand, an organization with an innovative cultural background can guide employees within the organization to have common values and goals, which will also contribute to the development of the organization.

In conclusion, this research believes that organizational cultural innovation is the recombination of new business philosophy, values, corporate spirit and other elements to maintain dynamic coordination between organizational strategy, process, structure and technology. Organizational cultural innovation is one of the dimensions of organizational innovation.

2. Organizational structural innovation is one of the dimensions of organizational innovation.

The structure of the organization has the characteristics of formality, complexity, and centralization. Structural innovation mainly refers to the optimization and improvement of the existing power and responsibility distribution structure and communication methods within the organization. This includes, first, the form of organizational structure can be changed, such as the degree of decentralization and management scope of the organization. The general forms now include linear function type, division system, matrix system structure and virtual system structure, etc. Second, the organization can redesign part or all of the positions and working procedures. Third, by modifying the job description, enrich the content of some positions. The fourth is to reform the employee's remuneration system, performance evaluation system and use some flexible work systems.

Specifically, we can divide the content of structural innovation into 8 aspects:

(1) Adjustment of organizational scale;

(2) Adjustment of management scope and organizational level;

(3) Changes in the degree of centralization and decentralization;

(4) Re-division of rights, functions and powers of different departments;

(5) Changes in the type of organizational structure;

(6) The adjustment of the relationship between the various institutions within the organization;

(7) Changes in the management process within the organization;

(8) Adjustment and reform of the incentive and control system in the enterprise.

Some scholars have conducted research on the relationship between environment and organizational structure. For example, W. Richard Scott pointed out that the strategic environment, working environment, and institutional environment of an organization will have a greater impact on the organization's structure [11] (Richard Scott, 1975). Lawrence and Lorsch pointed out that the industry environment to which the organization depends is different, and the structure of its choice is different [12] (Lawrence, Lorsch, 1968). The structural contingency theory studies the main variables of the relationship between the environment and the organization and the general pattern of their mutual relationship. The theory believes that there is no general organizational structure, and the organization must choose a suitable organizational structure model according to its actual situation.

In conclusion, this research believes that organizational structural innovation is to change the organizational hierarchy, changes in centralization and decentralization, the division of functions and powers, and the development of a new organizational structure to maintain dynamic coordination with the organization's strategy, culture, process and technology. Organizational structural innovation is one of the dimensions of organizational innovation.

3. Organizational process innovation is one of the dimensions of organizational innovation.

Process innovation in a broad sense includes the innovation of various work processes, not limited to production and technology, but in a narrow sense usually refers to the improvement of methods, systems, and operating procedures in production and business activities. It mainly removes redundant links within the organization and redesigns unreasonable procedures to make the company's production and operations more effective. It penetrates all aspects and links of the organization.

Due to the rapid development of technology and the increasingly fierce competitive environment, many companies have increased their investment in technology and products in order to enhance their competitive advantages. However, some studies have found that product and technological changes are not the only way to maintain competitiveness in a complex and dynamic external environment. Especially for Chinese companies, if they want to maintain a long-term competitive advantage and promote the development of the company, it is very necessary to introduce new management models and methods and improve the existing management processes.

There are many benefits for companies to carry out process innovation.

First, it is more conducive for enterprises to understand market demand. Because any process transformation and optimization of an organization needs to understand the background of the market and organize production activities according to market needs. By combining the market to find unreasonable links in production activities and improve them, it can promote better operations of the enterprise. Second, optimization process can greatly reduce the production and operating costs of enterprises. Based on the combination of information technology and the application of a comprehensive quality management system, by optimizing and removing unreasonable and redundant links in production activities, it can effectively reduce labour costs and improve work efficiency, make full use of the resources of the enterprise, and make the workflow of the enterprise more smoothly.

In conclusion, organizational process innovation is a process that uses information technology to gradually improve existing processes or fundamentally redesign and implement new processes. Organizational process innovation is one of the dimensions of organizational innovation.

4. Information technology innovation is one of dimensions of organizational innovation.

Swanson (1994) defines information technology innovation as "innovative application of information technology". He pointed out that only through innovation, information technology could be effectively coupled with the entire enterprise's organizational design, process, strategy, and external relationships [13] (Swanson, 1994).

Lee & Kim (1998) defined information technology innovation as "the whole process of initiating, adopting and implementing new IT to improve organizational performance", and proposed a conceptual model of information technology innovation and a contingency model for implementing information technology innovation [14] (Lee, Kim, 1998).

The new generation of information technology represented by big data, cloud computing, and the Internet of Things, on the one hand, affects the value creation method of the enterprise, the characteristics of the competitive environment, the source of competitive advantage, the manufacturing model, the resource and its allocation, the organizational boundary, the organizational structure, and the decision-making track, credit, conflict resolution, leadership style and innovation management. On the other hand, it provides a very powerful enabling tool for enterprise organizational innovation.

In conclusion, information technology innovation is the implementation of new information technology resources and their allocation methods to maintain dynamic coordination between the application of information technology and big data and the organization’s strategy, culture, process and structure. Information technology innovation is one of dimensions of organizational innovation.

Methodology

Variable measurement and scale development

The items in this questionnaire are all derived from Chinese and foreign maturity scales and repeated discussions with scholars and business managers in related fields. The content of the scale was adjusted based on the analysis of the research situation (table 1). The questionnaire uses the Likert seven-point scale.

Table 1

The index measurement of dimensions of organizational innovation

Questionnaire design and sampling method

The survey process mainly takes the form of email, telephone survey and direct interview. The subjects of this survey are concentrated in coastal provinces such as Beijing, Shanghai, Guangdong, Zhejiang, etc.

Descriptive statistics of the sample

This study sent a total of 300 formal questionnaires, and a total of 212 valid questionnaires. The samples of the questionnaire involved 16 different industries in the manufacturing industry such as electronic equipment manufacturing industry, automobile manufacturing industry, food manufacturing, transportation equipment manufacturing, textile industry and clothing industry, etc.

Reliability and validity analysis of the scale

In table 2, it can be seen that the composite reliability (CR) is greater than 0.7, and the average variance extraction (AVE) is greater than 0.5. It indicates that the questionnaire has good reliability and there is higher internal consistency.

Confirmatory factor analysis can be realized by using LISEREL and AMOS statistical software. Many scholars point out that confirmatory factor analysis has many advantages over exploratory factor analysis [21] (Xie Hefeng, Xiao Dongsheng, 2007). Therefore, this study uses confirmatory factor analysis to evaluate the validity.

The results of the confirmatory factor analysis of organizational innovation are shown in figure 1 and table 2. The scale of organizational innovation includes four dimensions. Among them there is fitness statistics of structural equation modeling, X²/d.f.=2.345<3. The values of GFI, CFI, IFI, and NFI are respectively 0.911, 0.940, 0.941, 0.901. They are all greater than 0.9, which is very close to the ideal value 1. The value of RMSEA is 0.08, which means the fit is good; the value of RMR is 0.056, which means the degree of fit is acceptable. The P value of each item of the organizational innovation scale in table 2 reached a significant level (p<0.01); it means that the convergence validity of each aspect of the organizational innovation scale reached an acceptable range.

Figure 1. Analysis of confirmatory factors of organizational innovation (unstandardized estimates)

Source: author’s construction.

Table 2

Analysis of confirmatory factors of organizational innovation

Source: author’s construction.

Research results and discussion

Whether there is a strong correlation between different factors, the covariance test between the factors is carried out. The correlation and covariance test results between different factors are summarized in table 3.

Table 3

Summary of correlation and covariance test results

Source: author’s construction.

In table 3, the covariance values between any factors are not 0, and the critical ratios are all greater than 2.58, which indicates that the correlation coefficient value between any factors has reached a significant level. This means that in the four dimensions of organizational cultural innovation, organizational structural innovation, organizational process innovation and information technology innovation, there is a significant correlation between any two dimensions.

Figure 2. Structural equation model of dimensions division of organizational innovation

Source: author’s construction.

In table 3, the correlation coefficient between any two organizational innovation dimensions is obviously not equal to 1, indicating that these four dimensions have different constructs, thus showing good discriminant validity. Among them, the correlation coefficient between any two dimensions of organizational innovation exceeds 0.48, with a medium-high correlation, indicating that these four dimensions are finally explained by the higher-order factor of organizational innovation, as it is shown in figure 2. Fitness statistics of structural equation modeling of organizational innovation is X²/d.f.=2.297<3. The values of GFI, CFI, IFI, and NFI are respectively 0.910, 0.940, 0.941, 0.900, which is very close to the ideal value 1. The value of RMSEA is 0.08, which means the fit is good; the value of RMR is 0.078, which means the degree of fit is acceptable.

Organizational innovation is a multi-dimensional concept, and a systematic and comprehensive division of its dimensions is an important basis for fully understanding the content of organizational innovation activities in manufacturing enterprises. Through the above empirical analysis, the rationality of the four-dimension division of organizational innovation is obtained. Because organizational innovation is an open and complex system, its four dimensions are not isolated, but are interrelated and affect each other. It has been confirmed based on structural equation model.

Scott et al clearly pointed out in the process of analyzing organizational innovation that the change of a certain organizational element alone will often lead to an unbalanced organizational innovation of enterprises, and advocated that enterprises achieve innovation balance in all aspects of the organization [22] (Scott, Mcmurray, 2021). From this scholar's research, it can be inferred that the four dimensions of enterprise organizational innovation interact with each other, that is, there is a close relationship. The empirical research in this paper further proves the scholar's point of view. An innovative culture is more conducive to an enterprise adopting an innovative organizational structure to face external competition. In the relationship between structure and culture, structure is the external manifestation of culture on the one hand, and the basis of cultural formation and change on the other hand [23] (Peri, 2020).

Conclusion

The main conclusion of this article based on the theoretical research and empirical research is that organizational innovation includes four main dimensions: organizational cultural innovation, organizational structural innovation, organizational process innovation and information technology innovation; and there is a strong interaction between the four dimensions of organizational innovation. Thus, it is very necessary to integrate them organically and systematically.

In the process of investigation, employees and managers who fill out the questionnaires may have some deviations in the understanding of variables, so follow-up research needs to select a larger sample, conduct further investigations and interviews, and conduct in-depth research on manufacturing companies of different industries and sizes. In the process of empirical analysis, there are some research limitations.

Organizational innovation can be classified and measured differently from different dimensions. This study divides organizational innovation into organizational cultural innovation, organizational structural innovation, organizational process innovation and information technology innovation. Other different classifications and measures may be future research directions.

In the selection of sample industries, in the process of studying the demes ions of organizational innovation, this paper simply analyzes the differences between different industries, and does not conduct in-depth research. Subsequent research can focus on some particularities in an industry.