Empowering leadership in R&D teams: a closer look at its components,process, and outcomes

Empowering leadership in R&D teams has gained increasing popularity as it provides a balance between autonomy and control, encourages member participation and self‐leadership, and benefits creativity and innovation. This research examined the unique influences of two behavior components of empowering leadership: group‐focused empowering leadership and differentiated individual‐focused empowering leadership on R&D team's processes and team effectiveness. Using data from 54 R&D teams, we found that group‐focused empowering leadership is strongly related to intra‐team collaboration, which in turn is positively related to both team innovativeness and performance. Differentiated individual‐focused empowering leadership, however, is positively related to intra‐team competition.     

Diversity is strategy: the effect of R&D team diversity on innovative performance

Diversity in the workplace has attracted significant interest in organisations that want to attract and retain talented employees. Breakthrough innovation requires a wider knowledge base, and organisations increasingly rely on multidisciplinary R&D teams to identify scientific developments that bridge gaps and reduce time to market. However, research on the performance implications of R&D team diversity remains limited and the empirical evidence inconsistent. This paper investigates the impact of surface and deep-level diversity on R&D teams’ innovative performance and how diversity dimensions interact to drive innovation. We find supportive evidence that R&D team characteristics influence innovation outcomes, confirming our hypothesising that diversity is a valuable strategy for an organisation to pursue as it provides greater cognitive ability. Each diversity facet however has its own distinct effects depending on the novelty of innovation and industry. Yet, diversity is not solely positive and excessive heterogeneity could be detrimental to R&D team performance. Our findings suggest that high diversity in gender or skills in cognitively diverse teams might be negative attributes to take into consideration. Senior managers and organisations should therefore consider the appropriate mix of capabilities to benefit from creativity in diverse R&D teams and avoid possible conflict and distrust associated with diversity.     

Direct and interaction effects of top management team and board compositions on R&D investment strategy

This paper examines why firms differ in levels of R&D investment intensity by developing and testing a theory of direct and interaction effects of top management team and board outsider composition on R&D intensity. The theory is tested in a longitudinal sample of technology‐intensive firms that completed an initial public offering. The results indicate that both top management team composition and board composition have direct and additive effects on R&D investment intensity. Also, monitoring by outsider directors does not constitute a universally effective governance mechanism with regard to a firm's R&D investment strategy. Firms opt for lower levels of R&D investment intensity when their outsider‐rich board interacts with a team of managers who have high levels of (1) firm tenure, (2) shared team‐specific experience, or (3) functional heterogeneity. When a firm's competitiveness relies on sustained R&D investments, it is important to note these interaction effects and make adjustments to promote a healthy dialogue between managers and the board. Adjustments could be made to the management team composition (e.g., initiating management turnover to reduce firm tenure) or to the bundle of governance mechanisms (e.g., partially substituting board monitoring with other mechanisms). Copyright © 2006 John Wiley & Sons, Ltd.     

The implications of strategy and social context for the relationship between top management team heterogeneity and firm performance

This research reexamines the link between top management team (TMT) heterogeneity and firm performance. Specifically, I theorize that the effects of education, work experience, and tenure on performance will depend upon the top management team's strategic and social context. In a test of such theorizing, I find that (1) the positive relationships between TMT educational, functional, and tenure heterogeneity and performance are contingent on complexity, as indicated by a firm's international strategy and, (2) such relationships are clearly stronger in short‐tenured top management teams. The theory and results presented here provide impetus for future studies, as well as suggest to upper echelon researchers that they think more critically about the conditions under which demographic characteristics are most likely to influence organizational outcomes like performance. Copyright © 2002 John Wiley & Sons, Ltd.     

Cross‐cutting organizational and demographic divides and the performance of research and development teams: two wrongs can make a right

In interorganizational research and development (R&D) teams, diverse skills and insights may be combined productively, but the team members' differing organizational backgrounds may also inhibit team performance. In this paper, it is argued that interorganizational R&D teams are more likely to perform with a certain demographic composition. In particular, the problems of an organizational divide can be overcome by a second, demographic divide that cuts across organizational boundaries. With a cross‐cutting demographic divide – or faultline – interorganizational R&D teams may perform; without it, they tend to perform poorly. Supportive evidence is provided in a fuzzy‐set qualitative comparative analysis on 51 projects conducted in a single R&D partnership. As this implies, interorganizational R&D teams should deliberately be composed to show a cross‐cutting demographic divide.     

Managing innovative R&D teams

Successful R&D groups not only generate innovative ideas, but also transfers these newly created concepts through the organizational system for economic gain. While innovation is not a random process, managers often argue that R&D performance is hard to measure and even more difficult to manage. An exploratory field study into technology-oriented R&D environments determines the principle factors that influence innovation-based performance of R&D teams. The results identify specific barriers and drivers to innovative team performance and provide insight into the type of an organizational environment and managerial leadership that is conducive to innovative R&D team performance. The data further suggest that many of the performance variables have their locus outside the R&D organization. Yet, managerial leadership style, both at the R&D team level and at senior management, has significant impact on creativity that ultimately affects R&D performance.     

Entrepreneurial Orientation and Firm Performance: Drawing Attention to the Senior Team

Prior studies have argued entrepreneurial orientation (EO) plays an important role in explaining firm performance. This study aims to assess how senior team attributes moderate the relationship between EO and firm performance. For this purpose, an attention‐based perspective is adopted, focusing on attention scope as well as distributed and situated attention. By considering the role of senior team heterogeneity in broadening the attention scope of senior teams and the role of senior team shared vision in aligning distributed attention across organizational functions, this research investigates how senior teams may enhance the value‐creating potential of EO. In addition, we assess situated attention by including the notion of environmental dynamism and examining whether the role of the senior team attributes is contingent upon environmental conditions. Using a time‐lagged sample of 346 firms operating in various industries, we find that senior team heterogeneity helps firms to leverage their EO and improve their performance. Moreover, once environmental conditions are taken into account, results indicate that the absence of heterogeneity at senior team level may be particularly detrimental for firms operating in stable environments. The direct moderating effect of shared vision on the relationship between EO and performance is not substantiated. However, senior team shared vision has a positive impact for firms operating in dynamic environments, providing a premium for firms aiming to realize the inherent value of EO. Our research provides important implications for senior teams aiming to leverage their EO into increased firm performance. Evidence shows that while a heterogeneous team composition and senior team shared vision may provide several benefits, these advantages may fluctuate across environmental conditions.     

Top management team nationality diversity and firm performance: A multilevel study

This research reexamines the equivocal relationship between top management team (TMT) diversity and firm performance. Combining upper echelons theory with insights from institutional theory, we establish a new, timely dimension of TMT diversity—nationality diversity—and develop an integrated multilevel framework explaining how its performance implications vary across contextual settings. We find that nationality diversity is positively related to performance; and this effect is stronger in (a) longer tenured teams, (b) highly internationalized firms, and (c) munificent environments. More generally, our research demonstrates that the consequences of TMT diversity depend on the (1) specific attributes of diversity being considered and (2) firm and industry conditions under which strategic decisions take place. Copyright © 2012 John Wiley & Sons, Ltd.     

Shared and shared alike? Founders' prior shared experience and performance of newly founded banks

Research summary: Pre‐entry industry experience is a central construct in the founding team literature. Research on prior shared experience (PSE) emphasizes that founding teams face challenges integrating and acting on independent experiences, so PSE should be beneficial for new venture performance. Existing studies, however, typically study PSE in blunt terms, expecting that more is better. Instrumental variable analyses of a unique sample of 344 commercial banks founded in four U.S. states between 1996 and 2006 showed that industry‐specific PSE may be more or less beneficial, depending on several founding team characteristics. Our findings provide nuance and caution to the narrative that PSE is always beneficial. Under some circumstances, firms with founding team PSE may be no better off than those without founding team PSE, suggesting more research is necessary to understand when and why founding team experience matters to new firms. Managerial summary: Pre‐entry experience of founding teams affects new firm performance, but is hard for founders to leverage separately gained experience. Knowledge moves more readily if sets of managers leave together to start a new firm. But, it may be simplistic to conclude that prior shared experience (PSE) is always good, or better than the sum of independent experiences. In a set of banks founded in four U.S. states between 1996 and 2006, we find that PSE is not necessarily a direct pathway to better bank performance. Characteristics of the PSE, such as the part of industry the former and new banks operate in, can lower its benefit. We also found that the benefits of PSE erode as the entire founding team develops shared history after startup. Our findings have implications for entrepreneurs, investors, and policy‐makers. Copyright © 2015 John Wiley & Sons, Ltd.     

Individual performance in a coopetitive R&D alliance: motivation,opportunity and ability

This study examines individual knowledge sharing in a coopetitive R&D alliance. R&D is increasingly carried out in an R&D alliance setting, where individuals share highly specialized tacit knowledge crossing firm boundaries. A particular challenging setting is the coopetitive R&D alliance, where partner firms partially compete and individuals may leak competitive knowledge. This setting has been studied on the level of the partner firm. We want to deepen insights by examining the individual level. Drawing on the motivation‐opportunity‐ability framework, we study the influence of individuals’ job experience (ability) on their performance in the alliance. We also examine effects of two‐ and three‐way interactions between job experience, a central position in the social alliance network (opportunity) and intrinsic and extrinsic motivation. We find a positive association of job experience with individual performance, a positive interaction between job experience and extrinsic motivation and a positive three‐way interaction between job experience, central network position and intrinsic motivation, and discuss the impact of these findings.     

Scope versus speed: Team diversity,leader experience,and patenting outcomes for firms

Research Summary: How does the organization of patenting activity affect a firm's patenting outcomes? We investigate how the composition of patenting teams relates to both the scope of their patent applications and the speed with which their patents are approved, by examining the main effects of team members’ intra‐organizational diversity (based on affiliations with formal organizational units and informal organizational communities) and the moderating effects of team leader experience. We test our moderated mediation model in a sample of 121 teams that filed patents in a Fortune 50 company's India R&D center between 2005 and 2015, using proprietary employee data combined with newly released micro‐data from the U.S Patent and Trademark Office (USPTO). Our findings illuminate the micro‐foundations of innovation in firms by highlighting a trade‐off between organizing patenting activity to maximize scope versus speed. Managerial Summary: Patenting is an important strategic tool that firms can use to protect and create value from their innovations. A firm can benefit from filing a patent application that gives it a wider possible set of claims related to an innovation. It can also benefit from faster approval of a patent application by the Patent Office. However, our study shows that there is a trade‐off between patent application scope and patent approval speed, which creates tensions for the organization of patenting activities inside firms. In particular, we find that the diversity of a patenting team is positively related to patent scope but negatively related to patenting speed, and that these relationships vary with the experience of the team leader.     

How to counteract the suppression of exploration in publicly traded corporations

Top management teams frequently overemphasize efforts to exploit the current product portfolio, even in the face of the strong need to step up exploration activities. This mismanagement of the balance between explorative R&D activities and exploitation of the current product portfolio can result in the so‐called success trap, the situation where explorative activities are fully suppressed. The success trap constitutes a serious threat to the long‐term viability of a firm. Recent studies of publicly traded corporations suggest that the suppression of exploration arises from the interplay among the executive team's myopic forces, the board of directors as gatekeeper of the capital market, and the exploitation–exploration investments and their outcomes. In this paper, system dynamics modeling serves to identify and test ways in which top management teams can counteract this suppression process. For instance, we find that when the executive board is suppressing exploration, the board of directors can still prevent the success trap by actively intervening in the exploitation–exploration strategy.     

The roles of R&D team leaders in Korea: a contingent approach

This study empirically examines the relationship between the role of R&D project leaders and their team performance using data from 87 project teams in 6 R&D organizations in Korea. The results reveal that:
(1) R&D project leaders played five different roles in performing their jobs – strategic planner, team builder, gatekeeper, technical expert, and champion;
(2) All but the champion role of a leader is positively related with project team performance;
(3) However, this relationship between the role of leader and project team performance varies according to the characteristics of R&D project teams and their tasks.
Specifically, it becomes important for a leader to focus less on the team building role as the team gets older. The team building role of a leader, however, is more important for higher performance of relatively certain R&D projects, while for uncertain R&D projects, the strategic planning role appears to be more crucial. Based on these results, this study discusses several managerial and theoretical issues related to the role of a leader in R&D project teams.     

When do strategic alliances inhibit innovation by firms? Evidence from patent pools in the global optical disc industry

Research and development (R&D) consortia are specialized strategic alliances that shape the direction and scope of firm innovation activities. Little research exists on the performance consequences of participating in R&D consortia. We study the effect of patent pools, a unique form of R&D consortia, on firm performance in innovation. While prior research on alliances generally implies that patent pools enhance firm innovation, our study finds the opposite. Analyzing data on systemic innovation in the global optical disc industry, we find that patent pool formation substantially and significantly decreases both the quantity and quality of patents subsequently generated by licensors and licensees relative to the patenting activity of nonparticipants. Our empirical findings suggest that patent pools actually inhibit, rather than enhance, systemic innovation by participating firms. Copyright © 2011 John Wiley & Sons, Ltd.     

Balancing creativity and time efficiency in multi‐team R&D projects: the alignment of formal and informal networks

The business world is denoted by an increasing number of multi‐team research and development (R&D) projects, however, managerial knowledge about how to run them successfully is scarce. The present study attempts to shed light at this kind of projects by investigating the alignment of formal and informal network structures and their effect on the challenge to balance project creativity and time efficiency. In order to analyze this issue data in two multi‐team R&D projects in space industry are collected. There are two intriguing findings that are partly contradicting the state‐of‐the‐art knowledge. First, formally ascribed design interfaces and informal communication networks overlap only marginally because the informal communication networks are characterized by many more linkages. Second, the weak overlap between formally ascribed design interfaces and the informal communication networks is inversely U‐shaped associated with the team's creativity, whereas it negatively impacts the team's time efficiency.     

Let them go? How losing employees to competitors can enhance firm status

Research summary : Because employees can provide a firm with human capital advantages over competitors, firms invest considerably in employee recruiting and retention. Departing from the retention imperative of strategic human capital management, we propose that certain employee departures can enhance a firm's competitiveness in the labor market. Specifically, increased rates of career‐advancing departures by a firm's employees can signal to potential future employees that the firm offers a prestigious employment experience that enhances external mobility opportunities. Characterizing advancement based on subsequent employers and positions, we analyze data on U.S. law firm hiring and industry surveys of perceived firm status between 2004 and 2013. We find that increased rates of employee departures lead to increases in a firm's prestige when these departures are for promotions with high‐status competitors. Managerial summary : Firms often emphasize employee retention. Employee departures, especially as a result of being hired away by competitors, are often viewed as threats to a firm's competitive advantage. We propose, however, that employee retention need not be an unconditional strategic imperative. We argue that certain employee departures can enhance a firm's competitiveness in the market for human capital by signaling to potential employees that the firm offers a prestigious employment experience, which can help them obtain attractive positions with other employers. Analyzing data on U.S. law firm hiring and industry surveys of firm associates between 2004 and 2013, we find that increased rates of employee departures lead to increases in a firm's prestige when these departures are for promotions with high‐status competitors. Copyright © 2016 John Wiley & Sons, Ltd.     

The impact of racial diversity on intermediate and long‐term performance: The moderating role of environmental context

We conduct a firm‐level, 6‐year longitudinal analysis on the impact that racial diversity in human resources has on financial performance. When considering short‐term performance outcomes, we predict a curvilinear relationship between diversity and performance (i.e., firm productivity). Although we find evidence of a U‐shaped relationship between racial diversity and productivity, the relationship is stronger in service‐oriented relative to manufacturing‐oriented industries and in more stable vs. volatile environments. For longer‐term profitability, we propose and find support for more of a positive linear relationship between diversity and performance (i.e., Tobin's q) than a nonlinear one. This linear effect is stronger and more positive in munificent compared to resource‐scare environments. Thus, we aid in reconciling existing, often contradictory, studies by demonstrating the potential short‐term vs. long‐term impact of racial diversity on performance. We offer implications for future research on diversity considering the current and projected demographic landscape. Copyright © 2007 John Wiley & Sons, Ltd.     

Integration of Finance with Marketing and R&D in New Product Development: The Role of Project Stage

While the interfaces of marketing, research and development (R&D), and manufacturing in product development have been extensively studied, no large‐scale empirical study has focused on finance's role in the product development team. The present research investigates the role of finance in cross‐functional product development teams, thereby extending existing research on cross‐functional integration in product development. A set of hypotheses is tested with a survey of 389 project team leaders and top management team members from companies in the United States, Australia, New Zealand, Germany, and Austria. The findings suggest that the integration of finance in cross‐functional teams positively impacts project performance and that the importance of the finance interface depends on the project development stage and the innovativeness of the product developed. The results indicate that the R&D–finance interface is most critical at the early stage of a project, while the marketing–finance interface is most important at the late stage, and that the integration between R&D and finance is especially useful in the development of less innovative products.     

Knowing when to leap: Transitioning between exploitative and explorative R&D

A common perspective is that consistent R&D investment facilitates innovation, while volatile spending implies myopic decision making. However, the benefits to exploiting extant competencies eventually erode, so firms must disrupt their R&D function and explore for new competitive advantage. We suggest that high‐performing firms recognize when extant competencies decline and increase exploratory R&D to develop new competencies at the appropriate time. We find that changes in R&D expenditure away from the firm's historic trend, in either direction, are indicative of transitions between exploitative and exploratory R&D and are associated with increased firm performance. Increases in R&D expenditure above the trend are associated with an increased likelihood of highly cited patents, suggesting that firms are making the leap between R&D‐based exploitation and exploration. Copyright © 2013 John Wiley & Sons, Ltd.     

The Performance Effects of Human Resource Practices: The Case of Interclub Networks in Professional Baseball, 1919–1940

This study investigates the performance effects of two industry‐specific human resource management innovations that dramatically changed the way professional baseball teams selected and trained ballplayers. In the early part of this century, major league clubs developed and refined two player‐development practices based on “reserve team” and “farm team” systems. We use a panel data set of the win/lose records for the population of 16 major league clubs for the seasons from 1919 through 1940 to test hypotheses about the effect of human resource practices on organizational performance. The results suggest that the reserve team practice had no significant impact on organizational performance. In contrast, the more complex farm‐team system, pioneered by Branch Rickey of the St. Louis Cardinals, improved organizational performance and diffused rapidly throughout the league. We estimate that by 4 years after its creation, the farm‐team system improved a team's win rate by 0.068 points relative to nonadopters of the farm‐team system and teams with less than 4 years of prior experience with a farm‐team system. The results also show that the farm‐team effect was not confined to St. Louis but also was experienced by later adopters. These results contribute to the growing literature showing a positive effect of human resource policies on organizational performance. The results also illustrate the important role the external environment plays in shaping this relationship (e.g., legal restrictions to labor mobility).