What Makes Employees Behave Innovatively? Empirical Evidence from South Korea

Abstract

Although the value of a supportive organizational strategy has been recognized over time, there is a need to better understand its relationship with employees' psychological and behavioral responses. This study focuses on employees' innovative behavior as a result of their perceptions of internal market orientation in the organization. It proposes a sequential process model that examines the impact of internal market orientation on employees' innovative behavior through the ethical climate, psychological ownership, and employee stewardship toward the organization. Using data collected from 310 employees of small and medium-sized enterprises in various industries in South Korea, a linear sequential relationship among the constructs is confirmed. The findings of this empirical study, therefore, suggest that the ethical climate, psychological ownership, and stewardship mediate the effects of internal market orientation on employees' innovative behavior. The research thus offers a conceptual framework that shows the sequential process of the effect of internal market orientation on innovative behavior. Further, it shows that the perception of an ethical climate can be influenced by management and can develop an employee's psychological ownership. Implications for managers and directions for future research are also discussed.