Martinez Meseguer, L. - 1620584
Martinez Meseguer, L. - 1620584
Martinez Meseguer, L. - 1620584
E
MSc International Management
1The copyright of this thesis rests with the author. The author is responsible for the contents and opinions expressed in the thesis.
U.S.E is only responsible for the academic coaching and supervision and cannot be held liable for the content.
Acknowledgements
I would like to express my gratitude to everyone who has contributed to the successful
completion of this thesis. First and foremost, I would like to thank my supervisor Jeroen Mahieu
for his constant support, advice, encouragement and especially his patience throughout this
research. Your insightful feedback and encouragement to think critically about the processes
helped me learn a lot about research and myself. Thank you as well for motivating me during
the process, your way of teaching and the passion you transmit inspired me to put all my efforts
and deliver a good thesis. Mom and Dad, thank you for always believing in me, for not letting
me give up and for the financial support that you gave me to pursue my studies in the
Netherlands. You believed in me when not even I believed in myself, thank you, I do not know
what I would do without your guidance in life. To Niels, who has seen my best and worst and
has supported me since the beginning. I am beyond grateful to share my life with you. Thank
you for helping me to be a better person and helping me achieve my dreams. Gaia, Valerio,
Giovanni and Mara, nobody said this master was easy, but you guys certainly made it easier. I
will never forget the endless Econometrics and Finance nights, we thought we would never make
it, but here we are. Thank you for your support during this year, for adding fun to this hard
chapter of our lives and for always being there when I needed it.
Abstract
Since 2022, 5 million new start-ups have been created, making a 42% increase from pre-
pandemic levels. Innovation is the lifeblood of start-ups, and understanding the mechanisms that
drive it has become crucial in today’s competitive business landscape. Start-ups, characterized
by their risk-taking nature and limited resources, rely on their employees as unique sources of
knowledge to gain a competitive edge. This research investigates the effect of employee
autonomy on start-up innovation performance in three different types of innovation: product,
process and marketing innovation. Using data from the European Company Survey of 2019, this
study employs an Ordinary Least Squares (OLS) regression to examine the relationships
between employee autonomy and start-up innovation in product, process and marketing. The
results of this study show that employee autonomy increases start-up process innovation. No
significant effects are found regarding the effects of employee autonomy on product and
marketing innovation. Moreover, only when employees responsible for innovation have access
to a personal computer they will innovate. The theorised positive effect of other factors such as
employee ideas or employee motivation remains unclear. The findings of this study offer
important contributions to enhancing managerial practices and developing human resources
strategies in start-ups in Europe.
Over the past few decades, strategies emphasizing the importance of firm innovation have
topped executive agendas (Cassiman and Valentini, 2016). It is widely recognized that
innovation is essential for remaining competitive in today’s business environment, therefore,
many firms have focused on promoting innovative working environments to sustain their
competitive advantages (Li et al., 2021). Consequently, many firms are focusing on fostering
innovative working environments to remain competitive (Li et al., 2021). Innovative behaviour
can be defined as “the initiative taken by employees to introduce new products, processes or
markets into the organization” (Amo & Kolvereid, 2005; Dhar, R., 2016). Therefore, firms must
acknowledge their dependence on employees as unique sources of ideas to overrun competitors,
and managers must empower employees to adopt innovative behaviours (Afsar et al., 2014; Li
et al., 2021).
Hackman and Oldham (1980) defined job autonomy as “the degree to which the job provides
substantial freedom, independence and discretion to the individual in scheduling the work and
in determining the procedures to be used in carrying it out”. Job autonomy plays an important
role in determining the level of innovation of firms, and recent literature has found a positive
effect between employee autonomy and firm innovation (Paradkar et al., 2015; Masood, M., &
Afsar, B., 2017; De Spiegelaere et al., 2016). However, most articles that study this relationship
focus on large established companies, with limited research on the effects of employee
autonomy on start-up innovation (Masood, M., & Afsar, B., 2017; Burcharth et al., 2017; Dhar,
R., 2016).
Start-ups have become increasingly important in the current business landscape, especially since
the COVID-19 pandemic outbreak, characterized by a boom. These firms have emerged as the
torchbearers of change, creating new business rules and driving innovation (HustleHub, 2023).
Analysts predicted that the post-pandemic growth rate of entrepreneurship would continue to be
high, bringing positive prospects for the world economies (Altun, 2022). Moreover, start-ups
play a crucial role in driving both social change and economic recovery. They help achieve
sustainable development, catalyzing economic growth on both global and local scales. Start-ups
are known for being highly innovative (Statista, 2023; Fiorentino, et al., 2021), and often operate
in fundamentally different environments compared to large established firms (HustleHub, 2023;
Kerrigan, 2018; Esade, 2024), characterised by limited resources, higher uncertainty and a
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greater need for rapid adaption and innovation (Esade, 2024; Daviau, 2024). These
environments, coupled with unique organizational structures such as flatter organizational
structures, a risky culture and a flexible approach to creativity and management (Salina, 2024;
Anicich, Lee & Sánchez, 2024), can lead to different outcomes when employee autonomy is
fostered (Reisinger & Fetterer, 2021). Employees in start-ups feel more in control over their own
destinies, which makes them feel more valued and connected to the organization. Moreover,
while start-up teams are willing to delegate tasks earlier than large companies, larger established
firms insist that it can create confusion on who should do what (Das, 2021). After the recent
increase in knowledge-based start-ups and the creation of new industries, it has become crucial
to examine the effects of employee autonomy in the context of start-ups, given that it can yield
significantly different results than in established firms (Theurer, Tumasjan & Welpe, 2018).
Despite the increasing importance of start-ups in driving economic growth and fostering
innovation, there is a lack of evidence on how employee autonomy specifically affects start-up
innovation (Andries, P., & Czarnitzki, D., 2014). Existing research on the effects of employee
autonomy in start-ups remains limited, and some results are controversial (Dhar, R., 2016; Klaas
et al., 2010; Demircioğlu, 2020; Andries & Czarnitzki, 2014).
This study focuses on how employee autonomy affects start-up innovation performance. Using
data from the European Company Survey (2019), the study explores what is the effect of
employee autonomy on start-up innovation performance. Therefore, the central question of this
study is:
The results indicate that employee autonomy increases start-up innovation performance in the
context of process innovation only. The effects of employee autonomy on product and marketing
innovation are negligible. It is also found that the use of a personal computer has a mediating
effect between employee autonomy and start-up innovation performance. This paper
significantly contributes to the literature. First, it revisits research on employee autonomy and
start-up innovation performance, providing additional insights into managerial practices within
start-up teams. The results of this study highlight the importance of providing employee
autonomy for highly innovative start-ups. Second, this study offers supportive evidence for
developing human resources strategies that foster motivation and autonomy in the workplace.
The remainder of this study is structured as follows. First, the literature review and theoretical
framework present the main assumptions based on existing literature and revised theories,
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leading to the development of hypotheses. Second, the empirical methodology section details
the data and methods used to answer the research question and delves into the analysis and its
outcomes. Third, the results section presents the study's findings. Fourth, the discussion section
explores the reasons behind the results and critically examines the relationships between the
variables. Fifth, the limitations and implications section outline the constraints of the study, its
theoretical and practical implications, and suggests directions for future research. Finally, the
conclusion briefly summarizes the study results.
2.1.Employee Autonomy
Employee autonomy is described as “the freedom given to employees to better perform their
tasks while developing and improving the overall business” (Li et al., 2021). It does not mean
working in isolation or independently from others, it is the freedom given to employees to better
shape their workplace environment. Accordingly, employees who are satisfied when given
autonomy tend to perform well, have higher productivity, and are more committed to their work
(Demircioğlu, 2020). Autonomy is a thriving motivation for employees (Lammers et al., 2016),
and it is rooted in trust respect, integrity, and interdependence of employees (Mohammad et al.,
2019). It has been found that employee autonomy can increase employee motivation (Lammers
et al., 2016), and some studies found a positive link between workplace autonomy and
workplace innovation (Li et al., 2021; Dhar, R., 2016; De Spiegelaere et al., 2016).
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& Czarnitzki, 2014). Moreover, studies suggest that employees have the potential to contribute
to small firm innovation by bringing about innovative and disruptive ideas, which is further
supported by the fact that some small firm managers consider employees an important resource
and asset, and a prerequisite for innovation (Lichtenstein & Brush, 2001; Appelbaum, Bailey,
Berg, & Kalleberg, 2000; De Spiegelaere et al., 2016; Andries & Czarnitzki, 2014; Roper et al.
1996).
Innovative work behaviour (IWB) is defined as “all employee behaviour directed at the
generation, introduction and/or application (within role, group or organisation) of ideas,
processes, products or procedures, new to the relevant unit of adoption that significantly benefit
the relevant unit of adoption” (Farr, J. & Ford, C., 1990; De Spiegelaere et al., 2016). Other
researchers define IWB as a bundle of creative ideas that are applied in the workplace and can
deliver better outcomes (Li et al., 2021). IWB is a broader definition of proactiveness constructs
such as proactive work behaviour (Parker et al., 2006) and personal initiative (Frese et al., 1996;
Afsar et al., 2014) which focus on an individual’s inclination to implement ideas proactively. It
is enhanced through different mechanisms, such as organizational climate (Shanker et al., 2017),
personality traits (Woods et al., 2018), supervisor support (Mishra et al., 2017) and
organizational trust (Yu et al., 2018; Li et al., 2021). Therefore, creating an environment where
employees can carry out innovative ideas is key for promoting a firm innovative performance.
Leaders can create an environment without direct supervision, which is a driver of IWB (Wat &
Shaffer, 2005; Houghton & Yoho, 2005). The latter makes employees feel empowered and helps
them find meaning in their work, making them more intrinsically motivated, increasing firm
innovation ultimately (Berg & Hallberg, 1999; Krishnan, 2012; Jung & Sosik, 2002; Laschinger
et al., 2004; Afsar et al., 2014). Accordingly, IWB is expected to produce some kind of output
and benefit to the firm (Afsar & Badir, 2014).
2.4.Transformational Leadership (TL)
In line with the power of leaders to create an environment that drives IWB, Burns (1978) defined
transformational leadership (TL) as “leaders inducing followers to act for certain goals that
represent the values and the motivations, the wants and the needs, and the aspirations and
expectations of both leaders and followers”. TL has been largely studied since its origins in 1973,
and many studies highlight its implications for business development (Díaz-Sáenz, 2011; Jung,
Wu & Chow, 2008). For instance, there is a positive effect of CEO TL on organizational
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innovation (Jung, et al.,2008), and the degree of TL exhibited by CEOs affects goal importance
congruence, ultimately affecting firm innovation performance (Colbert, Kristof-Brown, Bradley
& Barrick, 2008). Therefore, increased TL can lead to increased motivation across employees,
which can be reflected in increased innovative behaviours (Colbert, et al., 2008).
Following the arguments of IWB and TL, Psychological Empowerment (PE) characterizes the
employee’s cognitive state by increased intrinsic motivation, perceptions of competence and
self-determination (Deci, Connell & Ryan, 1989). PE entails the individual’s perception that
they can instigate novel and innovative positive changes (Ramamoorthy et al., 2005), and can
be used to predict employee creativity, increasing creative process engagement and intrinsic
motivation. In addition, research on the relationship between psychological empowerment and
innovative work behaviour finds a positive relationship between both (Garcia-Morales et al.
2008).
Start-ups and established firms play different roles in the economy and greatly differ in terms of
organizational characteristics. Schumpeter (1942) already started studying the differing roles
that start-ups and established firms play in generating economic growth and innovation. Later
other studies, like the one by Sauermann (2017), found that not only do start-ups and established
firms have differences in resources and coordination, but also in the way the firms are structured,
and operate and how these deal with challenges. For instance, start-ups have flatter
organizational structures, a risk-taking nature and a customer-centric approach, while
established firms have more hierarchical levels, a risk-averse nature and a product-centric
approach (Sauermann, 2017).
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across 28 different countries in Europe had developed a ‘unicorn’ – a start-up valued at least
$1bn (Thornhill, 2024). Start-ups not only create and strengthen economic growth but also
create value that is nearly on par with the G7’s GDP economies. In addition, the amount of start-
up funding surpassed $600bln in 2021, and the number of unicorns in 2022 was well past 1,000
(Jurgens, J., 2022). Also, during the first half of 2021, European start-ups captured 20% of the
global capital, an increase of around 14% since 2019 (BITE Consulting Services, 2022). This
fast-changing nature of work is also affecting the settings in which employees want to work.
They are seeking greater flexibility and self-determination, and more individualised work
schedules (Theurer et al., 2018)
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in terms of the job security they can offer to their employees. While established firms have
become more stable over time and can offer greater security, start-ups are subject to more risk
and uncertainty, which translates into less job security. For this reason, risk-taking employees
tend to seek less stable jobs, which are often found in start-ups (Sauermann, 2017). Second,
regarding financial income, larger firms usually offer higher wages than small firms. Reasons
for this are that higher wages are related to higher levels of resources, which start-ups often lack.
Moreover, in established firms, employees have lower levels of certain non-pecuniary job
attributes (not related to financial rewards), resulting in needing to compensate for these
differences. The lower levels of salary in start-ups can be offset by higher levels of variable pay,
which can be more easily measured in the context of start-ups because employees work more
closely and it is easier to observe their efforts and output. Accordingly, start-ups have higher
growth and development potential, which may result in higher salaries eventually (Sauermann,
2017). Third, in line with the focus of this study, employees in start-ups may enjoy higher levels
of autonomy and independence (Sauermann, 2017). Benz and Frey (2008) find that employees
in start-ups get higher utility (job satisfaction and self-determination) than employees in
established firms when granted more autonomy. While extrinsic motivation is usually tied to
financial rewards, intrinsic motivation is linked to motivation based on autonomy and
intellectual change, which is more connected to creativity and innovation (Sauermann, 2017).
In their study, Sauermann and Cohen (2010) find a strong relationship between intrinsic
motivation and innovative performance in start-ups. Fourth, it is likely that employees in
established firms have fewer opportunities to work on different areas, given that the large
amount of resources they own allows them to focus on a specific task. However, because of the
lack of resources, start-up teams tend to be multidisciplinary, where employees are working on
managerial tasks as well. Assuming the levels of responsibility that the two types of employees
seek, employees in start-ups are expected to have higher preferences for responsibility than
employees in larger firms (Sauermann, 2017). Finally, given the innovative nature of start-ups,
it is often these firms that introduce new technologies into the market, suggesting a higher
intellectual challenge for the employees. Therefore, employees in start-ups often seek more
challenges than employees in established firms, which aligns with the risk-taking and disruptive
nature of start-ups (Sauermann, 2017).
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2.6.4. Disruption of traditional industries
Traditionally, industries were dominated by big companies with large market shares and
financial resources. However, start-ups have emerged with a disruptive approach to traditional
industries, identifying gaps and filling them with new solutions (Sheetal, 2023). With creativity
and determination, start-ups can disrupt even the most traditional industries, fostering
competition and forcing larger companies to adapt or risk becoming obsolete otherwise (Sheetal,
2023; Ridoy, 2023). These firms embody the spirit of entrepreneurship and inspire others to
follow their ideas and take risks (Ridoy, 2023). Additionally, start-ups have adopted a
sustainable approach to innovation, known as sustainable innovation, which is focused on
reconciling the needs of present and future generations, and ensuring that the progress today
does not come at the expense of future generations (Santosh, 2024). Santosh (2024) noted,
“From harnessing renewable energy to pioneering zero-waste production methods and
developing platforms that promote the sharing economy, start-ups are not just participating in
the market, they are actively reshaping it to align with the principles of sustainability”. The
disruption of traditional industries brings about growth in different ways. For example,
disruptive start-ups create jobs in technology, transportation or healthcare. These industries often
require knowledge-intensive inputs, providing job opportunities for employees (Tahir, 2023).
Start-ups also create new markets and increase competition, attracting both domestic and foreign
investors. The new technologies created by start-ups also increase productivity in traditional
industries, which can benefit from such developments to streamline processes and improve
efficiency (Tahir, 2023). In this regard, employee management becomes crucial for start-ups to
remain competitive in the current business landscape and keep developing disruptive
innovations (Santosh, 2024). Therefore, the proper use of intellectual capital in start-ups, by
leveraging autonomy and motivation among employees, can lead to greater levels of innovation
across start-ups (Andries & Czarnitzki, 2014).
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helps involve employees in the most important decisions and processes of the firm, creating a
sense of belonging and increasing engagement among employees (Salina, 2024). With fewer
hierarchical layers, employees feel closer to their managers and feel like they can share their
ideas. These attitudes increase employee motivation, they feel more valued and tend to engage
more in the start-up goals, which enhances innovation performance ultimately (Salina, 2024).
In line with the theories of Innovative Work Behaviour (IWB), Transformational leadership (TL)
and Psychological Empowerment (PE), and the differences between start-ups and established
firms, many factors contribute to increased employee autonomy in the context of start-ups.
Complex relationships exist between employees' self-perception at the workplace and influential
factors increasing motivation, which ultimately results in innovative behaviours. Despite the
interest of researchers in studying the implications of IWB, TL and PE for employee motivation
and innovative behaviour, little attention has been given to how they ultimately affect firm
innovation performance. Research that stresses the importance of this relationship, states that
these behaviours are crucial to the growth and competitiveness of organizations (Afsar et al,
2014; Hennessey & Amabile, 2010). While Hennessey and Amabile (2010) confirmed the
implications that employee intrinsic motivation has on creative tasks and IWB, Bass (1999)
stated that transformational leaders inspire and motivate employees, which is expected to
ultimately affect firm innovation performance. Accordingly, by psychologically empowering
employees, leaders are also able to foster environments where risk-taking and proactive attitudes
thrive (Theurer et al., 2018). The presented literature and theories emphasize the pivotal role of
employees as sources of innovation and competitive advantage for firms. However, the existing
studies fail to address the focus of this study, that is, start-ups. Data on employee autonomy and
firm innovation is largely studied in individual countries’ economies, which makes it hard to
generalise these studies (Andries & Czarnitzki, 2014; Dhar, R., 2016; Klaas et al., 2010;
Demircioğlu, 2020). Other studies also focus on specific industries, such as manufacturing,
construction or transportation (Andries & Czarnitzki, 2014), limiting the relevance of the
findings in the contemporaneous business landscape. Although the studies are limited in the
extent to which they can be applicable, they show a positive relationship between employee
autonomy and firm innovation. Accordingly, the increased differences between start-up firms
and established firms, lead to expecting different results in both contexts when employee
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autonomy is granted, hence the focus of this research on start-up innovation performance. Start-
ups offer significantly different features that lead to theorising the effect of employee autonomy
on innovation performance yielding significantly different results in the context of start-ups as
well. Although the extant literature is limited to which it can be applied in the context of start-
ups, the studies serve as the baseline to derive the expected findings of this research.
Accordingly, the extensive implications of start-ups and their critical role as drivers of
innovation and economic growth, leave a gap to study the effects of employee autonomy on
start-up innovation performance. It is therefore assumed that when employees can work freely
without the direct supervision of their managers, they will show more work innovative
behaviour, leading to increased start-up innovation performance. From the theory, the main
hypothesis of this study is derived below (H1).
3. Empirical strategy
To accurately address the hypothesis derived from the theoretical framework and therefore
answer the research question “What are the effects of employee autonomy on start-up innovation
performance?” a quantitative analysis is deemed appropriate. A quantitative analysis allows to
study the direct effect of an independent variable on a dependent variable while holding other
variables constant (Bhandari, 2023). This research aims to study the effect of employee
autonomy on three different measures of firm innovation while holding factors such as
motivation, employee involvement and monitoring constant. The sample used in this study is
derived from the European Company Survey from 2019 (ECS, 2019), which studies the
practices and policies of firms in Europe and comprises data from 21,869 companies and
measures 385 variables. Data from the ECS is collected from management representatives, and
it benefits from both internal and external validity, ensuring the quality of the data (Desiere, S.,
& Lenaerts, K., 2020). To answer the main hypothesis, a sub-sample derived from the ECS was
used. The sample was cleaned to only contain data from start-ups, resulting in 2,075
observations on average. Therefore, the start-ups in this study represent 100% of the
observations. The number of companies suffices the sample size for the generalizability of the
results. To clean the observations for start-ups, only firms that are 10 years or younger and that
have between 10 and 49 employees are considered start-ups. The choice of these measures has
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been made according to the variables of the study, and such characteristics represent the smallest
form of a firm from the data. This research is studied using the statistical software STATA.
Because the data used in this study is secondary, it is important to consider some limitations and
biases. First, the firms of this study are a minimum of 10 years old, therefore, observations on
younger firms do not exist and are expected to affect the results of this study and its
generalizability to start-ups. Accordingly, firms in this study have a minimum of 10-49
employees. Given that this characteristic can be also found in small businesses, it also represents
a limitation in the generalizability of the results to not only start-ups. Moreover, the respondents
of this study are managers, therefore, their perceptions regarding the activities and feelings of
non-managerial employees might differ from the perspectives of non-managers, leading to
biases in their answers. Some respondents skipped some questions used in this study, resulting
in missing values. The subsample therefore is comprised of a maximum of 2,075 observations,
and the number of observations differs across variables, with some missing values.
Dependent variables
The main dependent variable of this study is the start-up innovation. In this study, three main
dependent variables are measuring firm innovation: product innovation, process innovation and
marketing innovation. Product innovation measures the extent to which a new product or service
has been introduced to the market and/or the firm since 2016. Process innovation measures the
extent to which a new process has been introduced or changed, either for producing goods or
supplying services since 2016. The variable marketing innovation measures the extent to which
the firm has introduced any new or significantly changed marketing methods since 2016. These
are dummy variables and take the value 1 if the firm indicates that it undertook any kind of
innovation activity (product, process and marketing) either for the firm or for the market, and
zero otherwise. Because the type of innovation that a firm engages in can differ, using three
different types of innovation will allow for identifying possible differences in the extent to which
firms innovate.
The main independent variable of this study is employee autonomy. It is a dummy variable that
measures the extent to which managers control how employees carry out their tasks. It takes the
value of 1 if the respondent answered, ‘Managers create an environment in which employees
can autonomously carry out their tasks’ and 0 if the respondent answered, ‘Managers control
whether employees follow the tasks assigned to them’. Approximately, 69% of the managers
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create an environment in which employees can divide their tasks. This variable is considered the
most appropriate and representative of employee autonomy given the nature of data. Descriptive
statistics of the variables are presented in Table 1 on page 17. Appendix 1 depicts the variables
used and the constructs they measure. Appendix 2 depicts the variables used in this study, their
name in the survey and the categories that each variable contains. The survey further offers a
large variety of control variables, which indirectly affect the level of employee autonomy and
the innovation performance of start-ups. The choice of the control variables has been made based
on the theories proposed in the theoretical framework and the most suitable variables from the
ECS. Extant literature and theories highlight the importance of considering work-environmental
factors (Sainna, 2023; Salina, 2024).
Because start-ups often lack the resources to provide their employees with tools to carry out
their jobs (FasterCapital, 2024), the variable personal computer is included in the model,
measuring what percentage of the employees use a personal computer to carry out their daily
tasks. Moreover, monitoring employees is expected to have a negative effect on employee
autonomy, which can ultimately affect start-up innovation (Thiel, et al., 2022). Therefore, the
variable monitoring measures if start-ups use data analytics to monitor employee performance.
The variable improve morale measures how important is for the firm to improve employee
morale (Li et al., 2021). In line with the theory proposed, employee ideas are unique ideas
important for the competitive advantage of the firm (Li et al., 2021). Therefore, the variable
employee ideas measures how important it is for the start-up to increase the capacity of
employees to articulate ideas about improvement. Next, the variable extra pay measures if the
employees receive any extra pay linked to their individual performance, and the variable involve
employees measures how important it is for the start-up to involve employees in work
organisation changes (Sauermann, 2017). Finally, because the motivation of employees can also
affect the level of effort they put into their work, ultimately affecting innovation performance,
the variable motivation is included in the model, and it measures how motivated the employees
of the start-up are.
Figure 1 shows the expected relationship between employee autonomy on start-up innovation.
Based on the literature review and the theoretical framework, other variables are expected to
also affect start-up innovation performance. The expected direction of the effects is reflected
with a + / - sign.
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Figure 1. Expected effect of the variables of the study on start-up innovation performance.
Before running the regression, the data has been cleaned. The observations where respondents
chose the option ‘Skip’ were turned into missing values to avoid biases in the results. The
remainder of the variables that have not been used in this study have been deleted from the data
to avoid biases. Additionally, this study contains observations for firms considered start-ups
only. Firms considered start-ups are a maximum of 10 years old and have between 10 and 49
employees. Finally, the three measures of innovation were turned into dummy variables taking
the value of 1 if start-ups had introduced any, or changed product, process or marketing activities
since 2016, and zero otherwise.
First, regarding product innovation, only 34% of the firms innovated since 2016. 31% of the
firms innovated in processes (process innovation) since 2016, and 28% of the firms innovated
in marketing (marketing innovation) since 2016. In what concerns employee autonomy, 68.73%
of the managers create an environment where employees can autonomously carry out their tasks,
which means that most of the firms in this study give autonomy to their employees. In terms of
using a personal computer, 24.47% of the firms say that all their employees use a personal
computer. Moreover, 67% of the firms do not use data analytics to monitor their employees
(monitoring). 45.46% of the firms consider it fairly important to improve employee morale
(improve morale). In 51.27% of firms, it is important to increase the capacity of employees to
articulate ideas about improvement (employee ideas). In general, 40.74% of the firms do not
link any extra pay to the individual performance of the employees (extra pay). In addition,
42.04% of the firms involve their employees in work organisation to a moderate extent (involve
employees), and 66.49% of the firms think their employees are fairly motivated (motivation).
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Table 2. Frequencies and percentages.
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3.1.3. Correlations
Correlation coefficients between the variables of this study are reported in Table 3. The results
of the correlations indicate that there are some positive and negative relationships between
variables. As expected from the theory, there is a positive correlation between employee
autonomy and each of the three different measures of innovation (product, process and
marketing), and using a personal computer also has a positive correlation with the three
measures of innovation. Using data analytics to monitor employee performance has a negative
relationship with the three measures of innovation. However, improving employee morale and
increasing their ability to articulate ideas for improvement have a negative correlation with
innovation measures. These values are good indicators to go onto the next part, the regression
analysis.
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Table 3. Pairwise correlations.
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3.2. Data analysis
Given that the correlation table shows a positive relationship between employee autonomy and
the three measures of innovation, it is crucial to study the isolated effect of employee autonomy
on product, process and marketing innovation. Therefore, three basic models have been
developed, (1; 2; 3).
From Table 4, when autonomy increases by one unit, there is a 7.93 p.p. increase in product
innovation which is significant (p<0.01). Moreover, when autonomy increases by one unit,
process innovation increases on average by 8.74 p.p. and it is significant (p<0.01). Finally, when
autonomy increases by one unit, marketing innovation increases on average by 7.08 p.p., which
is also significant (p<0.01). The findings indicate that when employees have the freedom to
work autonomously, they might be more creative or effective in their roles, leading to an
increased innovation performance within start-ups. The three coefficients of autonomy mean
that when the effect of autonomy is isolated, the effect is positive and significant for every
measure of innovation. However, the effect of autonomy on innovation cannot be isolated given
that in real life there can be many different factors affecting the level of innovation. Next, three
models have been developed using the rest of the control variables previously explained, which
can affect the level of innovation performance of a firm indirectly.
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Main regression models with all controls
Table 5 reports the coefficient estimates, standard errors statistical significance of the main
independent variable autonomy and the rest of the control variables added. For simplicity, the
regression model shown below shows only one measure of innovation (innovation), however,
the OLS regression model is run for the three different measures of innovation in Table 5.
The findings from Table 5 demonstrate that the beta coefficients of the effects of employee
autonomy on the three different measures of innovation (product, process and marketing)
remain positive. The effect of employee autonomy on product innovation is positive (0.0248),
although insignificant. Employee autonomy and process innovation have a positive relationship
(0.0446) and is significant (p<0.05). Last, employee autonomy has a positive effect on marketing
innovation (0.0226), although insignificant. While the effects on process and marketing
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innovation reject the H1 that more employee autonomy increases the start-up level of
innovation, the effects on process innovation support H1.
Using a personal computer at the workplace has a positive significant effect on product
innovation (0.0382, p<0.01). The effect of a personal computer is also positive under process
innovation (0.0217), and significant (p<0.01). Accordingly, the effect of a personal computer is
also positive (0.0223) and significant (p<0.01) under marketing innovation. Monitoring
employees has a negative significant effect on every type of innovation, being stronger its effect
under marketing innovation. The effects of employee ideas and involving them in how the tasks
are organised have negative significant effects, which deviate from the expected findings
derived from the theory.
Because the focus of this study is the effect of employee autonomy on start-up innovation and
the results from Table 5 deviate from the expected findings, a step-by-step regression analysis
adding one control variable at a time has been carried out to identify the variable that can be
taking the effect of autonomy, either confounding the effect or mediating it. Based on that, a
mediation analysis of the variable personal computer has been carried out. Additionally,
Appendix 3 shows a moderator analysis carried out for the variable personal computer. Given
the insignificant results and their irrelevance within this thesis, the results are disregarded for
the scope of this research.
Using the seminal work of Baron and Kenny (1986) as the baseline for this analysis, a mediation
analysis has been carried out. According to the researchers, the effect of a mediator variable is
to represent the generative mechanism through which the focal independent variable is able to
influence the dependent variable of interest. In general, a given variable is considered a mediator
to the extent that it accounts for the relationship between the independent and the dependent
variables. In a mediation analysis, this study assumes a three-variable system, such that there
are three different paths affecting the outcome variable autonomy. The basic causal relationship
is depicted in Figure 2. The paths are (1) the direct impact of the independent variable on the
outcome variable, (2) the impact of the mediator on the outcome variable, and (3) the impact of
the independent variable on the mediator.
23
Figure 2. Mediation effect of a personal computer on start-up innovation performance.
According to Judd and Kenny (1981), a mediation analysis can be carried out using a series of
regressions. First, regressing the mediator on the independent variable (Table 6), second,
regressing the dependent variable on the independent variable (Table 4) and third, regressing the
dependent variable on both the independent variable on the mediator (Table 7). Judd and Kenny
suggest for a mediation effect to hold, the independent variable must affect the mediator in Table
6; the independent variable must affect the dependent variable in Table 4; and the mediator must
affect the dependent variable in Table 7.
Results of Table 6 show a positive and significant effect of the independent variable on the
mediator variable, which is in line with the mediation analysis proposed by Baron and Kenny.
The next step is to regress the dependent variable on the independent variable. The latter has
been previously analysed to predict the effect of the larger regression on innovation. Table 4
shows the results of such analysis and demonstrates a positive and significant effect for
24
autonomy on each of the three measures of autonomy. Finally, Table 7 shows the analysis of the
dependent variable on the independent variable and the mediator.
Table 7. OLS regression of the effects of the independent variable and mediator on the
dependent variable.
The findings demonstrate that the effect of the mediator is positive and significant in the three
forms of innovation. When the three aforementioned scenarios hold, the effects of the
independent variable on the dependent variable should be less strong in Table 7 (product: β =
0.0354; process: β = 0.0595; and marketing: β = 0.0430) than in Table 4 (product: β = 0.0793;
process: β = 0.0874; and marketing: β = 0.0708) which holds. Perfect mediation would hold if
the independent variable had no effect when the mediator was controlled, which is not the case
for this study.
Moreover, because the independent variable is assumed to cause the mediator, these two
variables should be correlated, which is true for this study (the correlation coefficient between
autonomy and personal computer is 0.2134). This correlation results in multicollinearity when
the effects of the independent variable and the mediator on the dependent variable are estimated,
which results in reduced power in the coefficients of autonomy in Table 7.
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5. Discussion
This research studies the effect of employee autonomy on start-up level of innovation
performance under the scenarios of product, process and marketing innovation (Hypothesis 1).
Using data from the European Company Survey of 2019 it is examined how employee autonomy
affects start-up innovation performance. The main findings of this study support Hypothesis 1
that giving employees more autonomy increases start-up innovation performance, but only
under process innovation. However, the results of the analysis fail to accept H1 that employee
autonomy increases product and marketing innovation. Several mechanisms can explain the
significant results only under process innovation and the lack of supporting evidence in the case
of product and marketing innovations.
26
competitive. The latter is in line with the proposed theories that start-ups and established firms
seek different types of employees, and different employees seek different companies to work at
(Agarwal & Ohyama, 2013; Stern, 2004; Sauermann, 2017). Fifth, because start-ups tend to
grant their employees more autonomy, it is also more appealing for innovative risk-taking
employees to seek environments where they can experiment and face new challenges. Therefore,
highly innovative employees will seek innovative firms. This aligns with the theories of start-
up cultures that their risk-taking and creative natures tend to attract employees who seek less
comfort and more challenges.Sixth, the rise of tech and software companies also explains the
significant results of process innovation. Nowadays, there is more availability of technological
tools that ease the innovation process and are cheap to use. Artificial Intelligence, Machine
Learning and the Internet of Things (IoT) are low-cost tools that start-ups can implement to
improve their processes. Moreover, data analytics and collaborative technologies such as cloud
computing foster process innovativeness in the way that many processes can be automated and
improved.
The same line of reasoning applies to marketing innovation. The rise of technologies and their
cost-saving nature makes it easier to target new customers, for instance with social media.
However, the extent to which start-ups can invest in marketing innovations remains limited to
the existence of technological tools that can be used to market new customers. The latter means
that start-ups will only innovate if they have access and the ability to invest in these tools, which
are often expensive, limiting their capacity to innovate. Additionally, developing a proper
marketing strategy often requires large investments, which start-ups do not own.
27
The effects of a personal computer
The findings of the main regression analysis also led to study the mediation effect of the use of
personal computers. The results of the mediation analysis suggest, in general, that giving
employees autonomy increases product, process and marketing innovation, but only when they
use their personal computers. This section delves deeper into the potential explanations of this
relationship.
From the results, it is found that, when it is not controlled for other factors, employee autonomy
increases the level of innovation performance of start-ups under the three types of innovation.
However, when it is controlled for other factors, like the use of a personal computer, employee
motivation or extra pay linked to performance, the effects of employee autonomy become
inherent only under process innovation. In the latter case, the use of a personal computer
increases innovation performance in the three scenarios when other factors are also controlled
(Table 5). This positive relationship between start-up innovation and the use of personal
computers at the workplace can have several explanations: there is a mediation effect of the
variable personal computer, or there is omitted variable bias.
On the one hand, the model might have suffered from omitted variable bias at first when
examining the isolated effect of autonomy on innovation. Personal computers can be a critical
tool for innovation, especially in today’s business environment. Therefore, autonomy is
channelled using a personal computer and becomes significant only when employees have
access to it. Moreover, it gives the employees more autonomy in the sense that they do not
depend on the start-up resources to carry out innovative activities. Personal computers also
enhance and enable communication to be seamless. This ability to communicate fast and
efficiently increases innovation. The bias occurs when the enhanced communication driven by
computers is not taken into account in the main analysis. Other effects of having a personal
computer can be better operational efficiency or the adoption of new technologies that come
with the use of personal computers. The ability of firms to operate more efficiently with
technological tools such as computers or the use of Artificial Intelligence or the Internet of
Things can enhance the innovative performance of start-ups. Hence, not taking these factors into
account in the main regression can lead to omitted variable bias.
On the other hand, the mediation effect theory was used to explain the statistical effects of
personal computers on start-up innovation performance. Based on the seminal work of Baron
28
and Kenny (1986), a mediation effect analysis of the variable personal computer was conducted.
From the results of Table 7, it can be concluded that a mediation effect exists. In this case, the
use of a personal computer partially mediates the relationship between autonomy and
innovation. As previously explained in the case of process innovation, it can be the case that the
use of a personal computer is a self-selection effect rather than a treatment. The latter means that
using a personal computer increases innovation, but just because employees in jobs that require
to be more innovative, happen to use a personal computer. A distinction can be made between
two types of jobs. White-collar jobs, in which usually more innovative behaviour is required,
may happen to be more innovative with the use of a personal computer, but only because the
jobs require innovativeness. These types of jobs are usually jobs in offices for tech or software
startups. However, in the case of blue-collar employees, using personal computers might be
insignificant because blue-collar jobs do not require them to be innovative, so it does not matter
whether employees use a personal computer or not. For instance, jobs in manufacturing,
construction or transportation might not benefit from employees using a personal computer. In
summary, the effect of personal computers on every type of innovation can have diverse reasons.
Under product innovation, it can be that in software and tech companies, testing a new product
can be easily done with the use of a personal computer. Accordingly, a personal computer
increases the availability of tools for developing software products. In the case of process
innovation, it allows for optimization and automation of processes in highly innovative software
and tech start-ups. Finally, in the case of marketing innovation, it provides a variety of digital
tools such as social media and data analytics that allow for the proper development of marketing
practices.
The results align with the previously mentioned theory of the mediation effect that the effect of
employee autonomy is channelled through the use of personal computers. Employees with more
autonomy might be more likely to use personal computers in ways that enhance start-up
innovation, this is why when in the absence of a mediation analysis, the effect of autonomy is
almost negligible in Table 5.
Control variables
Regarding the effects of other control variables, the researcher illustrates possible reasons for
the results. Figure 3 depicts the direction of the effects of every variable on innovation, given in
Table 5. Monitoring employees has a negative effect on the level of start-up innovation
29
performance and is significant in the three scenarios. This relationship can be explained using
the Agency Theory, in which agents (in this case the employees), when monitored, will feel that
they are not trusted by their principals (managers) and will put in less effort, diminishing start-
up innovation (Adam Smith, 1776). Moreover, improving employee morale (variable morale)
is also expected to have a positive effect on start-up innovation given the theory of Psychological
Empowerment elaborated in the theoretical framework. It is theorised in this study that
empowering employees by improving their morale has a positive effect on innovation ultimately,
due to the increased intrinsic motivation of the employees. The findings of this study, however,
contradict the expected findings. A reason for this can be a misalignment between purpose and
action. Firms of the study might ensure that improving employee morale is important for the
competitive advantage of the firm, however, the extent to which practices improving morale are
implemented remains unknown. Another reason for the negative effects can be a misalignment
of the incentives. Start-ups might be trying to improve the morale of their employees by means
that do not align with the expected results, such as short-term rewards or comforting them rather
than fostering a culture of problem-solving and risk-taking.
The effects of the variable employee ideas also come unexpectedly. From Table 5, it is seen that
increasing the capacity of employees to articulate ideas about improvement yields significant
negative results on start-up innovation performance. This is unexpected, given that according to
the theory by Hackman and Oldham (1980), firms rely on employees as unique sources of
innovation. A reason for this can be that although start-ups foster an environment where ideas
can be shared, the ideas that emanate from the employees are not good enough to improve the
innovation performance of start-ups. Accordingly, there can be a mismatch between purpose and
action, where start-ups consider that increasing the capacity of their employees is important for
the competitive advantage of the firm, but in practice, the ideas are not implemented.
30
Figure 3. Effects of the independent variables on the dependent variable.
The variable extra pay, that is linking extra pay to the individual performance of the employees
has differing effects under the three types of innovation. While product and marketing
innovation have an insignificant effect, process innovation has a positive significant effect.
These results can be explained by the fact that is easier to measure an improvement in processes
(clear metrics such as output produced, efficiency, and cost reductions), than in product or
marketing processes. Moreover, process innovation is sought continuously, while product and
marketing innovation might have longer time horizons, making it easier to link extra pay to
process innovation than to product or marketing innovation. Also, process innovation entails
less risk-taking. A process in a start-up can be easily adopted without much risk or financial
resources, given that the changes remain within the team. On the contrary, changing the product
or marketing activities entails a higher risk and more financial means.
The variable Involve employees also displays unexpected results. For every type of innovation,
involving employees in how the work is organised to give the firm a more competitive
advantage, has negative significant effects. Again, the reason for such results can be a
misalignment between purpose and action. While the respondent firms might consider involving
employees in the work organisation important, they might not do it in practice. Another reason
might be that again the culture of risk-taking and employee involvement does not yield
significant results because there can be consensus problems and the tasks are not efficiently
31
allocated. Employees can also focus too much on the right division of tasks while deviating from
the focus on innovativeness. This is also in line with another reason, that is their lack of
expertise. In a start-up, many processes rely on trial and error and learning from mistakes,
however, when the responsibility of allocating tasks is delegated to employees with little to no
experience in leading a firm, it can lead to suboptimal results.
The variable motivation also yields unexpected results. According to the theory of innovative
work behaviour (IWB) and psychological empowerment (PE), a variable on the levels of
motivation of the employees was added, expecting it to have a significant positive effect on
innovation. The theories proposed in the literature review and the theoretical framework suggest
that motivated employees tend to engage more in the workplace, put in more effort, and
consequently be more creative, leading to more firm innovation. In this study, despite the
66.49% of the firms that believe that their employees are motivated, the effects of such a variable
are negative and insignificant overall. In this case, firms might be focusing too much on short-
term rewards such as performance pay, which ultimately reduces intrinsic motivation because
the incentive comes from outside. Although there might be motivated employees, their efforts
can be focused on other activities such as efficiency, administration or financial numbers. An
important aspect to have in mind regarding employee motivation is that strategies focused on
enhancing individual innovation might mitigate collaboration, which is crucial under the product
and marketing innovation processes.
5.1. Implications
This work adds insights to the extant literature both in theory and practice, providing additional
knowledge to the relationship between employee autonomy and start-up innovation.
32
up operates. Finally, this study highlights the importance of employee-centric approaches to
innovation, especially in contexts of limited resources.
5.1. Limitations
While this study provides valuable insights into the topics of employee autonomy and start-up
innovation, it is important to highlight some limitations.
First, some construct measurements of the study present a limitation. While the dataset used in
this study comes from a reliable secondary source, some of the variables fail to measure the
intended constructs. The variable start-up was defined keeping only the observations of the
firms that were 10 years or younger and that had between 10 and 49 employees. However, firms
that are a minimum of 10 years old is a broader concept than the 0-6 years concept accepted by
the researcher. In addition, firms having between 10 and 49 employees may also contain
observations of small non-start-up businesses, which may affect the results of this study. Start-
ups can also contain from 1 to 9 employees failing to capture even smaller firms. Future research
should create a better construct for start-ups, making sure that it comprises only characteristics
of start-ups in age and number of employees, for instance, firms that are between 0 and 6 years
and have between 1 to 49 employees.
The variable employee autonomy measures only if the managers create an environment in which
employees can autonomously carry out their tasks. However, the researcher believes that this
variable fails to measure other ways of employee autonomy such as being able to contribute to
ideas in the workplace, working location, and schedule flexibility. It also fails to measure if the
33
employees can organise their own working space or how they carry out their activities.
Therefore, the variable employee autonomy lacks other forms of autonomy that can affect
innovation as well. The study by De Spiegelaere et al., (2016) finds three different measures of
employee autonomy, namely work method autonomy, work scheduling autonomy and work time
autonomy. The three measures of autonomy help create a better construct that measures other
dimensions of autonomy, therefore, using it would suit better this study.
The variable morale measures the importance that the firms attribute to improving the morale
of their employees. However, this variable does not measure to what extent the employees have
morale that can affect the firm positively, which may lead to unexpected results in the regression
analysis. In line with this, the variable employee ideas measures the importance that the firm
gives to increasing the capacity of the employees to articulate ideas, but does not provide a
measurement of the employees that articulate their ideas in the workplace. Finally, the variable
motivation measures how motivated firms think their employees are. In this case, the firm might
have the wrong belief about the motivation of their employees, failing to capture the real levels
of motivation of the employees.
Second, future studies should add more control variables that affect the settings of employee
autonomy and start-up innovation, given that the time and resource constraints of this study limit
the ability of the researcher to study the impact of other important factors.
Third, while the data of this study comes from the European Company Survey of 2019, some
aspects of the research limit its generalizability. The start-up variable fails to only measure the
desired construct, therefore, some of the findings might be hard to extrapolate to solely start-
ups, given that the sample is thought to comprise observations of small firms as well. Moreover,
the survey was carried out with European companies only, which might limit the application of
this study to other regions, considering the differences in cultures and practices across the globe.
Fourth, this study uses cross-sectional data, failing to capture the effects of employee autonomy
on start-up innovation in the long term.
Fifth, this study is limited by time and resources, resulting in the omission of potentially relevant
variables such as industry or type of hierarchy of the firm.
Considering the results and the limitations highlighted, this study can benefit from future
improvements. As explained in the limitations, more accurate definitions of start-up and
employee autonomy are needed. Future research should measure start-ups being between 0 and
34
6 years old and having between 1 and 49 employees. Moreover, an in-depth analysis of the
control variables is needed, and adding additional variables could add value to the research. For
example, variables measuring the industry in which the start-up operates, the company culture,
leadership style or hierarchy structure.
In line with the results of the three types of innovation, it is also crucial that future research
studies how they can be enhanced, and which factors increase each of them in start-ups.
Accordingly, studying the differences in innovation across industries can deliver further insights
into the mediating role of using a personal computer. For example, there can be a difference in
innovation performance related to the different types of jobs in start-ups.
Given that the data of this study is cross-sectional, a longitudinal study can add additional
insights into the effects of employee autonomy on start-up innovation in the long term, given
that other factors such as the development of the business and growth can have a moderator
effect between autonomy and innovation.
In addition, future studies should develop two different surveys where the perspectives of
leaders and the perspectives of employees are captured. This way, there will not be biases in
terms of what the leaders believe and what the actual situation is regarding employee motivation
and morale. In line with this, it is also important to stress the need to create more accurate scales
of the involvement of employees in the development of new ideas and task allocation, given that
this study fails to measure the actual involvement of employees in both cases and only measures
the importance that start-ups attribute to those.
6. Conclusion
This study underscores the significance of employee autonomy in the context of start-up
innovation performance. The findings reveal different effects of employee autonomy across the
three types of innovation: product, process and marketing innovation. While there is significant
empirical evidence for a positive effect of employee autonomy on process innovation in start-
ups, this study fails to provide supporting evidence for a positive effect of employee autonomy
in product and marketing innovations. Moreover, using a personal computer at the workplace
mediates the relationship between employee autonomy and start-up innovation performance,
and its effects are consistent across the three types of innovation. The overall impact of
autonomy on process innovation is robust and relevant to the European business landscape. This
study further highlights the potential relevance of work-related environmental factors that can
enhance employee autonomy, such as organizational structure, hierarchy or the industry in
35
which the start-up operates. The theoretical implications of this study underscore the pivotal role
of employees as sources of innovation to remain competitive, and the practical implications
highlight the need to foster strategies that enhance employee autonomy. However, the
limitations of this study suggest future research to study what factors limit the effect of employee
autonomy on product and marketing innovation, highlighting the importance of resource
constraints and the fast-changing business environment.
36
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8. Appendix
Pos. = 385 Variable = est_age Variable label = Age of the establishment in categories
This variable is numeric, the SPSS measurement level is NOMINAL
SPSS user missing values = -3.0 thru None
45
Value label information for est_age
Value = 1.0 Label = 10 years or less
Value = 2.0 Label = 11 to 20 years
Value = 3.0 Label = 21 to 30 years
Value = 4.0 Label = more than 30 years
Value = -3.0 Label = skipped
Pos. = 25 Variable = innoprod Variable label = Since 2016, has this establishment introduced
any new or significantly changed products or services?
This variable is numeric, the SPSS measurement level is SCALE
SPSS user missing values = -1.7976931348623155e+308 thru -1.0
Value label information for innoprod
Value = 1.0 Label = Yes, new to the market
Value = 2.0 Label = Yes, new to the establishment, but not new to the market
Value = 3.0 Label = No
Value = -3.0 Label = Skipped
Pos. = 26 Variable = innoproc Variable label = Since 2016, has this establishment introduced
any new/changed processes either for producing goods or supplying services?
This variable is numeric, the SPSS measurement level is SCALE
SPSS user missing values = -1.7976931348623155e+308 thru -1.0
Value label information for innoproc
Value = 1.0 Label = Yes, new to the market
Value = 2.0 Label = Yes, new to the establishment, but not new to the market
Value = 3.0 Label = No
Value = -3.0 Label = Skipped
Pos. = 27 Variable = innomark Variable label = Since 2016, has this establishment introduced
any new or significantly changed marketing methods?
This variable is numeric, the SPSS measurement level is SCALE
SPSS user missing values = -1.7976931348623155e+308 thru -1.0
Value label information for innomark
Value = 1.0 Label = Yes, new to the market
Value = 2.0 Label = Yes, new to the establishment, but not new to the market
Value = 3.0 Label = No
Value = -3.0 Label = Skipped
Pos. = 42 Variable = supchek Variable label = Which of these two statements best describes
the general approach to management at this establishment?
This variable is numeric, the SPSS measurement level is SCALE
SPSS user missing values = -1.7976931348623155e+308 thru -1.0
Value label information for supchek
Value = 1.0 Label = Managers control whether employees follow the tasks assigned to them
Value = 2.0 Label = Managers create an environment in which employees can autonomously carry out their tasks
Value = -3.0 Label = Skipped
Pos. = 35 Variable = ictcomp_d Variable label = [ICTCOMP and WPSIZE_MM] - How many
employees in this establishment use personal computers or laptops to carry out their daily tasks?
This variable is numeric, the SPSS measurement level is SCALE
SPSS user missing values = -1.7976931348623155e+308 thru -1.0
Value label information for ictcomp_d
Value = 1.0 Label = None at all
Value = 2.0 Label = Less than 20%
Value = 3.0 Label = 20% to 39%
Value = 4.0 Label = 40% to 59%
Value = 5.0 Label = 60% to 79%
Value = 6.0 Label = 80% to 99%
Value = 7.0 Label = All
Value = -3.0 Label = Skipped
Pos. = 39 Variable = itperfmon Variable label = Does this establishment use data analytics to
monitor employee performance?
This variable is numeric, the SPSS measurement level is SCALE
SPSS user missing values = -1.7976931348623155e+308 thru -1.0
Value label information for itperfmon
Value = 1.0 Label = Yes
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Value = 2.0 Label = No
Value = -3.0 Label = Skipped
Pos. = 69 Variable = trmot Variable label = Improving employee morale - important for
providing training to employees
This variable is numeric, the SPSS measurement level is SCALE
SPSS user missing values = -1.7976931348623155e+308 thru -1.0
Value label information for trmot
Value = 1.0 Label = Very important
Value = 2.0 Label = Fairly important
Value = 3.0 Label = Not very important
Value = 4.0 Label = Not at all important
Value = -3.0 Label = Skipped
Pos. = 77 Variable = vpinper_d Variable label = [VPINPER and WPSIZE_MM] - Variable extra
pay linked to individual performance - employees received variable pay
This variable is numeric, the SPSS measurement level is SCALE
SPSS user missing values = -1.7976931348623155e+308 thru -1.0
Value label information for vpinper_d
Value = 1.0 Label = None at all
Value = 2.0 Label = Less than 20%
Value = 3.0 Label = 20% to 39%
Value = 4.0 Label = 40% to 59%
Value = 5.0 Label = 60% to 79%
Value = 6.0 Label = 80% to 99%
Value = 7.0 Label = All
Value = -3.0 Label = Skipped
Pos. = 115 Variable = eicomp Variable label = To what extent does involving employees in
work organisation changes give the establishment a competitive advantage?
This variable is numeric, the SPSS measurement level is SCALE
SPSS user missing values = -1.7976931348623155e+308 thru -1.0
Value label information for eicomp
Value = 1.0 Label = To a great extent
Value = 2.0 Label = To a moderate extent
Value = 3.0 Label = To a small extent
Value = 4.0 Label = Not at all
Value = -3.0 Label = Skipped
Pos. = 127 Variable = lowmot Variable label = Overall, how motivated do you think employees
in this establishment are?
This variable is numeric, the SPSS measurement level is SCALE
SPSS user missing values = -1.7976931348623155e+308 thru -1.0
Value label information for lowmot
Value = 1.0 Label = Very motivated
Value = 2.0 Label = Fairly motivated
Value = 3.0 Label = Not very motivated
Value = 4.0 Label = Not at all motivated
Value = -3.0 Label = Skipped
In line with the results of the main regression analysis. A moderator analysis is also carried out
with the variable personal computer. This is done in an attempt to discover if the variable
personal computer moderates the effect of employee autonomy on start-up innovation. Results
47
of Table 10 fail to demonstrate that autonomy combined with a personal computer does not give
higher innovation levels. The results of the mediating effect in the main research show that
personal computer has a mediating effect on innovation.
When adding the variable personal computer into the regression, the effect of autonomy on
product innovation remains both positive and insignificant. However, the effects of autonomy
on marketing innovation become significant (p<0.05). The effects of personal computer on the
three types of innovation remain positive and significant as in the regression with all the
moderators. However, the findings of Table 6 suggest that the effect of employee autonomy on
innovation could be channeled through the use of personal computers. For this reason, an
additional regression has been carried out after creating an interaction term between employee
autonomy and the use of personal computers. Table 7 reports the OLS regression analysis results
with the addition of the interaction term (Auton*PersComputer).
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Table 10. OLS models with interaction term between autonomy and personal computer.
The results of table 7 suggest that when firms give employees more autonomy and they use their
personal computer to carry out their activities the firms do not become more innovative on
average. Despite the small positive effect of autonomy and the use of personal computers on
process innovation, it cannot be said that the use of a personal computer mediates the effect of
autonomy on innovation. The results section delves deeper into the reasons why there might
exist this relationship.
*Turning the ‘skipped’ option into missing values for every variable
replace supchek = . if supchek == -3
replace ictcomp_d = . if ictcomp_d == -3
replace itperfmon = . if itperfmon == -3
replace trialerr = . if trialerr == -3 | trialerr == -9
replace trmot =. if trmot == -3
replace trinn = . if trinn == -3
replace vpinper_d = . if vpinper_d == -3
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replace eicomp = . if eicomp == -3
replace lowmot =. if lowmot == -3
*Autonomy variable
rename supchek emp_autonomy
replace emp_autonomy = 0 if emp_autonomy == 1
replace emp_autonomy = 1 if emp_autonomy == 2
label define emp_autonomy_label 0 "managers control" 1 "managers do not
control"
label values emp_autonomy emp_autonomy_label
rename emp_autonomy autonomy
50
asdoc summarize firmsize firmage productinnovation processinnovation
marketinginnovation autonomy personalcomputer monitoring improvemorale
employeeideas extrapay involveemployee motivation,
save(summary_statistics.doc)
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