Leadership Research Summary:
- CEO leadership is considered a critical antecedent of product innovation performance, but the relational aspect of leadership has been largely neglected in this area. Drawing on upper echelons theory and relational leadership literature, this study explores whether, how, and when CEO relational leadership influences product innovation performance. Specifically, we analyze the underlying mechanism of TMT (top management team) voice behavior and two boundary conditions—TMT educational level and TMT age.
- Based on multi-source and multi-wave data on 105 Chinese firms, this study finds that CEO relational leadership plays an important role in promoting product innovation performance through the intervening mechanism of TMT voice behavior. Furthermore, the positive relationship between CEO relational leadership and TMT voice behavior is stronger in TMTs with higher educational level and lower age.
- This study contributes to the existing literature by empirically examining the under-investigated relationship between CEO relational leadership and product innovation performance, and by disentangling the underlying mechanism and boundary conditions.
Leadership Research Implications and Findings:
- The study’s findings contribute to the existing literature in several ways. First, this study extends the literature on CEO leadership and firm innovation. Although previous studies have examined the effects of various types of CEO leadership on firm innovation, most have focused on the personal attributes of CEOs and have largely ignored the relational dynamics and process of leadership (Reitz, 2015; McCauley and Palus, 2021). A growing body of leadership research has explored leadership influence from a relational perspective (Uhl-Bien, 2006). The findings suggest that by emphasizing relationships and relational interaction within an organization, CEO relational leadership can promote communication and understanding among TMT members and motivate them to voice their concerns and suggestions, which translates to improved product innovation performance. This study demonstrates that CEOs can shape innovation outcomes not only by modeling transformative behavior (Kraft and Bausch, 2016) or building an innovative vision (Caridi-Zahavi et al., 2016), but also by engaging in trivial daily conversations and relational interaction with TMT members (Uhl-Bien, 2006; Cunliffe and Eriksen, 2011). Thus, relational leadership provides a nuanced way to understand how CEO leadership facilitates product innovation.
- This study also complements research on how CEO leadership results in firm outcomes and enriches the CEO–TMT interface literature. Although the effect of CEO leadership on firm outcomes has been widely examined, research on the complex nature of this relationship is relatively scarce (Ling et al., 2008; Chen et al., 2014). Upper echelons research states that a CEO’s effect on firm outcomes can be transmitted by TMT dynamics, and the interplay between CEO and TMT can result in a stronger explanation of the heterogeneity of firms’ outcomes (Carpenter et al., 2004; Liu et al., 2018). In this study, researchers introduce TMT voice behavior as the interpersonal dynamic in TMT and verify its positive influence on product innovation performance. The intervening mechanism helps us have a better understanding of how CEO relational leadership influences product innovation performance. Specifically, CEO relational leadership, by engaging TMT members in rich dialog, encourages TMT members to voice their opinions, which results in deeper interaction between CEOs and TMT members and improves product innovation performance. The interplay between CEO relational leadership and TMT voice provides a strong explanation of how top executives influence firm outcomes.
- Likewise, this study contributes to research on the linkage between CEO leadership and TMT voice behavior by identifying two conditional factors. Although Cortes and Herrmann (2020) have demonstrated that transformational CEOs have a positive impact on employee participation, they do not explore the boundary conditions that may place limits on how CEO leadership actually affects employees’ willingness to voice their ideas. We move the research forward by introducing TMT educational level and TMT age as boundary conditions. TMT educational level and TMT age, as the prominent demographic details that reflect TMT members’ values and cognition, affect their interpretation of, and reaction to, external stimuli (Hambrick and Mason, 1984). The results demonstrate that TMT education and age significantly moderate the relationship between CEO relational leadership and TMT voice behavior. TMTs who are younger and more educated are more likely to respond to relational CEOs and voice their suggestions and ideas. In this manner, this study enriches the theoretical model of when CEO leadership facilitates TMT or employee voice behavior, which then advances product innovation performance.
- The research findings also have significant implications for practitioners. Accelerating technological change and intensified competition make rapid and successful product innovation a must for firms’ sustainable competitiveness (Chen et al., 2014). However, innovation cannot be achieved by any single member of an organization. It is a collective effort that requires every member work with others to solve problems together. Therefore, it is important for leaders in a firm to promote connections and interactions among organization members. Relational leadership is highly relevant to these practices. This study provides evidence that CEO relational leadership is beneficial for product innovation performance via TMT voice behavior. Thus, to facilitate product innovation, CEOs should develop relational skills and pay attention to daily interaction and communication. More specifically, CEOs should initiate conversations with TMT members and employees in formal or informal ways rather than waiting to receive reports from their employees. This is especially necessary in the digital era, as organizations become more decentralized and employees become partners and collaborators who wish to be valued.
- Additionally, the mediating mechanism of TMT voice behavior suggests that CEOs should encourage TMT members to voice their opinions by relating to and interacting with them. Relational leaders can also create an environment of open communication to encourage employees to express their concerns and suggestions. Lastly, the study demonstrates that TMT educational level and TMT age are important boundary conditions in the relationship between CEO leadership and TMT voice behavior. Younger, educated executives are more open to new ideas and have the ability to deal with complicated situations (Barker, and Mueller, 2002). They are more likely to engage in positive relationships with relational CEOs and express their innovative ideas and suggestions to bring about change. This finding suggests that apart from developing relational skills, CEOs should also be careful in the selection and appointment of TMT members. Irrespective of their size, firms that emphasize innovation should select TMT members who are not only technically competent, but also willing to express their opinions to contribute to the firm’s development.