Investigating the relationship between top management teams’ characteristics and organisational innovation: The mediating role of dynamic capabilities

Abstract

Despite the considerable role of TMT characteristics, a limited amount of interest has been paid to address the impact of top management teams’ characteristics on the organizational innovation. Further, as organizational innovation is the main responsibility of lower- and middle-level managers, there is a possibility to have a number of factors (i.e. dynamic capabilities) that could mediate the relationship between TMT characteristics and organizational innovation. Nevertheless, there is an absence of studies that have empirically tested the role of mediators on such relationship. Moreover, in the Saudi Arabia, the related issues of TMT characteristics, DCs, and organizational innovation have not been well covered. Thus, the focus of this research is to empirically examine relationship between TMT characteristics and organizational performance by considering the mediating role of DCs within the context of small- and medium-sized construction organisations in Saudi Arabia. A mixed method research design was adopted using both techniques: questionnaire survey and interviews. About 250 self-administered were collected using snowball sampling techniques to SME managers-owners of small construction firms in Saudi Arabia. Structured interviews, unstructured, open-ended discussion were also conducted to collect the qualitative data from 20 SME managers-owners in Saudi Arabia. The data collected by questionnaire were then tested using Structural equation model by facilitating AMOS software. According to statistical results, DCs were approved to have a significant mediating effect in the relationship between in the relationship between Educational Level, Tenure Diversity / Heterogeneity, Functional Experience and Organizational Innovation on the one hand, and performance on the other. These results are consistent with the results of the thirteenth question in the qualitative research which confirmed that the availability of Dynamic Capabilities gives organizations an advantage and enables them to achieve Organizational Innovation and improve performance. This study will hopefully provide both practitioners and academics with more understanding about the aspects that shape the relationship between TMTs characteristics, DCs and innovation. This, in turn, will help managers to have the best managerial practices enhancing the current situation of innovation and performance in small- and medium-sized construction companies in Saudi Arabia. As the current study only focused on the construction firms in Saudi Arabia, other sectors and countries could be considered by future studies to see the applicability of the current model on a larger scale. Further, future studies could consider other factors that could predict the organizational innovation as well as going further to discover the main consequences of the organizational innovation.