Innovation as Mindset: Management’s Moderating Role in the

Relationship Between Organizational Culture and Human Resources

Luca Furlani, Rita Giordano, Filippo Frangi, Alessandra Luksch and Antonio Ghezzi

Department of Management, Economics and Industrail Engineering, Politecnico di Milano,

Via Lambruschini 4B, Milan, Italy

Keywords: Innovation Management, Innovation Process, Organizational Culture, Organizational Management,

Human Resources, Innovative Behavior.

Abstract: Innovation has been traditionally studied through two main lenses: innovation as product and innovation as

process. Recently, a third perspective – innovation as a mindset – has emerged, focusing on the relationship

between innovation, organizational culture and individual involvement. A review of the literature of

innovation as mindset reveals fragmented field, lacking of a comprehensive definition and showing

inconsistencies with established innovation management studies. This study investigates these inconsistencies,

assesses the relevance of the mindset perspective to innovation studies, and examines the effects on innovation

of three key actors: organizations, individuals, and management. Based on an analysis of three Italian SMEs,

the research highlights the joint influence of organization and individuals on the innovation capability of the

organization itself. In addition, it has emerged the moderating role of management in the relationship between

organization and individuals. Management fosters a climate for innovation by enabling open communication,

supporting individual expression, and translating organizational values into actionable practices. The study

proposes a framework where the organization and the individuals have a direct impact on innovation, while

management acts as a facilitator and moderator.

1 INTRODUCTION

Innovation has traditionally been conceptualized

through two primary lenses: innovation as outcome,

which focuses on the tangible results produced by

innovation efforts, and innovation as process, which

emphasizes the mechanisms and stages leading to

those outcomes (Crossan & Apaydin, 2010). While

these perspectives offer valuable insights, recent

scholarship argues for the necessity of a third lens:

innovation as mindset (Kahn, 2018). This emerging

perspective emphasizes how innovation becomes

internalized by organizational members and

highlights the critical importance of alignment

between individual attitudes and organizational

culture in driving innovation success.

Despite its increasing relevance, literature on

innovation as mindset remains fragmented. This

fragmentation has resulted in isolated studies

examining organizational factors, individual

characteristics, and managerial practices without

sufficient integration of their interconnected

influences. To address this gap, the present study

adopts a multi-actor framework that examines three

key stakeholders in the innovation process: the

organization, the individual, and management. For

the latter actor, its moderating role between the

organization and the individual is investigated.

Existing research demonstrates that

organizational culture combined with leadership style

generates superior innovation outcomes that

ultimately enhance firm performance. (Hogan &

Coote, 2014; Lertxundi et al., 2019). Simultaneously,

extensive literature identifies specific skills and

personality traits that signal an individual's

innovativeness ( Dyer et al., 2019; Griffin et al., 2012;

Hasan & Koning, 2019).

This study addresses the need for a more

integrated understanding by exploring how

organizational context, individual characteristics, and

managerial practices collectively influence

innovation processes within three Italian SMEs.

Through qualitative interviews conducted with

managers across various sectors, the research

investigates the dynamic interactions between these

three levels of analysis. The findings reveal that

specific managerial practices – particularly fostering

innovation-supportive environments, promoting team

Furlani, L., Giordano, R., Frangi, F., Luksch, A. and Ghezzi, A.

Innovation as Mindset: Management’s Moderating Role in the Relationship Between Organizational Culture and Human Resources.

DOI: 10.5220/0013739700004000

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 17th International Joint Conference on Knowledge Discovery, Knowledge Engineering and Knowledge Management (IC3K 2025) - Volume 2: KEOD and KMIS, pages

461-468

ISBN: 978-989-758-769-6; ISSN: 2184-3228

461

heterogeneity, and facilitating effective cross-

functional communication – can significantly amplify

the innate innovation capacity present at both

organizational and individual levels. By examining

these interconnected relationships, this study

contributes to a more holistic understanding of

innovation as mindset and provides practical insights

for enhancing innovation capabilities in SME context.

2 THEORETICAL

BACKGROUND

In recent years, the concept of innovation has

attracted considerable attention, becoming a focal

point within organizational strategies and a recurrent

theme in political discourse (Kahn, 2018). Although

the widespread usage of this term has sometimes led

to superficial interpretations, innovation continues to

hold significant strategic value, influencing

investment decisions at both governmental and

corporate levels. Consequently, scholarly literature

extensively investigates innovation through two main

lenses: innovation as outcome, which emphasizes

measurable results, and innovation as process,

focusing on the mechanisms that drive these

outcomes (Crossan & Apaydin, 2010).

However, in recent years, opportunities and

intuitions have become sources of competitive

advantage, underscoring the central role of human

capital in innovation. Recognizing this human-

centered dimension, Khan (2018) proposes

innovation as mindset, which addresses the

internalization of innovation by individual members

of the organization and the advancement of a

supportive culture throughout the organization

(Kahn, 2018). Several studies support the view that

both organizational and individual aspects have a

direct impact on the innovation capability of the

organization (Lertxundi et al., 2019). However, the

mindset perspective introduces a novel angle by

providing a unified lens through which to examine

how these two dimensions, organization and

individual, influence each other.

2.1 Innovation as Mindset:

Organization Side

The organization is the first actor in the innovation as

mindset framework. While research consistently

demonstrates a positive relationship between

innovation and the size of the organization, empirical

evidence shows that size negatively moderates

knowledge sharing within the organization, which in

turn affect innovation (Khosravi et al., 2019).

Organizational culture combined with the

leadership style is recognized as the main driver of

innovation outcomes (Lertxundi et al., 2019), which

in turn positively impacts firm performance (Hogan

& Coote, 2014). Organizational culture refers to the

values and beliefs that establish norms and expected

behaviors that employees might follow (Schein,

1994). However, excessive formalization of values

and norms might lead individuals to be less likely to

share non-normative information (Goncalo &

Duguid, 2012).

Beyond the organizational culture, design

thinking approaches are considered to have positive

impacts as they stress the needs of end users,

embracing an empathetic mindset (Kahn, 2018).

Equally important is team composition, which

significantly impacts the creativity promotion

(Hansen & Levine, 2009). Indeed, fostering

heterogeneity within teams has been shown to

facilitate the avoidance of past biases (Majchrzak et

al., 2023), as well as the sharing of unique knowledge

and the generation of unconventional ideas (Goncalo

& Duguid, 2012).

Through organizational culture, process design,

and team composition, organizations can establish

climate for innovation, which is defined as the extent

to which team's values and norms emphasize

innovation (Anderson, 1998). Climate for innovation

– in its four dimensions: vision, participative safety,

task orientation and support for innovation –

combined with leadership style, work groups and

problem solving style stimulate an innovative work

behavior by employees (Scott & Bruce, 1994).

2.2 Innovation as Mindset: Individual

Side

Individuals are the second actor in the innovation as

mindset framework as innovation frequently is

originated from individual insights and initiatives

(Crossan et al., 1999). At the individual level, specific

cognitive and behavioral capabilities determine one’s

capacity to contribute meaningfully to innovation

processes.

Extant research identifies five critical skills that

significantly enhance individual innovation

performance: associating, questioning, observing,

experimenting and networking (Dyer et al., 2019).

When these skills are coupled with a pi-shaped profile

– characterize by deep expertise in two domains and

broad knowledge across multiple fields (Griffin et al.,

2012) – individuals are better adept to bridge diverse

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areas of knowledge and generate innovative solutions

(Kahn, 2018).

Moreover, fostering connections among creative

individuals is essential for generating new and

valuable ideas, as creativity inherently resides at the

individual level (Shalley et al., 2009). Additionally,

several studies highlight the relationship between

personality traits and innovation capabilities.

Specifically, according to the Big Five personality

traits theory,

extroversion and conscientiousness have

been identified as strong indicators of an individual's

propensity for innovation (Hasan & Koning, 2019).

2.3 Innovation Management

Management is the third actor in the innovation as

mindset framework as it represents the critical bridge

between organization and individuals. While

extensive researches has examined the influencing

factors on innovation management, as organizational

size or financial performance, the findings remain

contradictory (Khosravi et al., 2019). This

inconsistency underscores the complexity of

managerial roles in innovation processes and

highlights the need for a more nuanced understanding

of how managers mediate innovation outcomes.

Research demonstrates that leadership functions as a

mediating factor in fostering innovative work

behaviour within teams. Managing cognitive

uncertainty helps individual to navigate the ambiguity

of innovation processes (Bernards, 2024).

Notwithstanding, the manager of the innovation

process has its own cognitive configuration that affect

the decisional outcomes (Stroh et al., 2022), besides

its relevance in the development norms that

encourage innovative behaviors (Bhimani et al.,

2023). In addition, managerial decision making is

shaped by cognitive proximity, as managers are

inclined to rely on areas closer to their existing

knowledge base, thereby facilitating more effective

communication (Marzi et al., 2023).

Furthermore, managers have to deal with tensions

that Andriopoulos and Lewis (2009) conceptualized

as innovation paradoxes which regards strategic

intent (profits or breakthroughs), customer

orientation (tights or loose coupling) and personal

drivers (discipline or passion).

2.3.1 Knowledge Management

An additional dimension of innovation management

is knowledge management, as knowledge resides

within individuals and may exist in both tacit or

explicit forms (Blackler, 1995).

Effective knowledge management necessitates

the development of organizational absorptive

capacity, which entails two dimensions. Potential

absorptive capacity concerns the acquisition and

assimilation of new knowledge; while realized

absorptive capacity involves the transformation and

exploitation of new knowledge by integrating it with

existing knowledge (Cohen & Levinthal, 1990; Zahra

& George, 2002).

The governance of knowledge and the structure of

organizational networks further shape innovation

outcomes. Knowledge Governance Mechanisms

(KGMs) should combine formal and informal

practices: formal mechanisms facilitate the rapid

diffusion of best practices, while informal ones foster

the development of absorptive capacity (Aslam et al.,

2024). Moreover, network density influences

knowledge flows, as dense network enhance trust and

cooperation but may also generate redundancy and

constrain divergent perspectives (Sethi et al., 2001).

3 METHODOLOGY

Despite the expansive volume and increasing trend of

literature in the field of innovation, a review of the

literature reveals the fragmentation of studies

conducted in the area of innovation as mindset. The

development of this perspective through independent

and individual studies inevitably leads to

contradictory findings. Moreover, the multitude of

frameworks identifying skills that signal innovative

attitudes creates conceptual ambiguity. In this

context, investigating management’s role and the

levers available to enhance innovation performance

becomes particularly relevant. Consequently the

research question guiding this study is formulated as

follows: How innovation as mindset influence the

organizational innovativeness and what role does

management play in the relationship between

organization and human resources?

3.1 Research Design

Innovation as mindset is defined by Kahn (2018) as

“the internalization of innovation by individual

members of the organization and advancement of a

supportive culture throughout the organization”.

Drawing on this conceptualization, the present study

examines the two central actors identified within this

definition: the organization and the individual.

Additionally, management is selected as the

analytical perspective, given its intermediary role in

Innovation as Mindset: Management’s Moderating Role in the Relationship Between Organizational Culture and Human Resources

463

the relationship between the organization and

individuals.

3.1.1 Organization Side

On the organization side, the analysis focuses on

identifying and assessing the efforts and practices

adopted by firms to enhance their innovation

performance. In accordance with what has emerged

from the literature review, it investigates the level of

formalization of organizational culture, the role

organizational culture plays, how innovation process

is designed, how teams are composed, and the

relevance of the climate within teams. Specifically,

with regard to organizational culture, the role of

values and how they are translated into concrete

actions will be evaluated, following Schein's pyramid

(Schein, 1994).

3.1.2 Individual Side

On the individual level, the analysis examines the

presence of individual characteristics that signal a

higher innovativeness. This dimension is particularly

relevant, as innovation often initiated by individual

intuitions (Crossan & Apaydin, 2010). The literature

proposes various frameworks that identify skills

(Dyer et al., 2019), attitudes (Griffin et al., 2012), or

personality traits (Hasan & Koning, 2019) associated

with innovative behavior. However, little consensus

has been reached, underscoring the need for further

empirical investigation. In addition, attention is

directed toward the adoption of specific mechanisms

for knowledge sharing, which is recognized as

facilitator of innovation.

3.1.3 Management Side

The existing literature uses the term innovation

management to examine predominantly demographic

aspects of organizations, while employing the term

leadership to focus on actions taken directly by the

manager (Khosravi et al., 2019). With this side, the

objective is to examine the mediating role that

managers play in the relationship between

organizations and individuals. Consequently, it is

investigated how managers stimulate and foster

innovation within their teams, considering where

management's responsibility lies and where the

responsibility lies with the organization.

3.2 Case Study Design

To address the research aim, a qualitative approach

was adopted, involving in-depth interviews with

engineering managers and senior managers reporting

directly to the CEO in three Italian SMEs. Open-

ended questions were used to elicit detailed insights,

particularly concerning managerial practices,

organizational culture, and individual characteristics.

To ensure confidentiality and encourage candid

responses, all participants and their organizations

were anonymized.

3.3 Sample of Analysis Criteria

The selection of companies is based on the EU

Commission's definition of SMEs, which represents

99% of companies in Europe (European Commission,

2003). Moreover, the B2C sector is delineated as a

criterion for selection, given its dynamism, which is

attributable to its lower switching costs in comparison

to the B2B sector. The AIDA database is utilised for

the identification of companies, with filters applied to

narrow down the search based on company size and

ATECO codes.

This process resulted in a final sample of 40

companies, from which three companies from the

travel, fintech, and retail industries were selected.

3.4 Data Analysis

All interviews were recorded, transcribed verbatim,

and analyzed through a thematic coding procedure.

The interview protocol followed a semi-structured

format, organized around three macro-areas

(organization, individual, management). Each

interview lasted on average 45–60 minutes. Data

analysis combined deductive codes derived from the

literature with inductive codes emerging from the

transcripts. Two researchers independently coded a

subset of interviews and discussed discrepancies to

ensure consistency. Codes were then grouped into

categories and aggregate dimensions, following the

Gioia methodology (Gioia et al., 2013), to enhance

transparency and replicability.

4 EMPIRICAL RESULTS

The results of the interview are summarized in Table 1.

4.1 Company A

Company A demonstrates well-defined and

formalized organizational values that are

systematically integrated into employee selection

processes. However, some of these organizational

values, such as passion, are not clearly reflected with

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Table 1: Case study results.

Company A Company B Company C

Innovation process Formal innovation process Agile approach Formal innovation process

Organizational Values Organizational values

defined through a top down

approach, context impacts

innovation more than

culture

Organizational values

defines through a bottom

up approach, culture is the

measure of company

innovativeness

Organizational values

defined through a top down

approach, culture explains

how to achieve goals

Innovator characteristics Curiosity and propensity

for experimentation

Purposefulness and

transversality

Learn quickly and find the

simplest solution

Knowledge sharing Hackathons and team

meetings

Not formalized Team meetings

Management’s role To carry the company

perspective within the team

To establish the context

enabling individual to

innovate

To establish the context

and to protect team

members

How innovation happens Innovation is delegated to

individuals management

has to assess proposals

Innovation is fostered

through team heterogeneity

and communication with

each member of the team

Innovation is fostered

through an effective

communication with each

team member

Obstacles to innovation Bureaucracy, every project

needs justification

Targets set by BoD are

prioritized over

organizational values

A change in ownership

slowled innovation projects

concrete actions in daily activities. Nevertheless,

organizational values fulfil a critical coordination

function, facilitating alignment among individuals

and thereby overcoming hard skills.

The innovation process has undergone

progressive formalization in recent years, driven by

organizational growth and the necessity of reporting

to stakeholders.

At the individual level, Company A encourages

autonomous experimentation, even though new

innovative projects require the approval of C-level

managers. Respondents assert that the characteristics

that signal to him or her an innovative attitude are an

innate curiosity and a propensity for experimentation.

The organization emphasizes creating

psychologically safe environments where individuals

are free to make mistakes.

Knowledge sharing is facilitated through structure

mechanisms including regular team meetings,

hackathons, and occasional external partnership

sessions where collaborative problem-solving occurs

with other organizations.

Interviewees emphasize that team climate

significantly influences innovation outcomes, with

project success contingent upon alignment between

initiatives and established organizational culture. The

success of the project, however, is dependent on the

extent to which it is aligned with the organizational

culture.

4.2 Company B

In Company B, organizational values function as the

primary competitive differentiator. The initiation of

projects is founded upon a set of organizational

values that are not regarded as a secondary

consideration. Employees are asked to associate

practical actions to each organizational value, and

alignment with organizational values constitutes part

of the compensation. This approach entails the

capacity to engage with any given task, examine it

critically, and adapt it when necessary, reflecting both

embody these qualities are more likely to pursue

innovative initiatives and seek professional

opportunities aligned with innovation.

From a managerial perspective, managing such

autonomous individuals is a highly onerous task.

However, respondents note that once these

individuals are effectively organised, managers may

become functionally replaceable. Consequently, the

role of the manager is to establish the context that

allows individuals to freely express themselves. To

establish the context, safeguarding freedom of

speech, fostering team heterogeneity and the ability

of managers to consider perspectives that may lie

beyond their immediate areas of expertise emerge as

crucial aspects. An additional capability deemed

essential by the manager is to communicate in an

effective way to each member of the team,

considering its unique characteristics. In conclusion,

the interviewees define organizational culture as the

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465

extent to which the company is arranged to innovate.

Nevertheless, at actual company’s stage, target

metrics set by BoD are typically prioritized over

organizational values.

4.3 Company C

Company C has recently undergone an ownership

transition, which significantly impact the interview

findings. Organizational values are defined at

corporate level and, combined with a long-term

vision, define expected employee behaviours, while

serving as hiring criteria.

The innovation process follows a structured

approach: ideas emerge from any organizational

function – business, product, or technology – and

subsequently undergo managerial evaluation where

requirements are defined.

At the individual level, rapid learning ability and

solution simplification skills represent crucial

innovation characteristics. Similarly to Company A,

Company C organizes formal sessions for knowledge

sharing, during which all participants are encouraged

to propose improvements to the product.

Regarding managerial responsibilities, a

particular emphasis is placed on the importance of

managers in fostering an environment in which each

team member can thrive and fulfil their potential. This

encompasses not only fostering a positive and

productive team climate but also ensuring the

protection and well-being of team members. Effective

communication strategies with each team member are

a facilitator of innovation. Though, respondents

acknowledge no universal approaches exist for this

challenge.

In conclusion, organizational culture exerts a

significant influence on innovation processes. A

correlation has been observed between changes in

organizational ownership and a decline in the

efficiency of innovation processes. The results of this

observation indicate that organizational culture plays

a pivotal role in facilitating employee understanding

of how to achieve specific objectives

5 DISCUSSION

The study’s findings underscore the necessity for a

holistic approach to innovation, emphasizing the

interdependence of organizational culture,

managerial practices, and individual characteristics.

It is not possible to define an effective culture without

considering individuals and the moderating effect of

management. The present study confirms the

relevance of organizational culture to organizational

innovativeness, as previously stated in numerous

articles (Lertxundi et al., 2019). The interviews

indicate that the function of culture is to define how

the organization intends to innovate, thereby defining

organizational culture as the measure that signals the

company’s willingness to innovate. It is also noted

that the absence of a climate inclined to innovation

negates the effect that culture has on innovation.

With regard to the elements indicative of an

individual’s capacity for innovation, insights

obtained from the interviews largely align with

existing literature, reinforcing the conclusions of

previous studies (Cohen & Levinthal, 1990; Dyer et

al., 2019; Griffin et al., 2012; Zahra & George, 2002).

Notably, openness consistently emerged as a key trait

signalling individual innovativeness, consistent with

the Big Five personality traits theory. Additionally,

only company B specifically identifies

conscientiousness as another significant personality

trait supporting innovation, further substantiating

earlier research highlighting a positive relationship

between certain personality traits and innovativeness

(Hasan & Koning, 2019).

In terms of how management can promote an

innovative approach by human resources, creating a

collaborative environment and facilitating knowledge

renewal emerge as major levers. This perspective

stands in contrast to the approaches delineated in

Section 2.3, which underscores the significance of

cognitive uncertainty (Bernards, 2024), characterized

by the presentation of paradoxes to create space for

novel approaches. It is crucial to acknowledge that the

extant literature addressing the issue of stimuli for

innovation has done so in a largely isolated manner,

and the studies have been conducted in contexts that

bear little similarity to the complex and multifaceted

corporate environment. The composition of the team

also emerges as a key lever for fostering innovation

(Hansen & Levine, 2009). However, perspectives on

this aspect vary among companies. Company C

highlights the importance of communication,

emphasizing the manager’s need to personally know

team members (Marzi et al., 2023). Company B, in

contrast, underscores the value of team heterogeneity,

arguing that diversity enables a more comprehensive

approach to problem-solving (Majchrzak et al.,

2023). This study proposes a framework that aims to

present innovation as mindset through the three

players that compose it: organization, individual, and

management. The contribution of this study is

represented in Figure 1.

To strengthen the originality of the proposed

framework and enhance its theoretical contribution,

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466

we move beyond the descriptive account of the case

studies by formulating a set of testable propositions.

These propositions are grounded in our empirical

insights but articulated in a way that allows for

broader validation across different contexts.

• P1: The alignment between organizational

culture and individual innovative behaviors

positively influences organizational

innovativeness.

• P2: Management moderates the relationship

between organizational culture and individual

innovative behaviors by fostering

communication, team heterogeneity, and trust-

building practices.

By articulating these propositions, the framework

moves beyond description and provides a set of

theoretically grounded expectations that can be

empirically tested in future research. This strengthens

its originality by positioning innovation as mindset

not merely as an interpretative lens, but as a

generative theoretical perspective capable of

producing falsifiable claims.

Figure 1: Innovation as Mindset Conceptual Framework.

6 CONCLUSIONS AND

LIMITATIONS

The innovation as mindset provides a comprehensive

perspective for understanding how organizations and

individuals collectively engage with innovation

(Kahn, 2018). Existing literature consistently

highlights the influential role of organizational

culture in fostering an environment conducive to

innovation (Lertxundi et al., 2019; Scott & Bruce,

1994), while other research underscores specific

individual traits and capabilities associated with

innovative behaviors (Dyer et al., 2019; Griffin et al.,

2012). Within this context, this study explored how

managerial practices mediate and enhance the

interaction between organizational culture and

individual contributions to innovation.

Findings from qualitative analyses of three Italian

SMEs reaffirmed the pivotal role of organizational

culture in driving innovation, while the impact of

distinct individual characteristics was less evident.

Instead, managerial practices emerged as crucial

facilitators, particularly through fostering effective

communication grounded in managers' personal

understanding of team members and maintaining

team heterogeneity (Majchrzak et al., 2023). Such

practices enable team members to freely express

innovative ideas and contribute actively to

organizational creativity.

Nevertheless, this research presents certain

limitations, notably the restricted sample size and

specific industry context, which limit the

generalizability of findings. Future studies should

broaden the scope by exploring larger and more

diverse samples to validate these conclusions further.

Additionally, research could benefit from examining

innovation as mindset from an organizational

governance perspective. The presence of innovation

paradoxes (Andriopoulos & Lewis, 2009) identified

in this study warrants deeper investigation into how

these dynamics influence team climates and broader

innovation outcomes.

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