Encouraging Innovative Behavior: The Effects of Manager-Employee

Relationship Quality and Public Service Motivation

ABSTRACT

Innovation within organizations has captured the attention of public and private sector

scholars and managers due to its links to organizational performance, effectiveness and even

survival. Prior research has not considered what influences whether a manager encourages

innovative behaviors among employees. In this paper, we consider how a public employee’s

proactive behavior and task performance, the quality of his or her relationship with his or her

manager and the managers’ public service motivation (PSM) affect encouragement of innovative

behaviors. We examine these linkages using structural equation modeling (SEM) with data that

were collected from two surveys of 477 employees and 161 managers in a large state agency. We

found that the manager-employee relationship quality fully mediates the effects of employee

behaviors and that manager PSM has a direct positive influence on manager encouraging

innovation. The paper concludes by discussing the implications of these findings for public

management scholarship and practice.

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 INTRODUCTION

Innovation within organizations has captured the attention of public and private sector

scholars and managers for decades. This interest has been spurred by innovation’s links to

organizational performance, effectiveness, and even long-term survival (Damanpour &

Schneider, 2006, 2009; Scott & Bruce, 1994; Van de Ven, 1986; Walker & Damanpour, 2008).

Challenges, such as necessary cost reductions and downsizing, and opportunities, such as those

presented by advances in information technology, have motivated government organizations to

assess existing organizational practices and consider finding more efficient and effective ways of

doing work (Borins, 2002). For public sector managers and scholars, attention to innovation is

also prompted by the New Public Management movement’s focus on improving performance

and responsiveness of government organizations and improving the delivery of public services

(Borins, 2000; Behn 1991; Meier & O’Toole, 2002; Rainey & Steinbauer 1999). Within the

government reinvention rubric, “red tape” is expected to constrain employee behavior toward

compliance rather than incite innovation, and reductions in bureaucracy are touted as

mechanisms to boost employee innovation, creativity, and risk-taking, although studies to date

have found mixed support for these claims (Bozeman & Kingsley, 1998; Feeney & DeHart-

Davis, 2009; Moon & Bretschneider, 2002; Pandey, Coursey, & Moynihan, 2007). Leader

behaviors are another factor that may play an important role in encouraging innovation among

public employees, and this paper contributes to the ongoing conversation about public sector

innovation by addressing the research question “what factors can influence a manager’s

encouragement of innovative behaviors?”

Prior public sector research focused on innovation primarily has examined characteristics

of innovative organizations, innovation adoption, determinants of innovative behaviors by public

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employees and performance consequences (Damanpour & Schneider, 2006, 2009; Fernandez &

Moldogaziev, 2013a, b; Walker, 2008; Walker & Damanpour, 2008; Walker, Damanpour, &

Devece, 2011). Existing research indicates that managers can have a great deal of influence on

employee behavior and attitudes such as motivation and job satisfaction, and similarly they may

also affect innovation (Damanpour & Schneider, 2009). There is already some evidence that

supervisors’ support can influence innovation by frontline employees and managers. For

example, Borins (2000) found that immediate supervisor support was positively correlated with

public servants’ innovation. Damanpour and Schneider (2009) examined the influence of

managers’ personal characteristics on innovation adoption and found that managers’ education

level, job tenure, pro-innovation attitude, and political orientation were related to innovation

adoption. However, no previous study in public administration has examined factors that

influence a public manager’s support of innovative behaviors among workers.

In this paper, we consider factors that can influence a manager’s encouragement of

innovative behaviors. Innovation can be viewed as consisting of the generation and

implementation of ideas (Kanter, 1988; Van de Ven, 1996). It involves recognizing a problem or

need, generating new ideas as solutions, and creating awareness in order to ultimately implement

those ideas (Kanter, 1988). For the purpose of this paper, we define innovative behavior as

behavior directed toward the generation of new and useful ideas (de Jong & Den Hartog, 2007).

For example, managers can support innovative behaviors among workers by encouraging them

to consider new approaches and perspectives to improve organizational processes or solve

problems. Developing new processes, reinventing old procedures, and offering new services that

meet a public need are all examples of innovation by which public sector organizations can

improve their performance (Walker, 2008; Vigoda-Gadot & Beeri, 2012). However, bringing

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about such change in organizations is not a trivial task. To institute such innovations

organizations need employees who are willing to challenge the status quo, who do not simply

accept bureaucratic constraints, and who are willing to go beyond their proscribed organizational

role (Vigoda-Gadot & Beeri, 2012; Morrison & Phelps, 1999) as well as managers who

encourage and support employees to do so.

We aim to contribute to the public sector literature on innovation by considering what

influences a manager to encourage innovative behaviors. First, we examine the influence of the

quality of leader-member exchange (LMX) relationship on public managers encouraging

innovative behaviors among workers. Prior studies have linked the quality of a supervisor-

subordinate relationship and supervisor behavior to innovative behavior by employees (Basu &

Green, 1997; de Jong & Den Hartog, 2007; Fernandez & Pitts, 2011; Fernandez & Moldogaziev,

2013a, b; Graen & Uhl-Bien 1995; Scott & Bruce, 1994, 1998; Tierney, Farmer, & Graen, 1999),

but these studies did not consider how the relationship quality may influence a manager’s

encouragement for innovation among employees. In the current study, we focus on the influence

of the quality of LMX relationship as perceived by the manager, not the subordinate, on the

subordinate’s ratings of the manager’s encouragement for innovative behavior. Moreover, we

examine the role that employee proactive behavior and task performance play in the

development of manager’s perception about LMX relationship. Our study therefore also provides

important insight about the underlying social exchange processes through which employee

behavior affects manager encouragement of innovation. Second, we consider the direct effects of

a manager’s public service motivation (PSM) on encouraging innovative behavior. While high-

quality LMX relationship helps establish the conditions under which supervisors are more

comfortable supporting employee innovation, PSM provides an incentive to encourage

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innovation. Supervisors with higher PSM are not only more committed to providing public

services but also more interested in improving the public service delivery and outcomes.

We examine the connections between LMX quality, PSM and supervisor’s encouraging

innovative behaviors with data that we collected using two separate surveys from 477 employees

and 161 managers working in a large state agency. In the next sections we review literature on

LMX and PSM related to employee task performance, proactive behavior, and innovation to

develop our hypotheses. We then describe our data and methods and present the findings. We

conclude with a discussion of implications for public sector research and practice.

THEORY AND HYPOTHESES

LMX and Encouraging Innovative Behavior

Both managers’ and employees’ behaviors can be influenced by the quality of their

relationship (Gerstner & Day, 1997; Sparrow & Liden, 1997, Wayne, Shore, & Liden, 1997).

Leader-member exchange (LMX) theory is a relationship-based approach to leadership that

captures the relationship quality between a leader and follower (Uhl-Bien, 2006). It describes

how effective relationships develop between employees and managers as they negotiate and

develop roles and expectations over time (Graen & Scandura 1987; Graen & Uhl-Bien, 1995;

Scott & Bruce, 1998; Uhl-Bien, 2006). Interactions between a manager and subordinate are

influenced by each individual’s personal characteristics, behaviors, affect, and cognition (Uhl-

Bien, 2006; Uhl-Bien & Ospina, 2012). Over time these interactions lead to differentiated

manager-subordinate relationships. Some are defined primarily by formal interactions based on

the basic job and employment requirements (low-quality LMX) while others are characterized by

trust, loyalty, mutual liking, and respect (high-quality LMX) (Graen & Uhl-Bien, 1995; Scott &

Bruce, 1994). Managers enact different leadership styles with employees based on the nature of

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their relationship (Dienesch and Liden 1986; Graen & Uhl-Bien 1995). In high quality

relationships, managers may offer employees increased support, resources, and authority,

benefits that employees in low-quality relationships do not enjoy (Dienesch & Liden 1986;

Gerstner & Day, 1997; Liden & Graen 1980; Scandura & Graen 1984). In return employees in

high-LMX relationships may offer a higher level of commitment towards their work and

organizational goals (Dienesch & Liden 1986; Liden & Graen 1980; Scandura & Graen 1984).

Managers may also have higher performance expectations of employees in high quality

relationships versus those in low quality ones (Duarte, Goodson, & Klich, 1994).

It is the development of these relationships, employees’ potential influence on the

manager’s perceptions, and the potential for leader behaviors to be an outcome of a high quality

relationship (Yukl, O’Donnell, & Taber, 2009) that make LMX a useful concept in considering

whether a manager encourages innovative behavior among employees. As manager-subordinate

relationships develop over time, both parties can exert influence on that development (Yukl,

O’Donnell, & Taber, 2009). A manager’s initial impressions of an employee are typically based

on skill and competence and the employee’s motivation to assume responsibility (Dulebohn

Bommer, Liden, Brouer, & Ferris, 2012; Liden & Graen, 1980). Employees that perform job

tasks well are more likely to form high-quality relationships with the manager (Dulebohn et al.,

2012; Graen & Scandura, 1987). An employee who is cooperative and shows a high level of

commitment towards his or her task goals is likely to be well-liked by the manager and develop a

high quality LMX relationship (Duarte et al., 1994).

Employees who are proactive may also be more likely to develop high-LMX

relationships with their managers. Proactive behaviors are discretionary behaviors in which

employees perform tasks and engage in behaviors that are not defined as part of their formal

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organizational role (Organ, 1988; Van Dyne & LePine, 1998); it is “anticipatory action that

employees take to impact themselves and/or their environments” (Grant, Parker, & Collins,

2009: 8).i Voice, taking charge, and helping behaviors are all types of proactive behaviors that

represent actions on the part of employees to affect change (Crant, 2000; Grant et al., 2009).

Organizations may benefit from employees’ proactive behaviors when they involve voicing

important issues (Grant et al., 2009; Van Dyne & LePine, 1998) and taking charge to improve

work methods and routines (Grant et al., 2009; Morrison & Phelps, 1999). Proactive employees

take an active interest in improving their work lives and they are willing to challenge the status

quo and identify opportunities to do so (Crant, 2000; Zhang, Wang, & Shi, 2012). Supervisors

may be willing to reward proactive behavior when it is organizationally beneficial (Grant &

Ashford, 2008), and proactive behaviors have been linked to increased job performance and high

ratings of performance by supervisors (Crant, 2000; Grant et al., 2009). Thus when supervisors

perceive that employees are engaging in proactive behaviors that demonstrate initiative and that

benefit the organization, they may be more likely to view those employees as more committed

towards organizational goals and more willing to assume responsibility, which can then lead to a

high-LMX relationship.

Prior scholarship has indicated that several factors inherent in a high-quality LMX

relationship may lead to greater innovativeness on the part of employees. Employees in high-

quality relationships enjoy greater support, resources and opportunities that can motivate them to

engage in additional effort beyond their formal job role (Wayne, Shore, & Liden 1997). The

trust and managerial support inherent in high quality relationships may lead employees to be

more willing to take risks and engage in innovative behaviors because they have less fear of

being penalized or reprimanded (Basu & Green, 1997; Bozeman & Kingsley, 1998; Scott &

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Bruce, 1998). These employees are also often more empowered and enjoy greater autonomy,

both of which have been positively associated with innovative behavior (Fernandez &

Moldogaziev, 2013a, b; Scott & Bruce, 1994, 1998). Hence, they may be viewed, or view

themselves, as belonging to a higher status group, which may also encourage them to be more

committed to and involved in their work, and in turn to be generally more innovative (Basu &

Green, 1997).

However, this scholarship has not examined what may lead managers to encourage

innovative behaviors. Employees who perform well and who are proactive may be more likely to

be encouraged by their managers to innovate. Managers are more likely to delegate to an

employee when the employee is able, willing and confident/secure enough to do the job (Hersey

& Blanchard, 1993).  When an employee has high task performance, it shows that they are

capable and when an employee is proactive, it suggests that they are willing and eager to do the

work. More specifically, it can signal that they are willing to take initiative to generate and

implement new ideas.  When a manager observes an employee engaging in proactive behaviors,

he or she may also consider that employee as more likely to identify and attempt to address

problems that inevitably arise during innovation. 

Although employee task performance and proactivity may directly influence whether a

supervisor encourages innovative behaviors, here we posit that employee task performance and

proactive behaviors influence the supervisor’s encouragement to innovate through their positive

influence on LMX. When an employee behaves in a way that signals that they are competent,

can be trusted, and are willing to go beyond formal job roles, a high-quality relationship is more

likely to develop. The high levels of commitment inherent in employees in high-quality

relationships and the greater level of trust that managers place in these employees likely has a

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great deal of sway over managers’ behaviors towards them. Recognizing that these employees

are highly committed to the organization, a manager may have increased confidence in these

employees’ overall ability and willingness to innovate. The greater levels of managerial trust in

these employees may make managers more willing to encourage them to take risks and to

generate and implement new ideas that might benefit the organization as a whole.

Thus by performing well, and being engaged, motivated, and proactive, employees can

influence a manager’s perceptions and the development of the relationship. Employees in high-

quality relationships enjoy greater levels of trust from managers, and managers have greater

confidence in their abilities and commitment to the organization. As public managers seek to

increase their group’s performance and enhance public service delivery, they will seek out these

employees as those who they encourage to generate and try out new ideas. Our first set of

hypotheses focus on the mediation effects of LMX on the relationships between proactive

behavior and task performance on encouraging innovative behavior.

Hypothesis 1a: Public managers’ perception of LMX mediates the relationship between

subordinate task performance and encouraging innovative behavior.

Hypothesis 1b: Public managers’ perception of LMX mediates the relationship between

subordinate proactive behavior and encouraging innovative behavior.

Manager PSM and Encouraging Innovative Behavior

While stronger employee-supervisor relationships driven by a supervisor’s perceptions of

employee competence and motivation can help establish the conditions under which the

supervisor is more likely to support employee innovation, supervisors are also more likely to

encourage innovation when they place a higher value the potential outcomes of innovation. Not

surprisingly, employee support for organizational reforms and change has been commonly linked

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to their PSM (Wright, Christensen & Isett, 2013). Employees who place a higher value on

public service and the proper performance of duties are likely to initiate, support and even

encourage innovation as a way to improve service processes and outcomes (Rainey, 1999).

Consistent with this assumption, studies have found that PSM is not only associated with more

positive perceptions of government reforms and organizational change (Naff & Crum, 1999) but

also that such efforts can help foster or reinforce public employee PSM by giving employees

more opportunity to improve public service delivery (Davis & Stazyk, forthcoming; Moynihan &

Pandey, 2007). In addition to its potential to improve service provision, recent research also

suggests that employees with higher PSM may be more supportive of organizational changes

because they are more willing to accept the personal costs or risks that are often associated with

innovation and changes in their work (Wright et al., 2013).

While the existing studies have focused on the extent to which existence of or support for

organizational change or reform is associated with higher employee PSM (cf Moynihan &

Pandey, 2007; Naff & Crum, 1999; Wright et al., 2013), we suspect that PSM may also

incentivize supervisor encouragement of employee innovation. Public sector innovation can

result in changes that improve inefficient work processes and delivery of public services so that

public needs are better met (Damanpour & Schneider, 2009; Vigoda-Gadot & Beeri, 2012;

Walker, 2008). Therefore, supervisors who place a higher value on public service and the proper

performance of duties are more likely to encourage the innovative behaviors of their

subordinates. However, no prior study has examined the connection between supervisor PSM

and encouragement of innovation. Hence, we test the following hypothesis:

Hypothesis 2: Public managers’ PSM will be positively associated with encouraging

innovative behavior.

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 METHOD OF THE STUDY

Sample and Procedure

We tested the three hypotheses with data that were collected through two separate

surveys administered to all employees working in six distinct divisions in a large state

government agency in the Midwest region of the United States. The agency was responsible for

providing procurement, human resources, information technology and other administrative

services to various agencies, commissions, and boards in the state government as well as to local

government organizations. The surveys were conducted as part of a long-term project undertaken

by the agency for leadership training and development. Both of the surveys were distributed and

collected electronically.

The first survey was administered to all 820 employees in the agency regarding

managerial practices, PSM and their perceptions of the work climate. The survey was pretested

with a small group of employees (n = 9) working in the agency’s division of human resources to

obtain feedback on the questionnaire as well as test the electronic survey distribution tool. Prior

to the survey distribution, the agency head and division managers introduced the study to all

employees via email, communicating the study purpose, the confidentiality of responses, and that

all participation was voluntary. In the recruitment email, the research team echoed this

information. No individual data records were shared with the agency head and division

managers. Only aggregate results at the division level in the form of a research report were

shared with the division managers in the agency. The electronic survey administration tool

allowed participants to complete the survey at a time convenient to them during their normal

work hours. The survey remained open for three weeks, during which up to three individualized

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email reminders were sent to boost the response rate. Altogether, 477 usable employee surveys

were returned for an overall response rate of 59 percent.

We collected data regarding employee in-role performance, proactive behavior and LMX

through a separate survey of 176 supervisors. The 477 respondents who completed the first

survey were direct reports of this group. Each supervisor rated LMX, in-role performance, and

proactive behavior of a maximum of five of his or her direct reports. For supervisors who had

more than five direct reports, to normalize the time it took to complete separate surveys, we

randomly selected five employees for whom he or she was asked to provide information (i.e.,

each supervisor was asked to complete up to a maximum of five surveys). This resulted in a

small reduction in the employee sample size from 477 to 443 respondents, a retention rate of

approximately 93 percent. The supervisors were given two weeks to complete the surveys. The

supervisors had the option to complete the surveys at different times for different subordinates.

Similar to the first survey, up to three individualized email reminders were sent to the

supervisors to boost the response rate. While 161 supervisors (91%) returned completed surveys

for their subordinates, only 134 of these supervisors also completed the first survey regarding

PSM and their own attitudes and behaviors as an employee. Given that information from

supervisors on both sets of surveys were needed to test the full multivariate models, the analyses

was conducted on 315 supervisor-subordinate pairs.

An overview of the demographic data for the sample is provided in Table 1. As shown in

Table 1, a vast majority of the sample (78.0 percent) identified themselves as Caucasian.

Approximately, 16.4 percent of the sample identified themselves as African American, 2.4

percent identified themselves as Asian, and 1 percent identified as Hispanic. Forty-five percent

of the sample was women, which is comparable to the total percentage of women working in the

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agency (42 percent), indicating our sample is representative of the population with respect to

gender. Further, 15 percent of the sample identified themselves as clerical/support employees, 56

percent identified themselves as technical/professional employees and about 29 percent

identified as supervisors. The average age of the participants was between 41 and 50 years. The

tenure of the sample in their current position ranged widely from 1 to 35 years with a mean of

6.1 years and a standard deviation of 6.2 years. The tenure of the sample in their current agency

ranged from 1 to 38 years with a mean of 10.9 years and a standard deviation of 9.1 years.

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Insert Table 1 here
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Measures

All of the variables in this study were measured with items from previously validated

measures. Encouraging innovative behavior was measured in the employee survey using four

items of the Managerial Practices Survey (MPS) developed and validated by Yukl and

colleagues (Kim & Yukl, 1995; Yukl, Gordon & Taber, 2002). The items were: (1) Encourages

you to examine a problem from different perspectives; (2) Encourages innovative thinking and

new approaches for solving problems; (3) Encourages finding new ways to reduce costs; and (4)

Asks questions that encourage you to think about old problems in new ways. The items had a

five-point response format with an anchor for each choice indicating how much the behavior

described by the item is used by the supervisor (1 = Not at all, 5 = To a very great extent). The

internal reliability for the measure was high (Cronbach’s α = .90).

LMX quality was measured in the supervisor survey with three items from the LMX-7

instrument developed by Scandura and Graen (1984). Each item had five anchored response

choices with unique anchors that are appropriate for the item. The wording for the response

choices in a few items was changed slightly to reduce ambiguity. The three items were: (1) How
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much confidence do you have in this employee’s ability to do his or her job; (2) How much do

you trust this employee to defend you and protect your interests; and (3) How would you

describe the overall relationship between you and this employee? The internal reliability

coefficient for the LMX measure was .86.

Task performance was measured in the supervisor survey with two items that were

developed and validated by Williams and Anderson (1991) asking managers to assess their

employees’ in-role behavior. Each item had a five point response choice (0 = Never, 4 =

Always) and focused on employee performance in the areas that are part of the requirements as

specified in their job descriptions. The items were: This employee (1) Fulfills responsibilities

specified in the job description; and (2) Neglects aspects of the job he or she is obligated to

perform (reverse coded). The value for Cronbach’s alpha for this measure was .74.

We measured proactive behavior in the supervisor survey using four items that were

developed and validated by Van Dyne and LePine (1998) to measure proactive voice behavior.

The four items were: This employee (1) Speaks up and encourages other employees to get

involved in issues that affect the unit; (2) Communicates his/her opinions and suggestions even

when other employees in the unit disagree with him/her; (3) Develops and makes

recommendations about issues concerning the unit; and (4) Gets involved in issues that affect the

quality of work life in the unit. Each item for had a five point response choice (0 = Never, 4 =

Always) and the internal reliability coefficient for the measure was .84.

Supervisor PSM was measured using supervisor self-reports from their responses to the

first employee survey using three items that were adapted from items used by Grant (2008) to

measure prosocial motivation. While this measure does not allow us to distinguish between

different dimensions of PSM, recent research not only suggests that the prosocial motivation

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measure is empirically indistinguishable from a frequently used measure of PSM but also that

such global measures have a number of advantages over the current multi-dimensional measures

of PSM (Wright, Christensen & Pandey, 2013). Each item has a six point Likert type scale (1 =

strongly disagree, 6 = strongly agree). The items were: 1) I feel motivated to do well on my job

because I want to have a positive impact on others, 2) I care deeply about benefiting others in the

society through my work, and 3) I feel motivated do well because I want to help others.

Cronbach’s alpha for this measure was .74.

To isolate the effects of the predictor measures on the two outcomes, we control for

several employee and manager characteristics. Research has shown that similarity between

supervisor and subordinate gender and length of their relationship may positively influence LMX

quality (Duarte et al., 1994; Tsui & O’Reilly, 1989). Hence, we control for gender similarity and

dyad tenure in the regression analyses. To control for gender similarity, we created three dummy

variables: male supervisor and female subordinate (1 = Yes and 0 = No), female supervisor and

male subordinate (1 = Yes and 0 = No), and female supervisor and female subordinate (1 = Yes

and 0 = No); the reference category was male supervisor and male subordinate (MM). Dyad

tenure was measured with a single item from the employee survey: How long have you worked

for your current supervisor (1 = Less than six months, 5 = More than three years). A previous

study has found a negative association between employee age and minority status (i.e., race) and

innovative thinking (Fernandez & Moldogaziev, 2011). Therefore, we control for employee

minority status and age in our analyses. We measured employee age with a single item from the

employee questionnaire: What is your current age (Less than 20 years = 1, More than 60 years =

6). We constructed a dummy variable (White: Yes = 1, No = 0) to control for minority status

using information related to employee race that were collected in the employee survey.

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Moreover, manager encouragement for innovation may depend on the manager’s own age and

the employee’s tenure on his or her job. For instance, older managers may be more risk averse

and are less likely to encourage innovation than younger managers (Damanpour & Schneider,

2006). Hence, we included manager age, that was measured with a single item from the

employee survey (what is your current age), in the analyses. Because, employees who have been

in their position for a longer period may not receive the same level of encouragement for

innovation from their managers than those who have been in their position for a shorter period,

we control for employee job tenure, as well. Employee job tenure was measured with a single

item in the employee survey: How long (in years) have you worked in your current position.

RESULTS

Confirmatory Factor Analyses

Before testing the research hypotheses, we conducted confirmatory factor analysis (CFA)

with maximum likelihood estimation technique to assess validity of the study measures.

Following recommendations provided by Hu and Bentler (1999), multiple indices were

examined to assess the fit of the measurement model. Hu and Bentler (1999) suggested that a

satisfactory model fit can be inferred when the value for the Comparative Fit Index (CFI),

Incremental Fit Index (IF), and Tucker Lewis Index (TLI) is .95 or higher and the value for the

Root Mean Square Error of Approximation (RMSEA) is 0.06 or lower. The CFA results also

indicated that a measurement model assuming that items only loaded on their hypothesized latent

construct and that each latent construct was empirically distinct had a reasonably good fit to the

data (χ2 (94) = 235.70, CFI = 0.96, TLI=0.94, IFI = 0.96, and RMSEA = 0.06). As shown in

Table 2, the CFA results showed that all scale items had statistically significant factor loadings

(p<.01) for their respective latent constructs. The standardized factor loadings (λs) ranged from

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0.52 to 0.91; only two items had factor loadings below .70. These results indicated that the study

measures had sufficient validity.

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Insert Table 2 here
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Descriptive Statistics and Bi-variate Analyses

Table 3 below presents means, standard deviations, and correlation coefficients of all the

study measures. While the mean scores for supervisor encouraging innovative behavior, LMX,

supervisor PSM, subordinate task performance and proactive behavior were slightly negatively

skewed, differences between the average scores and the scale midpoints were not very large and

the standard deviations were relatively high, indicating adequate variability in the data sufficient

for further analysis. Consistent with our expectations, subordinate task performance and

proactive behavior were related positively with LMX (r = .69 and .58, p<.05) and supervisor

encouraging innovative behavior (r = .30, p<.01). Similarly, we found a positive correlation

between LMX and supervisor encouraging innovative behavior (r = .39, p<.05). In addition,

supervisor PSM had a weak but statistically significant correlation with encouraging innovative

behavior (r =.15, p<.05). Of the control variables, only job tenure is significantly correlated with

encouraging innovative behavior (r = -.16, p<0.05).

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Insert Table 3 here
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Tests of Hypotheses

We tested the research hypotheses using structural equation modeling (SEM) with the

maximum likelihood estimation technique.ii Figure 1 below summarizes the SEM results in the

form of a causal path model and reports the standardized regression coefficients. In the SEM

model, we did not include subordinate gender, age, tenure with the supervisor and supervisor age

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and gender because none of these measures (as shown in Table 2) had significant correlations

with either the predictor or the outcome measure. However, we controlled for subordinate race

(i.e., minority status) and job tenure because these two variables had significant correlations with

the predictor/outcome measures. To be parsimonious, we do not show the effects of race and job

tenure on the outcome measures in Figure 1.

The fit indices obtained from the SEM results indicated that the structural model

provided a reasonably good fit to the data (χ2 = 267. 81, df = 121, p<0.05, CFI = 0.96, IFI = 0.96,

TLI=0.94 and RMSEA = 0.05). As shown in Figure 1, the t statistics for path coefficients for all

of the direct relationships were statistically significant (p<0.05) and in the predicted direction. As

anticipated, we found a strong positive connection between subordinate task performance and

supervisor perception of the LMX quality (β = 0.73, p<.05). We also found that subordinate

proactive behavior had a significant positive relationship with LMX quality (β = 0.18, p<.05) and

that LMX quality had a significant positive influence on supervisor encouraging innovative

behavior (β = 0.40, p<.05). Supervisor PSM had a significant positive influence on encouraging

innovative behavior (β = 0.34, p<.05). Additionally, subordinate job tenure was found to have a

significant negative effect (β = -0.18, p<0.05) on supervisor encouraging innovative behavior.

To assess whether LMX fully or partially mediated the effects of subordinate task

performance and proactive behavior (Hypotheses 1a and 1b) on supervisor encouraging

innovation, we assessed fit of alternative structural models by adding direct paths (one at a time)

from subordinate task performance and proactive behavior to supervisor encouraging innovative

behavior. We also tested whether supervisor PSM had an indirect influence on the outcome

variable through influencing LMX relationship. The analyses indicated that the best fitting

model was the one in which LMX fully mediates the effects of subordinate task performance and

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proactive behavior and supervisor PSM has only a direct influence on encouraging innovative

behavior. That is, none of the three additional paths were found to be statistically significant.

We calculated Sobel’s (1982) Z statistics to assess the statistical significance of the two indirect

effects: (1) task performance  LMX  encouraging innovative behavior (β = 0.29) and (2)

proactive behavior  LMX  encouraging innovative behavior (β = 0.07) and found both to be

statistically significant (Zs = 5.52 and 2.15, respectively, p<0.05).

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Insert Figure 1 here
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DISCUSSION AND CONCLUDING REMARKS

As public sector organizations face calls for increased effectiveness in meeting public

needs, public managers must increasingly consider innovation as a core behavior to encourage

among employees. Innovation can institute changes across many functions and levels within

public organizations, including service delivery, management processes, structure and how

public organizations collaborate with outside agencies (Walker, 2008). Many studies have

countered the prevailing assumption that public organizations and employees resist change

(Fernandez & Wise, 2010) and have examined factors such as management, organizational and

innovation characteristics related to innovation adoption and performance (e.g. Damanpour &

Schneider, 2009; Walker, 2008; Walker et al., 2011). And other studies have explored particular

management strategies, such as empowerment, that can be used to encourage employees to

innovate (Fernandez & Moldogaziev, 2013a, b). But understanding under what circumstances

public managers may encourage employees to innovate is also an important part of the

innovation question within public organizations that has not been explored. Our study

contributes to the public sector innovation literature by beginning to fill this gap. We found that

while employee proactive behaviors can affect a manager’s encouraging innovative behavior, the
19
quality of the relationship between the manager and employee fully mediates these relationships.

We also find support for a direct link between a manager’s public service motivation and

encouragement of innovative behavior. In this section we explore more deeply why these links

may exist, and offer implications for research and practice.

Supporting and instituting change in organizations is not without risk. Considering the

scrutiny to which public organizations and managers may be subjected, it is not without reason

that managers may approach innovation and change with caution. The risks associated with

innovation only increase when they consider delegating and empowering others innovate. As a

result, they are likely to be selective with respect to the employees to whom they offer support

and encouragement for innovation. The factors that we examine here, leader-subordinate

relationship quality and public service motivation, may offer plausible accounts as to why public

managers’ encourage innovative behavior among employees despite the risks involved. First, if

the broader aim of public organizations is to improve the overall quality of life for its

constituents and build stronger communities (Walker et al., 2011), it is not surprising that public

managers with greater levels of public service motivation are more likely to encourage

innovative behaviors. This finding adds to the existing research that suggests that employee PSM

can increase employee support for changes in the workplace (Moynihan & Pandey, 2007). In

addition to increasing the desire for innovation as a way to improve public service delivery, PSM

is also likely to increase supervisor support for employee innovation by reducing their concerns

that such behavior may have risks or costs to their own careers (Wright et al., 2013). While much

of the PSM literature has focused on its influence on employee perceptions and behaviors, this

study is one of the first that provides important evidence in how manager’s PSM may influence

the behavior of other employees by altering how they supervisor or lead their subordinates.

20
 Second, managers may be more likely to encourage employees to take risk when they

have a certain level of trust and confidence in that employee’s abilities, commitment, and

motivations and when they have worked with that employee for a longer period of time. Leader-

member exchange offers a conceptual frame that captures the relational nature of manager-

employee interactions and that, in a high-quality relationship, embodies greater trust, confidence

in employee commitment, and autonomy granted to the employee (Dienesch & Liden, 1986;

Gerstner & Day, 1997; Liden & Graen, 1980; Scandura & Graen, 1984; Scott & Bruce, 1994,

1998). These interactions can have a greater influence on determining work outcomes than

individual characteristics and leader perceptions of employee behaviors alone (Uhl-Bien, 2006).

Our findings show that employees who behave in ways that demonstrate a willingness to go

beyond their formal role and voice ideas that can address organizational issues are more likely to

have a high-quality relationship with their manager and the manager is more likely to encourage

innovative behavior. However, when LMX is added into the model, the quality of the

relationship completely accounts for the relationship between proactive behavior and

management encouragement of innovative behavior. This result makes sense when we consider

the greater levels of trust and confidence granted to employees in high-quality relationships.

Having proven their commitment and having performed in ways that demonstrate competence,

that they can be trusted, and a willingness to innovate through their proactivity, managers are

more likely to have confidence in these employees’ ideas and encourage them to take risks that

could ultimately benefit organizational performance.

Our study also offers practical implications for employees who wish to be empowered to

innovate within organizations and given the autonomy to take some of these risks. This

contribution is somewhat unique in that implications for practice more often focus on what

21
public managers can do rather than actions the employees themselves can take. Our study

indicates that employees who wish to gain support and encouragement from their supervisor to

innovate may be able to do so by influencing the relationship quality. Employees who wish to be

empowered to generative innovative ideas can focus their energy on signaling to their managers

that they can be trusted, are competent, and are committed to the best interests of the

organization. Our findings show that both task performance and proactivity are related to

manager-subordinate relationship quality, which in turn is related to whether a manager

encourages innovation. By performing well at their job tasks and being proactive, they can

influence the quality of the relationship, and in turn they may be afforded the trust, latitude and

resources enjoyed by employees in high-quality relationships. Those benefits can offer them the

freedom to take charge and generate and try out new ideas.

One weakness of our study is its use of cross-sectional data. As a result, we cannot

capture the dynamic nature of relationship development between a manager and employee, or

changes over time in employees’ proactive behavior and task performance. Public service

motivation may also change over time, and we also cannot examine those effects with cross-

sectional data. Longitudinal data are needed to more fully investigate the effects of high- and

low-quality relationships and public service motivation on a managers’ encouragement to

innovate. For example, data that captures the relationship quality at different points in an

employee’s tenure with a manager and/or at different points in a supervisor’s tenure with the

organization and within his or her role would enable the examination of how managers’

encouragement to innovate may change over time. Future studies that collect longitudinal data

could shed light on the dynamics of when managers encourage innovative behaviors.

22
 This study also relies on data from just one large state agency. Other studies of public

sector innovation have examined organizational characteristics such as organizational structure

and size, performance management, and external communication and their effects on innovation

and have found some influence (Damanpour & Schneider, 2006; Walker, 2008). It follows that

agency differences may also influence whether or not a manager encourages innovative

behaviors among workers. For example, some public sector agencies may be more likely to have

managers who promote innovative efforts simply due to the nature or scope of their mission.

Future studies could also expand the public sector innovation literature by comparing managers’

likelihood to encourage innovation within different agency contexts.

23
 Table 1
Sample Characteristics
Characteristics Percent
Ethnicity
Asian 2.4%
African American 16.4%
Hispanic 1.0%
Native American .4%
Caucasian/White 78.0%
Other 1.8%
Gender
Female 45.2%
Male 54.8%
Nature of Position
Clerical/support 15.0%
Professional/technica 55.7%
l
Managerial 29.4%

Age
< 20 years .2%
21 - 30 years 5.2%
31 - 40 years 11.9%
41 - 50 years 37.3%
51 - 60 years 32.1%
> 60 years 9.2%

24
 Table 2
Standardized Factor Loadings (λ) and Average Variance Extracted Estimates (AVE)
Items Encouraging Superviso LMX Proactive Task AVE
Innovation r Behavior Performanc
PSM e
1 .75 .68
2 .90
3 .91
4 .72
5 .70 .53
6 .91
7 .52
8 .85 .68
9 .83
10 .79
11 .83 .59
12 .77
14 .82
15 .63
16 .77 .62
17 .80

25
 Table 3
Means, Standard Deviations (SD), and Correlation Coefficients for the Study Measures
Measures Mean SD 1 2 3 4 5 6 7 8 9 10 11 12
1. Male Supervisor and Male Subordinate (MM) .39 .49 --
2. Female Supervisor and Female Subordinate (FF) .23 .42 -.43*
3. Female Supervisor and Male Subordinate (FM) .15 .36 -.34* -.24*
4. Minority .21 .40 -.05 .15* .02
5. Age 4.29 .99 -.01 -.08 .07 -.00
6. Supervisor Age 4.30 .88 .11* -.21* -.08 -.01 .11*
7. Subordinate Job Tenure 6.15 6.19 -.04 .03 .02 .12* .27* .10
8. Dyad Tenure 3.26 1.41 .02 -.06 -.01 .01 .20* .19* .29*
9. Supervisor PSM 5.54 .55 .08 -.02 -.06 -.02 -.02 .08 -.02 -.02
10. Proactive Behavior 3.64 .78 -.03 .01 -.11 -.11 -.02 .10 -.17* -.00 .20*
11. Task Performance 4.23 .72 -.03 .05 -.03 -.19* -.02 .11 -.02 .03 .15* .53*
12. LMX 4.14 .81 -.01 -.06 -.02 -.15* -.07 .12* -.06 .10 .17* .58* .68*
13. Encouraging Innovation 3.16 1.10 -.01 .04 .00 -.09 -.09 .03 -.16* -.06 .15* .30* .30* .39*
*
p<.05, N=315

26
 Figure 1
Summary of the SEM Results

Subordinate .73*
Task
Performance

Subordinate .18*
Proactivity LMX

.40*

Supervisor Supervisor
PSM .34*
Encouraging R2=.34
Innovative
Behavior

27
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End Notes
i

Throughout the literature, proactive behaviors are similar to, and sometimes categorized within or

interchanged with extra-role behavior, organizational citizenship behavior (OCB), change-oriented

organizational citizenship behavior, and interpersonal citizenship behavior (ICB) (Morrison & Phelps,

1999; Organ 1988; Pandey, Wright, & Moynihan 2008; Van Dyne & LePine, 1998; Vigoda-Gadot &

Beeri, 2012).
ii
To ensure that multicollinearity did not influence the results, we ran a series of OLS regression

models and estimated variance inflation factor (VIF) scores for the predictor measures in the regression

results. We found that the VIF scores for all measures were much lower than the typical threshold value

of 4.0 indicating multicollinearity did not adversely influence our results.