Organizational Climate,Innovation and Performance: A Systematic Review

Abstract

Organisational climate (OC) plays an important role in the innovation of an organisation. In addition, innovation has become critical for nations, organisations and individuals in an increasingly complex and challenging world. Yet, very few studies are designed to investigate the causal path of the effect of innovation on organisational performance systematically by examining the influence of organisational climate.

The purpose of the study has been to consolidate, synthesize and critique the empirical studies that have examined the relationship between organisational climate, innovation and organisational performance.

A systematic literature review approach has been followed to find the appropriate studies on these constructs (organisational climate, innovation and organisational performance) and the building blocks of science (concepts, statement and conceptual framework) have been used as a structure to analyse and report on the findings.

After consulting 96 major databases, covering a wide range of fields, only seven articles that investigated the causal path between organisational climate, innovation and organisational performance were identified. The differences and similarities on how concepts were used are presented. These differences become particularly apparent when the tools used to measure these constructs are examined. Studying the articles has also resulted in the development of appropriate and comprehensive typologies concerning the variables. The findings also show that models are typically linear and these are affirmed when subjective, rather than objective, measures are used.

This research study alerts researchers and practitioners alike about the importance of clear and shared definitions of constructs. Without that meaningful communication, observation on the topic is impossible. The findings also show that the methods of measurement influence results, which should be considered when interpreting the results.

Keywords

Organisational climate organisational innovation organisational performance systematic review

Introduction

The competitive challenges faced by an organisation require the organisation to search for more innovative and novel approaches to the delivery of their product and services (Shanker, Bhanugopan, & Fish, 2012). Innovation is considered by many scholars to be a key driver of organisational performance (Grant, 2012; Gunday, Ulusoy, Kilic, & Alpkan, 2011; Matzler, Kepler, Deutinger, & Harms, 2008). Important to the relationship is an organisational climate for innovation (Nusair, 2013; Panuwatwanich, Stewart, & Mohamed, 2008).

Despite the importance of the aforementioned relationship (organisational climate, innovation and organisational performance), the majority of empirical studies that investigate these three constructs are generally fragmented. Some scholars (Björkdahl & Börjesson, 2011; Lin & Liu, 2012; Zhang & Begley, 2011) investigated the relationship between organisational climate and innovation. Others (Durán-Vázquez, Lorenzo-Valdés, & Moreno-Quezada, 2012; Oke, Walumbwa, & Myers, 2012) investigated the relationship between innovation and organisational performance. Very few studies are designed to trace the causal path between organisational climate, innovation and organisational performance.

A search of 96 academic databases shows that studies that investigate the relationship among organisational climate, innovation and organisational performance in one study are still in their infancy, as reflected in the seven articles published (Baer & Frese, 2003; Charbonnier-Voirin, El Akremi, & Vandenberghe, 2010; Choi, Moon, & Ko, 2013; Crespell & Hansen, 2008; Nusair, 2013; Nybakk & Jenssen, 2012; Panuwatwanich et al., 2008). The primary objective of this study is to consolidate the published scientific knowledge about the studies that have investigated the impact of the organisational climate for innovation on innovation and organisational performance. In order to do that, the three building blocks of science (concepts, statements and conceptual framework) will be used to analyse the published scientific knowledge.

Literature Review

The literature will be presented in two parts. The first part covers the three constructs under investigation, and the second part focusses on what the building blocks of science entail.

Constructs

Organisational climate

Several definitions have been proposed for the term organisational climate. According to Hamidianpour, Esmaeilpour, Alizadeh and Dorgoee (2015), organisational climate denotes the employee’s perception about the organisation’s rewards system, leadership credibility, organisational policy, formal and informal procedures and, ultimately, a sense of belonging and trust within the organisation. Perhaps, it is with the above definition in mind that Padmaja (2014) argues that organisational climate includes leadership styles, participation in decision-making, the provision of challenging jobs to employees, the provision of a good working environment and the creation of a suitable career ladder for employees. From the employee’s point of view, managers are the most important elements in the social exchange climate of an organisation (Qadeer & Jaffery, 2014).

Innovation

Innovation is perceived to be one of the core competences of a successful firm (Chen, Lee, Tsui, & Yu, 2012). Yet, despite its importance, the term ‘innovation’ is still somewhat blurry and is sometimes confused with invention. The term innovation is defined as a new issue that creates value to a firm or stakeholders (Saunila & Ukko, 2012). Innovation can be ‘incremental’ or ‘radical’. Incremental innovation build on existing competencies is related to minor improvements to existing products or services (Inauen & Schenker-Wicki, 2012). In contrast, radical innovation is the development of new services or a fundamentally new way of organising and delivering a service (Mustafid & Anggadwita, 2013). As such, the terms ‘incremental’ and ‘radical’ indicate the degree of novelty (Un, 2010).

Organisational performance

Organisational performance is the most important indicator of organisational success and one of the most important variables in management research (Stegerean & Gavrea, 2010). According to Lakhal (2014), organisational performance refers to how well an organisation achieves its market-oriented objectives as well as its financial goals. Many organisations have developed or adopted a number of organisational performance measurement systems to monitor the success of their corporate strategy. The Balanced-score Card, however, is touted as the most comprehensive organisational performance measurement system because it provides a mix of both financial and non-financial means to monitor and manage organisational performance (Hilman & Siam, 2014). Financial performance includes income generation, annual operating expenditure, cash flow impact, return on assets (ROA), return of equity (ROE), market growth, credit impact and percentage of profit (Gupta, Dutta, & Chen, 2014). The non-financial performance includes customer satisfaction, internal process and learning, international ranking, reputation, good governance and customer loyalty (Ariff, Zakuan, Tajudin, Ahmad, Ishak, & Ismail, 2014; Hilman & Siam, 2014).

Building Blocks of Science

One of the major traits of science is the focus on phenomena that can be publicly observed and tested (Handfield & Melnyk, 1998). As a result, the three pillars on which science is build are observation, induction and deduction (Popper, 1961). Perhaps, it is in this context that Reynolds (1971) argued that a scientific body of knowledge should consist of concepts and statement. Building on the seminal work of Mouton (1996) and Kerlinger and Lee (2000), De Vos, Strydom, Fouché and Delport (2011) echoed the same sentiments that concepts and statement are central to the building blocks of science, but they went a step further to argue that the conceptual frameworks is an equally important component in the building blocks of science. The three building blocks of science (concepts, statement and conceptual frameworks) guided the authors when analysing the published scientific knowledge.

Concepts

In the Oxford Dictionary, the term ‘concept’ is defined as ‘an idea or principle that is connected to an abstract’ (Hornby, 2010, p. 298). In other words, concepts are the symbolic constructions by means of which people make sense of the meaning attributed to their words (Mouton, 1996). As a result, understanding concepts is the most basic requirement of a scientific enquiry (De Vos et al., 2011). Possibly, it is with this context in mind that Sharma and Chrisman (1999) argued that, in order for researchers to be able to build on the existing body of knowledge, it is imperative that the research concept is clearly defined.

Statement

In simple terms, the Oxford Dictionary defines ‘statement’ as ‘an opinion based on what someone has said or written’ (Hornby, 2010). A statement takes on many forms which include definition, hypothesis or a proposition (De Vos et al., 2011). For discussion purposes, a brief description of each statement follows:

A definition is a form of statement that delimits or demarcates the meaning of a word in terms of its sense of reference (Mouton, 1996). A definition can be operational (denotative) or theoretical (connotative). The theoretical definition denotes a specification of the connotative meaning of a concept. The operational definition describes a certain operation, typically some type of a measurement in which the use of the concept is considered to be valid.

A hypothesis is a statement that should be observed in the real world if the theory is correct (De Vos et al., 2011). The empirical hypothesis is thus an information item that becomes transformed into a new observation, derived from interpreting the hypothesis, using instrumentation, scaling and sampling (Handfield & Melnyk, 1998).

A proposition is a statement that contains claims that can be tested (Mouton, 1996). Stated differently, a proposition states the relationship between two constructs or more (Bacharach, 1989). Unlike hypotheses, however, propositions involve concepts rather than measures.

Conceptual framework

A framework is defined as the parts of a building or an object that support its weight and give it shape (Hornby, 2010). According to De Vos et al. (2011), there are three distinct types of conceptual frameworks, namely, topologies, theories and paradigms:

A topology is defined as a conceptual framework, the phenomena of which can be classified based on common characteristics (Mouton, 1996). In other words, a typology is a systematic classification or a study of types.

A model is an abstract presentation of reality (De Vos et al., 2011). Along similar lines, Whetten (1989) defined a model as a virtual aid that highlights the main features of the phenomena. Put differently, ‘a model is a simplified description of the phenomenon in the real world that is an object of the research’ (Blunch, 2013).

A theory is a set of interrelated constructs or variables (Kerlinger & Lee, 2000). According to Dubin (1978), a theory must contain four essential elements, namely, ‘what’, ‘how’, ‘why’ and ‘who, where and when’. The first element ‘what’ seeks to identify which factors should be considered as part of the explanation of the phenomenon of interest. Having identified a set of factors (i.e., variables, constructs or concepts), the next logical question is to identify ‘how’ they are related, followed by the rationale behind the relationship. The underlying question about the rationale is ‘why’ the other scholars should give credence to the presentation of the phenomenon. In order to give credence and put forward a particular theory, it is important to state explicitly the limitations and contextual factors that might influence the findings (Morrison, 2003). As such, the questions of ‘who, where and when’ becomes very important because they address the object, the geographical setting, the organisational type or industry and time horizon in which the phenomenon has been studied.

A paradigm is a set of beliefs, values and techniques shared by the members of a community (Kuhn, 1970). In other words, a paradigm is a general framework for looking at life (De Vos et al., 2011). The paradigm plays an important role when the researcher embarks on a process of explaining a phenomenon because a research paradigm influences how the researcher views and interprets material and guides the consequent action to be taken about it.

To explore the relationship between climate for innovation, innovation and organisational performance, the three building blocks of science (concepts, statements and conceptual framework) have been examined to analyse prior studies which have investigated the relationship among these constructs critically.

Methodology

This study has adopted two generic steps central to the systematic review methodology, namely, defining the search strategy when engaging in the available literature and then selecting relevant studies by applying inclusion and exclusion criteria (Nightingale, 2009). As such, the primary aim of this systematic review is to analyse prior studies which have investigated the relationship among organisational climate, innovation and organisational performance.

The keywords ‘climate’, ‘innovation’ and ‘performance’ were used in the search. As the keywords ‘creativity’ and ‘innovation’ are occasionally used interchangeably in the literature, these were also included. Similarly, the keywords ‘financial’, ‘output’ and ‘return on investment’ (return*) were used because they are occasionally used interchangeably with performance. The options (criteria) selected for the search were full text, peer-reviewed, scholarly journals and published in English. Target articles needed to match all three keywords in a title, using two major academic databases, are EBSCOhost and ProQuest. In total, 27 articles were retrieved from both EBSCOhost and ProQuest. Seven duplicate articles were, however, identified, resulting in 20 distinct articles retrieved from the search.

The abstracts of the articles which met the first level of inclusion criteria were analysed in order to identify those articles that treat climate for innovation, innovation and performance as variables. Seven articles (presented in Table 1) met these criteria.

Findings

As presented in Table 1, only seven articles were retrieved that investigated the relationship between climate for innovation, innovation and organisational performance in a single study. These findings illustrate that there is a lack of research that investigates the causal path among these three constructs. There is, however, no shortage of studies investigating the relationship between these strategic variables when studied in pairs, climate and innovation on one hand and innovation and organisational performance on the other. Studying these constructs in isolation, however, makes it difficult to understand the causal relationship among these constructs.

Of the seven articles that investigated the causal path among organisational climate, innovation and organisational performance, only one is more than 10 years old, while the others were published during the last eight years. The seven articles that explicitly investigate the relationship between climate for innovation, innovation and organisational performance were analysed, using the three building blocks of science (concepts, statements and conceptual frameworks) identified by De Vos et al. (2011).

Concepts

As described in the literature review, concepts are the symbolic constructions by means of which people make sense of the meaning attributed to their words (Mouton, 1996). Table 1 presents the list of concepts listed in the article that investigates the relationship among climate for innovation, innovation and organisational performance. These are the words that appear in the keywords list of the article.

Table 1.

List of Concepts

Year	Author	Title of the Article	Concepts
2003	Baer & Frese	Innovation is not enough: Climate for initiative and psychological safety, process innovation and firm performance	None
2008	Crespel & Hansen	Work climate, innovativeness and firm performance in the US forest sector: In search of a conceptual framework	None
2008	Panuwatwanich et al.	The role of climate for innovation in enhancing business performance: The case of design firms	Innovation, construction industry, design and business performance
2010	Charbonnier-Voirin, et al.	A multilevel model of transformational leadership and adaptive performance and the moderating role of climate for innovation	Transformational leadership, adaptive performance, climate for innovation and multilevel analysis
2012	Nybakk & Jenssen	Innovation strategy, working climate and financial performance in traditional manufacturing firms: An empirical analysis	Innovation strategy, innovative working climate and financial performance
2013	Choi, Moon and Ko	An organisation’s ethical climate, innovation and performance: Effects of support for innovation and performance evaluation	Ethical climate, organisational innovation, support for innovation, performance evaluation, financial performance and innovation
2013	Nusair	The role of climate for innovation in job performance: Empirical evidence from commercial banks in Jordan	Climate for innovation and job performance

Source: Authors’ own.

Table 1 reveals that only five of the seven articles listed keywords (Charbonnier-Voirin et al., 2010; Choi et al., 2013; Nusair, 2013; Nybakk & Jenssen, 2012; Panuwatwanich et al., 2008). The most common (more than twice) keywords that appear in the five articles are climate for innovation, innovation and performance. Other keywords are design, transformational leadership, multilevel analysis and ethical climate.

Statements

The following statements (definitions and hypotheses) were found on the articles analysed. All studies were quantitative in nature, and, as such, there were no propositions.

Definitions

The most common words/phrases defined are organisational climate, climate for innovation, innovativeness, organisational innovation and performance. Other definitions include innovation strategy, culture for innovation and organisational process. For the purpose of this article, however, the focus is on the three variables under investigation, namely, organisational climate, innovation and organisational performance.

Organisational climate: The definitions pertaining to ‘climate’ include organisational climate, climate for initiative, climate for innovation and support for innovation. According to Crespell and Hansen (2008), organisational climate is an organisational reality composed of behaviours, employee attitudes and feelings, which are characterised by the environment of the organisation. Along similar lines, Charbonnier-Voirin et al. (2010) adopt the term ‘organizational climate’ as the set of shared perceptions regarding organisational policies and procedures that convey messages regarding the reward system, which often emerge through social interaction processes. Similarly, Baer and Frese (2003) view the term ‘organizational climate’ as being a broad class of organisational variables that describe the organisational context for individual actions. In the same vein, ‘climate for innovation’ is defined as an organisational climate that fosters innovative behaviour (Crespell & Hansen, 2008). In other words, climate for innovation refers to the norms and practices that encourage flexibility, the expression of ideas and learning (Charbonnier-Voirin et al., 2010). Perhaps, it is in this context that Baer and Frese (2003) define ‘climate for initiative’ as the formal and informal organisational practices and procedures that guide and support proactiveness, self-starting and persistence approach towards the work. In a broader context, Choi et al. (2013) define ‘support for innovation’ as the degree to which management encourages employees to try new things and to take risks.

Innovation: None of the study material found in this search defines the word ‘innovation’ explicitly. Instead, studies opted to use the word innovativeness and the phrase innovation strategy. Nybakk and Jenssen (2012) adopted the definition of innovativeness of West and Farr (1989). According to West and Farr (1989), the term ‘innovativeness’ is defined as a quality that is shared by most professionals and management workers. Nybakk and Jenssen (2012) go further to argue that, given the appropriate facilitating environment, innovativeness has a potential to be enacted in the working environment. Baer and Frese (2003) adopted a more comprehensive definition of innovativeness put forward by various scholars (Denison, 1996; Hurley & Hult, 1998). Baer and Frese (2003) define innovativeness as a cultural phenomenon that is readily observable in an organisational climate. Even more far-reaching, the innovation strategy is defined as a concept that embodies four dimensions describing the degree to which innovation can be manifested. These dimensions are products, processes, business systems embedded in management values as well as the degree of expenditure in research and development (R&D).

Organisational performance: Only two (Charbonnier-Voirin et al., 2010; Nusair, 2013) of the seven studies which investigate the relationship among organisational climate, innovation and organisation performance define organisational performance. Both studies adopted individual performance as a proxy of organisational performance. In the first study, Charbonnier-Voirin et al. (2010) define adaptive performance as the proficiency with which an individual can alter his or her behaviour in order to meet the demands of the environment, an event or a new situation. This includes skills, such as solving problems, dealing with uncertain and unpredictable work situations, handling emergency and crisis situations, learning new work tasks, technologies and procedures, handling work stress, demonstrating interpersonal, culturally- and physically-oriented adaptability. In the second study, Nusair (2013) adopted the performance definition as described by Lawler and Porter (2008) in which they stated that performance is a function of individual ability and skills and effort in a given situation. Although other studies do not explicitly define organisational performance, attempts were made to show how organisational performance is measured. For instance, Baer and Frese (2003) use the firm’s goal achievement and ROA as a proxy to measure organisational performance. Panuwatwanich et al. (2008) measured organisational performance in terms of economic growth and customer satisfaction. Nybakk and Jenssen (2012) used return on sales (ROS), sales growth rate, ROA and overall competitiveness, whereas Choi et al. (2013) opted for sales growth and revenue as a proxy to measure organisational performance.

Hypotheses

Only 17 hypotheses investigated the causal path among organisational climate, innovation and organisational performance. The tested hypotheses provide many truth statements with overwhelming evidence that organisational climate for innovation is positively associated with innovative behaviour. Similarly, innovative behaviour was found to be positively associated with organisational innovation (Baer & Frese, 2003; Choi et al., 2013; Crespell & Hansen, 2008; Nusair, 2013; Panuwatwanich et al., 2008). The results further reveal that organisational innovation is positively associated with organisational performance (Baer & Frese, 2003; Charbonnier-Voirin et al., 2010; Choi et al., 2013; Crespell & Hansen, 2008; Nusair, 2013; Nybakk & Jenssen, 2012; Panuwatwanich et al., 2008).

The study conducted by Nusair (2013) further investigated whether the demographic characteristics (gender, age, education and experience) have an influence on the relationship between climate for innovation and job performance, and the results showed that there was no relationship. Others studies did not test whether the demographic characteristics mediated the relationship among organisational climate, innovation and organisational performance. Of more significance, Nybakk and Jenssen (2012) confirmed that the innovation strategy is positively and significantly associated with financial performance, measured in sales growth and ROA.

Conceptual Frameworks

All seven studies analysed are quantitative in nature, and, as such, none of the studies attempted to develop a new theory. Similarly, none of the studies discussed the research paradigm. Four of the seven studies developed and tested the models using various topologies to reach an understanding on the three constructs under investigation.

Topologies

As described in the literature review, a topology is a conceptual framework in which phenomena are classified. Topologies are discussed below with reference to the three constructs.

Organisational climate: Various topologies have been identified that can be directly linked to organisational climate. These include team climate for innovation (Charbonnier-Voirin et al., 2010; Crespell & Hansen, 2008), leadership for innovation (Panuwatwanich et al., 2008), organisational culture (Panuwatwanich et al., 2008) and support for innovation (Choi et al., 2013).

Innovation: None of the articles analysed presents innovation in terms of topologies.

Organisational performance: The two most popular topologies of organisational performance (financial and non-financial) are utilised. One study (Choi et al., 2013) exclusively used financial measures and two studies (Nusair, 2013; Charbonnier-Voirin et al., 2010) exclusively used non-financial measures. Four studies (Baer & Frese, 2003; Crespell & Hansen, 2008; Nybakk & Jenssen, 2012; Panuwatwanich et al., 2008) opted to use both financial and non-financial measures of organisational performance. Another classification is subjective or objective measures of organisational performance. Objective measures are defined as the absolute values of a firm’s actual performance (Battor & Battor, 2010), whereas subjective measures generally assess the perception of respondents about their company’s performance relative to that of their competitors (Greenley, 1995). Five studies used subjective measures, one study using objective measures and the other using both subjective and objective measures of organisational performance.

Models

Four of the seven articles analysed, developed and tested a model (Charbonnier-Voirin et al., 2010; Choi et al., 2013; Hansen & Crespell, 2008; Panuwatwanich et al., 2008), whereas the other three studies (Baer & Frese, 2003; Nusair, 2013; Nybakk & Jenssen, 2012) tested the hypotheses without incorporating the results into a model.

Crespell and Hansen (2008) attempted to integrate the concept of work climate, innovativeness and firm performance into a unifying model using structural equation modelling. In order to achieve this objective, the authors proposed the operational model consisting of variables, such as climate for innovation, managerial attitude towards change, innovation strategy, firm size, organisational innovativeness and firm performance. The scale for management attitude towards change showed a composite reliability below cut-off points and was subsequently deleted in the model. The results revealed that climate for innovation, firm size and the innovation strategy affect innovativeness, with the innovation strategy having the strongest effect. The study also showed that climate for innovation has both a direct effect and an indirect effect (via innovativeness) on firm performance. Furthermore, the results indicated the indirect effect of innovation strategy on firm performance via innovativeness.

Along the same lines, Panuwatwanich et al. (2008) proposed a conceptual model which consists of the climate for innovation, innovation diffusion outcome and firm performance. Within the elements of climate for innovation, the model proposed three key constructs, namely, leadership or innovation, team climate for innovation and organisational culture for innovation. Furthermore, it was proposed that organisational culture for innovation depend on leadership for innovation and team climate for innovation. The model was tested using structural equation modelling, and the results revealed that leadership for innovation has a strong and positive influence on team climate for innovation and organisational culture. The results further revealed that the team climate for innovation had a moderate and positive influence on the organisational culture for innovation. In turn, the organisational culture for innovation was found to have a strong positive association with the innovation diffusion outcome, whereas business performance appears to be strongly influenced by the outcomes of innovation diffusion.

Charbonnier-Voirin et al. (2010) developed a model using four constructs, namely, transformational leadership climate, individual perception on transformational leadership, climate for innovation and individual adaptive performance. The primary aim of the study was to test the multilevel model of the relationship between transformational leadership and adaptive performance. Second, the study examined the moderating role of climate for innovation on the relationship between transformational leadership and adaptive performance at an individual level. The results revealed that an individual perception of transformational leadership and leadership climate was significantly and positively associated with individual adaptive performance. In addition, the results showed that the relationship between perceptions of transformational leadership and adaptive performance is stronger under a high climate for innovation.

More recently, Choi et al. (2013) developed a model to examine how an organisation’s ethical climate positively relates to its financial performance by considering an organisational innovation, support for innovation and performance evaluation. The model was tested using Partial Least Square (PLS) and, contrary to expectations, the interaction term of performance evaluation and ethical climate was not significant. As a result, performance evaluation was removed from the model. The results revealed that an organisation’s ethical climate is positively related to financial performance, and its positive relationship is mediated by an organisation’s innovation. But, of more significance, the results also showed that support for innovation has a moderating effect such that the positive influence of an organisation’s ethical climate on its innovation increases when support for innovation is high.

Although the other three studies did not develop a model, the findings of these studies contributed to the models discussed above. For instance, the study conducted by Nusair (2013) also confirmed that leadership for innovation, team climate for innovation and organisational culture for innovation are positively and significantly related to job performance. Similarly, Nybakk and Jenssen (2012) also illustrated that the innovation strategy and innovative working climate have a positive effect on financial performance. Following a slightly different approach, Baer and Frese (2003) showed that climate for initiative is positively and significantly related to company performance. In addition, the study showed that the climate for initiative moderates the relation between process innovations such that a high level of climate for initiative is associated with a positive relation and a low level of climate for initiative is associated with a negative relation.

Paradigm

None of the articles explicitly mentions the paradigm adopted for those studies. One can, however, reasonably maintain that the only paradigm that fits these studies is the positivist paradigm.

Summary

The key findings regarding knowledge on organisational climate, innovation and performance are presented in Table 2, following the three building blocks of science.

Table 2.

Key Findings on Organistional Climate, Innovation and Performance

Building Blocks of Science	Findings
Concepts	The most common keywords that appear in the five articles are climate for innovation, innovation and performance.
Statements	The following is a synthesis of the found definitions: Organisational climate: Organisational climate is an organisational reality composed of behaviours, employee attitudes and feelings, in other words, a set of shared perceptions regarding organisational policies and procedures that convey messages regarding the reward system which often emerge through social interaction processes. Such a climate for innovation carries connotations, such as ‘norms’, ‘practices’ and ‘procedures’ that encourages proactiveness, trying new things and develops employees to take risk.Innovation: The term innovation is a quality that is shared amongst professionals, a cultural phenomenon that is readily available underpinning organisational climate, in which innovative ideas manifest themselves.Organisational Performance: Performance can be assessed at the individual and organisational level. At the individual level, skills such as problem solving, dealing with unpredictable environment, handling crisis situation, work stress and learning new tasks, technologies, cultural- and physical- oriented adaptability are essential in assessing individual performance. At the organisational level, the firm’s financial performance is the most important factor. Non-financial aspects such as customer satisfaction are, however, equally important in assessing organisational performance.
Statements	Several hypotheses reoccurred in the articles:Organisational climate is positively and significantly associated with innovation. Innovation is positively and significantly associated with superior organisational performance. Organisational climate for innovation is influenced by leadership for innovation, team climate for innovation and organisational culture. Of more significance, innovation strategy is found to be strongly and significantly associated to innovativeness.
Conceptual Framework	The following typologies were common: Organisational climate : OC is classified into three categories, namely, team climate for innovation, leadership for innovation and organisational culture. Innovation: None of the studies investigated bothers to explore how innovation typologies will have an impact on the nature of the relationship among this three constructs. Performance: The two common topologies of organisational performance are financial and non-financial performance. Other topologies are subjective versus objective measures of organisational performance.
	There was little distinction between models presented: The synthesis of all the models developed reveals that organisational climate influences organisational innovation and, in turn, innovative organisations exhibit superior organisational performance when compared to their competitors. Of more significance is that the innovation strategy is strongly and significantly related to innovativeness, whereas organisational size has also been identified as one of the factors that influence the level of innovativeness.
	Although none of the study explicitly mentioned the paradigm adopted, it can be deduced that researchers adopted a positivist of the epistemology paradigm.

Source: Authors’ own.

Conclusion

This article has reviewed seven peer-reviewed articles from EBSCOhost and ProQuest. The primary aim has been to analyse articles that investigated the relationship among organisational climate, innovation and organisational performance using three building blocks of science (concepts, statements and conceptual frameworks) as identified by De Vos et al. (2011). For the sake of distinction, the conclusion is discussed with reference to the three building blocks of science.

In assessing the concepts (keywords) used, it can be concluded that the term organisational climate is broad, and it can relate to ethical climate, working environment climate and the specific dimension of organisational climate that relates to innovation. In addition, the analysis of the concepts shows that scholars that focus on climate for innovation recognise the importance of leadership styles and innovation strategy as the mediating factors on the relationship between organisational climates for innovation.

The analysis of definitions reveals that scholars are not consistent when they refer to ‘climate for innovation’. Some authors use organisational climate, others use climate for initiative, while yet others use support for innovation. The themes that emerge from organisational climate are ‘norms’, ‘practices’ and ‘procedures’ that encourage proactiveness, trying new things and developing employees to take risks. Similar innovation definitions resemble words, such as ‘quality, ‘cultural phenomenon’, ‘process’, ‘processes’ and ‘business systems’. Central to the definitions of organisational performance is the value of individual performance and the financial performance. The proxy for individual performance includes skills such as dealing with an unfamiliar environment, particularly managing uncertainties. On the other hand, financial performance is assessed in terms of ROA and ROS. Although financial performance is the most preferred benchmark for performance, other scholars have used non-financial measures such as customer satisfaction. Where hypotheses were studied, the literature reveals that organisational climate indeed influences innovation positively, but this is mediated by leadership style and organisational strategy. Of more significance, the analysis showed that innovative organisations generally do relatively better than competitors in terms of financial and non-financial performance.

From studying the reported models, it can be concluded that organisational climate influences the level of innovativeness in the organisation. The relationship between organisational climate and innovation is, however, mediated by other factors which include innovation strategy, firm size, leadership style and support for innovation. In turn, the reported models demonstrate that organisational innovation influences organisational performance positively. As such, organisations can create value by promoting a combination of both transformational leadership style and climate for innovation to increase individual and team performance.

From the truth statements, top management is urged to incorporate innovation deeply into corporate strategy by aligning resources, structures and functions around it. In addition, the ability to foster and lead such a work environment requires that the top management looks for such a trait during management selection and training. Furthermore, it is important for top management to note and acknowledge that the perception that to remain competitive requires management to pay more attention to innovation can be misleading. The synthesis of the results revealed that an effective innovation strategy can be achieved only if a strong climate for innovation exists in the organisation.

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