Are tensions beneficial or detrimental for the enterprise’s mainstream and new stream innovation? A paradox perspective

Abstract

BACKGROUND:

In order to achieve sustainable and competitive advantages, enterprises must develop mainstream and new stream innovation simultaneously so as to achieve the short-term performance as well as the long-term competitive advantage. However, the funding and time resources owned by enterprises are often restricted, which make the tensions and competitive demands pervasive in the process of developing the mainstream and new stream innovation. Furthermore, the relationship between tensions and organizational innovation remains controversial and related empirical researches are rare.

OBJECTIVE:

Based on the paradox theory and ambidexterity innovation theory, we divide organizational innovation into mainstream- and new stream innovation, aiming to discuss the different influences of experiencing tensions on the two different types of organizational innovation. In addition, we aimed to explore the role of leaders’ paradox mindset in the relationship of experiencing tension and mainstream- and new stream innovation.

METHODS:

Our research uses regression analysis to perform hypothesis testing. The survey data of 226 small and medium-sized enterprises are used to conduct empirical tests on the hypothesis proposed in our research.

RESULTS:

The results display that resource scarcity is the source of organizational tensions, and leaders’ paradox mindset moderate the effects experiencing tensions on mainstream- and new stream innovation and moderate the indirect effect of resource scarcity through tensions on mainstream- and new stream innovation.

CONCLUSIONS:

Organizations will encounter a lot of contradictions and competitive demands in the process of developing mainstream- and new stream innovation. Effective leaders must learn to get comfort from their discomfort and effectively manage tensions. This study promotes movement in this direction and contributes to the resolution of the paradox of organizational innovation. We hope that our research fuels additional investigations to uncover approaches to tensions.

Keywords

Resource scarcity paradox mindset experiencing tensions mainstream innovation new stream innovation

Zhu Bin, Professor, Department of Management Science and Engineering, Fuzhou University. Her research interests include technology management, technology innovation and human resource management.

Ren Dashuai, Doctoral student, Department of Management Science and Engineering, Fuzhou University. His research interests are leadership, innovation management and technology innovation.

1 Introduction

The organizational structures and processes are becoming increasingly complex nowadays. Moreover, organizations are developing and getting linked to internal and external networks alongside diversification and globalization. In addition, the majority of Chinese SMEs are in a state of resource shortage for a long time, and they are also facing the pressure of change brought about by the economic restructuring and industrial structure upgrading. These comprehensive factors make enterprises increasingly face diverse kinds of organization tensions [1].

However, scholars have been controversial about the relationship between tensions and innovation. For example, some scholars note organizational tension in positive notions in terms of stimulating the process of innovation as well as enhancing leadership and organization’s performance [2 –5]. However, it may also fuel organizational anxiety and vicious downward spirals, raise stress, threaten leader’s perception of certainty and order, and may challenge the ego of leaders triggering defensive responses. This situation may further paralyze leader’s actions or foster intractable conflicts [4, 6], the possible reason for the argument is that these studies do not distinguish between types of innovation [7]. The innovation activities of enterprises can be divided into two types according to the degree of novelty. They are mainstream innovation and new stream innovation. Among them, the new stream innovation has a higher degree of novelty, while the mainstream innovation has a lower novelty. Scholars have come to realize that if the type of innovation are not distinguished, the conclusions obtained may reduce the accuracy. Besides, The relationship between tensions and innovation may be influenced by contextual factors. The leaders’ paradox mindset may be an important contextual variable that affects the relationship between tension and innovation. However, the exist research focuses on investigating the nature of tensions in tandem with counter responses at the organizational level [5, 8], among senior leaderships [9, 10], and at other macro-levels to explore the nature of tensions and how to manage tensions. Nevertheless, limited theoretical underpinnings are available which endeavor to present individual variations among leaders of the organization. Moreover, the empirical research works are in limitations, leaving many key issues in this field are yet to be resolved. For example, what circumstances/contexts may intensify the leader’s experience of tensions? What is the difference between the influence of tensions on the mainstream and the new stream innovation? How can leaders’ paradox mindset cope with organizational tensions to successfully respond to tensions or even benefit from tensions?

In response to the above problems, our research makes the following improvements. First, our research takes resource scarcity (i.e. time pressure and financial resources) as external context conditions that intensifies the experience of tensions, and choose leaders’ paradox mindset as a moderator variable which influences the relationship between tensions and innovation, and explore how leaders experience and respond to organizational tensions to influence the relationship between tensions and innovation, which is considered as a key to unraveling tension effects.

Second, our research attempts to resolve the inconsistent relationships between organizational tensions and innovation. By differentiating the innovation type, we divide innovation to mainstream and new stream innovation, specific discussion of the relationship between tensions and the mainstream innovation and new stream innovation of enterprises.

Finally, prior studies have shown that traditional Eastern cultures and Western cultures have different attitudes toward tensions. Western culture lays emphasis on the contradictions and the conflict between tensions. Meanwhile, the Eastern culture emphasizes the pursuit for the “moderate way” of opposing views [11, 12]. Therefore, it is more likely to generate paradox mindset under the influence of Eastern culture context. Hence, the present study examines the effects of tensions on mainstream and new stream innovation performance from the Chinese perspective.

1.1 Theory background and hypothesis

1.1.1 Paradox mindset

We can regard mindset as a framework or lens which can be used to interpret experiences or organize intricate reality [13]. Referring to the theory of paradox mindset [1 , 15], this study believes that leadership paradox mindset refers to leaders who tend to value, accept, and adapt to tensions, and regard tensions as opportunities for success, embrace them, and search for a “both/and” strategy [4], Leaders with paradox mindset will approach those conflicting needs as opportunities to succeed. Accepting tensions enables them to recognize the complex interactions between self-needs and other needs, competition and cooperation, and to recognize how these two requirements are mutually reinforcing, and to adapt to this paradoxical situation [16], Leaders with paradox mindset do not avoid or try to eliminate tensions, but acknowledge the potential benefits of tensions in satisfying both self-needs and others-needs. On the contrary, leaders who lack paradox thinking were prone to choose from cooperation or competition.

1.1.2 Mainstream and new stream innovation

Kanter [17] put forward the concepts of “Mainstream Innovation” and “New stream Innovation” for the first time in his thesis “Three Tiers for Innovation Research”. Afterwards, Kanter [18] elaborated on the concepts of mainstream innovation and new stream innovation in his paper “Swimming in the New streams: Mastering Innovation Dilemmas”. He thought mainstreams innovation has momentum. Mainstream’s path has been established, and its business flow has been developed. Mainstream innovation have the prestige and legitimacy that has already been established and has already been understood. various commitments have been promised to maintain the mainstream stream, and these commitments consist of budgets, schedules, job definitions and expectations. Enterprises should generate new stream innovation while caught up in the mainstream innovation activities. Especially in the current environment, mainstream innovation is easily dry up and stagnate. Therefore, enterprise organizations should find new opportunities to explore in new directions, and seek innovation that will enhance the mainstream. And for this purpose, they should to excavate new stream. Lawson and Samson [19] pointed out that mainstream innovation is the key to a company’s current success. Mainstream’s organizational process builds around stability, efficiency, and profitability in generating cash flow. New stream innovation always leverages knowledge to develop new products, new processes, new systems which will pave the way for company’s future success. Terziovski [20, 21] believes that mainstream innovation refers to innovation activities that can eliminate waste, mistakes, defects, and cut costs and provide customers with continuous service, new stream innovation can enhance the dynamic capability of enterprises, which can be used to continuously develop new products, services and knowledge. Zhu [22 –24] believes that “Mainstream innovation” refers to the cyclical leading technological activities that satisfy the market competition and enterprise development, that support the enterprises’ main business with the instruction of mainstream technology at the current stage, and that facilitate the establishment of mainstream technology paradigm and the generation of mainstream technology mechanism. Mainstream innovation, as one of technological innovation forms, its own development also depicts the cyclical characteristics of technological life evolution, which presents the “S"curve cyclical evolve with “sprout-growth-maturity-decline” process. And Zhu [25, 26] also points out that “New stream innovation” refers to the driving trendy technological innovation activities that reflect the trend of technological development and the requirement of technological innovation, that rooted in mainstream innovation at all stages, accompanied by new technology gestation and accumulation which lead to innovation breakthroughs, and that finally achieves the cyclically of mainstream innovation at all phases.

(1) Resource scarcity and tensions

The shortage of resources includes two aspects. First, all tangible and intangible innovation resources at the same time when the company carries out mainstream innovation and new stream innovation are in short supply. Second, companies are facing time pressure while carrying out innovation of both mainstream and new stream. Resources scarcity can increase tensions [1]. When an enterprise has sufficient innovation resources, the enterprise’s innovation business department and mainstream business department can simultaneously obtain sufficient resources. The innovation business department has enough funds to carry out R&D activities, develop new stream innovation, while the traditional business department can also increase investment continuously, reduce costs, increase market share, through the mainstream innovation, and maintain new stream innovation and mainstream innovation at a high level at the same time, At this time, the organizations can rely on mainstream products to obtain sufficient profit returns, and can rely on new stream innovation products to obtain sustainable competitive advantages, the advantages of mainstream innovation and new stream innovation have been fully utilized [27]. At this time, the level of tensions that the leaders face is very low, but when the company’s innovation resources are limited, coordinating and managing the mainstream and new stream innovation at the same time requires a lot of costs. Allocating resources for new stream innovation will inevitably reduce the distribution of mainstream innovative resources [28], so innovative business units and mainstream business units will inevitably compete with each other, thus increasing the tensions and contradictions in the innovation process, because there are not enough redundant resources to learn and trials errors, leaders will face great pressure so that they will not be able to fully realize their potential [29, 30], on the contrary, when enterprises have enough slack resources, even if it can’t not produce significant results in the short term [31], companies will allow leaders to continue to explore alternatives. On the other hand, when the leader of the organization has sufficient time, the leader can switch between different goals to fully realize the potential of each goal [27]. For example, when company’s innovation resources are insufficient, but have sufficient time, companies can obtain sufficient resources from the outside through alliances, mergers and acquisitions, technology sharing and another means, thus prompting enterprises to carry out mainstream innovation and new stream innovation at the same time. Leaders can adjust organizational structure in time to meet the needs of different innovation, leaders can also change their own leadership style in time, simultaneously focusing on and addressing short-term outcomes and long-term adaptability, exploration and exploitation, focus and flexibility of the strategic contradiction, At this time, leaders can solve the tensions that enterprises face in the aspects of technology, learning, organizational structure, and culture, At this time, it is unlikely for leader experiencing tensions. However, when leaders face time pressure, companies cannot acquire resources and create innovative capabilities in time. The leaders of a company cannot simultaneously focus on and accomplish multiple goals and conduct different ways of learning. It is necessary to balance the two kind of innovation that maintain high-performance mainstream innovation and new stream innovation that promote sustainable development of enterprises [28], thus aggravating the contradiction between multiple goals, and inspired the tensions between the work. Based on the above analysis, we assume that the leader with scarce resources can experience and recognize the tensions of the organization more than the opponent with redundant resources, and therefore we put forward the following assumptions:

Hypothesis 1: There is a significant positive correlation between the scarcity of resources (limited time pressure and limited resources) and the degree of tensions.

1.1.3 Tensions and mainstream innovation and new stream innovation: The role of leader’s paradox mindset

Paradox mindset may effectively transform tensions into beneficial results when experiencing tensions, and can shape the way which the leaders understand tensions. Leaders with low paradox mindset regard tensions as a dilemma and try to alleviate anxiety by resolving conflict and discomfort caused by tensions, in this situation, experiencing tensions can be threatening and may lead to dysfunctional. In order to avoid conflicts and discomfort caused by tension, leaders with low levels of paradox mindset tend to choose one from two seemingly contradictory alternatives and then maintain a consistent commitment to this choice [32]. For example, when a leader with a low level of paradox mindset face the tensions of developing mainstream innovation and new stream innovation at the same time, some leaders choose mainstream innovation to promote short-term performance of the organization because of considerations for performance appraisal and promotion of position. While some leaders ignore organization’s costs for their “ideals” and blindly carry out the new stream innovation with high-intensity, and high uncertainty, both of which follow the “either or” logic. They attempt to solve the difficulties faced by the enterprise through sacrificing either mainstream innovation or new stream innovation. However, this choice will either sacrifice the enterprise’s short-term efficiency or the sustainable competitive advantage. Leaders with high paradox mindset will advocate coexistence with contradictions with intentions to pursue, scrutinize, and confront conflict to form new understanding [33] instead of blindly searching for consistency. Paradox mindset can increase cognitive flexibility, and “leaders who have paradox mindset can extend their attention to different perspectives but also balancing these views” [34]. Leaders with paradox mindset can integrate the contradictory agendas. They can recognize the conflicts between the agendas, and may accept or manage those conflicts [34]. These leaders may be able to most successfully embrace paradoxical cognition and balance strategic decisions through paradoxical cognition—paradoxical frames and cognitive processes of differentiating and integrating [35]. When dealing with strategic conflicts, they can embrace the logic of “both/and” instead of “either/or” to promote innovation [1, 36]. Similarly, Smith and Chertok [37] used entrepreneurs as research objectives and found that paradox-type leaders play an important role in dealing with the needs of diversified contradictions and can help leaders to solve the business challenges faced by enterprises and effectively inspire the potential of leaders and employees. Moreover, Ouyang TH [38] found that paradox elements were full filled in the process of strategic transformation, and the organization needs to effectively dissolve the strategy paradox through the high-level organization of the paradoxical leadership.

For example, leaders with a higher level of paradox mindset will take the seemingly contradictory demands between mainstream innovation and new stream innovation as an opportunity to succeed. In doing so, leaders may recognize the synergy between mainstream innovation and new stream innovation as well as the mutual-improvement between them. They are able to see that the development of mainstream innovation can provide more innovative resources for the development of new stream innovation in tandem with realizing that new stream innovation can bring new improvements to mainstream innovation [39]. Also, they are adaptive to the contradictions between mainstream innovation and new stream innovation.

Based on the above analysis, when confronted with tensions, those leaders with higher paradox mindset are more likely to regard tensions as an opportunity to gain energy from a broader search for integrated solutions, thereby achieving outstanding mainstream innovation and new stream innovation. On the contrary, those leaders who lack paradox mindset are busy trying to eliminate the tensions and thus fewer resources are available, thus making assumptions:

Hypothesis 2: Leader’s paradox mindset plays a moderating role in the relationship between tensions and mainstream innovation and new stream innovation. When the level of leaders’ paradox mindset is high, experiencing tensions will increase the mainstream innovation and new stream innovation of the company. When the level of leaders’ paradox mindset is low, experiencing tensions will hinder the company’s mainstream innovation and new stream innovation.

Based on the assumptions presented in the previous section, our research further infers that the leader’s paradox mindset can moderate the mediating role of experiencing tensions, specifically, leader’s paradox mindset moderates the indirect relationship between resource scarcity and mainstream innovation and between resource scarcity and new stream innovation. When the leader’s paradox mindset is high, the organization is more likely to cope with the tensions caused by scarcity of resources, thereby promoting mainstream innovation and new stream innovation of the organization. On the contrary, when the leader’s paradox mindset is low, the leader is more likely to adopt the logic of “either or”, so that the tensions caused by the scarcity of resources cannot be effectively dealt with, which is not conducive to the mainstream innovation and new stream innovation of the organization. According the above analysis, we put forward the following hypothesis:

Hypothesis 3: The leader’s paradox mindset moderates the indirect effects of resource scarcity on mainstream innovation and new stream innovation by experiencing tensions. When the level of leader’s paradox mindset is high (low), experiencing tensions plays an intermediary role in the positive (negative) relationship between the scarcity of resources and mainstream innovation and new stream innovation.

2 Methodology

2.1 Participants and procedure

This study used questionnaires to collect data. In order to ensure the reliability of the items in the questionnaire and the reliability and validity of the measurement tools, we try to use the scales that have been used in the existing literature at home and abroad, and then make appropriate modifications and adjustments according to the purpose of the survey and feedback from the surveyed objects. Specifically, the questionnaire design includes the following four steps:

First, on the basis of reviewing and summarizing the literature about paradox mindset, and mainstream and new stream innovation, select the scale that best fits the connotation of the concepts proposed in this study. For the translation of English items, we follow the traditional translation and back-translation procedures. English questionnaires are first translated from English to Chinese by a researcher who is simultaneously proficient in Chinese and English, and translated back into Chinese from English, then compare the difference with another investigator, make corrections, and then finalize the translation to complete the questionnaire. In the second step, after the initial survey questionnaire was determined, structured in-depth interviews were conducted with senior executives of the five companies to ensure that the items used in the questionnaire were in line with the actual situation of the company, and in accordance with the feedback from the senior management of the company. Partially discuss, review, and revise the parts of the initial questionnaire. The third step is to conduct pretest surveys among EMBA groups to further judge whether the content of the variables used has a good level of reliability and validity. According to the feedback, some of the original questionnaires and the items are revised or deleted. The fourth step, based on the results of the pretest, revised and dealt with the problems found, and finally formed a formal questionnaire for the study. In order to maximize the reliability of the data and avoid the influence of homogeneous errors, we use multisource data collection methods to obtain independent and dependent variables from different sources. Specifically, we divided the questionnaire into two sub-questions in a large sample test, which was filled out by different research subjects.

Among them, the sub-questionnaire for mainstream and new stream innovation and leaders’ paradox mindset and experiencing tensions all reported by the enterprises senior manager, the research samples collected mainly come from enterprises in Shanghai, Beijing, Jiangsu, Henan, and Fujian province in China. Finally, 350 questionnaires were returned, including 124 invalid ones, only 226 valid questionnaires were actually obtained, and the ratio of valid questionnaires is 64.5%. Among them, female leader accounted for 36% of the total number, leader with bachelor degree or above accounted for 69.8% of the total number, the average age of all samples was 28.22 years, enterprises with a staff size of 100 to 300 people account for 45.75%.

2.2 Measures

We used a seven-point Likert-type scale as a measurement tool, Unless otherwise specified, the respondents generally evaluates the extent they agree with the description of the variable item.

(1) Resource scarcity. We used two three-items scales adapted from existing measures [40, 41] to measure resource scarcity, limited resources (e.g., “Adequate funds are available for the process of the organization innovation”), and time pressure (e.g., “Time pressure is often encountered in the process of organizational innovation”). The Cronbach’s alpha coefficient of this variable is 0.86, and the confidence level is good to meet the needs.

(2) Leaders’ Paradox mindset. The measure of managers’ paradox mindset is based on a mature scale developed by Miron Spektor[42] and consists of 9 items, “e.g., I am happy to deal with competitive demands.” The alpha coefficient was 0.92.

(3) Experiencing tensions. Referring to Miron Spektor’s [42] developed maturity scale, consisting of 7 items, “e.g., I often have to meet the conflicting needs, I often meet the competitive needs that need to be solved at the same time, etc”. The Cronbach’s alpha coefficient of this variable is 0.88, and the reliability level is better.

(4) Mainstream and new stream innovation. The measurement of the mainstream and new stream innovation mainly refers to the maturity scale developed by Mile Terziovski [20, 21]. The new stream innovation consists of 5 items, “e.g., revenue from new products, number of innovation adoptions, Research and development as a % of total sales, and the adoption of innovation time”.

The mainstream innovation consists of three items, “e.g., customer satisfaction, employees morale, ecological efficiency”, The Cronbach’s alpha coefficient of mainstream innovation and new stream innovation is 0.76 and 0.86 respectively, which exceed the threshold and the confidence level is acceptable.

2.2.1 Control variables

We controlled variables including the enterprise’s age, scale and type, and the corporate leader’s age, level of education and term of service etc.

3 Results and discussion

3.1 Confirmatory factor analysis

Through the software AMOS21.0, a confirmatory factor analysis (CFA) was performed on variables such as “leaders’ paradox mindset, experiencing tensions, resource scarcity, mainstream innovation, new stream innovation” and other variables tested for discriminant validity. Finding the fit index of the five-factor model (leader’s paradox mindset, mainstream innovation, new stream innovation, experiencing tensions, resource scarcity) (×2/df = 4.97, CFI = 0.92, IFI = 0.92, RMSEA = 0.07, SEMR = 0.05) Reached acceptable criteria and was significantly better than other models, indicating good discriminant validity among variables. The model fitting index is shown in Table 1. Secondly, this paper calculates the AVE value of the variable to measure the convergence validity of the variable. By calculation, the AVE values of each variable range from 0.5 to 0.8, both of which are greater than 0.5, and the measured variables have good convergence validity. Finally, by analyzing the correlation coefficient between the variables given in Table 1 and the square root of the AVE value of each variable (the diagonal in Table 2), it is found that the square root of the AVE value of each variable is greater than the line where the variable is located. The correlation coefficient value shown in the column. This indicates that the variables in this study have good discriminant validity.

Table 1
Confirmatory factor analysis results for scale validation

Model Factor X²/df CFI IFI RMSEA SEMR

5-factor model PM, RS, ET, MI, EI 4.97 0.92 0.92 0.07 0.05

4-factor model PM,RS,ET,MI+EI 6.52 0.89 0.88 0.14 0.16

3-factor model PM, RS+ET, EI+MI 15.29 0.78 0.76 0.18 0.19

2-factor model PM+RS+ET,EI+MI 16.76 0.76 0.74 0.23 0.21

1-factor model PM+RS+ET+EI+MI 30.83 0.60 0.58 0.25 0.23

Model	Factor	X²/df	CFI	IFI	RMSEA	SEMR
5-factor model	PM, RS, ET, MI, EI	4.97	0.92	0.92	0.07	0.05
4-factor model	PM,RS,ET,MI+EI	6.52	0.89	0.88	0.14	0.16
3-factor model	PM, RS+ET, EI+MI	15.29	0.78	0.76	0.18	0.19
2-factor model	PM+RS+ET,EI+MI	16.76	0.76	0.74	0.23	0.21
1-factor model	PM+RS+ET+EI+MI	30.83	0.60	0.58	0.25	0.23

PM: Leaders’ paradox mindset, RS: Resource scarcity, ET: Experiencing tensions, MI: Mainstream innovation, EI: New stream innovation, +: two factors merged.

Table 2

Correlation coefficients of variables

Variables	M	SD	1	2	3	4	5	6	7	8
1.Gender	0.46	0.41	—
2.Age	28.22	6.54	–0.085	—
3.Education	2.82	0.74	0.065	–0.050	—
4.Size	4.54	1.62	0.001	0.015	0.013	—
5.RS	3.87	0.65	0.013	0.031	0.017	0.035	0.758
6.EP	3.62	0.47	0.026	0.116	0.022	–0.082	0.436^*	0.823
7.PM	3.78	0.75	0.058	0.104	0.044	0.077	–0.265^**	0.286^**	0.843
8.MI	3.87	0.81	0.124	–0.108	0.009	0.065	–0.282^*	0.066	0.319^**	0.826
9.NI	3.71	0.66	0.097	0.95	0.036	–0.091	–0.263^*	0.061	0.364^**	0.427^**

^*p < 0.05 ^**p < 0.01, 1: Leader gender, 2: Leader age, 3: Education, 4: Organization Size, 5: Resource scarcity, 6: Experiencing tensions, 7: Leaders’ paradox mindset, 8: Mainstream innovation, 9: New stream innovation.

3.2 Descriptive statistics

Our research mainly uses SPSS21.0 statistical software to conduct simple descriptive statistics, correlation analysis, and regression analysis of the research variables in order to test the theoretical model and proposed hypothesis. The descriptive statistics of the variables involved in our research and the results of the correlation analysis are shown in Table 2. The correlation coefficients between variables are all below the threshold of 0.65, indicating the acceptability of the multicollinearity among the research variables.

3.3 Tests of hypotheses

In order to test the hypothesis, this article takes the variable of mainstream innovation and new stream innovation as dependent variables, and takes variables such as resource scarcity, leadership paradox mindset, and experiencing tensions as independent variables. Additionally, the company’s age, size, type of company, and leaders’ age, education level, term of office, and other variables are used as control variables to perform hierarchical multiple regression. First, the control variables are included in the regression model. The first step is to put the control variables into the regression equation, the second step is to introduce independent variables; the third step is to introduce the moderate variable; and the fourth step is to introduce the interactive item of the independent variable and the moderate variable. If the interaction of the independent variable and the moderate variable has a significant influence on the dependent variable, it indicates that there is a moderate effect.[43] Prior to analysis, the variables were centralized to reduce the effect of multicollinearity. The results showed that the control variables selected in this study had no significant effect on the mainstream and new stream innovation, so we report the analyses without these control variables. The results are shown in Table 3:

Table 3
Regression results testing model

Predictor Experiencing tensions Mainstream innovation New stream innovation

1 2a 2b 2c 3a 3b 3c

Independent variable

Resource scarcity 0.46^ –0.15 –0.14 –0.12 –0.24 –0.23 –0.16

Experiencing tensions –0.03 –0.03 0.06 0.02 –0.02 0.06

Moderate variable

Leaders’ paradox mindset 0.34^ 0.31^* 0.44^ 0.41^

Interaction items

PMET 0.26^ 0.29^

R2 0.08 0.11 0.15 0.22 0.14 0.18 0.26

ΔR2 0.03 0.04 0.07 0.04 0.08^

F 8.29^ 8.57^ 7.07^ 6.11^ 7.86^ 6.84^ 5.97^**

Predictor	Experiencing tensions	Mainstream innovation	New stream innovation
	1	2a	2b	2c	3a	3b	3c
Independent variable
Resource scarcity	0.46^**	–0.15	–0.14	–0.12	–0.24	–0.23	–0.16
Experiencing tensions		–0.03	–0.03	0.06	0.02	–0.02	0.06
Moderate variable
Leaders’ paradox mindset			0.34^**	0.31^*		0.44^**	0.41^**
Interaction items
PM*ET				0.26^**			0.29^**
R2	0.08	0.11	0.15	0.22	0.14	0.18	0.26
ΔR2		0.03	0.04	0.07		0.04	0.08^*
F	8.29^**	8.57^**	7.07^**	6.11^**	7.86^**	6.84^**	5.97^**

^*p < 0.05, ^**p < 0.01.

Hypothesis 1

We proposed in Hypothesis 1 that resource scarcity positively related to experiencing tensions, we tested them by setting up Models 1 presented in Table 3. The results showed that leaders are more likely to experience tensions when facing resource scarcity contexts as presented in Table 3. (model 1, β= 0. 46, p < 0.01), therefore, the hypothesis H1 is supported, it is assumed that the majority of Chinese SMEs are often in a state of resource scarcity, and mainstream innovation and new stream innovation are always in competition for resources rather than complement each other. Therefore, leaders are more likely to feel tensions at this time.

Hypothesis 2

We proposed in Hypothesis 2 that the relationship between experiencing tensions and mainstream innovation and new stream innovation was contingent on leaders’ paradox mindset. In models 2b and 3b, we respectively use mainstream innovation and new stream innovation as dependent variables, and taking resource scarcity, experiencing tensions, and paradox mindset as independent variables. No significant effects were found of experiencing tensions on mainstream innovation (model 2b, β= –0.03, p = n.s.), and on new stream innovation (model 3b, β= –0.02, p = n.s.). In models 2c and 3c, we respectively used mainstream innovation and new stream innovation as dependent variables, taking resource scarcity, experiencing tensions, and paradox mindset as independent variables, and linked interactive items of paradox mindset and organizational tensions. The results show that paradox mindset positively affects mainstream innovation (model 2c, β= 0.31, p < 0.05) and new stream innovation (model 3c, β= 0.41, p < 0.01). Additionally, the interaction between paradox mindset and organizational tension positively affects mainstream innovation (model 2c, β= 0.26, p < 0.05) and new stream innovation (model 3c, β= 0.29, p < 0.1) Therefore, paradox mindset can moderate the relationship between tensions and mainstream innovation and the relationship between tensions and new stream innovation. These results are supporting to accept hypothesis H2. In order to more intuitively show the moderating role of paradox mindset in this study, according to Cohen’s suggestions, one standard deviation above and below the mean of the moderated variables was used respectively as the high point and the low point to draw the moderate effect diagram of the relationship between the degree of paradox mindset and the mainstream innovation and new stream innovation at the different levels of tensions.

Figure 1 shows that for leaders with low level of paradox mindset, experiencing tensions have no significant association with mainstream innovation (Simple slope, p > 0.05). For leaders with a high level of paradox mindset, experiencing tensions was positively associated with mainstream innovation (Simple slope, p < 0.01).

Fig. 1

Effect of experiencing tensions and paradox mindset on mainstream innovation.

Figure 2 shows that for leaders with a low level of paradox mindset, there is no significant relationship between experiencing tensions and new stream innovation (Simple slope, p > 0.05). However, for leaders with a high degree of paradox mindset, experiencing tensions was positively associated with the new stream innovation (Simple slope, p < 0.01).

Fig. 2

Effect of experiencing tensions and paradox mindset on new stream innovation.

Hypothesis 3

In order to verify hypothesis 3, our research refers to the test method of the Moderated Mediation Models recommended by Hayes [44]. Using the Bootstrap procedures to test, the results shows that when the leader’s paradox mindset level is low (one standard deviation below the mean), the indirect effect of the resource scarcity through experiencing tensions on the mainstream innovation is significant(b = –0.05, SE = 0.03), 95% confidence interval is [–0.158, –0.013], when the leader’s paradox mindset level is high (one standard deviation above the mean), The indirect effect of resource scarcity through experiencing tension on mainstream innovation is significant(b = 0.10, SE = 0.07), and the 95% confidence interval is [0.012, 0.196]. Similar to the mainstream innovation, when the level of leader’s paradox mindset is low, the indirect effect of resource scarcity on new stream innovation through experiencing tensions is not significant(b = –0.09, SE = 0.04), 95% confidence interval is [–0.206, 0.014], when the leader’s paradox mindset level is high, the indirect effect of resource scarcity through experiencing tensions on new stream innovation is significant(b = 0.12, SE = 0.06), 95% confidence interval is [0.029, 0.159].This result shows that when the organization’s resources are scarce, the organization’s leaders are more vulnerable to tension between developing mainstream innovation or new stream innovation. For leaders with low paradox mindset, resource scarcity tensions will hinder mainstream innovation and new stream innovation. For those with high paradox mindset, experiencing tensions will promote mainstream innovation and new stream innovation. These results are supporting to accept the hypothesis H3.

To ensure the robustness of the our research, we tested possible alternative models, and we test whether there is a U-shaped relationship between resource scarcity and mainstream innovation and new stream innovation under certain circumstances. Hence, we regressed new stream innovation and mainstream innovation on scarce resources and squared scarce resources. Our research found that squared scarce resources have no effects on experiencing tensions, and at the same time, squared scare resources have no effects on new stream innovation and mainstream innovation.

Since our sample data is cross-sectional, our research constructs a feedback path, using the original independent variable as the dependent variable and the original dependent variable as the independent variable to examine the plausible. Leaders of companies with better mainstream innovation and new stream innovation have more access to resources and thus less tensions. We use mainstream innovation and new stream innovation as independent variables, alongside experience tensions as a dependent variable and resource scarcity as a mediator variable. The present study examines whether mainstream innovation and new stream innovation can have a direct or indirect effects through scarcity. Using Model 4 with PROCESS [44], our research found that both mainstream innovation and new stream innovation all don’t have a direct or indirect effects on experiencing tensions through resource scarcity, therefore, there is no endogenous problem in the variables of this paper.

The study found that the relationships between resource scarcity and experiencing tensions as well as mainstream innovation and the new stream innovation depend on leader’s paradox mindset. Leaders can use paradox mindset to improve enterprises’ mainstream innovation and new stream innovation.

4 Discussion

Why do some leaders turn organization tensions into benefits, while others bring organization to death? We found the following conclusions:

First, resource scarcity will increase managers’ experiencing tensions, When the enterprises only have limited fund resources and are under time pressure constraints, it is easy for managers to perceive paradoxical tensions, such as the tensions of competition and cooperation, profit and society, short-term performance and long-term performance, flexibility and efficiency, exploration and exploitation.

Second, leaders’ paradox mindset can moderate the relationship between experiencing tensions and the mainstream and new stream innovation of enterprises. Leaders with high paradox mindset can regard tension as inherent, positively accept organizational tensions, and use “both/ and” strategy to treat organizational tensions, which can turn the dilemma of resource scarcity into an opportunity to promote the growth of mainstream innovation and new stream innovation. For those leaders with low levels of paradox mindset, In the case of facing resources scarcity, they will feel more pressure and make decisions that are not conducive to the sustainable competitive advantage of enterprises, which is not conducive to the mainstream innovation of enterprises and the improvement of new stream innovation.

Third, leaders’ paradox mindset will moderate the indirect effect of resource scarcity through tensions on mainstream innovation and new stream innovation. Resource scarcity will increase the manager’s opportunity of experiencing tensions. For leaders with low paradox mindset, experiencing tensions created by resource scarcity will hinder the improvement of mainstream and new stream innovation. For leaders with high paradox mindset, experiencing tensions will enhance mainstream innovation and new stream innovation.

4.1 Theoretical contributions

Firstly, through systematic empirical research, our study verified that through the mechanism of leaders’ paradox mindset, leaders can effectively deal with various organizational tensions, thus promote the improvement of mainstream innovation and new stream innovation, and overcome the drawback that prior research about the the nature and management of tensions focus on theoretical level [42]. In addition, the definition of leading paradox mindset incorporates emotional factors, combining emotional reactions research with tensions [6, 15] combined with emotional response, extend previous studies mainly from cognitive processes [35] and sense making [5].

Second, previous research conclusions on the relationship between tensions and innovation have formed many controversies. Most scholars regard innovation as a single dimension variable, and lack of attention to the moderate mechanism, our research is conducive to reconcile previous scholars’ inconsistent conclusions about the relationship between tensions and organization innovation. Prior studies have found that tensions may enhance [10, 35] or hinder [4, 6] the organization’s innovations Our research attempts to divide organizational outcomes into mainstream innovation and new stream innovation from the perspective of ambidexterity innovation, and then explores the relationship between experiencing tensions and mainstream innovation and new stream innovation. We found that experiencing tensions does not affect the organization’s mainstream innovation and new stream innovation. The key to unpack the relationship between tensions and mainstream and new stream innovation lies in the moderating role of the managers’ paradox mindset.

Third, our research helps reconcile the prior scholar’s mixed findings about the relationship between resource scarcity and organization innovation. There were two different opinions on the relationship between resource scarcity and organizational innovation. One view suggests that resource scarcity may have a positive impact on organizational innovation [45], and other believe that resource scarcity may have a negative impact [46] or don’t affect [40, 41] the organization innovation. We integrate these findings with research on paradox to provide a new explanation for the relationship between resource scarcity and mainstream and new stream innovation. Working under the conditions of time pressure and limited resources will increases the likelihood of experiencing tensions, but the paradox mindset can moderate the indirect effects of resource scarcity on mainstream innovation and new stream innovation. Hence, our findings extend work on the relationship of resource scarcity and innovation.

Finally, the concept of paradox mindset has been proposed by foreign scholars. The relevant research has been based on the cultural background abroad. The role of paradox mindset in cross-cultural context has always been an important issue that needs to be demonstrated [42]. Oriental or Chinese thought is known for its comprehensiveness and inclusiveness [11]. Our research based on the localization situation, and used Chinese local data samples to verify the important role of leading paradox mindset, and to leader’s paradox mindset in Chinese local context. we found that the role of leaders’ paradox mindset in moderating the effects of tensions is confirmed.

4.2 Practical implications

First, in the context of scarce resources, change, and diversification, leaders of Chinese companies may often feel the impact of uncertainty and complexity, and they face more tensions. Therefore, the leaders of enterprises must use paradox mindset to better understand how to cope with increasing uncertainty, which often involves competitive possibilities in managing behavior. Organizational leaders should be trained to make paradox mindset an important part of their daily skills [35]. Leaders should think in terms of context and choose behavioral choices based on variables such as subordinate or organizational context [47]. Leaders should be trained to learn to deal with both short-term emergencies and long-term behavioral strategies to deal with seemingly irrelevant and contradictory poles, focusing on contradictory thinking and action.

Second, the solution of organizational tensions and the stimulation of innovation ability are ultimately depended on the leader of the organization. The leader must make the optimal decision in the seemingly contradictory dilemma. This decision-making ability may be a fundamental determinant of an company’s destiny. Therefore, leaders should cultivate their ability of paradox mindset, and might learn to obey the cognitive processes. Leaders should follow the “both/and” rather than “either/or” logic thinking to treat the strategic contradiction in organization, and might positively use paradox mindset while facing the threatening situations of tensions caused by resource scarcity and time pressure, and timely transform the latent tensions into salient tensions, and effectively manage organizational tensions, learn to live with the tensions.

While dealing with the tensions between mainstream innovation and new stream innovation, there is a need to follow the strategic framework thinking method. First, leader should improve their difference cognitive ability and recognize the differences between technology, organizational structure, culture, employees, value networks, and even thinking logic of mainstream innovation and new stream innovation, as well as find more integration points through the cognitive process of differencing [35]. Second, leaders should improve their integrating cognitive ability, shift levels of analysis from the product level to the organizational level of analysis to identify possible synergies so as to manage the strategic contradictions and tensions of enterprises, and promote the integration of exploration and exploitation, short-term efficiency and long-term effects, focus and flexibility, and promote the sustainable development of enterprises.

4.3 Limitations and future directions

First, the measurement of mainstream innovation and new stream innovation of the company comes from the subjective evaluation of the questionnaire rather than the objective financial statement data. Although prior research has found that subjective performance data are related to objective performance data. However, if we can obtain and use more objective reporting data, it will undoubtedly make the research conclusions more convincing. There are certain limitations in this research as well, for example, sample size, cross-sectional focus, and non-comparative design, suggest research needs, In the future, more experimental designs and data sources should be sought as far as possible to reduce common method bias [48].

Second, the study sample may have geographical limitations. Since the study participants were from the Chinese enterprises, the findings of this study mainly reflect Chinese perspective of integrating opposites and achieving positive subordinate outcomes. Future research can be conducted to analyze how well Western leaders display the same leader behaviors and achieve similar outcomes. Scholars might conduct cross-cultural research to explore whether paradox mindset is effective in other cultural contexts, and whether leaders within those contexts display somewhat different behaviors in managing paradoxes.

Third, our study selected resource scarcity (limited time and finances) as a major source of experiencing tensions. The future research can explore other factors which may trigger tension, for example, change, plurality, etc. [1]. Moreover, future research can subdivide the type of tensions to test whether our conclusion can be generalized across different types of tensions or not. (such as organizing, and identity tensions). Fourth, future research can examine how to cultivate and inspire leaders’ and employees’ paradox mindset [49], such as fostering leaders’ and employees’ paradox mindset through some incentives. In addition, the current literature has more qualitative research, and in the future, empirical research can be conducted using principal-agent model, cooperative-games model, and other methods. Finally, future research can look for other contextual factors that influence the relationship of tensions and mainstream innovation and new stream innovation, such as the work regulatory focus, as well as factors that can moderate the relationship between tensions and different type of innovation [10, 11], such as the leadership style or entrepreneurship posture [50]. In addition, the relationship between tension and employee innovative behavior is also a direction worth studying [51].

5 Conclusion

In conclusion, In the process of carrying out mainstream innovation and new stream innovation, leaders will encounter various contradictions and competing demands. Hence, the leaders of the organizations must learn to gain comfort from discomfort situation alongside managing tensions effectively. This research attempts to link paradox theory to innovation theories in tandem with contributing to the micro-foundations of organizational paradox. Besides, our research offer a basis for further management research and practice in this complex setting.

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