Beyond the “good” and “evil” of stability values in organizational culture for managerial innovation: the crucial role of management controls

Previous literature has widely regarded stability values in organizational culture as a necessary evil at best and proposed their reduction to shape innovation. Our study expands the literature by empirically exploring the relationship among stability values in organizational culture, management control (MC), and managerial innovation. Managerial innovation is important for every organization because it contributes to technical innovation in the long term and is directly or indirectly associated with firm performance in a positive way, but its success or failure depends on a process of diffusion through the organization as a social system. Based on a survey of 260 large German firms, we find that managerial innovation has a negative association with the degree of stability in organizational culture but a positive association with an emphasis on three of the four tested MCs, namely, action controls, personnel controls, and cultural controls. We reveal that a large extent of the negative effect ascribed to stability in organizational culture is caused by a lack of emphasis on cultural controls rather than by the degree of stability itself. Furthermore, we go beyond the assessment of stability as purely “good” or “evil” by generating empirical evidence of the positive fit between stability and cultural controls for managerial innovation, following contingency theory. According to our findings, organizations with a relatively high degree of stability in their culture (e.g., bureaucracy or hierarchy) may be enabled to shape managerial innovation through cultural controls.