The present study uses dynamic capabilities and micro foundations theory to unearth the emergence of multilevel innovation in service sector organizations. Transformational leadership (TL) and corporate social responsibility (CSR) are proposed as human resource (HR) based antecedents. The study also aims to reveal the role of collective organizational engagement (COE) as a mediator in developing dynamic capabilities and contingent pay policy (CPP) as a moderator.
The research is a multilevel study where employees are nested within organizations. We used multilevel modeling in Mplus V. 8.7 to perform the analyses.
Results of multilevel structural equation modeling revealed that TL, CSR, and COE are vital microfoundations through which innovation emerges in an organization. COE acts as a partial mediator in the relationship between CSR and innovation. The level of CPP in organizations moderates these relationships at the employee level rather than at the firm level.
This research is one of the few multilevel and multisource studies to empirically test the impact of HR-based antecedents on innovative work behavior and firm innovativeness simultaneously. It also contributes to engagement literature by furthering an understanding of the nascent concept of COE.
