Boosting innovation : the underestimated role of psychological safety in Swiss SMEs
Creators: name: Müller, Nadine
Publisher: name: ZHAW Zürcher Hochschule für Angewandte Wissenschaften
Year: 2023
Subjects: 658.406: Innovationsmanagement, Change Management

description: Small and medium-sized enterprises (SMEs) constitute 99% of all businesses in Switzerland, providing employment and economic value. Due to today’s dynamic environments, organizations must continuously innovate to maintain their competitive advantage. Hence, these enterprises must enhance their employees’ capacity for innovative work behavior. Innovative work behavior is the intentional creation, introduction, and application of new ideas. For that reason, Swiss SMEs need to foster such behavior by emphasizing leaders’ need to create a psychologically safe environment.
The research question is, therefore, to what extent a psychologically safe work environment leads to greater employee engagement and, thus, to more innovative work behavior in Swiss SMEs. This study assumes that engaged employees are more likely to dare to raise new ideas and share these ideas with team members without fear of rejection.
The basis for the study is profound literature research better to understand the definitions and the interaction of the variables. Subsequently, their transferability to Swiss SMEs is empirically examined by conducting expert interviews. This approach provides an overview of the innovation practices in Swiss SMEs as well as the need for a psychologically safe work environment to innovate.
The results of this study confirm the assumption that fostering a psychologically safe environment boosts employee engagement because such an environment encourages open dialogue, seeks constructive feedback, and emphasizes learning over blame. Thus, effectively reducing fear of failure and interpersonal risks associated with the innovation process. As a result, employees are more motivated and actively contribute with innovative ideas, which is critical for business growth and gaining a competitive advantage in SMEs. In order to establish psychological safety in a team, a leader should be perceived as trustworthy by upholding principles of respect and shared goals. By prioritizing psychological safety in the workplace, Swiss SMEs can enhance innovative work behavior among their workforce by actively fostering open communication, cross-department collaboration, admitting mistakes, and establishing a sense of community through regular informal team events or activities. Furthermore, having flat hierarchies, short communication channels, and smaller team sizes is beneficial in leading people to be closer to each other and appreciating each other’s work. However, not only the organization or the leaders are responsible for fostering such a climate.
Instead, every team member on their own is responsible for fostering such a culture by providing support, constructive feedback, and appreciation towards other team members. In conclusion, innovative activities require a psychologically safe environment, which is independent of the industry, region, or company size, since it is a group-level construct stating that the perceived psychological safety is the same within teams but different across all teams within an organization.