When Shared Rewards Spark Innovation: How Collaboration Fuels Creative Success

What is it about?

This study examines how reward interdependence—the degree to which managers’ rewards depend on colleagues’ performance in other departments—affects product innovation. It explores how structural factors (job rotation and decision autonomy) and relational factors (social interaction and interactional fairness) shape this link. The model suggests that cross-departmental reward ties can promote collaboration and knowledge sharing, but the organizational context determines how effectively these synergies drive innovation. Using data from Canadian-based firms, the findings show that reward interdependence enhances product innovation, especially when organizations emphasize job rotation, social interaction, and interactional fairness. These elements promote cross-functional understanding and trust, allowing managers to leverage each other’s insights in developing new products. In contrast, decision autonomy does not significantly influence this process, suggesting that innovation benefits more from cooperation and relational harmony than from independent decision-making. For practitioners, the results highlight the value of integrating rewards and relationships to promote innovation. Leaders should design incentive systems that tie individual success to collective achievement while fostering interactive and fair environments that facilitate collaboration. When managers feel connected—through both shared rewards and mutual respect—innovation thrives more naturally across functional boundaries.

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Photo by Vitaly Gariev on Unsplash

Photo by Vitaly Gariev on Unsplash

Why is it important?

This study is unique in presenting a systems-based perspective on how organizational structures and relationships interact to shape innovation outcomes. It identifies an ideal configuration that combines structural supports like job rotation with relational strengths such as fairness and interaction, showing that the latter plays a more powerful role in stimulating innovation. By connecting reward interdependence to broader organizational contingencies, it expands understanding of how firms can harness collaboration for creative advantage. Its timeliness lies in its insights for Canadian organizations and others navigating increasingly complex, cross-functional environments. As innovation becomes ever more dependent on cooperation across teams and departments, this research underscores a crucial lesson: shared success, fairness, and interaction are the cornerstones of sustainable innovation performance.