The effect of perceived rewards on radical innovation: the mediating role of knowledge management in Indian manufacturing firms

This paper examines the mechanisms through which employees’ perception of rewards influences their radical innovation. The paper develops and empirically tests a model proposing that perceived rewards influence radical innovation via the mediating mechanisms of knowledge acquisition and knowledge sharing. Data from three Indian manufacturing companies were collected using a questionnaire. Responses from 235 employees were analysed (using structural equation modeling via AMOS27) to examine the links between perceived rewards, knowledge sharing, knowledge acquisition, and radical innovation. The findings showed that: 1) perceived rewards had positive and significant relationships with radical innovation, knowledge acquisition, and knowledge sharing; 2) knowledge acquisition had a positive and significant relation with radical innovation, but knowledge sharing was not significantly related to radical innovation; and 3) knowledge acquisition mediated the relationship between perceived rewards and radical innovation. No support was found for the mediating role of knowledge sharing in radical innovation. The paper examines the overlooked role of perceived rewards in facilitating knowledge behaviours and radical innovation. In addition, the practices examined in the model are assessed as perceived by employees, rather than as perceived or intended by managers.