The organizational climate for psychological safety: Associations with SMEs' innovation capabilities and innovation performance

Abstract

This paper conceptualizes psychological safety as an organizational level phenomenon, andproposes that an organizational climate for psychological safety is positively related to SMEs'innovation performance and innovation capabilities. These hypotheses are tested on data fromNorwegian SMEs. The results demonstrate that psychological safety is positively associated withSMEs' innovation performance, and positively related to product-, process-, service-, and businessmodel innovation capabilities. Furthermore, an organizational climate for psychological safety isparticularly important for enhancing afirm’s radical innovative capability, while environmentaldynamism is found to moderate the effect of psychological safety. The results support the re-levance of psychological safety at thefirm level of analysis.