Balance of Cross-Functional Collaboration and Stretch and its Interaction with Firms’ Innovation Performance

Literature does not provide a detailed explanation of the role of climate for innovation in the relationship between cross-functional collaboration and corporate innovation performance. The aim of this explorative study is therefore to investigate the complex interaction between cross-functional collaboration, climate for innovation and firms’ innovation performance. Based on the analysis of a random data sample of heads of works councils of 450 large-sized firms in Germany, working with innovation, this paper finds, that there is an effect between cross-functional collaboration and innovation performance which is complementary mediated by innovation climate. Overall, this finding leads to the conclusion that companies need to balance ‘soft’ factors as cross-functional collaboration and ‘hard’ factors as stretch in order to stimulate a productive innovation climate. Firms, which systematically work with and succeed in this balancing act, have also higher chances for increasing their innovation performance.