MUNCIE - A new Ball State University study suggests companies that place a higher emphasis on their employees may be more innovative and entrepreneurial. The study, "Social reactiveness and innovation: The impact of stakeholder salience on corporate entrepreneurship," examined 200 senior-level managers and developed a social proactivness scale which measured a manager's priorities toward internal and external issues. Mike Goldsby, executive director for the Institute for Entrepreneurship and Free Enterprise at Ball State, led the study and says companies that were more proactive on internal social issues saw greater innovation.

The study was done in conjunction with researchers from Indiana University, New Mexico State University, Iowa State University and the University of Missouri-Kansas City. In an interview with Inside INdiana Business, Goldsby said the results of the study were surprising.

"What drove innovation was socially-proactive, ethically-driven companies on the way they treat their people, on their HR practices," said Goldsby. "Essentially, the key finding is that if you want to drive innovation, be people oriented and as the people are taken care of, if you've got a progressive, inclusive and supportive internal culture, then people are going to be more engaged and there's going to be more innovations coming."

Goldsby says while external social issues may not necessarily drive innovation, that doesn't mean they're not important. That category includes issues such as external environmental policies, community relations, and employees' involvement in community groups and functions outside of the company. 

Goldsby is also the chief entrepreneurship officer and the distinguished professor of entrepreneurship at Ball State. He adds in today's business environment, if a company wants to maintain competitiveness, it is very much driven by innovation and creativity. 

"The best place to start is looking to your people," said Goldsby. "One finding in a previous study I did that I think really plays out here is people will be as committed to the company as they feel supported by the managers and by the organization. So if you want committed, engaged, innovative people, and as we know that innovation usually comes from a lot of people, not just one person, if you want that to happen then you really need to think about how to treat your people well and make them feel that the company cares about them."

The study was published in a recent issue of the Journal of Small Business Strategy. You can view the study below: