Governance structures and innovation in the Irish Software Industry

In the present study we develop and test a causal model of the influence of organizational governance mechanisms on firm innovation. We hypothesize that firm incentive provisions and self-regulation behaviors affect the creative capabilities of firms. Further, we hypothesize that creative capabilities affect the social climate for innovation and consequently, climate for innovation should affect new product innovation. We also hypothesize that firms' investments in human capital should positively influence self-regulation behaviors. Using a sample of forty-five software firms in Ireland, we find support for most of our hypotheses. Implications for managerial practices and research are discussed.