The Contribution of Occupational Psychology Theories in the Formation and Management of Innovative Teams in Contemporary Organisations


The rapid change in the business environment and an increase in global competition have enabled innovation within an organization, which is crucial in ensuring its performance in the long-term. Innovation is considered crucial in gaining competitive advantage. In addition, it is a result of the need to grow and keep pace with rival organizations. Other authors such as Chapman, Berman, and Blitz (2008) argue that innovation is the outcome of individuals satisfying their curiosity through optimizing current concepts or developing new concepts. In addition, innovation is perceived as the effective execution of creative ideas, which implies that creativity is the core aspect of innovation. As Chen et al. (2007) explain, innovation occurs when small teams and individuals take part in creative thinking and successfully execute their ideas. The nature of innovation implies that occupational psychology plays a crucial role in helping organizations to enhance their innovation and creativity levels (Ahmad 2010).

The goal of this paper is to evaluate the contribution of occupational psychology theories in the formation and management of innovative teams in modern organizations. The paper provides an overview of occupational psychology, after which it delves into the various ways through which occupational psychology theories, especially the person-fit theory and transformational leadership theory, contribute to the formation and management of innovative teams.

Overview of Occupational Psychology

Occupational psychology places emphasis on enhancing workplace productivity and other factors that affect workplace productivity such as employees’ mental and physical well-being. Occupational psychology spans various organizational aspects including team development, leadership, employee behavior and attitudes, employee well-being, individual performance management, organizational effectiveness, and organizational culture. Occupational psychology has the overarching goal of studying and understanding human behavior in an organization (Millward 2005).

Occupational psychology comprises of two elements, particularly personnel psychology and occupational psychology. Personnel psychology is concerned with ensuring that individuals fit in with their particular job roles by means of evaluating the characteristics of employees and matching employees to job roles that they are likely to report superb performance. Personnel psychology also entails employee training and development, assessing employee performance, and development of employee performance standards. Occupational psychology occurs at the organizational level and places emphasis on studying the impact of organizations on individual behavior. Individual behavior within an organization is influenced by a number of factors including role expectations, management styles, social norms and organizational structures (Millward 2005). Having an understanding of these factors can allow the organization to introduce measures that can be used in improving employee performance and well-being and concurrently benefiting the organization. The following subsections discuss how occupational psychology theories can be applied in forming and managing innovative teams. Emphasis is placed on two aspects of occupational psychology principles and theories, which include person-environment fit and the role of leadership in forming a creative climate (Millward 2005).

Person-Environment Fit

The past two decades have seen an increase in the interest in the issue of person-environment fit. It is imperative to understand the relationship between work environment and people, and how the fit between the work environment and people affects innovation and creativity, effective teamwork, turnover, adjustment, satisfaction, and performance. Various studies have affirmed a positive link between person-environment fit and individual creativity. According to Ahmad (2010), despite the fact that creativity can be manifested at various levels, including organizational, group and individual levels (discussed later), individual creativity is the ultimate source of creativity. This means that creativity at higher levels such as teams and organizations depends on the integration of individual creative potentials significantly (Ahmad 2010).

The interaction between environmental and personal variables as documented in existing literature point out that person-environment fit has a positive impact on creative behavior. An example is a fit between a follower motivation (intrinsic motivation) and a leader, which has been established to boost creative behavior. Choi and Price (2005) reported that the congruence between an environment and a person in the environment is a crucial prerequisite for heightened creativity. Essentially, person-environment fit exemplifies the idea that behavior, attitudes and individual outcomes are not attributed solely to the environment or person; instead, they are attributed to the relationship between the environment and the person. Person-environment fit is practically significant when forming and managing innovative teams. This is because the fit between the abilities of a person and the environmental demands plays a crucial role in the selection of members to be a part of a team (Ahmad 2010).

Overall, the person-fit theory provides a framework that facilitates the assessment and prediction of the manner in which individual characteristics and the organizational work environment are likely to influence creative behavior. Two perspectives of person-environment fit exist, which include the needs-supplies fit (employee needs) and the demand-abilities fit (job environment demands). The needs-supplies fit denotes the extent to which individual employees needs like the desire to utilize their abilities and skills, are provided by the work environment. This is particularly important with respect to forming creative teams in the sense that the team environment should provide team members with the opportunity to make use of their abilities and skills (Choi & Price 2005).

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Leadership and Creative and Innovative Climate

The work behavior of employees is significantly influenced by their leaders. In literature, it has been reported that the leadership style is a significant factor that influences performance and creativity behavior (Chapman, Berman & Blitz 2008; Chen et al. 2007). There are numerous leadership theories. The transformational and transactional leadership theories have a significantly different representation of leadership. According to the transactional leadership theory, a system of punishments and rewards is used in motivating followers. Transactional leadership focuses on stability, defining task requirements, and using rewards on task fulfillment (Jung, Chow & Wu 2003). Therefore, it is evident that transactional leadership is unlikely to fit the needs of an organization or a team that seeks to achieve innovation. By contrast, transformational leadership involves inspiring followers to act as well as creating a sense of purpose. Transformational leadership seeks to alter the status quo by providing their followers with challenges and opportunities for growth as well as by promoting vision. Research has affirmed the effectiveness of transformational leadership in ensuring satisfaction and commitment of followers. The nature of transformational leadership makes it a fit with innovative culture in teams and organizations (Eisenbeiss, van Knippenberg & Boerner 2008).

In occupational psychology, leaders are considered a part of an all-encompassing process that involves environmental, organizational and social factors. This means that leadership is perceived as a process rather than a person (Chapman, Berman & Blitz 2008; Charbonnier-Voirin, Akremi & Vandenberghe 2010). The crucial role played by leadership in forming creative and innovative climate has been affirmed in literature. In a creative and innovative climate, the organizational norms and practices support employees in developing and exploring novel ideas, processes, and products. Transformational leadership has been reported to be crucial with respect to nurturing creativity and innovation within the organization as a whole (macro-level), within teams (Meso level) and at the individual level (micro-level) (Chen et al. 2007).

Owing to the fact that transformational leaders have the primary task of encouraging employees to broaden their minds and perceive problems from various perspectives, attain higher performance and encourage employees using challenging vision, transformational leaders can achieve this provided that teams have norms and practices that encourage the development of new ideas, creative thinking, and personal initiatives. Developing a creative climate at the team level requires transformational leadership. As Chen et al. (2007) explain creative climate is characterized by norms and practices that encourage flexibility, expression of ideas and learning. People working in a creative climate are likely to think about themselves and empowerment and build on their cognitive and emotional resources to make innovative contributions to the organization. Therefore, creative climate focuses on building the inner resources of an individual in order to contribute to the mission of the team or organization (Eisenbeiss, van Knippenberg & Boerner 2008).

Transformational leaders can enhance team/individual creativity and innovation using intellectual stimulation, individualized consideration, idealized influence, and inspirational motivation. This can be used in encouraging team members to build on their resources and strengths in order to contribute to the mission of the team or organization. Therefore, transformational leadership, as a theory of occupational psychology, contributes to forming and managing innovative teams in modern-day organizations (Jung, Chow & Wu 2003).


It is evident from the discussion in the paper that occupational psychology theories and principles can be applied in the formation and management of innovative teams. This is possible through producing the person-environment fit, usage of transformational leadership to foster a creative/innovative climate, and understanding the interplay between the various domains of innovation. With respect to person-environment fit, there is no doubt that creative behavior is a function of the context and the person; therefore, understanding of the creative/innovative processes requires examination of both contextual and individual factors. Essentially, a fit between the person and the environment is positively associated with creativity. Therefore, team environment should provide team members with the opportunity to make use of their abilities and skills. Transformational leadership can be used to enhance team/individual creativity and innovation through intellectual stimulation, individualized consideration, idealized influence, and inspirational motivation.

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