Innovation is widely recognised as a driving force for a firm’s economic growth (Gann 2003). Particularly in the design sector where creativity and innovation dictate business competitiveness, firms capable of successfully generating and/or adopting innovation are more likely to stay competitive than those who do not. To achieve this, firms need to be able to understand how innovation can be effectively diffused. Diffusion, as defined by Rogers (1983), is the process by which an innovation is communicated through certain channels over time among the members of a social system. As a result, innovation diffusion has been viewed as a result of a social psychological process.
Generally, social psychological process can manifest itself in the form of an environmental stimulus namely ‘climate’, which is considered as a determinant of motivation and behaviour (Kozlowski and Doherty 1989). Climate is defined as ‘a shared and enduring molar perception of the psychologically important aspects of the work environment’ (Ashfort 1985). Furthermore, as pointed out by Schneider and Reichers (1983), members of an organisation are exposed to numerous events and situations which are perceived in related sets. Therefore, when examining climate in an organisation, it is imperative that climate be related to a specific issue. In view of this, the study presented in this paper concentrates on analysing ‘climate for innovation’. In addition, the study is concerned with the context of ‘design’, which is an important element of a construction project lifecycle. In the realm of innovation research, design has long been recognised as an important part of the innovation process, yet it is poorly understood in innovation studies (Salter and Torbett 2003). Milne and Leifer (1999) maintain that what is less understood is how the quality of the environment (i.e. climate) may impact design activity aimed at developing innovative products. To address this gap, the present study aims at examining the climate for innovation and its role in determining innovation(related outcomes among AED firms.