How do you encourage employees to innovate? Let them fail.

Creating a corporate culture where risk taking—which can result in failure—is supported is an important element in developing new ideas, says Richard Woodman, Lawrence Fouraker Professor of Management and co-author Feirong Yuan, recent Mays PhD graduate, now of the University of Kansas.

If employees are afraid that failure will lead to firing, it’s not likely that they will go out on a limb. Managers should then treat failure lightly, if it is the result of a creative effort.

In the same vein, employers should praise innovation. Employees are more likely to try a new idea, if it will result in a personal image boost, labeling them as innovative, even if the idea doesn’t ultimately thrive.

There’s a tricky relationship between companies and innovation, says the research. While many companies claim to want innovative ideas, managers are frequently unwilling to risk failure to see them realized. Therefore employees are unwilling to take the risk to pitch an idea that might hurt their standing in the company. Image risk at the corporate and individual level is a major deterrent to innovation.

Also a deterrent is the “not my job” attitude. Employees may not be aware that innovation is expected of them. Employers wanting innovation should include it as a specific job requirement. If innovation is seen as an add-on, rather than a regular task, then companies shouldn’t be surprised employees don’t make creative thinking a top priority.

While gathering data, the researchers interviewed employees and supervisors on topics such as organizational support for innovation, employee-supervisor relationships, job requirements for innovation, and the level of workers’ dissatisfaction with the status quo. Researchers analyzed responses to form a better understanding of what factors companies might manipulate to create an environment that fosters innovation. Their findings will appear in an upcoming issue of Academy of Management Journal ((Yuan, F. & Woodman, R. W. “Innovative behavior in the workplace: The role of performance and image outcome expectations.” Academy of Management Journal, 2010, 53: 323-342.)).