Innovation and Culture

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This article was originally published on my LinkedIn page.

Every company or organisation needs to innovate to stay relevant, to keep a competitive edge and remain on top of the business. Research shows that creativity and innovation are influenced by national culture. If a culture is characterized by a large power distance, for instance, which means more hierarchy and more acceptance of power differences, there seems to be a measurable lower rate of innovation taking place (Shane, 1993; Kaasa & Vadi, 2010; Halkos & Tzeremes, 2013). This can be explained by the fact that information sharing, a prerequisite for finding innovative solutions, is easier in cultures with small power distance. Also, there is less reluctance to challenge the status quo and therefore new ideas may surface and more breakthroughs can take place.

Several researches have studied creativity and innovation and related them to the Hofstede dimensions of national culture. Naturally innovation takes place in every culture. Yet there are tendencies and the most important dimensions which play a role, are the following: 

  1. Power distance index (PDI): ‘the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally’ (Hofstede 1980, 28).
  2. Masculinity versus femininity (MAS): ranges from ‘societies in which social gender roles are clearly distinct’ to ‘societies in which social gender roles overlap’ (Hofstede 1980, 82).
  3. Uncertainty avoidance index (UAI): ‘the extent to which the members of a culture feel threatened by uncertain or unknown situations’ (Hofstede 1980, 113).

It is this last dimension, uncertainty avoidance, which is found to have the largest (negative) influence on innovation. This relationship, earlier found by Shane (1993) and Vaskarelis (2001), was confirmed by Kaasa & Vadi (2010), who measure innovation by the number of patents applications and who stress that they measure innovation initiation only. Halkos & Tzeremes, on the other hand, use an extensive method to measure innovation: through a combination of various input variables (knowledge creation, such as R&D expenditures, and entrepreneurship, such as the amount of innovating SME’s etc.) and various output variables (patents, but also high tech export; sales of new-to-market products and others). They find that uncertainty avoidance, of all dimensions, actually has the strongest relationship with innovation (2013).

This influence can be explained by the fact that innovations create some kind of change, uncertainty and ambiguity by nature. High uncertainty avoidance cultures usually create rules to avoid this ambiguity and it is these rules and the reliance on rules, which may prevent ideas and creativity to surface. “Uncertainty-averse attitudes also mean that there is less incentive to come out with a novel idea that will be possibly rejected.” (Kaasa &Vadi, 2010, p. 586).

Concerning the remaining dimension, the outcomes of various studies is more mixed. Shane doesn’t find a relationship between masculinity and the number of trademarks per capita (1993). Williams & McGuire find no effect of masculinity on the economic creativity of a country (2005). Both Kaasa & Vadi, and Halkos & Tzeremes, however, do find a negative relationship between innovation and masculinity. Although weaker than the two dimensions mentioned above, it seems that femininity has a positive effect on innovation. This may come as a surprise, since it is a masculine culture that puts more emphasis on achievement and success. “Nevertheless, there are some possible influences that have to be taken into account. In feminine societies, the focus is on people and a more supportive climate can be found. A warm climate, low conflict, trust, and socio-emotional support help employees to cope with the uncertainty related to new ideas. (Nakata and Sivakumar, 1996)” (Kaasa & Vadi, p. 587).

Hence, these studies show how countries’ cultural values influence innovation and the outcomes can be taken along in the decision making concerning the allocation of R&D expenditures and personnel working within these units. At the same time such decisions depend on many variables and both national and organizational culture are intertwined and simultaneously at play. These results, therefore, may also serve as a point of departure in order to find structures, processes and behaviour within a particular organization, which have either positive or negative effects on innovation. Custom-made research can determine what stimulates or hinders creativity within a specific context and which strategies could be put in place to create an innovative atmosphere.

(c) Alette Vonk – – +31 (0) 6 2215 1182

Used literature:

–       Halkos, G.E. and N.G. Tzeremes, 2013. Modelling the effect of national culture on countries’ innovation performances: A conditional full frontier approach. International Review of Applied Economics 27:5, 656-678.

–       Hofstede, G. 1980. Culture’s consequences: International differences in work related values. Beverly Hills, CA: Sage.

–       Kaasa, A., and M. Vadi, 2010. How does culture contribute to innovation? Evidence from European countries. Economics of Innovation and New Technology, 9:7: 583-604.

–       Nakata, C., and K. Sivakumar. 1996. National culture and new product development: An integrative review. Journal of Marketing 60, no.1: 61–72.

–       Shane, S. 1993. Cultural influences on national rates of innovation. Journal of Business Venturing 8: 59–73.

–       Vaskarelis, N. C. 2001. The impact of patent protection, economy openness and national culture on R&D investment: a cross-country empirical investigation. Research Policy 30: 1059–1068.

–       Williams, L.K., and S.J.J. McGuire. 2005. Effects of national culture on economic creativity and innovation implementation. Paper presented at the International Society for New Institutional Economics Conference, The Institutions of Market Exchange, 22–24 September, in Barcelona, Spain.

The original article can be found here: My blog on LinkedIn.