For innovation, corporate culture matters more than location

Is there a corporate culture of innovation that transcends national differences? That’s one of the intriguing suggestions of a new study called  “Radical Innovation Across Nations: The Pre-eminence of Corporate Culture” that is scheduled to be forthcoming in the January 2009 issue of the Journal of Marketing. Researchers Gerard J. Tellis, Jaideep C. Prabhu andRajesh K. Chandy report findings from a survey of executives who were closely involved in innovation efforts at more than 750 public companies in 17 different countries.

Tellis, Prabhu and Chandy also used data available from sources such as the World Economic Forum and the IMD World Competitiveness Report to create variables for each of the 17 countries in areas such as capital, skilled labor and innovation-friendly government policies.  And their survey asked respondents questions about their companies’ corporate culture and about the companies’ level of radical innovation.

The researchers found that a number of attitudes and practices associated with corporate culture had a significant positive effect on radical innovation — and radical innovation, in turn, had a postive impact on the financial market’s valuation of a company.  Corporate attitudes that had a relatively strong positve effect on radical innovation included a willingness to cannibalize a company’s existing products, an orientation toward the future, and a tolerance for risk.  Not surprisingly, having a high percentage of a company’s employees working in R&D also had a significant positive association with radical innovation.

But, once the effect of corporate culture was accounted for, the researchers found that a number of country-level factors — such as the environment for skilled labor in the country as a whole  –  had little impact on a company’s level of radical innovation.

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