For innovation, corporate culture matters more than location.
Is there a corporate culture of innovation that transcends national differences? That’s one of the suggestions of a study called “Radical Innovation Across Nations: The Pre-eminence of Corporate Culture” that was published in the January 2009 issue of the Journal of Marketing. Gerard J. Tellis, Jaideep C. Prabhu and Rajesh K. Chandy reported findings from a survey of executives involved in innovation efforts at more than 750 public companies in 17 countries. Tellis is the Neely Chair in American Enterprise and professor of marketing at Marshall School of Business, University of Southern California; Prabhu is Jawaharlal Nehru Professor of Indian Business and Enterprise at Judge Business School, University of Cambridge; and Chandy is James D. Watkins Chair in Marketing at Carlson School of Management, University of Minnesota, as well as Tony and Maureen Wheeler Chair in Entrepreneurship and Innovation at London Business School.
In addition to their survey, Tellis, Prabhu and Chandy used data from sources such as world competitiveness reports to create variables for each of the 17 countries in areas such as capital, skilled labor and innovation-friendly government policies. Their survey also asked respondents questions about their company’s corporate culture and 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 positive impact on the financial market’s valuation of the company. Corporate attitudes and practices that had a relatively strong positive effect on radical innovation included a willingness to cannibalize a company’s existing products, an orientation toward the future, a tolerance for risk, the empowerment of product champions and incentives for enterprise. 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.