For radical 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.

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 and Rajesh 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 positive 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.

8 Comments On: For radical innovation, corporate culture matters more than location

  • vamana | December 10, 2008

    So true. I have worked with four companies in last 20 yrs, across 7 countries in Software Industry. First place had me drive crazy with the need for being different that led to 7 patents. Second one had a need for new development ahead of market and the company’s culture of open collaboration ensured that the product was always relevant to customers though a novelty in itself. It was a cultural shock when I went to the thrid company – though rated as the best employer, best outsourcer, etc.. Innovation had a process and policy tag, which ensured that ideas died before reaching a conclusive approval from the board that said mostly NO to all investment oriented innovation! Return mattered most, than the value of the innovation. So, I agree that corporate culture really influeces the innovative behavior in employees.

  • drjacobs | December 11, 2008

    a company’s culture shapes the acceptance of change and difference, levels of trust and collaboration and the open flow of information across the company.

    Companies that operate from a Culture-Led, Market-Driven perspective understand that leadership on innovation is not just about hard-metric results. It is also about how people get those results.

    These companies build innovation into their talent management practices so they can identify and foster
    entrepreneurial talent. This happens when:

    1. Learning builds a real capacity for both internal and external collaborative innovation

    2. Skills and mind-sets for new ways of thinking and new ways of working are taught with experiential or action-learning

    3. Executives are sourced, selected, evaluated, and rewarded on collaborative-innovation traits

    4. Cross-functional interdependence that unlocks complexity and enables execution is actively exploited

    5. New connections and intersections – often from difference, crossing borders, diversity and constructive conflict – are highly valued

    6. High-trust cultures use rigorous debate and discussion for deeper exploration, analysis and learning.

    Dianne Jacobs
    The Talent Advisors
    Melbourne, Australia

  • sudhakarsen | December 11, 2008

    A Corporate culture is the medium on which the corporate strategy stands & enables operational effectiveness, the corporate culture acts as a catalyst and adds capabilities, it paves the base for innovation.

  • btemkin | December 11, 2008

    One of the 6 new management imperatives that I’ve defined on my blog is “Turn Innovation Into A Continuous Process.” It sounds like this study aligns nicely with my advice in this area. My blog (Customer Experience Matters): http://experiencematters.wordpress.com/

  • bensimo | December 15, 2008

    Yes, culture is the key. Culture is created by how management treats employees and thus how employees feel about their work. Treating employees with a top-down command and control approach quite naturally demotivates and demoralizes employees. Take away all the demotivators and employees will return to their natural motivated, creative, innovative and productive state.

    Culture is always management’s choice though most of them do not realize this truth. The extent to which management meets the employee’s basic need to be heard and be respected dictates the culture. In my 30+ years of managing people, I made all the errors by using a top-down approach for my first 12 years, and then moved to its opposite over a period of years. Arriving at its opposite was managerial nirvana because I had unleashed the full potential of almost every employee and they literally loved to come to work. Besides, they blew away competitors in every way.

    Sounds too good to be true doesn’t it.

    Best regards, Ben Simonton
    http://www.bensimonton.com/articles.html

  • ashimberg | December 18, 2008

    All great points. And yet the challenge becomes how to make sure we have identified the key vital behaviors (not just the goals and values) of top leaders, embedded leaders and our front line employees that will drive the type of outcomes that we’re talking about here. These vital behaviors are at risk at many organizations today, where the employee base finds the leaders a bit hypocritical that they are espousing one set of cultural behaviors but modeling something quite different in their actions.

    Especially during financial downturns like the one we’re experiencing, the impact of environmental and corporate initiated actions are driving profound unintended consequences into the Unwritten Rules (how the place really works) of many corporate cultures. The number of negative influences that block these innovation oriented vital behaviors from happening is staggering.

    We need to leverage a wide assortment of positive influence strategies that overwhelm these negative influences and drive these vital behaviors into action. Unfortunately as we study the results of leaders across organizations- most tap into very few of these strategies, relying on maybe one or two influence strategies, and then are left wondering why the Vital Behaviors that they need from the organization don’t seem to take hold. Only the leaders that tapped into four or more of the six categories of influence strategies had sustainable traction and results. This is the topic we’ve explored in the Fall edition of SMR in the article called How to have Influence.

  • Sloan Review on corporate culture paper « Creative Cultures | January 26, 2009

    [...] Posted on January 26, 2009 by Azra Brankovic MIT’s Sloan Management Review post includes link to the paper “Radical Innovation Across Nations: The Pre-eminence of Corporate [...]

  • MaRS Blog – Innovation and Commercialization in Canada » Blog Archive » Radical innovation: Don’t get caught asleep at the wheel | February 9, 2010

    [...] “Radical Innovation Across Nations: The Pre-eminence of Corporate Culture” (Journal of Marketing, January 2009) reports the results of a survey of 759 companies in 17 different countries. Data at the national level was compared with data at the firm level in different categories including labour, capital, government and culture to see what was the most important factor in the commercialization of radically new products. [...]

Add a comment