Examining the Role of Corporate Culture in Innovation
Across nations, corporate culture is a better predictor of a firm’s ability to capitalize on disruptive innovations than factors such as government policy and R&D spending.
Title:
Radical Innovation in Firms Across Nations
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Authors:
Gerard J. Tellis, Jaideep C. Prabhu, and Rajesh K. Chandy
Publisher:
Journal of Marketing, vol. 73, no. 1
Date Published:
January 2009
Disruptive innovations, such as the microwave oven or the compact disc, can create or destroy markets and are crucial to the growth of both firms and national economies. The authors of this study tracked the performance of more than 750 public firms across 17 nations. Although they agree with the traditional view that government initiatives such as laws protecting intellectual property and state-funded research parks can encourage innovation, they found that these variables don’t matter as much as previous research suggests. Instead, the authors argue, corporate culture is the most significant factor in determining why certain firms are better innovators. They also found that corporate initiatives like R&D spending and patent filings — factors typically used to measure innovation — are not directly correlated with the development of disruptive new products. According to the study, successful innovators share three key traits: a high tolerance for risk, a willingness to cannibalize existing assets to invest in unproven technologies, and a culture that encourages idea creation and product innovation. (For more on innovation, see “Beyond Borders: The Global Innovation 1000,” by Barry Jaruzelski and Kevin Dehoff, s+b, Winter 2008.)
Bottom Line:
Across nations, corporate culture is a better predictor of a firm’s ability to capitalize on disruptive innovations than factors such as government policy and R&D spending.
