Culture and innovation: The moderating effect of cultural values on corporate entrepreneurship

Abstract

In the few last decades researchers have paid attention to the role of entrepreneurship and innovation in productivity, employment, and economic and social development. In addition, literature has focused on the entrepreneurship that occurs within organizations, such as corporate entrepreneurship. Also, the role of culture is crucial for the development of innovation. Consequently, it is vital to understand why some firms are more innovative and develop more entrepreneurial projects than others, and what determines innovation performance. This research uses Institutional Economics as a conceptual framework with the objective of analyzing the environmental factors that condition innovation within the firms. Specifically, the study determines the moderating effect of cultural values on corporate entrepreneurship. The study uses a logistic regression and the Global Entrepreneurship Monitor – GEM – database from the years 2004–2008, with information of 62 different countries (718.758 observations). The main findings highlight the impact of the environmental factors on organizational innovation, specifically on corporate entrepreneurship. Variables such as living in an entrepreneurial culture and media exposure (informal factors), and the number of procedures necessary to create a new business or access to finance (formal factors), appear to be significant for corporate entrepreneurship. Moreover, informal factors behave as moderators between formal factors and corporate entrepreneurship. The article has several implications from both theoretical perspective (advancing in the application of Institutional Economics for the study of innovation within the firms) and from the practical point of view (providing insights for governmental policies interested in fostering innovation and corporate entrepreneurship).