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Radical Innovation Across Nations: The Preeminence of Corporate Culture
Abstract and Figures
Radical innovation is an important driver of the growth, success, and wealth of firms and nations. Because of its importance, authors across various disciplines have proposed many theories about the drivers of such innovation, including government policy and labor, capital, and culture at the national level. The authors contrast these theories with one based on the corporate culture of the firm. They test their theory using survey and archival data from 759 firms across 17 major economies of the world. The results suggest the following: First, among the factors studied, corporate culture is the strongest driver of radical innovation across nations; culture consists of three attitudes and three practices. Second, the commercialization of radical innovations translates into a firm's financial performance; it is a stronger predictor of financial performance than other popular measures, such as patents. The authors discuss the implications of these findings for research and practice.
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... Public policies stimulate entrepreneurial activity and growth through creating market-supporting conditions that facilitate economic freedom, shape entrepreneurial ecosystems, and reduce financial barriers (Minniti, 2008;Roper & Scott, 2009;Fuentelsaz et al., 2018;Hechavarría and Ingram, 2019;;Fuentelsaz et al., 2021Wurth et al., 2022. Subsequently, business ventures achieve high growth by engaging in radical innovation, which concerns introducing new products that add significant value to new customers, break new grounds in functionalities and utility, and disrupt existing markets by expanding market boundaries (Chandy & Tellis, 1998;Estrin et al., 2022;Tellis et al., 2009). This innovation aspect is a crucial part to consider if we aim to measure the impact of promoting and facilitating entrepreneurship at an institutional level. ...
... Figure 1 shows the 2 × 2 Ansoff matrix to illustrate the different types of innovation (Gurcaylilar-Yenidogan & Aksoy, 2018). First, Radical Innovation is defined as introducing new products in new markets using new technology, having the potential to create a large impact on the economy and society (McDermott and O'Connor, 2002;Tellis et al., 2009;Coccia, 2012;Shkolnykova & Kudic, 2022). Radical innovation is valued because it is the main driver of radical change in markets through new product-market combinations (Domínguez-Escrig et al., 2019). ...
... Entrepreneurs with vision and high growth aspirations benefit from a positive entrepreneurial culture that surrounds them (Capelleras et al. 2019). In this sense, individuals with vision and high-growth aspirations are likely to engage in radical innovation, new product introductions (breakthrough innovation), and profound market expansion (disruptive innovation) to achieve a high innovation impact (Chandy & Tellis, 1998;Estrin et al., 2022;Tellis et al., 2009). As the informal institutions shape the culture and social norms and is especially relevant for opportunity-driven entrepreneurs, radical innovation is for them a phenomenon worth pursuing when aspiring for high growth. ...
Entrepreneurship and innovation create a positive impact on the economy and society. Globally, governments invest resources to support new ventures and facilitate innovation. In this study, we examine this phenomenon by studying the pathway that goes from individual entrepreneur to innovation impact. We measure the effect of entrepreneurial motives on different types of innovations, with a particular focus on its amplification by formal and informal institutional conditions. Specifically, we use multi-level models to analyze annual data of 29 countries for 2006 to 2018. We find that opportunity-driven entrepreneurs are associated with higher levels of radical innovation, breakthrough innovation, and disruptive innovation. Better tax policies and less bureaucracy amplify this positive effect on radical innovation and breakthrough innovation. For necessity-driven entrepreneurs, the regulatory quality amplifies the positive effect on radical innovation and disruptive innovation, while monetary resources dampen this effect. Our findings show that the differences in innovation impact can be explained by differences in entrepreneurial motives and their specific interactions with formal and informal institutional conditions.
... The effect of innovation on corporate survival has received much attention from researchers due to the rapid development of technology (Gómez-Prado et al., 2022;Lee, Lee, & Garrett, 2019;Rubera & Kirca, 2012;Tellis, Prabhu, & Chandy, 2009;Zheng et al., 2022). However, companies cannot rely solely on their product innovation to survive due to potential market failure (Chiesa & Frattini, 2011;Wan, Zhao, Liu, Dinçer, & Yüksel, 2022) and/or rival imitation (Bu & Cuervo-Cazurra, 2020;Naranjo-Valencia, Jiménez-Jiménez, & Sanz-Valle, 2011) for new products. ...
This study focuses on investigating the relationship between process innovation and financial success through firm competitiveness and the effect of internationalization as moderation on this association. Innovation becomes one of the most important parts for companies because it will create a competitive advantage and indirectly improve the company's financial performance. This study used a sample of 389 Craft Micro, Small and Medium Enterprises (MSMEs) in West Java, Indonesia. SEM Analysis Moment of Structural (AMOS) 24 is used to test the path and multigroup analysis during the data analysis process. The empirical evidence of this study indicates that process innovation and company competitiveness have a substantial positive relationship with the financial performance of MSMEs. Furthermore, efforts to improve the performance of MSMEs come directly from process innovation and business competitiveness. Indirectly, firm competitiveness does not mediate the connection between process innovation and financial performance. Besides, this study also found that internationalization significantly moderates the impact of firm competitiveness on financial performance. We use a sample of companies that include ultra-micro companies, where they are not yet familiar with a good financial recording system or an efficient production process. Therefore, craft SMEs must be able to make a good financial record (for accessing funds from banks) so they can transform into modern tools and optimize their process innovation by improving their production processes. Thus, SMEs can more easily reach international markets for better financial performance.
... Measurement items from previous studies were used for all components. The measurement items for the sustainability of SMEs were adopted from (Imran, Salisu, Aslam, Iqbal, & Hameed, 2019); financial knowledge, access to credit, and financial risk mindset measurement items were adopted from Ye and Kulathunga (2019); and five items for organizational risk-taking tolerance were adopted from (Hock-Doepgen et al., 2021;Tellis, Prabhu, & Chandy, 2009). Except for financial risk attitude, a five-point Likert scale was used to collect responses, ranging from 1 (strongly disagree) to 5 (strongly agree). ...
Small and medium-sized enterprises (SMEs) contribute significantly to the economic growth of emerging economies. However, SMEs have difficulty maintaining their performance. This paper examines the impact of financial literacy on the sustainability of SMEs with the roles of access to finance, financial risk attitude, and organizational risk-taking tolerance as mediators. This study concentrated on the Indonesian market and used questionnaires to collect data from the owners or chief financial officers of SMEs. The extent of the correlations was examined using partial least squares structural equation modeling. It was found that financial literacy, financial risk attitude, and organizational risk-taking tolerance are significant antecedents of SME sustainability. Access to finance, on the other hand, was not a factor in SME sustainability. A financial risk mentality was also revealed to have a substantial influence on the association between financial literacy and SME viability in the study. Furthermore, the relationship between financial literacy and SME viability was found to be mediated by organizational risk-taking tolerance. This study has significant relevance for SMEs, as it confirms that financial literacy is crucial for continued success. SMEs with proper financial literacy will have a superior attitude to financial risk and organizational risk-taking tolerance, ensuring their sustainability. Future studies can investigate SME sustainability in other emerging economies and compare their performance and sustainability.
... We adopted the 10-item scale of Jin et al. (2019) to measure IC and the 9-item scale developed by Barak et al. (1998) to measure DC. The authors used a composite factor for innovation culture based on theoretical support (Tellis et al., 2009) and empirical evidence from previous research (Martensen et al., 2007). This approach allows us to capture the combined effects of innovation engagement and success while maintaining methodological consistency with other constructs in our research model. ...
Purpose
The study examines the impact of emotional intelligence on service innovation capabilities. Furthermore, it explored the mediating role of diversity climate and the moderating role of innovation culture.
Design/methodology/approach
An online questionnaire helped to collect data from 257 public sector employees in the United Arab Emirates (UAE). The proposed hypotheses were analysed using structural equation modelling.
Findings
Building on the ability model, the study found that employees' emotional intelligence has a positive impact on diversity climate; that diversity climate does not mediate the relationship between emotional intelligence and service innovation capabilities and that innovation culture has a moderating effect between diversity climate and service innovation capabilities.
Originality/value
The paper clarifies the emotional intelligence of the workforce and its ability to influence innovation culture and diversity climate in public organisations, ultimately benefiting service innovation capability research. As such, the study contributes to the literature by proposing and analysing some antecedents of service innovation capabilities in the context of public organisations. The study also offers policymakers information on what prevents innovation, which they can use to raise the bar on service quality requirements in the public sector.
... Comme le soutiennent Vecina et al. (2013), le souhait d'un employé de rester dans l'entreprise peut être accrue par la communication des valeurs d'une organisation, de ses objectifs et de ses résultats. Toujours en matière d'innovation, les valeurs d'entreprise qui forment une culture organisationnelle forte ont, en effet, été identifiées comme un facteur positif pour favoriser l'innovation, car elles créent une vision partagée (Neukam, 2017 ;Tellis, Prabhu et Chandy, 2009). Au cours de notre étude, nous avons mis en évidence deux processus de transmission différents de la culture d'entreprise qui soutiennent l'engagement d'un employé : un processus top-down chez FLUID et un phénomène parallèle top-down et bottom-up à la fondation HANDI. ...
Il n’est plus à prouver que l’innovation a une importance significative dans la stratégie des organisations. L’avantage concurrentiel d’une organisation dépend alors largement de la motivation intrinsèque de ses collaborateurs à être créatifs et donc à innover. Dans ce chapitre, notre objectif est de proposer des éléments de réponse à l’amélioration de l’engagement et de l’attachement d’un individu à l’organisation afin d’accroître sa motivation intrinsèque à réaliser des tâches créatives.
Nos réflexions sont fondées sur une étude de cas comparative entre un acteur de l’économie sociale et solidaire (ESS) et une entreprise industrielle.
Nous suggérons que la seule présence d’une mission sociale de l’entreprise n’est pas suffisante pour stimuler la motivation intrinsèque des collaborateurs. Le cadre organisationnel et une stratégie de communication claire des valeurs de l’entreprise sont au moins aussi cruciaux pour maintenir la motivation intrinsèque d’un individu dans le temps.
Purpose
This study investigates firms' innovation behaviour under environmental change. Therefore, it examines the effect of trade disputes on corporate technological innovation and how product market competition moderates this relationship.
Design/methodology/approach
This research tests the hypotheses using the fixed effects model based on panel data of publicly listed enterprises in China from 2007–2020.
Findings
The empirical results validate the positive association between trade disputes and corporate research and development (R&D) intensity as well as the U-shaped relationship between trade disputes and radical innovation. Additionally, the moderating effect of product market competition is verified: a concentrated market with less competition flattens the U-shaped curve of radical innovation induced by trade disputes; as the market becomes more concentrated and less competitive, the U-shaped relationship eventually turns into an inverted U.
Originality/value
First, this study contributes to the corporate innovation and trade dispute literature by expanding the environmental antecedents of technological innovation and the firm-level consequences of trade disputes. Second, this study enriches the theoretical framework of the environment–innovation link through an integrated perspective of contingency theory and dynamic capabilities view. Third, instead of the traditional linear mindset which had led to contradictory results, this study explores a curvilinear effect in the environment–innovation relationship.
The mechanism of cooperative innovation (CI) for high-tech firms aims to improve their technological innovation performance. It is the effective integration of the internal and external innovation resources of these firms, along with the simultaneous reduction in the uncertainty of technological innovation and the maintenance of the comparative advantage of the firms in the competition. This study used 322 high-tech firms as our sample, which were located in 33 national innovation demonstration bases identified by the Chinese government. We implemented a multiple linear regression to test the impact of CI conducted by these high-tech firms at the level of their technological innovation performance. In addition, the study further examined the moderating effect of two boundary conditions-big data capabilities and policy support (PS)-on the main hypotheses. Our study found that high-tech firms carrying out CI can effectively improve their technological innovation performance, with big data capabilities and PS significantly enhancing the degree of this influence. The study reveals the intrinsic mechanism of the impact of CI on the technological innovation performance of high-tech firms, which, to a certain extent, expands the application context of CI and enriches the research perspective on the impact of CI on the innovation performance of firms. At the same time, the findings provide insight for how high-tech firms in the digital era can make reasonable use of data empowerment in the process of CI to achieve improved technological innovation performance.
Response styles are a source of contamination in questionnaire ratings, and therefore they threaten the validity of conclusions drawn from marketing research data. In this article, the authors examine five forms of stylistic responding (acquiescence and disacquiescence response styles, extreme response style/response range, midpoint responding, and noncontingent responding) and discuss their biasing effects on scale scores and correlations between scales. Using data from large, representative samples of consumers from 11 countries of the European Union, the authors find systematic effects of response styles on scale scores as a function of two scale characteristics (the proportion of reverse-scored items and the extent of deviation of the scale mean from the midpoint of the response scale) and show that correlations between scales can be biased upward or downward depending on the correlation between the response style components. In combination with the apparent lack of concern with response styles evidenced in a secondary analysis of commonly used marketing scales, these findings suggest that marketing researchers should pay greater attention to the phenomenon of stylistic responding when constructing and using measurement instruments.
With increasing competition in the global marketplace, international segmentation has become an ever more important issue in developing, positioning, and selling products across national borders. The authors propose a methodology to identify cross-national market segments, based on means-end chain theory. The methodology offers the potential for integrating product development and communication strategies by linking product characteristics to consumer benefits and values. For that purpose, a model is developed that identifies relations between the consumer and the product at the segment level, which increases the actionability and responsiveness of the segments. The model accounts for different response tendencies, across and within countries, that commonly hamper identification of cross-national segments. A Monte Carlo study shows that the model performs well in recovering the parameters across a wide range of conditions. The segmentation model is applied to consumer data on yogurt collected in 11 countries of the European Union. Four international segments are identified and found to be related to consumer sociodemographics, consumption patterns, media consumption, and personality. The authors show that the model has high predictive validity and outperforms the standard clustering approaches traditionally employed in international segmentation.
Most managers know that organizational culture influences the firm's economic consequences and recognize its important role in shaping product-innovation processes. Highly innovation-supportive cultures are credited with fostering teamwork and promoting risk-taking and creative actions that seem directly linked to effective newproduct development. Fostering highly innovation-supportive cultures in practice, however, is easier said than done. From the voices of participants in new-product development processes in high-technology organizations, we report what we have learned about the distinctive features of highly innovation-supportive cultures in product-innovation settings and propose how organizations might develop such cultures.
Why might firms be regarded as astutely managed at one point, yet subsequently lose their positions of industry leadership when faced with technological change? We present a model, grounded in a study of the world disk drive industry, that charts the process through which the demands of a firm's customers shape the allocation of resources in technological innovation—a model that links theories of resource dependence and resource allocation. We show that established firms led the industry in developing technologies of every sort—even radical ones—whenever the technologies addressed existing customers' needs. The same firms failed to develop simpler technologies that initially were only useful in emerging markets, because impetus coalesces behind, and resources are allocated to, programs targeting powerful customers. Projects targeted at technologies for which no customers yet exist languish for lack of impetus and resources. Because the rate of technical progress can exceed the performance demanded in a market, technologies which initially can only be used in emerging markets later can invade mainstream ones, carrying entrant firms to victory over established companies.
An expository overview of the use of Lisrel in validating marketing constructs is presented and its advantages over the “traditional approaches” are demonstrated. Lisrel's contribution in all phases of construct validation is discussed. It is shown that lisrel has much to offer in purifying the measure by testing the unidimensionality of the measurement instrument, and in cross-validation to investigate the convergent validity (within a method) and reliability, Lisrel allows a rigorous assessment of the stability of the construct and its measurement instrument, and it is a powerful methodology for assessing convergent validity across methods, discriminant validity, and nomological validity. The use of Lisrel in construct validation is empirically illustrated by the analysis of data concerning consumers' variety seeking tendency with respect to foods.
