NATIONAL RAmS
OF INNOVATION SCOTT SHANE
EXECUTIVE The purpose of this research was to examine ihe e&et of fhe ~~~furo~ vu&es of i~iv~d~iism, power distance, u~certa~n~ avoidance, aid mas-
~U~~AR~ calinity on ~t~o~~ rates of ~~~ovat~o~ in 33 countries in 1975 and 1980. The study found that rates of innovation are most closely associafed with the guttural value of uncertainty acceptance, but that lack ofpower distance and i~ividua~ism also are related to high rates of innovation. This research
suggests that mztiuns may di@er in their rates of innovation because of the cultural values of their citizens.
These fiindings have important implications for managers and policy-makers. First, culture mutters. Countries may not be able to increase their rates of innovation simply by increasing the amount of money spent on research and development or indusrrial infrastructure. They also may need to change the values of their citizens to those that encourage innovative activity. This concept, in turn, suggests that national rates of innovation are driven by more fu~mental forces than economic conditions, and that societal change may be necessary to make less i~novaiive societies mm-e ~nnovati~?e~
Second. the values associated with high national rates of ~n~vation are those that many scholars have tong argued are important at the&m level. An acceptance of~~ertain~ appears to be necessary, pro~biy because ~nnovat~on reguire~ a tolerance for risk and change. ~~~v~dua~isrn seems to be ~mportant~ perhaps because of its ~so~iation with autonomy, independen~e~ a~ freedom. Lack of power distance appears important, perhaps rejecting the role that tolerance of change in the social order and distribution of power play in the innovation process.
Third, the study indicates that the strength of the relationship between innovation and two cultural values-individualism and lack of power distance-were stronger in 1975 than in 1980,
Address correspondence to Scott Shane, Department of Management, 2000 Steinberg Hall-Dietrich Hall, The Wharton School of the University of Pennsylvania, Philadelphia, PA 191046370.
I thank tbe So1 C. Snider Entrepreneurial Center at the Wharton School of the University of Pennsylvania and the Graduate School of Business and Public Management at Victoria Unive~ity of Wellington, New Zeatand fur the financial support that made this research possible. i aiso thank Ned Bowman, Lars Kolvereid, Hans Pennings, and Russ Root for their comments on an earlier draft of this article.
Ioumal of Business Venturing 8,59-73 8 I993 Elsevier Science Publishing Co., Inc.. 655 Avenue of the Americas, New York, NY 10010
60 S. SHANE
suggesting, perhaps, that these values are becoming less important in spurring the innovation process. This finding supports the anecdotal evidence that many collectivist and hierarchicaf Asian nations are
becoming more innovative.
Fourth, this study shows that per capita income is a more important economic variable than industrial structure in determining national rates of innovation. This finding confirms previous work that has shown that as nations become wealthier, they become more innovative. The reason may be
that wealthier countries have more demand for innovations, both because innovations are often labor- saving. and because wealthier nations have greater demand for new and difSerentiated consumer
goods.
To increase a ~ount~‘s rate of technological change, policy-makers need to understand the forces that drive national rates of innovation. Economists have found national rates of innovation to be associated with two macro-economic characteristics: industrial structure (Nelson and Winter 1977; Pate1 and Pavitt 1989), and national income level (Vernon 1966, 1970). However, other researchers have suggested that cultural values also influence national rates of innovation (Moulin 1961; Shaper0 and Sokol 1982; Wallace 1970). This article tests the proposition that cultural values influence national rates of innovation by comparing national scores on Hofstede’s (1980) survey of cultural values with per capita rates of innovation in 1975 and 1980 across 33 countries.
CULTURAL DI~E~N~ES IN CANAPES BE~V~OR
Societies are endowed by nature with different physical environments. To succeed in a given environment, the members of a society must adopt environmentally reievant patterns of behavior. For example, to succeed in wet rice cultivation, group effort is needed to transplant rice seedlings. Consequently, societies dependent on rice agriculture have developed social systems that encourage the group effort necessary for survival in their given environment.
These environmentally relevant patterns of behavior lead to the formation of different cultural values in different societies. Cultural values are what Hofstede (1980, p. 25) calls “the collective programming of the mind which distinguishes the members of one human group from another . . . the interactive aggregate of common characteristics that influence a human group’s response to its environment.” Over time, the values developed as a way of coping with environmental conditions become institutionalized through the use of rules, authority structures, and standard operating procedures (Meyer and Rowan 1977). The result is persistent differences in human behavior in different countries.
Consequently, when people establish organizations, the characteristics of these insti- tutions reflect their cultural values. Organizational behavior reflects societal attitudes toward authority, trust, loyalty, commitment, motivation, control, discipline, communication, con- sultation, participation, coordination, and uncertainty (Tayeb 1988). As differences in or- ganizational behavior have been found to influence rates of innovation (Kanter 1982), cul- turally determined differences in these behaviors might explain national differences in rates of innovation.
FOUR BASIC VALUES
In a massive study of the cultural values of 88,000 managers, Hofstede (1980) found that cultural differences across societies can be reduced to four quantifiable dimensions: uncer-
CULTURE AND RATES OF INNOVATION 61
tainty avoidance, individualism, masculinity, and power distance. Uncertainty avoidance represents discomfort with unstructured or ambiguous situations and preference for certainty. Individualism stands for a preference for acting in the interest of one’s self and immediate family, as opposed to collectivism, which stands for acting in the interest of a larger group in exchange for their loyalty and support. Power distance represents the acceptance of inequality in power and authority between people. Masculinity stands for a belief in ma- terialism and decisiveness rather than service and intuition (Hofstede 1980).
Hofstede (1980) found that these four cultural values are unequally represented across countries. Differences in these values might explain differences in national rates of innovation if some of the values are more likely than others to promote innovation. We now turn to the relationship between Hofstede’s (1980) cultural values and innovation-enhancing be- havior.
Power Distance
Hofstede’s (1980) power distance index represents five beliefs that discourage innovation. These are importance of hierarchy, vertical communication patterns, centralization of power, control over subordinates, and resistance to change in the distribution of power. We start with hierarc:hy.
Thompson (1967) and Bums and Stalker (1961) have found that minimizing hierarchy increases innovation; while other researchers have noted that policies that reduce equality among the members of an organization reduce innovation in the United States (Maidique and Hayes 1984), Europe and Japan (Quinn 1985). Hofstede (1980) found that managers in power distant societies use wealth, power and prestige to create and reinforce social inequality. This finding supports previous research on hierarchicai differences across societies (Brossard and Maurice 1974; Vlassenko 1977; Whyte 1969).
Free communication across levels of the organizational hierarchy has been found to increase innovation in the United States (Thompson 1967; Aiken and Hage 1971; Evan and Black 1967; Kanter 1982) and Japan (Nonaka and Yamanouchi 1989; Nonaka 1990). Hofst- ede (1980) found that power distant societies lack informal communication between people of different hierarchical levels. This finding confirms what other authors have written about information exchange between superiors and subordinates in hierarchical societies (Whyte 1969; Harbison and Burgess 1954; Williams et al. 1965).
Research has shown that decentralized authority increases innovation both in the United States (Hage and Aiken 1970; Aiken and Alford 1970; Zaltman et al. 1973; Hull and Hage 1982) and Japan (Imai et al. 1985). Hofstede (1980) found that people in power distant societies favor the concentration of authority and decision-making. These results support the findings OF earlier researchers (Brossard and Maurice 1974; Child and Kieser 1979).
Trust in subordinates spurs innovation. Trust allows managers to overcome the in- accuracies of venture plans and forecasts (Quinn 1979), while rigid control has been found to hinder the flexibility necessary for innovation (Block and MacMillan 1985; Sathe 1988). Tight control also reduces creative thinking (Schollhamer 1982), while freedom from rigid rules and job definitions enhances idea generation. This finding has been validated in studies undertaken in the United States (Kanter 1982) and Japan (Westney and Sakakibara 1985). Hofstede (1980) found that control systems based on trust are more common in non-power distant societies than in power distant countries. Moreover, managers in power distant societies believe in giving subordinates detailed inst~ctions with I&tie autonomy to interpret them (Hofstede 1980).
62 S. SHANE
Successfully innovating organizations accept change in the distribution of power. Knight (1987, p. 288) found that innovating companies believe that anyone can become an innovation champion. “Even the janitor should be able to champion an idea all the way through to its development. If the person generating the idea is not the person who gets to run with it as champion, the chances for success are decreased dramatically, perhaps by as much as 50%.” Tushman (1977) notes that innovation alters the distribution of power in organizations. Hofstede (I 980) found that managers in power distant societies show an unwillingness to accept change in the distribution of power, and demonstrated strong negative correlations between the power distance index and measures of social mobility. These results support Weber’s (1958) argument that hierarchical social systems reduce occupational mo- bility, technical change, and innovation. These arguments lead to the first hypothesis:
HI: Less power distant societies will be more innovative than more power distant societies.
Individualism
Hofstede’s individualism index represents three beliefs that have been found to encourage innovation. These are a belief in freedom, an outward orientation, and a belief in the importance of contact with senior managers.
Freedom of managers to take the actions they see as most worthwhile has been found to be important to successful innovation in organizations in the United States (Kanter 1982; Sathe 1988; Bums 1975; Twiss 1980) and Japan (Nonaka and Yamanouchi 1989; Jolly and Kayama 1990; Imai et al. 1985). Hofstede (1980) has found that individualistic societies are more likely than collectivist ones to stress the importance of freedom.
Outward orientation is important to innovation. Contact with outsiders stimulates creativity (Utterback 1974; Pavitt 1971; Mueller 1962). So does the diversity of a devel- opment team. This has been found in studies of firms in the United States (Feldman 1988; Katz and Allen 1982), Japan (Imai et al. 1985; Nonaka 1990), and Europe (Bessant and Grunt 1985). Hofstede (1980) found that individualism is associated with an outward ori- entation. Lynn and Hampson’s (1975) measure of national rates of extroversion was sig- nificantly correlated with Hofstede’s (1980) individualism index.
Researchers have found that innovation requires the support and interest of senior managers both in the United States (Fast and Pratt 1981; Maidique 1980; Quinn and Mueller 1963; Roberts 1968, 1980; Block et al. 1986; MacMillan and George 1985; Susbauer 1973; Kierulff 1979; Maidique and Hayes 1984) and Japan (Nonaka and Yamanouchi 1989; Imai et al. 1985). Hofstede (1980) found that managers in individualistic societies are more likely than managers in collectivist societies to believe in the importance of making contacts with senior managers. These arguments lead to our second hypothesis:
H2 Individualistic societies will be more innovative than collectivistic societies.
Uncertainty Avoidance
The cultural value of uncertainty acceptance is also associated with innovation. By inno- vating, managers initiate change; researchers have found that this change increases mana- gerial perceptions of uncertainty in firms in the United States (Kanter 1982) and Japan (Imai
CULTURE AND RATES OF INNOVATlON 63
et al. 1985; Nonaka and Yamanouchi 1989). However, people in uncertainty accepting countries are more tolerant of this uncertainty than people in uncertainty avoiding societies (Hofstede 1980). Philips and Wright (1977) found that southeast Asians are more accepting of uncertainty than Britons, and so favor more new ideas. Yates et al. (1989) found similar results for Asians and Americans; Wright et al. (1978) showed that uncertainty is evaluated less by decision-makers in China than by decision-makers in the United States. This argument leads to our third hypothesis:
H3: Uncertainty avoiding societies will be less innovative than uncertainty accepting so- cieties.
Masculinity
Hofstede’s (1980) work has shown that the cultural value of masculinity is related to two organizational characteristics common to innovative organizations: rewards and recognition for performance, and training and improvement of the individual. Research has shown that innovative managers are motivated by financial rewards, prestige, and a sense of accom- plishment (Gee and Tyler 1976; Quinn 1979). Bessant and Grunt (1985) found that this is true both in the United Kingdom and in Germany. Hofstede (1980) found that masculine societies place greater emphasis on individual achievement and rewards than do feminine societies.
Successfully innovating companies invest in employee development (Kanter 1982). Bessant and Grunt (1985) found that this emphasis on training holds both in Great Britain and Germany. Hofstede (1980) found that a second aspect of masculinity is a belief in the importance of training. This argument leads to our fourth hypothesis:
H4: Masculine societies will be more innovative than feminine societies.
ECONOMIC VARIABLES
To provide a fair measure of the effect of cultural values on national rates of innovation, we need to ‘control for national differences in industrial structure and per capita income as these factors have been found to influence national rates of innovation.
Industrial Structure
Innovation is more common in some industries than in others (Nelson and Winter 1977). Patenting provides greater protection in certain fields (Bet-tin and Wyatt 1988). Innovation also is easier in industries that produce physical products, where scale economies are im- portant, and where government support is strong (Nelson and Winter 1977).
Industry level differences in the rate of innovation are important to this study because nations differ in the degree to which they possess firms in these different industries. For example, 18 of 45 motor vehicles firms are Japanese, but 17 of 22 aircraft companies are American, and 18 of 47 mechanical and metals firms are German (Pate1 and Pavitt 1989).
Per Capita Income
Vernon (1966, 1970) argued that innovation is more common in wealthier nations. Innovation requires skilled engineers and scientists who are more likely to be found in more developed
64 s. WANE
countries because of the greater financial resources of universities and laboratories in in- dustrialized nations. The ability to market products also is greater in developed countries because of better infrastructure, better techniques for understanding market demand, and better means of distribution.
More importantly, wealthy societies innovate more because they are faced with greater demand for innovations (Myers and Marquis 1969; Schmookler 1954, 1962). For example, people in wealthy countries demand labor-saving devices because of the high cost of labor and low cost of capital in these nations (Vernon 1966).
The measurement of rates of innovation at the national Ievef is problematic, V~iab~es like research and de~e~opn~ent expenditures and the number of scientific and technical personneI are collected in only a handful of countries. Variables like per capita numbers of scientific articles produced or numbers of Nobel Prize winners capture only radical shifts in the development of technology, not incremental changes in technology or organizational in- novation.
Two variables measuring overall innovation in many countries are available for con- sideration at the national levei: patent and trademark statistics. However, patent statistics are a more appropriate measure of invention than they are of innovation as many ideas patented never become viable products. Scholarly studies (Sahaf I981 ; Scherer 1980) define an innovation as the m~k~ting of an invention, a concept that rates of patenting do not measure.
Given these limitations, this study measures national rates of innovation as per capita numbers of trademarks. Trademarks are words or devices that differentiate one company’s goods from those of another. They are sought by companies introducing new products to protect the brand names they create from imitation. To receive a trademark, a company must demonstrate that the good is something that creates distinctiveness in the eyes of a buyer (Liebesny 1972). That is, a product must be an innovation to receive a trademark,
While the per capita number of trademarks is the best available measure of national rates of innovation, it is not without problems. First, companies trademark onfy those innovations that they plan to market. They do not apply for tmdemarks for process innovations because trademarks will nut protect these innovations against imitation by competitors. Secondly, the ~~ationship between innovations and trademarks is not always one to one. In some cases, many inn(?vations lead to a single product patented by a trademark. For example, the Apple Macintosh trademark is applied to a product composed of innovations in the computer operating system, the data entry mechanism, and the design of the monitor. fn other cases, a single innovation might lead to many trademarks. For example, the devei- opment of miniaturization technology in electronics by Sony has led to the development of handheld stereos, televisions, and laptop computers, all of which are protected by Sony trademarks. Thirdly, the laws governing trademarks and the protection that they offer com- panies varies across countries. For example, the United States government might assign a trademark more easiIy than the Japanese government, but the Japanese trademark might offer greater p~ote~tjon against imitation.
While the first two weaknesses of trademarks as measures of jnnovation are unavoidable problems in a study of this type, efforts were made to control national differences in ease of acquiring rrademarks. Instead of examining the per capita number of trademarks in each country’s home market, national rates of innovation are measured as per capita numbers of
CULTURE AND RATES OF INNOVATION 65
trademarks granted to nationals of 33 countries in the United States and world markets in 1975 and 1980. This means that per capita number of trademarks was measured as the average across countries and in the single largest market. This approach controls for national differences in trademark regulations.
Moreover, the use of two measures strengthens the validity of the findings. If the same cultural values explain per capita rates of innovation under both measures, the likelihood that the results are measure-specific is lessened.
Another issue in a study of this kind is the time period during which the comparisons are made. The years for which trademark data were collected-1975 and 1980--were chosen to be roughly contiguous with Hofstede’s study, which examined values in the 196’7-1968 and 1970-1972 periods and were validated in 1976. The examination of data from a period later than 1980 might not take into account shifts in values in countries for which shifts in numbers of innovations per capita were found.
Skeptics might wonder about the use of two cross-sectional studies four years apart to measure the effect of culture on rates of innovation in light of shifts in values and rates of innovation. While a longitudinal study would be preferable to two cross-sectional analyses, the non-availability of time series data on cultural values across countries necessitates the cross-sectional approach. Moreover, two factors support the validity of this design: (1) national rates of innovation are relatively stable over time (Cantwe 1989) so that findings at one point in time are likely to hold at another point in time; (2) cultural differences at one point in time could still explain why one nation is more innovative than another at that point in time.
The Culture Variables
Measurement of the effects of cultural values on a society’s rate of innovation is problematic for many reasons. First, it is difficult to get accurate measures of cultural values. Studies of cultural values often fail to control for differences in organizational structure, corporate culture, legal systems, technology, wealth, and economic systems (Negandhi 1974). It also is difficult to develop measures of culture that are reliable, valid and can be applied in many countries (Hambrick and Brandon 1988). Finally, it is difficult to measure culture in a manner that allows a researcher to examine the effect of cultural values on other phenomena, such as national rates of innovation.
In this study, the independent variables used to measure national culture are taken from Hofstede’s (1980) study, which identified four cultural values-unce~ainty avoidance, power distance, individualism, and masculinity-from a survey of 88,~ employees in over 40 subsidiaries of IBM. “From the questionnaire data, Hofstede created ordinal scales for countries for each of the four cultural dimensions based on a standardized factor analysis of questionnaires. In the development of the indices, bias for differences in occupational positions among subsidiaries was controlled (Kogut and Singh 1988, p. 422).”
The measures used by Hofstede have been shown to have both validity and reliability. Hofstede’s (1980) use of factor analysis enhances the construct validity of his questionnaire. As Kerlinger notes, “factor analysis is perhaps the most powerful method of construct validation (1973, p. 468).” Moreover, as Kogut and Singh have argued, (1988, p. 422) “the use of these indices here is conservative, for if they are poor constructs, they are less likely to be found significant and with the Q priori predicted sign.”
The validity of Hofstede’s indices to people outside IBM can also be seen from correlations between his indices and those of other researchers. Gordon’s (1976) surveys of
66 S. SHANE
personal and interpersonal values, Haire et al. ‘s (1966) studies of capacity leadership, sharing information and participation, Bass and Franke’s (1972) study on openness versus secrecy, Morris’ (1956) study on ways to live, Reader’s Digest’s (1970) study on attitudes toward older and younger people, Taylor and Hudson’s (1972) press freedom study, Cutright (1968) and Taylor and Hudson’s (1972) sectoral inequality studies, Converse’s (1972) time use pattern study, Cutright’s (1968) occupational inheritance study, McClelland’s (1961) need for achievement and need for affiliation studies of children’s readers, and Kogut and Singh’s (1988) study of foreign investment entry mode all correlate significantly with at least one of Hofstede’s dimensions.
The reliability of Hofstede’s indices has also been shown. In his study, Hofstede (1980) surveyed managers at IBM twice, at intervals five years apart and used for his scales only questions with test-retest correlations of 0.5 or better (Kogut and Singh 1988). Furthermore, Hofstede (1980) found that when he surveyed 362 managers from 15 countries at IMEDE in 1976, his original scores and the IMEDE scores correlated rho = 0.64, even though the original survey was conducted in the participants’ native languages and the IMEDE survey was conducted in English.
Despite their strengths, Hofstede’s measures of cultural values have two major weak- nesses. First, Hofstede (1980) measured the cultural values of managers in one corporation. While correlations between his measures and those of other researchers working with broader samples are significant, Hofstede’s sample was not randomly selected from the population, and is representative only of those citizens of the countries he studied that chose to work for IBM. Hofstede assumes, as is done here, that the interaction of cultural values and tendency to work at IBM is equal across all countries. However, if the interaction effect between cultural values and the tendency to work at IBM differs across countries, Hofstede’s (1980) measures of values might be inaccurate.
Second, Hofstede’s measure of cultural values is based on the average values of managers in a society. Because average managers may not be the people developing in- novations in organizations, the argument that a society with higher average scores for innovation-inducing values acts more innovative assumes equal distribution of the values across individuals in all societies. As this assumption has not yet been tested, it may be unfounded. While these weaknesses do not invalidate the usefulness of Hofstede’s (1980) measures, the reader should keep in mind the limitations of the measures of cultural values
employed here.
The Economic Variables
Two economic independent variables were included in the analysis. The first was per capita income, measured in 1975 and 1980, taken from the World Bank’s publication, The World
Development Report. The second was percentage of total value added accounted for by industries typically generating large numbers of innovations. This variable also was taken from The World Development Report, and was constructed by taking a percentage of gross national product, total value added in rubber, plastics, chemicals, petroleum, non-electrical manufacturing, electrical manufacturing, transportation, and professional and scientific
equipment. This ratio shows the tendency of a nation to have an industrial structure composed of industries most likely to innovate.
Data Analysis
The effect of cultural values on national rates of innovation was examined through the use of least squares multiple regression analysis with the economic variables included as controls.
CULTURE AND RATES OF INNOVATION 67
Least squares was selected because the innovation variables approximate normally distributed variables with sufficient variance. Simultaneous entry of the variables into the regression equations was undertaken because the study was designed to determine the effect of cultural values on rates of innovation once the economic variables had been controlled. Due to restrictions of sample size, the cultural variables were included individually in regression equations with the control variables. In this way, the number of independent variables in the regressions never exceeded three, preserving sufficient degrees of freedom. The pound sign in the regressions indicates that the variables were not entered into that regression equation.
RESULTS
The regression results seek to explain the variation across nations in the tendency to innovate. Table 1 shows cross-sectional data for 1975 and 1980 for the dependent variable measured as the per capita number of trademarks filed in the United States by nationals of the countries under study. Table 2 shows cross-sectional data for 1975 and 1980 for the dependent variable measured as the per capita number of trademarks filed in all world markets by nationals of the country under study. The results of the ordinary least squares form of regression produce significant results that exhibit a degree of consistency across the two measures of innovation. In no instance was a variable significant when innovation was measured by per capita number of trademarks in one market, but not the other. In no case was a variable significant when the entire regression equation was not significant.
Uncertainty avoidance appears to be the most important cultural variable as it is significant in four out of four regression equations in which it is included. Power distance and individualism appear to have some explanatory power as they each are significant in two of four regression equations. These variables are significant for 1975, but not 1980, suggesting, perhaps, that the importance of these variables is waning. The masculinity variable has no explanatory power.
The regression equations indicate that the economic control variables are significant less often than uncertainty avoidance, the strongest cultural variable. Between the two economic control variables, per capita income appears to have more explanatory power then industrial structure.
CONCLUSIONS
The data soggest a number of conclusions about national rates of innovation. First, culture matters. If countries wish to increase their rates of innovation, public policies that increase the amount of money spent on research and development or industrial infrastructure may not be enough. Countries also may have to change the attitudes of their citizens. Highly innovative societies have people who are individualistic, low in power distance and accepting of uncertainty. Societies in which people do not have this value set may spend money on research and development and industrial infrastructure, but still fail to achieve the desired results in mrrns of rates of innovation because of the beliefs of their citizens,
Second, an explanadon for why differences in cultural values influence rates of in- novation might be found in institutional theory. According to institutional theory, organi- zations are influenced by the societies in which they operate (Granovetter 1985), and exhibit their values (Zucker 1977). As organizational characteristics reflect societal values, managers might find that the organizational behaviors that promote innovation (identified in the man- agement literature under the broad rubric of organic) are easiest to develop in uncertainty
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70 S. SHANE
accepting, individuaiisti~, non-power distant societies, and these behaviors, in turn, might help to increase national rates of innovation.
Third, this study provides predictable conclusions on the meaning of the individual CldtUrd values for the process of innovation. The negative relationship between power distance and innovation is an old theme. Change in the social order was an important characteristic in the industrialization of Europe, and is considered important to the devel- opment of most Third World countries. The positive relationship between innovation and uncertainty acceptance suggests the importance of tolerating risk and change when engaging in innovative activity. The positive relationship between innovation and individualism sug- gests that the possession of the beliefs individualism represents-autonomy, independence and freedom-make some countries more innovative than others.
Despite these endings, this study has a number of limitations. One is that changes in cultural values could not be examined. Hofstede’s monumental data collection effort mea- sured values at one point in time, and his study did not show differences in rankings of cultures across time. It may be that the shifts in national rates of innovation between 1975 and 1980 occurred in response to shifts in values. Unfortunately, without replication of Hofstede’s survey, we can only speculate. Future research should examine culture and rates of innovation dynamically by looking at the relationship between changes in values and changes in rates of innovation. This would tell if countries can increase their rates of innovation by changing their values.
A second limitation stems from the weaknesses of the measures of cultural values and rates of innovation used in the study. Given the crudeness of these measures, a cautious reader might want only to conclude that the per capita rate of development of innovations that can be protected by trademarks are influenced by cuitural vaIues of IBM managers in various countries. Any conclusions more specific than this require the acceptance of the assumptions underlying the measures of cultural values and rates of innovation presented in this study.
Given the preliminary nature of this study, much work remains to be done. Further research should increase the number of cultural variables employed to explain rates of innovation, The predisposition of a society to imitate and its attitudes toward time are two of many cultural variables missing from Hofstede’s indices of cultural values. In addition, better measures of cultural values and national rates of innovation could be developed.
Finally, more work should examine the interaction of culture and economic variables. Perhaps in this area, we could borrow from our colleagues in org~izational behavior. After years of debate on whether personality or situational variables explain more of the variance in human behavior, researchers have developed models to explain the interaction of these variables. Adapted to the area of cultural and economic explanations for innovation, re- searchers could look at the cultural predispositions for which greater economic spending leads to more innovation.
In short, this study suggests that researchers looking at innovation across societies should investigate culture. While possessing limitations, this research indicates that culture plays a part in the innovation process.
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