Understanding the Cultural Factors to Build Innovation in Organizations

Abstract

Radical Innovation is the key for organizations to reinvent themselves and becoming successful in competitive international markets. Compared to other types of innovation such as incremental which focuses on customers’ immediate needs, radical innovation offers a company unprecedented customer benefits and the ability to create new businesses and markets. Research from literature has shown that cultural factors play an important role in the successful integration of radical innovation efforts. Using the Adhocracy component within the Competing Values Framework moderated by market orientation, we developed a testable model of the relationship among 4 cultural factors and radical innovation. The 4 cultural areas are commitment to learning, shared vision, Open mindedness using responsive market orientation as a moderator. The study included a pilot of 50 participants followed by the main study that included 187 participants across different organizations and worldwide locations. We did a hierarchical linear regression in order to examine both the direct and moderated effects of the predictors on the outcome. With the exception of open mindedness, the results show a positive relationship among the variables. Proactive Market Orientation does not have a negative effect on radical innovation. Noting the fact that the organizational context differs with companies, the insights from the analysis will be used as recommendations for interventions to increase the innovation levels in multiple organizations.

Keywords: radical innovation, culture, learning orientation, risk taking, market orientation

JEL Classification: C20, O32, O33, M10