National Culture and Corporate Innovation

In this paper, we examine how cultural norms along the dimensions of individualism-collectivism and uncertainty-avoidance affect corporate innovation. Using a comprehensive sample across 41 countries, we find that firms located in countries with higher levels of individualism generate more and higher impact patents, and are more efficient in converting R&D into innovative output. In contrast, we find that firms located in countries with higher levels of uncertainty-avoidance produce fewer and less significant patents, and are less efficient with their R&D expenditure. Taken together, our findings show that national culture plays an important role in influencing corporate innovation around the world