[Research Contribution] The Impact of Culture on Innovation in the Era of Globalization

31 March, 2025

Keywords: Organizational Culture; Innovation; National Culture; Bibliographic Analysis.

In the context of globalization and rapid technological development, culture plays an important role in promoting innovation in enterprises. The research from University of Economics Ho Chi Minh City (UEH) focuses on exploring the impact of organizational culture and national culture on innovation capabilities, emphasizing the importance of building a cultural environment that supports innovation in organizations. With an approach based on the analysis of recent studies, this article provides a comprehensive view of the relationship between culture and innovation, helping enterprises better understand how culture can optimize innovation and create sustainable competitiveness.

Research Background

In the era of globalization, economic competition is increasing and technological advances are shortening product life cycles. Therefore, innovation has become an important factor to achieve sustainable development and competitiveness. In many countries, innovation is considered a driving force for technology and corporate management. In Vietnam, the Report from the Ministry of Science and Technology, the World Bank and the Australian Embassy (11/2021) affirmed that innovation is key towards achieving sustainable development goals.

Studies in Vietnam have examined diverse aspects of innovation, from business capacity to national experience. Despite many challenges in infrastructure and support mechanisms, innovation is attracting the attention of researchers, politicians, and entrepreneurs in Vietnam.

With the development of innovation in Vietnam, the current issue is how to implement it successfully. Organizational culture plays an important role in the success of innovation. Companies known for their innovation, listed as Apple, Google, SAS, and Toyota, all emphasize their unique cultural elements, from encouraging individual creativity to sustaining continuous improvement. Researchers can learn from these models and should consider whether all types of culture have a positive impact on innovation in organizations.

Theoretical framework of culture and innovation

Organizational and national culture are important factors that influence the innovation capabilities of organizations. Organizational culture, according to Saffold (1988) & Schein (1992), provides a foundation of values and management principles that shape how organizations operate and innovate. Theoretical studies listed as Quinn and Rohrbaugh’s (1983) competing values framework indicate that four major types of culture (hierarchical, clan, developmental, and rational) can influence an organization’s creativity. Organizational culture is not only foundational for building trust and working habits within a business but also facilitative to innovation. Meanwhile, national culture, based on Hofstede’s (2010) research, emphasizes factors listed as power distance, individualism/collectivism, and uncertainty avoidance that have a profound impact on the innovation strategies of multinational enterprises. These cultural factors influence how businesses set strategies, target markets, and approach customers in a global environment. Businesses need to understand and to adapt to the national culture in which they operate to optimize their creativity and innovation.

Results of the overall analysis of the studies from 2015 to 2024

From 2015 to 2024, researches on the impact of culture on innovation have increased dramatically. Figure 1 below presents the number of publications by year, persuading the development trend in this field. In 2015, there were only 13 published articles on the relationship between culture and innovation; on the other hand, by 2024, this number had increased to 69. This means that the academic and business communities are increasingly interested in the importance of culture in promoting innovation.

Figure 1: Statistical graph of the number of publications on social innovation by year

Studies mainly focus on two aspects: the impact of organizational culture and the role of national culture on innovation. According to Martins & Terblanche (2003), organizational culture plays a guiding role and acts as a driver of employee and senior management creativity. Recent studies, like those by Makumbe and Washaya (2022), confirm that businesses with a culture that encourages innovation will more easily adapt to change and to develop innovative initiatives.

In particular, since 2020, the number of publications on digital innovation and digital culture has increased significantly. Businesses have begun to focus more on building a digital culture to support digital transformation and innovation. Albahri et al. (2023) have shown that a strong digital culture helps businesses develop new technologies and improve business processes and make decisions based on digital data.

Overall, the results of this survey guarantee that both organizational and national culture have a significant impact on the innovation capabilities of enterprises. A culture that supports innovation will help enterprises better adapt to rapidly changing markets and technologies.

The relationship between culture and innovation

From Figure 2, it can be identified that studies on the impact of culture on innovation show a close connection between various factors in the innovation ecosystem. Organizational culture and innovation are closely related, with a strong culture making it easier for enterprises to promote innovation and growth. Muskat et al. (2021) and Abdi et al. (2018) emphasize that enterprises with organizational cultures that support innovation are often better at innovation and can easily develop innovative initiatives in both stable and volatile environments.

Figure 2: Schematic diagram of the linkages between studies on the impact of culture on innovation

One important factor in this connection is the ability of enterprises to build a cultural environment suitable for digital development. Research by Vargas-Halabi & Yagüe-Perales (2024) introduces that digital culture can improve the innovation capabilities of enterprises by creating an environment of continuous learning and innovation. When the organizational culture supports learning and innovation, enterprises not only develop new ideas but also improve the ability to implement innovative initiatives.

In addition, national culture strongly influences the innovation capabilities of multinational enterprises. Pucheta-Martínez & Gallego-Álvarez (2024) assert that national culture can adjust the innovation strategies of enterprises, helping them adapt to different cultural environments. For example, in countries with cultures that are open to change, businesses are more likely to adopt innovative initiatives than in more conservative and closed countries.

The impact of culture on innovation across countries

Culture has a profound impact on innovation across countries, with considerable differences in how countries use cultural factors to foster innovation. China, with their combination of a success-oriented culture and heavy investment in research and development (R&D), stands out in driving innovation in the field of service and technology. The UK strengthens a keen interest in innovation through their education and business systems, creating an environment conducive to innovation. The US leads the way with their risk-taking culture and strong entrepreneurial environment, with innovation hubs like Silicon Valley. Figure 3 illustrates the distribution of countries interested in the impact of culture on innovation, reflecting the extent and how cultural factors influence the innovation environment of each country.

Figure 3: Diagram of research on the impact of culture on innovation in countries

In addition, other countries pay attention to the role of culture in innovation. Indonesia and Germany take advantage of cultural diversity and invest in R&D to promote technology and startups. Spain maintains an innovative environment thanks to government support whereas Vietnam combines traditional and modern elements to develop technology and startups. Malaysia and Italy support innovation in technology and design, South Korea and Ireland through education and business environment, and Hungary and the Netherlands stand out with policies supporting innovation. These countries convey the differences in how they apply culture to promote innovation.

Research on the Impact of Culture on Innovation

The literature review suggests that both organizational culture and national culture play an important role in developing effective innovation strategies. The foundational work of Tian et al. (2018) provided the basis for exploring the influence of culture on innovation, and subsequent research has expanded on these aspects. Studies listed as Makumbe & Washaya (2022) as well as Yang, Luu, & Qian (2022) clarify how organizational culture influences innovation capabilities, with different theoretical models elucidating this relationship. Other studies, listed as Santos-Vijande et al. (2021) as well as Vargas-Halabi & Yagüe-Perales (2024), do emphasize the importance of organizational culture in managing and implementing innovation projects, indicating that creating a supportive cultural environment is necessary to foster creativity. Figure 4 provides an overview of the main research directions related to the impact of culture on innovation.

Figure 4: Schematic diagram of the main research directions on the impact of culture on innovation

Regarding national culture, Pucheta-Martínez & Gallego-Álvarez (2024) pointed out that it influences the way innovation strategies are implemented and evaluated whereas Chen et al. (2022) focused on the influence of Confucian culture in family businesses in China. These studies suggest that national cultural factors can modulate the way organizations adopt and implement innovation, influencing innovation performance and acceptance in different cultural contexts.

Research recommendations

From the research results, it can be stated that enterprises,in order to promote innovation, need to focus on building an organizational culture that supports creativity. One main solution is to facilitate employee participation in decision-making and the development of innovative initiatives. Santos-Vijande et al. (2021) suggest that encouraging employees to contribute ideas and to develop creative skills will help businesses maintain sustainable innovation capabilities.

In addition, businesses need to create a strong digital culture that supports the implementation of new technologies and digital data-driven business processes. Albahri et al. (2023) affirm that digital culture can help businesses develop innovative initiatives and improve management and decision-making processes.

Finally, understanding and adapting to national culture is an important factor for multinational enterprises to succeed in innovation. Tian et al. (2018) recommend that businesses need to carefully analyze local cultural factors and adjust their innovation strategies to suit each specific market. This will not only help them optimize their innovation capabilities but also improve business performance.

Opportunities and challenges in building a culture of innovation

Building a culture that supports innovation is a great opportunity for sustainable business development. When a culture of innovation is strongly promoted, businesses can develop new products and services, increase competitiveness and improve labor productivity. However, the main challenge is how to create a homogeneous cultural environment in a multinational enterprise. According to Chen et al. (2022), cultural differences between countries can lead to conflicts in the process of implementing innovation initiatives. Therefore, creating consensus among different cultural groups is a key factor.

Another challenge is managing change in the organization. Bokhari (2022) pointed out that, in many businesses, changing organizational culture to promote innovation often encounters resistance from employees. To overcome this challenge, businesses need to invest in training and developing innovative skills in addition to creating a continuous learning environment to reduce resistance to change.

In short, this study has shed light on the crucial role of culture in promoting innovation, especially in the context of globalization and rapid technological change. Organizational culture plays a supporting role, an important guiding factor helping businesses create an environment for innovation and sustainable development. When an organizational culture is strong and open to change, innovation will have a better chance of developing, making businesses take advantage of opportunities from the market and technology.

In addition, the study emphasizes the importance of understanding and adapting to local cultural factors in the context of globalization. Differences in national culture can strongly influence the innovation strategies of multinational enterprises. Understanding these cultural factors assists enterprises in adjusting their strategies to suit each market and to maintain flexibility and creativity in all situations. This study provides practical suggestions for enterprises on how to build an organizational culture that supports innovation and optimize competitiveness. The contribution of this study lies in providing a clear theoretical framework on the relationship between culture and innovation together with synthesizing research trends in the 2015-2024 period. It also clarifies the role of culture in promoting creativity and opens up new directions for managers in building appropriate cultural strategies. These results are of academic value and can be a foundation for businesses in orienting their creative activities, creating momentum for sustainable development in an increasingly global competitive environment.

Authors: Vuong Khiet, Dr. Phan Thi Bao Quyen, Dr. Do Thi Hai Ninh, Dao Thi Minh Huyen – University of Economics Ho Chi Minh City (UEH)

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