Organizational culture as determinant of product innovation

The purpose of this paper is to study empirically the relationships among organizational culture and product innovation.

The paper formulates some hypotheses from the literature review. These hypotheses are tested using structural equations modelling with data collected from 420 firms.

Organizational culture is considered to be one of the key elements in both enhancing and inhibiting innovation. The findings provide evidence about this proposition. While ad hocratic cultures could enhance the development of new products or services, hierarchical cultures inhibit product innovation.

First, the data in the study were collected from one source. A second limitation is the cross‐sectional design of this research. Finally, only four of the six features of the competing value model have been evaluated. Apart from overcoming these limitations, suggestions for future research are: use longitudinal studies and multiple informants; study the moderator effect of some variables on the culture‐innovation relation, such as the type of innovation; and include other cultural types, that is, clan culture and market culture.

The paper provides evidence that, first, in order to increase product innovation, companies should foster cultures with external and flexibility orientations. Moreover, the paper suggests that values, beliefs and assumptions that are coherent with ad hocratic culture are key drivers for developing new products or services.

The paper jointly examines in the same model the little‐researched links between organizational culture and product innovation.