a study on chinese innovativeness from a cultural...

A Study on Chinese Innovativeness from A Cultural Perspective

Calvin Ding-To Chan University of Michigan – Ann Arbor

Chinese Innovativeness 1

I. Abstract

This research examines China’s level of innovative capability and predicts its prevalent type

of innovation activities from a cultural perspective. The research is performed in the form of a

cross-cultural comparative analysis of China, Japan, and the U.S.. The analysis demonstrates the

differences in the innovation activities in these countries due to their contrasting national cultural

characteristics.


II. Acknowledgements

To my dearest parents for having given me the valuable opportunity to receive education

here at the University of Michigan. The experience has added a lot to my life. Also to my

dearest elder brother for being caring and supportive for all these years.

Special thanks to all my housemates and roommates that I have had during my college

days. Without them, I wouldn’t have gone through all the cultural difficulties that I was faced

with under the new environment. I appreciate their tolerance for me being different. They are

truly the most wonderful part of my college experience.

Also thanks to Professor George Siedel for his wonderful Senior Seminar which offers

me the chance to conduct this research. His guidance has been extremely valuable and vital to

the successful completion of this research.


III. Table of Contents

Introduction....................................................................................................................5

Thesis 5

Approach 5

Innovation ......................................................................................................................8

Definition 8

Categorization 9

Significance 12

Benchmarking 13

The Current Global Scenario 15

Culture..........................................................................................................................17

Definition 17

Limitation 18

Categorization 19

Measurement 22

Innovation & Culture ...................................................................................................29

The Connection 29

Culture-Innovation Impact Analysis 35

The Findings 42

Conclusion...................................................................................................................46


IV. Table of Figures

Figure 1. Types of Innovation.................................................................................................................. 9

Figure 2. Life Cycle Dynamics and Sources of Competitive Advantage.............................................12

Figure 3. Innovation Index: Variables & Definitions ............................................................................14

Figure 4. Cultural Characteristics Scores for Selected Nations .........................................................23

Figure 5. Cultural Characteristics Scores for Selected Nations (Chinese Populated Societies [CPSs] Combined/Averaged)...............................................24

Figure 6. Confucian Dynamic Index for Selected Countries ...............................................................26

Figure 7. Confucian Dynamic / Term Orientation Index for Selected Countries (Chinese Populated Societies [CPSs] Combined/Averaged)...............................................26

Figure 8. Scores for Six Dimensions of National Cultural Characteristics of China/ CPSs, the United States, and Japan.........................................................................28

Figure 9. Previous Studies’ Conclusions on Cultural Influences on Innovation ................................31

Figure 10. Culture-Innovation Impacts — Propositions..........................................................................32

Figure 11. Culture-Innovation Impacts – Types of Innovation ..............................................................33

Figure 12. Culture-Innovation Impacts – Types of Innovation (Revised) .............................................34

Figure 13. Culture-Innovation Impacts — China/CPSs, U.S., and Japan ..............................................38

Figure 14. Culture-Innovation Impacts — China/CPSs, U.S., and Japan (with Impact Multiplier)..........................................................................................................40

Figure 15. Culture-Innovation Impacts — Hong Kong, Singapore, and Taiwan (with Impact Multiplier)..........................................................................................................42


V. A Study of Chinese Innovativeness from A Cultural Perspective

Introduction

Thesis

The purposes of this research is to examine China’s level of innovation capability and

to predict its prevalent type of innovation activities from a cultural perspective.

Approach

There are many factors that affect the innovativeness of a society, among these,

culture is one of them. Herbig (1995) divided the societal features that tend to affect a

society’s innovative ability into two categories: culture and structure. Culture refers to the

traits internalized in a society that differentiate the society from others. Structure refers to

the economic, political, legal, educational, and geographical features of a society. A

culture that is apt for innovation, without the appropriate structure, is insufficient to

enable a nation to be innovative. Culture and structure must both be appropriate in order

to provide the foundation for a society to successfully innovate. Nonetheless, this

requirement does not limit the significance of culture’s influence on innovation. Culture

is deeply inherited in the society. Compared to the structure of a society, culture is not a

factor by choice. With an innovation-inhibiting culture, the society will face severe

difficulty in gaining innovative capability by improving its structure; on the other hand, a

society that is culturally innovative only requires the proper structure to be implemented.

This research is limited to studying only cultural factors for two reasons: (1) culture is


one of the most significant factor in determining the innovative activities of a society, and

(2) the interaction between cultural and structural influences is complicated and is beyond

the scope and resources of this study.

The evaluation of culture can be subjective. In order to provide a more objective

basis for the cross-cultural comparative analysis in this research, most of the data that are

needed to quantify cultural characteristics are employed from numerical data provided by

previous studies on national culture. These studies include Hofstede’s research (1984)

and the Chinese Value Survey (1987). Despite the fact that these two studies were able to

provide objective measurements on cultural characteristic, they share one common

limitation: they were not performed in mainland China. Supposedly due to political

reasons, no empirical data that characterize the culture in the mainland were able to be

collected. As a result, this study will employ data for Hong Kong, Singapore, and Taiwan

to project the typical Chinese cultural character. This choice will be further discussed in

the section on Culture.

This research is largely based on Herbig’s (1984) cross-cultural study between U.S.

and Japanese innovative sourcing capabilities. Herbig’s study provides two main

elements that serve as fundamentals for this research: (1) A model connecting the impact

that certain cultural characteristics have on a nation’s innovative capability, and (2) the

application of the model to perform a cross-cultural comparison between U.S. and

Japanese innovative capability from a cultural standpoint. This study extends the

application of Herbig’s model to Chinese culture in order to examine China’s potential to

become an innovative nation.

The first half of this report will focus on defining and categorizing the two major

elements: innovation and culture. Data that are to be used in the analysis part of the paper

will also be presented and explained. The second half of the paper will concentrate on


drawing the connection between culture and innovation, as well as the application of the

Culture-Innovation Impact model to China, U.S., and Japan.


Innovation

Definition

Innovation is the process that catalyzes growth. It can be divided into three types as

defined by Makino (Herbig, 1995): organizational, product, and technological.

Organizational innovation is achieved by the streamlining of company structure or by the

reorganization of distribution systems. Product innovation involves the manufacturing of

goods that are adapted to changes in consumer spending. Technological innovation, the

focus of this study, involves growth based upon the development of new technology as

well as the reorganization of production systems. Therefore, technological innovation

(called innovation hereafter) not only involves the use of science and technology to

invent new physical products. It also involves the invention and application of

technologies and new ways of operations in businesses or in our everyday lives that

enhance satisfaction of human needs in the form of goods or services. Porter and Stern

(1999) defined innovation as “the transformation of knowledge into new products,

processes and services.” (P.12) The process requires not only researching in science and

technology, but also discerning and meeting the needs of customers. Herbig (1991), in his

study on ways of building innovative capabilities, defined innovation as the conversion of

an invention into a business or other useful application. In simpler terms, innovation can

also be interpreted as Invention + Exploitation. It is the process of innovation that realizes

the potential uses of an invention and market that invention to its potential markets.

Herbig also went on to categorize innovation into four forms that are to be discussed

next.


Categorization

Innovation can take any of four forms (Herbig, 1994):

Figure 1. Types of Innovation

1. Invention Higher Order Innovative Activities 2. Radical Innovation

3. Evolutionary Innovation (Continuous & Modified) Lower Order Innovative Activities 4. Process Innovation

Source: Herbig, Paul. The Innovation Matrix: Culture and Structure Prerequisites to Innovation. Westport, Connecticut: Quorum Books, 1994: 7.

1. Invention

Invention is the first working model resulting from the discovery of a scientific

principle. It can also be the first practical application of an existing scientific concept.

Inventions, depending on their potentials to be successful in the market, may not always

be further developed into commercial products. Examples of invention include the first

transistor by Bell Labs in 1947, and the first controlled fission below the University of

Chicago’s football stadium in 1942 (Herbig, 1994).

2. Radical Innovation

Radical innovation can also be called basic or discontinuous innovation. Radical

innovation involves the introduction of a completely new product made possible by a

new technology that will result in changes in behavioral patterns. Technologies

introduced tend to create whole new industries and diffuse throughout the industrial base.

Also, substantially high risk (and cost) is associated with the developing firm and the

user. Examples of radical innovations include computers, photocopiers, lasers, atomic

energy, and radar (Herbig, 1994).


3. Evolutionary Innovation

Evolutionary innovation includes continuous and modified (also called dynamically

continuous) innovations. The two are similar in that they both refer to innovations that

bring no changes in behavioral patterns and little disruption to the society. Continuous

innovation refers to incremental technological changes such as that of a modified

product, including product line extensions, new sizes, new flavors; while modified

innovations refer to continuous innovations that are more disruptive, such as an electric

pencil sharper or an electric toothbrush (Herbig, 1994).

4. Process Innovation

Process innovation are improvements in the way existing products are being

produced or in the development of new ways of producing new products. Productivity for

manufacturing processes or the transference of goods and services is enhanced by this

kind of innovation. Beside enhancement in productivity, process innovation also makes

possible lower costs and higher quality for an existing good or service. Examples include

ship containerization, just-in-time, material resource planning systems, quality circles,

and Total Quality Management (Herbig, 1994).

Herbig (1994) further grouped the four forms of innovation into high and low order

innovative activities to distinguish the difference in societal impact associated with the

different forms (see Figure 1). Invention and radical innovations belongs to high order

innovative activities due to the substantial impact that they bring to the society and

changes to business and living practices. Herbig also recognized that advanced skills are

required to produce these activities. To the contrary, low order innovative activities,

under which evolutionary and process innovations are categorized, bring limited societal

impact, and are comparatively plentiful and more easily to produce. Low order innovative


activities are important in the sense that they help realize the best (commercial) use of the

invention and make the technology available for more people by improving product

quality and lowering manufacturing cost.

Pitts and Lei’s (2000) concept on Industry Life Cycle Dynamics and Competitive

Advantage shows the two orders of innovation activities are more emphasized at different

stages of an industry’s development (Figure 2). In the early stage an industry, product

concepts, creativity, design capabilities, and new technologies or methods—or simply

higher order innovative activities—are the main sources of competitive advantage; while

at later stages of the development of an industry, sources of competitive advantage

mainly come from manufacturing skills, process technology, process refinements, and

cost-based drivers—or simply lower order innovative activities. Product innovations

dominate in the early stages because product designs are in flux, economies of scale are

not attained and the production systems are inefficient; while in the later stages when the

dominant design is standardized, process innovations become dominate. As Guile and

Brooks described, in the semiconductor industry from 1950 to 1968, eight of the thirteen

major product innovations occurred in the first seven years of the period. Successful new

entrants were responsible for half of the major product innovations, whereupon

companies with vested positions in vacuum tubes provided the majority of the process

innovations (Herbig, 1994). This is similarly true with the automobile industry: U.S.

automakers were mightily successful in the early years until buyers began to look for

lower prices and more add-ons in recent years; this is when Japanese automakers, who

excel in process and continuous innovations, started to gain ground and take on dominant

positions in the industry.


Figure 2. Life Cycle Dynamics and Sources of Competitive Advantage

• Product concepts • Creativity • Design capabil ities • New technologies or methods (favors smaller firms early on)

• Manufacturing skills • Process technology • Process refinements • Cost-based drivers (favors larger firms over time)

Introductory Growth Mature Stage of Product Lif e Cycle

Type

of D

istin

ctive

C

ompe

tenc

e or

Ski

ll N

eede

d

Source: Pitts, Robert & Lei, David. Strategic Management: Building and Sustaining Competitive Advantage. Cincinnati, Ohio: South-Western College Publishing, 2000: 124.

Significance

From an economic viewpoint, innovation critically determines the prosperity, long-

run economic growth, and standard of living of an economy. The prosperity of any

economy depends on its productivity since productivity determines the level of output,

the wages and also the returns earned by holders of capital; while improvements in

productivity come from technologically innovative advancements. The well-known

Keynesian economic model, which measures the aggregate demand of an economy

(essentially the GNP of a nation), shows that growth from an economy comes from two

sources: population growth, and technological advancements. In the absence of sustained

technological innovation, the rate of labor productivity growth, per capita income, and

standard of living will ultimately fall to zero (Porter & Stern, 1999).


Benchmarking

Patents are often viewed as indicative of innovative skills because they are

quantifiable and are comparatively easy to use and interpret. This view is to a limited

extent true since each patent refers to one innovation, and therefore the number of patents

a nation holds would reflect the number of innovations created by the people or

organizations in that nation. Despite patents’ popularity and ease of use for quantitative

comparisons, one needs to be aware of at least two limitations with using the number of

patents as the prime indicator of national innovativeness (Herbig 1996). First, patents

vary widely in their significance: a new type of paperclip can be eligible for a patent as

can a new drug that cures cancer. To overcome this shortcoming, it is important to take

into account the nature, significance, and the level of technological advancement of the

patent. Another limitation is that there are different costs associated with patenting in

different countries. It also takes different amounts of time to successfully apply for a

patent. Patents in the US take an average of two years while patents in Japan take at least

three and often five years or more to clear (Herbig, 1996). These national differences

associated with obtaining patents limit patents’ ability to be representative of a nation’s

innovative capability.

A recent research conducted by Porter and Stern (1999) for the Council on

Competitiveness, multiple variables are used to determine the innovation capabilities of

seventeen developed and eight emerging countries. For developed countries, the study

tracks the data variables from 1973 up to 1995 while only recent data was used for

emerging economies. Statistical analysis was performed to determine the significant

influences on innovative output three years ahead and the weight associated with each

influence. Innovation indices were then calculated for each country and innovation

indices into the future were also projected based on the trajectory of the country’s policy


and resource commitments. The indices were per capita-based in order to reflect the true

levels of labor productivity and standard of living; this also allows comparison across

large and small countries; smaller innovative countries can achieve higher rankings.

Figure 3 summarizes the variables used and their respective sources:

Figure 3. Innovation Index: Variables & Definitions

Variable NameVariable NameVariable NameVariable Name DefinitionDefinitionDefinitionDefinition SourceSourceSourceSource

Innovation Output

International patents Patents granted in the United States to establishments in country j in year (t+3); for the United States, the number of patents filed both domestically and in at least one other CHI-documented country

CHI U.S. patent database

Quality of the Common Innovation Infrastructure

Aggregate Personnel Employed in Research & Development

Full time equivalent scientists & engineers in all sectors

OECD Science & Technology Indicators

Aggregate Expenditures on Research & Development

R&D expenditures in all sectors in millions of PPP-adjusted 1985 U.S.$


Openness to International Trade & Investment

Average survey response by executives on a 1-10 scale regarding relative openness of economy

IMD World Competitiveness Report

Strength of Protection for Intellectual Property

Average survey response by executives on a 1-10 scale regarding relative strength of intellectual property

IMD World Competitiveness Report

Share of GDP Spent on Secondary and Tertiary Education

Public spending on secondary & tertiary education divided by GDP

World Bank

GDP Per Capita Gross Domestic Product in thousands of PPP-adjusted 1985 U.S.$

World Bank

Cluster-Specific Innovation Environment

Percentage of R&D Funded by Private Industry

R&D expenditures funded by industry divided by total R&D expenditures


Quality of Linkages

Percentage of R&D Performed by Universities

R&D expenditures performed by universities divided by total R&D expenditures


Source: Porter, Michael & Stern, Scott. (1999). “The New Challenge to America’s Prosperity: Findings from the Innovation Index.” Council on Competitiveness. Washington D.C.: 79.


The Current Global Scenario

Porter and Stern’s Innovation Index research (1999) reported that as of 1995, the U.S.

was the world’s most innovative nation, with an innovation index of 145.23. Following

the U.S. are Switzerland, Japan, Sweden, and Germany, all with innovative indices of

over 100. A common assumption is that innovation capability of a nation must increase

over time as education and necessary infrastructure improve; nevertheless, the Innovation

Index report shows that a nation’s capacity to innovate can level or move in either

directions. The Netherlands, for example, had an innovation index of 78.21 in 1975 and

an index of 48.26 in 1995. Such occurrences of steadily decreasing innovative capability

have also taken place in Italy and the U.K. between 1975 and 1995. With the exception of

a few countries, the common assumption is to a large extent true. Among the group of

developed nations, the general trend had been rising during this same period, although the

rates at which capability improvements took place were remarkably different. The rates

of improvements can be as steady as in France (20% in 20 years) or as radical as in

Denmark (four-folded). Another important characteristic pointed out by the report was

that these indices can be volatile—volatile as in stock prices. This is especially common

among the most innovative nations: Switzerland, Japan, and the U.S.. Switzerland had

long been the undisputed world leader in innovation until its 100-point fall after it hit its

highest around 230 in 1989. Before that happened, Switzerland had been enjoying

favorable, while unsteady, capacity improvements. Similar falls in innovative capacity hit

Japan in 1989 and between 1991 and 1994, a period during which Japan lost 60 points.

The U.S. had also been subject to significant upward and downward movements of its

innovation index from 1975 to 1995. These movements in the level of these countries’

innovative capabilities could have been due to changes in domestic economic conditions;


however, further research is necessary to accurately determine the root causes for this

observation.

Underdeveloped countries in 1995, including Singapore, Taiwan, South Korea,

Israel, Ireland, India, China, and Malaysia, were not comparably innovative to the leading

developed nations. The indices for these countries ranged from barely above 0 to around

20; China, India, and Malaysia, were projected to remain at the bottom of the list even

until 2005. However, there is much uncertainty associated with the projection of the

indices for these countries as economic and political conditions change rapidly in these

fast-growing economies. The study was meant to serve as a starting point for evaluating

the innovative potential of these developing countries. Unlike other nations that are under

more fundamental development, Singapore, Taiwan and South Korea, with better

infrastructure in place, are relatively prepared to increase their innovative capacity.

Singapore was projected to reach around 90 on the innovation index by 2005, Taiwan 50,

and South Korea 30. Although the projected numbers showed that none of the emerging

countries will overtake the top-tier innovators in the near future, they have successfully

pointed out that it is possible for imitators to become innovators.


Culture

Definition

A landmark research by Hofstede (1984) studied the impact of national culture on

work-related attitudes and values. Detailed behavioral questions about work-related

values in twenty different languages were presented to more than 116,000 employees of a

multi-national corporation, IBM, in forty countries around the years of 1968 and 1972

(Hofstede, 1984). Answers from these questions were then analyzed using formal

statistical methods. Due to its comprehensiveness and sound statistical backups, data

from Hofstede’s research is used in this study to characterize national cultures.

Culture has been defined in many ways. Hofstede defined culture in his study as

“…the collective programming of the mind which distinguishes the members of one

human group from another….Culture, in this sense, includes systems of values; and

values are among the building blocks of culture.” Hofstede also quoted an

anthropological definition from Kluckhohn:

Culture consists in patterned ways of thinking, feeling and reacting, acquired and

transmitted mainly by symbols, constituting the distinctive achievements of human

groups, including their embodiments in artifacts; the essential core of culture

consists of traditional (i.e. historically derived and selected) ideas and especially their

attached values. (P.25)

Herbig (1994), in his study on prerequisites to innovation, defined culture as:

An all inclusive system to communications which incorporates the biological and

technical behavior of human beings with their verbal and nonverbal systems of

expressive behavior. Culture is the sum total of a way of life, including such things as

expected behavior, beliefs, values, language, and living practices shared by members

of a society; it is the pattern of values, traits, or behaviors shared by the people within

a region. (P.49)


Culture carries too broad of a meaning to be clearly defined. Ironically, culture, can

even be defined or interpreted in different cultural contexts, by people from different

cultural backgrounds. In this study, we will use the three above mentioned quotes as

guiding definitions and treat culture as the set of embedded values that members of a

human group share that causes the group’s patterned ways of thinking, feeling,

conversing, reacting, behaving, and living. The human groups, in this research, will be

referred to the nations or countries that are under study.

Limitation

Data for three Chinese populated nations, Singapore, Taiwan, and Hong Kong, are

used to project data for mainland China. There has been an unavailability of empirical

research on Chinese personality conducted in mainland China, especially since the

traumatic shock to the Chinese academe brought by the Cultural Revolution during 1966-

70. For ideological and political reasons, no scientific research has been done or exported

from the country, if any has indeed been conducted (Bond, 1986). Nevertheless, data

from Singapore, Taiwan, and Hong Kong does have a high level of representativeness of

the typical Chinese culture given the fact that people in these countries are not local

natives. They are mostly descendents of early immigrants who came from different parts

of mainland China (Bond, 1986). Populations of these countries today are also composed

of largely Chinese: 76% in Singapore, 98% in Taiwan, and 95% in Hong Kong (Global

Road Warrior, 2000). In addition, Chinese languages are widely spoken and traditional

festivals are commonly celebrated in these countries. Another important fact is that

culture is enduring against time and changes to the surrounding environment. There are

latent personality traits, values of the culture that are to be continued despite superficial


modifications to social and economic conditions. Bond (1986) supported this idea by

noting:

When a Chinese person from mainland China meets a Chinese person from Taiwan

or Hong Kong, it is unlikely that they would think that they were people from different

national cultures. More probably, they would feel that they were “birds of the same

flock.” (P.107)

Although inferences and generalizations of the typical Chinese cultural character are

drawn from these three nations in this study, it is reasonable to believe that the inferences

and generalizations would be fairly representative.

Categorization

Hofstede (1984) broke down national culture into four dimensions in his study,

Individualism-Collectivism, Power Distance, Uncertainty Avoidance, Masculinity-

Femininity, which will be used in this study. Each of Hofstede’s four dimensions

provides a broad sense of an aspect of national culture; they include some of the most

significant work-related values and attitudes. To explain Hofstede’s four dimensions in

simple terms:

1. Individualism-Collectivism

Individualism-Collectivism encompasses opposite poles. Cultures that score high on

individualism value a loosely knit social framework in which people are expected to take

care of themselves and their immediate families. In contrast, cultures high in collectivism

are characterized by a tight social framework in which people distinguish between in-

groups and out-groups, expecting their in-group (e.g., family, company) to look after

them in exchange for loyalty (Ibarra, 1996).


2. Power Distance

Power Distance reflects the extent to which a national culture accepts and reinforces

the fact that power in institutions and organizations is distributed unequally. In cultures

with high power distance, status differences are viewed as legitimate and intrinsic. These

status differences can be based on a variety of characteristics including age, social class,

organizational rank, or family role (e.g., parent, child). In cultures with low power

distance, a hierarchical relationship is simply an inequality of roles that is established for

convenience in a particular context. Thus, someone who is my subordinate today may be

my boss tomorrow, or may be my boss on a particular project (Ibarra, 1996).

3. Uncertainty Avoidance

Uncertainty Avoidance indicates the degree to which a national culture values the

reduction of uncertainty and ambiguity. Members of high uncertainty avoidance cultures

try to reduce the effects of uncertainty by providing greater career stability, establishing

more formal rules, demonstrating low tolerance for deviant ideas and behavior, and

believing in absolute truths. Formal laws and informal rules are used to control the rights

and duties of employers and employees, and to make events clearly interpretable and

predicable (Ibarra, 1996).

4. Masculinity-Femininity

Masculinity versus femininity measures assertiveness, competitiveness values

(masculine) versus nurturing, interpersonal relationships, helping, caring, values within a

society (femininity). This is the extent to which the society differentiates roles between

the sexes and places emphasis on masculine values of performance and visible

achievement. Masculine societies have a high level of social sex role division while more

feminine societies have less contrasting defined roles for men and women. Traditional


masculine values include the importance of showing off, of performing, of achieving

something visible, of making money, of “big is beautiful.” Values that are associated with

a more feminine role include: modesty, humility, valuing relationships with people,

minding the quality of life and the preservation of the environment, caring, consideration,

helpfulness, accommodating, enjoyable work environment, helping others, in particular

the weak, and “small is beautiful.” (Herbig, 1994)

These four dimensions, however, are by no means all the many possible dimensions

that one can break down national culture. Herbig (1995) suggested two additional cultural

dimensions of a nation that have possible impacts on innovation: Confucian Dynamics /

Term Orientation, and Homogenous-Heterogeneous Society Composition. These two

dimensions will also be used in this study in addition to the four dimensions Hofstede

covered:

5. Confucian Dynamics / Term Orientation

Confucianism is not a religion but a set of pragmatic rules for daily life, derived from

what Confucius saw as the lessons of Chinese history. To understand why Term

Orientation is related to Confucian Dynamics, one must understand the essence of the

Confucius rules that put emphases on persistence (perseverance), ordering relationships

by status and observing this order, thrift, having a sense of shame, protecting your face,

respect for tradition, and reciprocation of greeting, favors, and social contacts. Confucian

societies also uniformly promote education, a desire for accomplishment in various skills

(particularly academic and cultural), and seriousness about tasks, job, family, and

obligations. A properly trained member of a Confucian culture will be hard working,

ambitious and creative in helping the group to which he or she belongs (family,

community, or company). There is much less emphasis on advancing individual (selfish)


interests. Thus, societies with high Confucian characteristics have patience, and a long-

term viewpoint (Herbig, 1994). Confucian Dynamics do contain a wide spectrum of

values that characterize culture. Many of the principles, such as their promotions of the

idea of relationships by status, seriousness about job, family, obligations, and initiation of

help to groups, do cover or intersect with dimensions suggested by Hofstede, such as

Power Distance, and Individualism-Collectivism. However, since we have already

isolated Hofstede’s four dimensions as separate national cultural characteristics in this

study, the use of Confucian Dynamics as a dimension is limited to determining the Term

Orientation of a society.

6. Homogenous-Heterogeneous Society Composition

The Society Composition dimension simply refers to the cultural Homogeneity or

Heterogeneity in the nation. A nation that has a homogeneity society composition means

that all or most of it members share the same or a highly similar culture; while a

heterogeneous nation, on the other hand, contains more than one or many cultures that

interact with one another to shape the national culture.

Measurement

1 - 4. Hofstede’s Four Dimensions

Hofstede’s study (1984) provides a quantifiable and considerably comprehensive

basis for this study. It provides an objective and systematic measure on national work-

related culture in the four dimensions above mentioned: Individualism-Collectivism,

Power Distance, Uncertainty Avoidance, Masculinity-Femininity.

Hofstede’s study, from 1984, may seem outdated in today’s information age where

business scenarios change in a matter of months, weeks, or even seconds. However, it is

also important to recognize that it takes a considerably long time for changes to take


place in a nation’s culture and that these changes usually take place gradually. For this

reason, the data from Hofstede would provide one of the best measurements of national

cultural character available for this study.

Figure 4 below shows the Hofstede dimensions and the values for the U.S., Japan,

and the selected nations representative of China—Singapore, Taiwan, and Hong Kong.

As mentioned, data from these Chinese Populated Societies (CPSs) will be used to infer

cultural characteristics for mainland China due to the lack of desired empirical research

conducted there. The range of scores is from 0 (lowest) to 100 (maximum); the scores are

relative and not ratio based.

Figure 4. Cultural Characteristics Scores for Selected Nations

Chinese Populated SocietiesChinese Populated SocietiesChinese Populated SocietiesChinese Populated Societies

Hong KongHong KongHong KongHong Kong SingaporeSingaporeSingaporeSingapore TaiwanTaiwanTaiwanTaiwan U.S.U.S.U.S.U.S. JapanJapanJapanJapan

IndividualismIndividualismIndividualismIndividualism----CollectivismCollectivismCollectivismCollectivism 25 (32) 20 (34-35) 17 (36) 91 (1) 46 (22-23)

Power Power Power Power DistanceDistanceDistanceDistance 68 (8-9) 74 (6) 58 (19) 40 (26) 54 (22)

Uncertainty Uncertainty Uncertainty Uncertainty AvoidanceAvoidanceAvoidanceAvoidance 29 (37-38) 8 (40) 69 (20) 46 (32) 92 (4)

MasculinityMasculinityMasculinityMasculinity----FemininityFemininityFemininityFemininity 57 (16-17) 48 (24) 45 (26-27) 62 (13) 95 (1)

Rankings (among 40 countries) are shown in brackets; lower rankings (1, 2, 3…) reflect relatively high index values, high rankings (40, 39, 38…) reflect relatively low index values; ranged ranking reflects tied scores.

Source: Hofstede, Geert. Culture’s Consequences: International Differences in Work-Related Values. Beverly Hills, London: Sage Publications: 315.

For easier interpretation of Figure 4:

A high score on the Individualism-Collectivism scale refers to the existence of a high

degree of individualism in that nation, a low score reflects a collective cultural

characteristic.


For Power Distance, a high score means power is more unequally distributed in

institutions and organizations in that nation, implying that more hierarchical

structures exist; a lower score reflects the lesser of these hierarchical roles.

The scores for Uncertainty Avoidance show the nations’ degrees of unwillingness to

accept and face uncertainty. A nation that dislike taking risks would end up on the

high end of the scale, a nation with a score on the opposite side of the scale promotes

stability.

The Masculinity-Femininity index measures the degree to which a nation conform to

the traditional view of male-dominance, as well as the nation’s emphases on power

and material-based satisfaction.

The scores for the three Chinese Populated Societies (CPSs) are considerably similar,

especially for the dimensions of Individualism (Scores: 25, 20, 17; Range: 25-17=8),

Masculinity-Femininity (Scores: 57, 48, 45; Range: 57-45=12), and Power Distance

(Scores: 68, 74, 58; Range: 74-58=16). A gap exists between Taiwan’s score and the

other two countries’ scores in the Uncertainty Avoidance dimension (Scores: 29, 8, 69;

Range: 69-8=61). Averages of these values for the three CPSs will be used to project the

corresponding value for China in each of the cultural dimensions. The resulting values

are summarized in Figure 5.

Figure 5. Cultural Characteristics Scores for Selected Nations (Chinese Populated Societies [CPSs] Combined/Averaged)

CPSsCPSsCPSsCPSs U.S.U.S.U.S.U.S. JapanJapanJapanJapan

IndividualismIndividualismIndividualismIndividualism----CollectivismCollectivismCollectivismCollectivism 21 91 46

Power DistancePower DistancePower DistancePower Distance 66 2/3 40 54

Uncertainty Uncertainty Uncertainty Uncertainty AvoidanceAvoidanceAvoidanceAvoidance 35 46 92

MasculinityMasculinityMasculinityMasculinity----FemininityFemininityFemininityFemininity 50 62 95


5. Confucian Dynamics / Term Orientation

Data from a study conducted by Chinese researchers in the 1980s is employed to

measure Confucian Dynamic influences in the nations being studied. This research,

named the Chinese Value Survey (CVS), was initiated in response to Hofstede’s initial

national cultural characteristics study in 1980 (Hofstede revised and republished another

version of his study in 1984, which is being used in this paper), questioning the

objectivity of Hofstede’s study. They suspected that the people, methodologies, and

instruments employed by Hofstede’s were western in origin and therefore the resulting

study might also have been culturally bounded (The Chinese Culture Connection, 1987).

Hofstede (1984) himself put this idea in these terms:

If we begin to realize that our own ideas are culturally limited, from that moment we

need the others—we can never be self-sufficient again. Only others with different

mental programs can help us find the limitations of our own. (P.374)

The purpose of CVS, lead by a major university in Hong Kong, was to provide a

cross-cultural study of national cultural characteristics from a non-western, or more

specifically, Chinese, perspective. Although not as grand in scale and extensive in time as

the Hofstede study, the Chinese researchers conducted CVS across 22 selected countries

on five continents with over 100 selected samples from each country. An initial 40

fundamental and basic Chinese values were formulated and then grouped into four

dimensions that are statistically most significant. One of the dimensions was Confucian

Work Dynamics. The data for this dimension will be used for the Confucian Dynamics /

Term Orientation dimension in this study. Scores for selected countries are presented in

Figure 6:


Figure 6. Confucian Dynamic Index for Selected Countries

Chinese Populated SocietiesChinese Populated SocietiesChinese Populated SocietiesChinese Populated Societies

Hong KongHong KongHong KongHong Kong SingaporeSingaporeSingaporeSingapore TaiwanTaiwanTaiwanTaiwan U.S.U.S.U.S.U.S. JapanJapanJapanJapan

Confucian Confucian Confucian Confucian Dynamic IndexDynamic IndexDynamic IndexDynamic Index 96 (1) 48 (8) 87 (2) 29 (16) 80 (3)

Rankings (among 22 countries) are shown in brackets

A rather high level of consistency can be observed between the three Chinese

Populated Societies (Rankings: 1, 8, 2). As previously done with the scores from

Hofstede’s four dimensions, the average score of the three CPSs will be used to

represented the corresponding value for mainland Chinese in order to facilitate easier

comparison. The resulting scores are presented in the Figure 7:

Figure 7. Confucian Dynamic / Term Orientation Index for Selected Countries (Chinese Populated Societies [CPSs] Combined/Averaged)

CPSsCPSsCPSsCPSs U.S.U.S.U.S.U.S. JapanJapanJapanJapan

ConfucConfucConfucConfucian Dynamics ian Dynamics ian Dynamics ian Dynamics / Term Orientation/ Term Orientation/ Term Orientation/ Term Orientation 77 29 80

6. Homogenous-Heterogeneous Society Composition

The U.S. population is definitely one of the most heterogeneous in the world. Given

the nation’s young history, openness to differences, and immense yet sustained global

immigration, the U.S. population is diverse in race, ethnicity, and culture. In addition to

the presence of surviving native Americans and the descendants of Africans taken as

slaves to America, the national character has been enriched, tested, and constantly

redefined by the tens of millions of immigrants who by and large have gone to America

hoping for greater social, political, and economic opportunities than they had in their

home countries (Britannica, 2000).


Japan, contrary to the U.S., is a highly homogeneous population. The homogeneous

composition is largely due to the society’s reluctance to allow foreign invasion in the

form of immigration. The Japanese prefer to keep their culture in the purest form with

little or no variations. Japanese are expected to share the same values, norms, language,

aesthetics, and one strong national identification.

China covers a large geographical area, which is marginally larger than the size of

United States, or 25 times the size of Japan. The country stretches for over 3,000 miles

from east to west and from north to south (Britannica, 2000). Drastically contrasting

geographical landscapes, including weather, environment, resources exist within the

Chinese boundaries. These geographical differences gave birth to and nurtured the

development of different regional and tribal cultures. Throughout the 4000-year recorded

Chinese history, the sub-cultural groups have been repeatedly integrated into and

disintegrated from the main Chinese empire. This provided China with a strongly

distinctive national culture that has numerous relatively-weak, yet identifiable sub-

cultures. As previously explained, it is unlikely that even for Chinese from Hong Kong,

Taiwan, Singapore, or the southern or northern part of mainland China to think that they

belong to different cultures. Rather they think they all belong to the Chinese culture, even

though societal, structural, and cultural differences exist between these places.

All Six Dimensions

Figure 8 provides a summary chart of the numeric measurements of national cultural

characteristics that will be used in the analysis part of this study. They will further be

discussed in the next section.


Figure 8. Scores for Six Dimensions of National Cultural Characteristics of China/ CPSs, the United States, and Japan

China/CPSsChina/CPSsChina/CPSsChina/CPSs U.S.U.S.U.S.U.S. JapanJapanJapanJapan

IndividualismIndividualismIndividualismIndividualism----CollectivismCollectivismCollectivismCollectivism 21 91 46

Power DistancePower DistancePower DistancePower Distance 66 2/3 40 54

Uncertainty AvoidanceUncertainty AvoidanceUncertainty AvoidanceUncertainty Avoidance 35 46 92

MasculinityMasculinityMasculinityMasculinity----FemininityFemininityFemininityFemininity 50 62 95

Confucian Dynamics / Term Confucian Dynamics / Term Confucian Dynamics / Term Confucian Dynamics / Term OrientationOrientationOrientationOrientation 77 29 80

HomogenousHomogenousHomogenousHomogenous----Heterogeneous Heterogeneous Heterogeneous Heterogeneous Society ComposiSociety ComposiSociety ComposiSociety Compositiontiontiontion Mixed Heterogeneous Homogeneous


Innovation & Culture

The Connection

Innovation is a behavior and a value creation process. Since culture fundamentally

affects the behaviors and values of human groups, it is reasonable to draw a causal

relationship between culture and innovation. Likewise, ways of conducting businesses,

carrying out negotiations, and socializing are all behaviors, and they are recognized as

having close connections with culture. Herbig (1994) explains how cultural values

determine social behavior: “People find certain behaviors and values to be adaptive and

helpful; others, non-adaptive and even harmful. Helpful practices are shared and

rewarded; harmful practices are discouraged or discarded.” The culture of a society

determines what is valued and what is not; it subsequently provides the reasons to

determine whether the society should innovate or not. If a technological innovation

creates additional societal value, it will be encouraged; if the process costs more than the

value it can bring to the society, it will be inhibited. Margaret Mead, with regard to the

cultural costs of innovation, describes a situation in which the introduction of a

technological innovation conflicts with the values of the culture, and the innovation is

therefore discouraged and inhibited (Herbig, 1994):

To the Chinese, the introduction of power machinery meant that he had to throw over

not only habits of work but a whole ideology; for dissatisfaction with the ways of his

fathers in one particular meant doubt of the father’s way of life in all its aspects. If

the old loom must be discarded, then 100 other things must be discarded with it, for

there are somehow no adequate substitutions. (P.51)

This implication of cultural influence on innovation applies to both the creation and

the adoption of innovation. As Hofstede (1984) says, “Culture itself, within a system,


affects both the inquisitiveness of the members of the society and their tolerance for new

ideas and therefore their rate of discovery and innovation.” Inquisitiveness refers to the

culture’s interest in and motivation for discovering and inventing; it relates to the

culture’s rate of innovation creation. The tolerance for new ideas, on the other hand,

refers to the willingness and readiness of the culture to adopt innovations that have been

invented or those that are to be invented.

The relationship between culture and innovation is complicated and difficult to

observe due to the complexity and subtlety of culture. Culture is composed of attributes.

Certain attributes may not have direct connections to innovation, while others can exert

either positive or negative effects on the capability of a nation to innovate. For example,

innovation involves making commitments in the present for returns in the future; it is

opportunistic, adventurous, and requires impactive societal changes. The value creation

process requires the taking of risk. It is therefore safe to postulate a positive correlation

between risk preference and innovation. Given this proposed correlation, if other societal

and cultural characteristics are the same between two nations, we would expect the nation

that tolerates more risk would have a higher capacity to innovate.

Cultural attributes, such as risk preference, not only affect the innovative capabilities

of a nation; at the same time, they also affect the types of innovation that will

predominate in that nation. For example, a nation whose culture welcomes risk and

changes would encourage radical innovations and inventions, while a nation with a

culture favoring certainty and stability would foster the development of evolutionary and

process innovations. In fact, numerous studies examined this intriguing relationship

between culture and innovation. Figure 9 provides a summary of the research and

conclusions regarding cultural influences on innovation:


Figure 9. Previous Studies’ Conclusions on Cultural Influences on Innovation

Cultural TraitsCultural TraitsCultural TraitsCultural Traits Affects on InnovationAffects on InnovationAffects on InnovationAffects on Innovation

Barnett (1953) Higher Individualism

Higher Innovation Capacity

Rothwell and Wissema (1986) Willingness to Take Risks Readiness to Accept Change Long-Term Orientation


Hofstede (1984), Shane (1992) High Individualism Low on Power/Status/Hierarchy


Hofstede (1980) Weak Uncertainty Avoidance

Higher Entrepreneurship

Haiss, 1990; Schneider, 1989, Hofstede, 1980 Masculine versus Feminine

Innovation Differences

Beteille (1977) Political Democracy, Capitalism, Competition and Individualism

Relative Variables

Mokyr (1991) Individualism Lower Power Distance Homogeneous Society

Higher Radical Innovations Higher Radical Innovations More Lower Order Innovations

Twaalfhoven and Hattori (1982) Collectivist

Higher Process Less Radical Innovations

Chol Lee (1990) Early Adapters Low Levels of Centralized Government, A Positive Attitude towards Science Frequent Travel.


Source: Herbig, Paul. The Innovation Matrix: Culture and Structure Prerequisites to Innovation. Westport, Connecticut: Quorum Books, 1994: 55.

Herbig (1995), in his cross-cultural study between the Japanese and U.S. innovative

capabilities, postulated a list of propositions, which incorporated findings from previous

related studies (Figure 10):


Figure 10. Culture-Innovation Impacts — Propositions

Proposition 1: The higher the individualism for any given society, the greater the

tendency to generate radical innovations and inventions.

Proposition 2: The greater the collectivist nature of a society, the greater the tendency

to generate evolutionary and process innovations. The greater the

collectivist nature of a society, the fewer radical innovations and

inventions that are generated.

Proposition 3: The higher the power structure in a society, the less the ability to

generate radical innovations and inventions. The higher the power

structure in a society, the greater the tendency to concentrate and excel

at process and evolutionary innovations. The lower the power structure

in a society, the greater the ability to generate radical innovations and

inventions.

Proposition 4: The higher the uncertainty avoidance (risk avoidance) in a society, the

greater the tendency to generate process and evolutionary innovations

and the less the ability to excel at radical innovations and inventions.

The lower the uncertainty avoidance (risk taking) in a society, the greater

the means to generate radical innovations and inventions.

Proposition 5: The higher a society’s tendency toward Confucian characteristics, the

more the emphasis on evolutionary innovations.

Proposition 6: The more homogeneous a society is, the greater the tendency toward

process and evolutionary innovations and avoidance or radical

innovations and inventiveness. The more heterogeneous a society is, the

more capability it has to generate radical innovations and inventions.

Proposition 7: The longer term horizon a society has, the more impetus is provided to

produce process and evolutionary innovations. The shorter term horizon

a society has, the more process and evolutionary innovations are

inhibited.

Source: P. Herbig and J. Miller. (1991). “The Effect of Culture Upon Innovativeness: A Comparison of United States and Japanese Sourcing Capabilities.” Journal of International Consumer Marketing 3/3: 42-43.

These propositions were then systematically presented in a chart (Figure 11):


Figure 11. Culture-Innovation Impacts – Types of Innovation

InventionInventionInventionInvention RadicalRadicalRadicalRadical EvolutionaryEvolutionaryEvolutionaryEvolutionary ProcessProcessProcessProcess

ICICICIC Individualism + + - -

Collectivist - - + +

PowerPowerPowerPower Status / Hierarchy - - + +

Egalitarian + + O O

RiskRiskRiskRisk Avoidance - - + +

Takers + + O O

MMMM----FFFF Achievement / Competitive U U + +

Laissez-Faire U U O O

CompositionCompositionCompositionComposition Homogeneous - - + +

Heterogeneous + + O O

TermTermTermTerm Short-Term U U - -

Long-Term U U + +

Keys: +

- Positive Impact Negative Impact

O U

No Conjectual Impact Unknown Impact

Source: P. Herbig and J. Miller. (1991). “The Effect of Culture Upon Innovativeness: A Comparison of United States and Japanese Sourcing Capabilities.” Journal of International Consumer Marketing 3/3: 48.

When Herbig talked about culture’s influence on innovative type, he associated

invention with radical innovation, and evolutionary innovation with process innovation.

This is because the cultural characters that the four types of innovations require are

similar to the other types of innovation within the same group. This can be observed from

Herbig’s propositions (Figure 10) and consequently in the above chart (Figure 11), where


the signs representing the relationships between the cultural characteristics and the types

of innovation are the same between column one (invention) and column two (radical

innovation), column three (evolutionary innovation) and column four (process

innovation). For the purpose of simplification, in this study the two sets of columns are

combined in a modified version of the Culture-Innovation Impact table in Figure 12.

Some of the terms describing cultural dimensions are also modified (and reordered) for

better consistency with the rest of this study:

Figure 12. Culture-Innovation Impacts – Types of Innovation (Revised)

Invention / RadicalInvention / RadicalInvention / RadicalInvention / Radical Evolutionary / ProcessEvolutionary / ProcessEvolutionary / ProcessEvolutionary / Process

Individualism / Individualism / Individualism / Individualism / CollectivismCollectivismCollectivismCollectivism Individualism + -

Collectivist - +

Power DistancePower DistancePower DistancePower Distance Hierarchical - +

Egalitarian + O

Risk AvoidanceRisk AvoidanceRisk AvoidanceRisk Avoidance Avoidance - +

Takers + O

Masculinity / Masculinity / Masculinity / Masculinity / FemininityFemininityFemininityFemininity Masculine U +

Feminine U O

Confucian Confucian Confucian Confucian Dynamics /Dynamics /Dynamics /Dynamics / Short-Term U -

Term OrientationTerm OrientationTerm OrientationTerm Orientation Long-Term U +

HeterogeneousHeterogeneousHeterogeneousHeterogeneous----HomogeneousHomogeneousHomogeneousHomogeneous Homogeneous - +

Society Society Society Society CompositionCompositionCompositionComposition Heterogeneous + O

Keys: +

- Positive Impact Negative Impact

O U

No Impact Unknown Impact


We will apply this model to the measurements on the six dimensions of the CPSs,

Japan, and the U.S. as previously presented (Figure 8) to identify how these nations’

cultures influence their innovative capabilities as well as their resulting prevalent

innovation type.

Culture-Innovation Impact Analysis

As Herbig applied his model (Figure 12) to U.S. and Japan in his cross-cultural study

between the two nation’s innovative capabilities, he found that the U.S.’s innovative

strengths are in invention and radical innovations, while those of Japan are in

evolutionary and process innovations. As he pointed out:

Although the U.S. does fairly well in process and evolutionary innovations, that it does

not excel is evidenced by the tremendous deficit to Japan and the large number of

once American products no longer made in America by American-based companies.

But if the U.S. excels anywhere, it is in radical innovations, inventions, and basic

science. The Japanese excel at evolutionary and process innovations but traditionally

have failed to contend in radical innovations or major inventions and basic science.

(P.82)

Characterized by an extremely high degree of individualism, fairly low degrees of

power distance and uncertainty avoidance, a moderately high degree of masculinity, and

a heterogeneous society composition, the United States is full of creative and radical

ideas that fuel high order innovations. The Japanese, on the other hand, characterized by

fairly high levels of collectivism and power distance, extremely high levels of risk

avoidance and masculinity, coupled with a Confucian and highly homogeneous society,

have all the cultural strengths that they need to excel in low order innovations while not

only lacking, but inhibiting, the growth of high order innovations at the same time.

Herbig (1996) went on to point out how culture in Japan affects innovation in day-to-

day reality:


In Japan, process innovation is rewarded and encouraged. One major advantage the

Japanese company has is that Japanese workers welcome technological change. Few

try to sabotage productivity improvements. This is not so in the United States. To the

average American factory worker, automation can result only in the exchange of

people for machines….In contrast to this fear of unemployment, many Japanese

corporate workers are lifelong employees. If a worker’s duties become automated, he

knows he will be moved elsewhere within the company and be trained to do a new

task….This is why Japanese employees submit tens of thousands of suggestions per

year even without any significant reward. Group unity and loyalty help to stimulate

suggestions and spirit of participation. (P. 6)

Herbig’s finding can be well-supported by observing the difference between the

recent innovative achievements by the U.S. and Japan. The U.S. has introduced radical

innovations such as microprocessors, the Internet, the telephone, and the transistor. Japan,

on the other hand, has shown its competency with low order innovations by dominating

the electronics market (including CD, DVD players, VCRs, and fax machines) and by

implementing Just-In-Time production systems in manufacturing automobiles.

Herbig (1995) has provided strong cultural reasons that account for differences

between U.S. and Japanese innovative activities. Unlike the U.S and Japan, China

currently enjoys an extremely low level of innovativeness. Therefore, instead of

employing the Culture-Innovation model to provide an explanation, this study will

employ the modified model to provide a prediction on China’s innovative activities based

on its cultural attributes. Applying the model to the identified Chinese cultural

characteristics shows that China is culturally a strong contender in evolutionary and

process innovations. Although not as culturally adept as the Japanese in low order

innovations, the Chinese do not show a significant discrepancy in strength among the

other type of innovation as do the Japanese and the United States. The following rules

will be set up for a more systematic way to apply data to the culture-innovation impact

model as well as to make comparison between the three countries easier:


Rule 1. An index of more than 50 is considered to be high in that cultural dimension;

an index of less than 50 is considered to be low in that cultural dimension;

culture-innovation impact will then be determined accordingly for that

dimension. An index of 50 shows that there is a combination of both poles of

the cultural dimension; this will be represented by a “U” sign, showing that

the given value in the cultural dimension imposes undetermined impact on

innovation.

Rule 2. The number of “+” or “-“ signs will be summed individually for both high

order and low order innovations for each of the three countries. Culture-

innovation impact that each sign represents is assumed to be in the same

strength and therefore allows calculation. It is assumed that each “+” sign

cancels out the effect from each “-“ sign, and vice versa.

Rule 3. The “U” sign denotes an undetermined culture-innovation impact. Impact of

this type will not be considered.

Rule 4. The “O” sign denotes no impact between the cultural characteristic and

innovation, as inherited from Herbig’s model.

Figure 13 on the following page summarizes the culture-innovation impacts for the

three nations by applying the above rules.

Starting with the U.S., its +4 rating for high order innovations shows that the U.S. has

considerable strength in high order innovations. U.S.’s -1 rating for low order innovations

implies that the nation is marginally weak in evolutionary and process innovations.

Contrasting innovative capabilities can easily be observed from the above scores between

the U.S. and Japan: the Japanese are rated with a markedly high score, +6, in low order

innovations but a -4 in high order innovations. The results from the above analysis for

these two nations closely coincide with Herbig’s (1995) findings that U.S. is strong in

inventions and radical innovations, while the Japanese are strong in evolutionary and


process innovations and weak in high order innovations. The Chinese score a -1 in high

order innovations and a +3 in low order innovations. This analysis shows that the Chinese

are adept, but not quite as much as the Japanese, with evolutionary and process

innovations while it is only marginally weak with inventions and radical innovations.

Figure 13. Culture-Innovation Impacts — China/CPSs, U.S., and Japan

CountriesCountriesCountriesCountries China/CPSsChina/CPSsChina/CPSsChina/CPSs U.S.U.S.U.S.U.S. JapanJapanJapanJapan

Innovation TypeInnovation TypeInnovation TypeInnovation Type High High High High orderorderorderorder

Low Low Low Low orderorderorderorder

High High High High orderorderorderorder



LLLLow ow ow ow orderorderorderorder

IndividualismIndividualismIndividualismIndividualism----CollectivismCollectivismCollectivismCollectivism - + + - - + (21) (91) (46)

Power DistancePower DistancePower DistancePower Distance - + + O - + (66 2/3) (40) (54)

Uncertainty AvoidanceUncertainty AvoidanceUncertainty AvoidanceUncertainty Avoidance + O + O - + (35) (46) (92)

MasculinityMasculinityMasculinityMasculinity----FemininityFemininityFemininityFemininity U U U + U + (50) (62) (95)

Confucian Dynamics /Confucian Dynamics /Confucian Dynamics /Confucian Dynamics / Term OrientatiTerm OrientatiTerm OrientatiTerm Orientationononon U + U - U +

(77) (29) (80)

HomogenousHomogenousHomogenousHomogenous----Heterogeneous Heterogeneous Heterogeneous Heterogeneous Society CompositionSociety CompositionSociety CompositionSociety Composition U U + O - +

(Mixed) (Heterogeneous) (Homogeneous)

Total ImpactTotal ImpactTotal ImpactTotal Impact -1 +3 +4 -1 -4 +6

Cultural characteristic scores are shown in bracketed small-prints.

To further refine this analysis to take into account the strength of the influences from

each of the cultural dimensions, which was previously restricted by Rule 1, an impact

multiplier scale will now be introduced. The multiplier scale provides a multiplier that

represents the strength of the culture-innovation impact: the more extreme (high or low)

the nation’s score in the cultural dimension, the larger the impact multiplier would be,


and so would the cultural characteristic’s impact on innovation. The multiplier that is

determined to be used with the cultural dimension score will then be used to “multiply”

the culture-innovation impact, a “+” or a “-“ sign in order to represent the corresponding

level of impact from the nation’s strength in that particular cultural dimension. The

multiplier scale is shown below:

Ranges of Cultural Dimension Score Impact Multiplier

0 9|10 19|20 29|30 39|40 49|50|51 60|61 70|71 80|81 90|91 100

5x 4x 3x 2x 1x 0 1x 2x 3x 4x 5x

This second analysis will extensively use the numerical data that were presented

earlier. However, one piece of data, society composition, was non-numerical. As a result,

impact multipliers that are to be used with the culture-innovation impact will be assigned

qualitatively and arbitrarily. The U.S. has a highly heterogeneous societal composition,

since it has one of the world’s most diverse societal-cultural composition. Assuming that

the U.S.’s social-cultural diversity is as distinct as its national characterized individualism

(the U.S. scored a 91 on the scale), we would rate U.S.’s heterogeneous society

composition in the 90s (or homogeneous society composition in the 10s on a reversed

scale) and the appropriate impact multiplier will be a 5x. Japan’s societal homogeneity in

the 90s will also be rated with a multiplier of 5x since the nation has a highly

homogeneous population; as Britannica (2000) puts it, “Japan has a large, and to a great

extent, ethnically homogeneous population.” China has one strong national cultural

identity while having lots of identifiable sub-cultures. It is uncertain that how this mixture

of the two poles of social/cultural compositions would influence the resulting innovation

type. As a result, no impact multiplier will be used for China’s culture-innovation impact

from society composition, but rather “U” signs are used to show the uncertain impacts to


both high and low order innovations. Having all input multipliers determined, the revised

culture-innovation impact diagram for the three nations is shown in Figure 14:

Figure 14. Culture-Innovation Impacts — China/CPSs, U.S., and Japan (with Impact Multiplier)

CountriesCountriesCountriesCountries China/CPSsChina/CPSsChina/CPSsChina/CPSs U.S.U.S.U.S.U.S. JapanJapanJapanJapan







IndividualismIndividualismIndividualismIndividualism----CollectivismCollectivismCollectivismCollectivism 3- 3+ 5+ 5- 1- 1+ (21) (91) (46)

Power DistancePower DistancePower DistancePower Distance 2- 2+ 1+ O 1- 1+ (66 2/3) (40) (54)

Uncertainty AvoidanceUncertainty AvoidanceUncertainty AvoidanceUncertainty Avoidance 2+ O 1+ O 5- 5+ (35) (46) (92)

MasculinityMasculinityMasculinityMasculinity----FemininityFemininityFemininityFemininity U U U 2+ U 5+ (50) (62) (95)

Confucian Dynamics /Confucian Dynamics /Confucian Dynamics /Confucian Dynamics / Term OrientationTerm OrientationTerm OrientationTerm Orientation U 3+ U 3- U 3+

(77) (29) (80)

HomogenousHomogenousHomogenousHomogenous----Heterogeneous Heterogeneous Heterogeneous Heterogeneous Society CompoSociety CompoSociety CompoSociety Compositionsitionsitionsition U U 5+ O 5- 5+

(Mixed) (Heterogeneous) (Homogeneous)

Total ImpactTotal ImpactTotal ImpactTotal Impact -3 +8 +12 -6 -12 +20


This second analysis appears to be consistent with the results from the first analysis,

in which the magnitude of a nation’s strength in specific cultural dimensions are not

accounted for. The U.S., with a score of +12, still stands out as the most culturally

competent nation in inventions and radical innovations, while the same is true for Japan

with evolutionary and process innovations. China still shows only moderate strength and


marginal weakness in high order and low order innovations respectively. There are two

additional observations from this chart:

1. Japan shows more extreme values representing its strength with low order

innovations and its deficiency with high-order innovations. This can be

explained by the Japanese extreme values on the scales that measure cultural

characteristics. These extreme cultural values include uncertainty avoidance,

masculinity-femininity, and society composition, all of which were applied

multipliers of 5.

2. The values of the multipliers for China/CPSs are rather moderate; there are

no multipliers of 1 or 5 used for China. This may have been a result of the

process in which we took average values of each cultural dimension across

the three countries. The process may have decreased the chance of any

extreme value being used.

In order to observe how the effect from observation 2 affected our results for

China/CPSs in our analysis, Figure 15 on the next page shows individual culture-

innovation impact analyses applied to the three CPSs: Hong Kong, Singapore, and

Taiwan.

More extreme values of impact multipliers are used in this case. The resulting total

impact scores of the three countries, although are not necessarily close to identical,

appear to be similar because of the closeness in their original cultural dimension values.

Scores of all the three countries are consistent with those resulting from combined

cultural dimension values: a -3 for high order innovations and a +8 for low order

innovations.


Figure 15. Culture-Innovation Impacts — Hong Kong, Singapore, and Taiwan (with Impact Multiplier)

CountriesCountriesCountriesCountries Hong KongHong KongHong KongHong Kong SingaporeSingaporeSingaporeSingapore TaiwanTaiwanTaiwanTaiwan



HighHighHighHigh orderorderorderorder




IndividualismIndividualismIndividualismIndividualism----CollectivismCollectivismCollectivismCollectivism 3- 3+ 3- 3+ 4- 4+ (25) (20) (17)

Power DistancePower DistancePower DistancePower Distance 2- 2+ 3- 3+ 1- 1+ (68) (74) (58)

Uncertainty AvoidanceUncertainty AvoidanceUncertainty AvoidanceUncertainty Avoidance 3+ O 5+ O 2- 2+ (29) (8) (69)

MasculinityMasculinityMasculinityMasculinity----FemininityFemininityFemininityFemininity O 1+ U O U 4+ (57) (48) (69)

Confucian Dynamics /Confucian Dynamics /Confucian Dynamics /Confucian Dynamics / Term OrientationTerm OrientationTerm OrientationTerm Orientation U 5+ U 1+ U 4+

(96) (48) (87)

HomogenousHomogenousHomogenousHomogenous----Heterogeneous Heterogeneous Heterogeneous Heterogeneous Society CompositionSociety CompositionSociety CompositionSociety Composition U U U U U U

(Mixed) (Mixed) (Mixed)

Total ImpactTotal ImpactTotal ImpactTotal Impact -2 +11 -1 +7 -7 +11


The Findings

The analyses performed have extended the application of Herbig’s Culture-

Innovation Impact model to the Chinese. The results consistently suggest that the Chinese

are adept in evolutionary and process innovations while lacking the competency in

inventions and radical innovations.

There are three major limitations regarding the methodology employed to perform

the analyses presented:


1. The scores for culture-innovation impacts are not proportional. Their

weights, or more specifically the impact multipliers, were estimated rather

arbitrarily based on their respective score of the nation on the cultural

dimension. A “2+” does not necessarily represent a strength that is the twice

as strong as a “4+”.

2. The positive influences on high order innovations from individualism do not

necessarily equal the positive impact that comes from having an egalitarian

culture, even though the nation’s score on the two dimensions are the same.

It is likely that the six cultural dimensions that have been selected in this

study exert unequal levels of influences on innovation, and that this cannot

be determined without an extensive statistical study correlating the cultural

dimensions with the types of innovation that shows the weights and

significance of each variable.

3. Although scores from Hofstede’s study provide an excellent numerical basis

for analysis, they do not reflect the distribution of the individual values that

were used to form the final score, nor do they tell how well the values on the

two poles on each cultural dimension are represented in that nation. A nation

that has fifty percent of its population strongly in favor of individualism and

the other fifty percent of its population strongly in favor of collectivism

would theoretically scores a 50 on that dimension. On the other hand, a

nation that is neither individualistic nor collective scores a 50 on the same

dimension. Consequently, based on Herbig’s culture-innovation impact

model, this cultural characteristic of the nation would have be determined as

having no impact on its innovation strength/type. It was assumed in both

Hofstede’s and Herbig’s study that there would be no co-existence of values


from the two extremes of cultural dimension, rather they should be on a

straight scale and cancel out effects from each other. This may be true in the

case of an individual, but we should recognize the fact that members of

societies are allowed to hold different opinions and therefore coexistence of

the values on the two poles of the cultural dimension is possible. If these

values are sufficiently represented in the society, regardless of the values on

the opposing sides of the scale, they should still have an impact on the

society’s innovation capability.

Despite these limitations, findings from the analyses should provide a strong basis for

predicting the Chinese innovative capability. Although innovative activities can hardly be

observed today, there are early traits that can be observed in the presently more

developed Chinese populated economies that will help confirm the findings from this

study.

Taiwan’s domestic industry is mainly composed of small- and medium-sized

enterprises (SMEs). These enterprises account for 98% of Taiwan’s domestic industrial

output (Searl, 1998). A recent study revealed that these Taiwanese SMEs value

competitive priorities of their businesses in this order: quality, dependability, cost,

flexibility, innovation, service and time (Chen, 1999). The improvement of quality

basically comes from continuous refinement of the product as well as a better

manufacturing capability to reduce the number of defects. The fact that Taiwanese

companies ranked quality as the most important priority shows that they put heavy

emphasis on evolutionary and process innovations. In addition, cost, a competence that

tends to come from strong evolutionary and process innovation, are also highly valued.

Given its competency in evolutionary and process innovations, Taiwan has established

itself as the third-largest supplier of information technology products. It produces a third


of the world’s laptop computers, and 15% of desktop personal computers for top brand

names like Dell, Compaq and IBM (Searl, 1998). The country is also the world’s largest

producer of scanners, keyboards and modems. Taiwan has undoubtedly proven itself as

having superb manufacturing capabilities despite its small size and population.

Singapore and Hong Kong are similar. They are both extremely competent in

electronics manufacturing and product improvement; large proportions of their industrial

output is made up of electronics products ranging from watches to computer components.

The patterns of the innovation processes in these Chinese populated countries is in a way

similar to that in Japan. They all place heavy emphases on seeking ways to produce

standardized technology products that are of higher quality and lower cost, as well as

improving the application of existing technologies in order to leverage their commercial

values. This similarity serves as support of the above analyses in which these countries

have been determined to be comparatively competent in evolutionary and process

innovations.


Conclusion

This study has examined the influence that culture places on a nation’s innovative

capabilities, and has predicted that the Chinese culture is adept in evolutionary and

process innovations while lacking competency with inventions and radical innovations.

Today’s China is suffering from an extremely low level of innovative activities,

possibly due to its innovation-inhibiting political environment. On the other hand,

countries such as Hong Kong, Singapore, and Taiwan, that are populated mainly with the

Chinese have shown signs of increasing innovative capabilities. This shows that, with a

better structural environment, the Chinese are capable of being innovative.

The Chinese economy, though, has been under rapid development in recent years,

and still falls short of being able to implement a structure that promotes innovative

activities. Structural factors are essential for even a culturally innovative nation to be

innovative. China in the old days, with a prosperous society and an advanced economy,

untapped its cultural innovativeness and was the first to introduce the use of paper,

explosives, compasses, and silk. However, for many years, the structural environment in

China has inhibited these innovative activities. With the increased importance of

innovation, China, and its twelve billion people, certainly wants to become innovative

again, hopefully in the foreseeable future.


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