The Relationship
between Organizational
Innovation and New
Product Adoption
By
Michael Aubry
Why is it important to understand
this relationship?
It is important to understand the influence of
culture on organizational innovation from a
global context. It is still difficult to understand
the overall impact from an individualistic and a
collectivistic perspective. To make a better
determination of cultural influence, outside
representations will be used to create a
conceptual model that will demonstrate
applicability to the field of international business.
Culture


Culture is “an inclusive system of communications
which incorporates biological and technical behavior of
human beings with their verbal and nonverbal systems
of expressive behavior (Herbig and Dunphy, 1998).
It will be vital for this comparative study to determine
whether or not prescribed characteristics are accurate,
especially “if the behavior, ideas, and material apparatus
which must accompany the use of innovation can affect
improvements along lines already laid down in culture”
Herbig and Dunphy (1998), which could lead to the
possibility of the acceptance of products or services
that are considered “innovationary”.
The Four Dimensions

Power Distance Index – power distance
represents the acceptance of inequality, and
that “it is endorsed by the followers as much as
the leaders”. This is an inherent quality for
most societies as inequality amongst different
social classes is widely accepted throughout the
world.
The Four Dimensions

Individualism/Collectivism – individualistic
societies do not expect group cohesiveness and
integration. Collectivistic societies are strongly
integrated and are differentiated by strong
familial loyalties.
The Four Dimensions

Masculinity/Femininity – this refers to gender
roles within a society. This could also be
considered the “the extent to which the goals
of men dominate those of women” (Harvey,
1997).
The Four Dimensions

Uncertainty avoidance – this is considered the
ability of a society to tolerate risk and
uncertainty. According to Hofstede (19672003) “it indicates to what extent a culture
programs its members to feel either
uncomfortable or comfortable in unstructured
situations”.
Organizational Innovation


Organizational innovation is “an environment, a
culture – almost spiritual force – that exists in a
company” and drives value creation” (Buckler,
1997). This is an essential definition that can be
further analyzed and segmented into several
different components.
Organizational culture is a significant driver of
innovation and can vary differently across
cultures.
Organizational Innovation

According to Goffee and Jones (1998) “organizational
culture can be segmented into four dimensions based
upon two initial categories”. These inclusive categories
include sociability, which is defined as “friendliness in
relationships between people in an organization; and
solidarity, which carries a standard definition of “the
ability of people to pursue shared goals efficiently and
effectively for the larger good of the organization
without much regard for the impact on individuals and
relationships between them” (Goffee and Jones, 1998).
Organizational Innovation

1.
2.
3.
4.
The Four Dimensions of Organizational Culture:
Communal - a communal organization is highly sociable, and
“is typical in small organizations”
Fragmented - A fragmented organization is significantly
different, due it its’ lack of solidarity, and governance
Networked - A networked culture consists of an organization
that has “frequent water-cooler conversations, and colleagues
going to lunch together and spending time in activities and
social gatherings outside the workplace (Rashid and Zabid,
2003)
Mercenary - Mercenary cultures are focused on strategy and
effectives processes for “winning in the marketplace (Rashid
and Zabid, 2003
Organizational Innovation


Organizational climate is a significant function
that may also impact a firm’s ability to innovate.
According to Ahmed (1998), “climate is defined
as “understanding and perceptions of the
environment act as guiding mechanisms, the
practices and procedures that come to define
these perceptions are labeled as climate”.
Organizational Innovation

1.
2.
3.
4.
Organizational Climate can be segmented into four
dimensions:
Nature of Interpersonal Relationships – this is a prime
determinant of trust, and differs across cultural contexts
Nature of Hierarchy – this dimension is concerned with
bureaucratic structures and how they are affected by individual
or collectivistic relationships
Nature of Work – work duties or functions can significantly
impact employee/employer relationships
Focus of Support and Rewards – Certain cultures are
intrinsically motivated, while others rely on extrinsic benefits.
Organizational Innovation

Significant research has focused on organizational
culture, and has found various characteristics, including
the ability of culture to impact idea acceptance of new
product inquisitiveness. Furthermore, according to
Barnett (1953) he postulates a positive correlation
between the individualism of society and its innovative
potential; the greater the freedom of the individual to
explore and express opinions, the greater the likelihood
of new ideas coming into being.
Product Adoption



To determine the eventual relationship between
organizations and consumers it is important to
understand the product adoption process.
Prior research conducted by Hirschman (1980) has
found the “conceptualization of innovativeness centers
on the consumers desires to obtain information about
innovation”. Furthermore, “innovativeness is equated
with the inherent novelty seeking and is defined as the
desire to seek out the new and different” (Hirschman,
1980).
The product adoption process is continuous model that
begins with the initial consumer or “innovator”.
Product Adoption





The product adoption process is continuous model that begins with
the initial consumer or “innovator”.
The next phase of the product adoption process includes the early
adopters. They enjoy being first in the consumption process, and are
valued opinion leaders within the community.
The third phase of the product adoption process includes individuals
who comprise the early majority. These individuals analyze the
purchasing process of the “innovators” and the early majority to
determine whether or not they might experience cognitive dissonance.
The fourth phase of the product adoption process consists of
individuals who prefer to adopt a product within an inclusive group
known as the late majority. They have a tendency to be slow with
adopting new products due to misinformation or being lackadaisical
This process ends with the laggards who lack timeliness, and may not
adopt the product due to being sufficiently
Product Adoption

In the overall makeup of this model it is
important to understand that “adopters other
than the innovators are influenced in their
adoption of new products and ideas by the
pressures of the social system that may take the
form of interpersonal communications and
observations, therefore, these influences are
coming from sources external to the individual”
(Singh, 2005).
Product Adoption


Although product adoption is comprised of
nefarious phases, it is important to understand
what leads to the overall formulation of the
consumer decision making process.
There is a component within the adoption
process that is exemplified by external sensemaking abilities.
Product Adoption


This overall sensemaking ability has been defined as
“the cyclical process of taking action, extracting
information from stimuli resulting from that action,
and incorporating information and stimuli from that
action into the mental frameworks that guide further
action” (Seligman, 2006).
Sensemaking is an essential component of the adoption
process when analyzing innovationary products and
ideas
Product Adoption

The overall framework
from the consumer
adoption and
sensemaking process is
provided by Seligman
(2006):
The Relationship between Culture
and Product Consumption

Although Hofstede’s model is from an
organizational perspective, this comparative
analysis will try to compare it cross-culturally
using statistical analyses that have been used in
prior research. To make a broad generalization
reference will be made to a study conducted by
Singh (2005) where the cultural differences in,
and influences on consumers propensity to
adopt innovations will be viewed from a
statistical perspective.
Hypotheses

In Singh’s research, he generated 15 hypotheses
that were related to the Hofestedian methods
previously discussed (this study will only look at
the hypotheses that are relevant to the
aforementioned content). It is important to list
these hypotheses to understand the implications
that could significantly impact the meaning of
this comparative study Singh (2005).
Hypotheses








H1 - “Consumers from more individualistic cultures are going to display a
relatively higher propensity to innovate as compared with those from less
individualistic ones”.
H2 - “Consumers from a more collectivist society are going to display a
higher propensity to imitate as compared with those from a less collectivistic
one”.
H3 - “Consumers in smaller power distance cultures will display a higher
propensity to innovate than those in large power distance cultures”.
H4 - “Consumers in larger power distance cultures will display a higher
propensity to imitate than those in smaller power distance cultures”.
H5 - “Consumers in weaker uncertainty avoidance cultures will display a
higher propensity to innovate than those in large power distance cultures”.
H6 - “Consumers in stronger uncertainty avoidance cultures will display a
higher propensity to imitate than those in smaller power distance cultures”.
H7 - “Consumers in more masculine cultures will display a higher propensity
to innovate than those in large power distance cultures”.
H8 - “Consumers in more feminine cultures will display a higher propensity
to imitate than those in smaller power distance cultures”.
Analysis
In this study the two countries analyzed were France and
Germany. Based upon earlier data generated be Hofestede it was
determined that France was more individualistic, higher on
power distance, higher on uncertainty avoidance, and they were
lower on masculinity/femininity. Statistically, the Cronbach
Alpha was just under the desired .70 (this could have been due to
the number of items on the scale), however it was determined
that the scales were satisfactory. Furthermore, an ANOVA was
used with the country categorized as the independent variable,
and consumer innovativeness and the propensity to imitate as the
dependent variables.
Results




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


H1 – Not supported due to lack of statistical significance
H2 – Not supported due to lack of statistical significance
H3 – Supported due to statistical significance
H4 – Not supported due to lack of statistical significance
H5 – Supported due to statistical significance
H6 – Not supported due to lack of statistical significance
H7 – Supported due to statistical significance
H8 – Not supported due to lack of statistical significance
Results


It is apparent that consumer innovation is related to
many of the Hofstedian components, except for
individualism.
It is interesting to see that an individualistic culture
would not have a higher propensity to innovate
considering there is conflicting evidence that is thought
to exist, particularly Shane (1992), who found that “the
psychological characteristics of independence,
achievement, and nonconformity, all of which have
been found to encourage innovation, are more
common in individualistic societies”.
Results

Based upon this findings it would be possible to
make a generalization that products that are
introduced in cultures that are defined by “weak
uncertainty avoidance, small power distance, low
uncertainty avoidance would have little trouble
in being accepted as our study has shown these
characteristics to be conducive to adoption of
things novel” (Singh, 2005).
The Relationship between Culture
and Organizational Innovation

Although there is a strong relationship between
innovative organizations and innovative
consumers it is important to determine the
cultural relationship impacting firms
implementing a transnational or global strategy.
It may be necessary to refer back to the four
dimensions mentioned earlier in the comparative
analysis to further understand the relationship
between cultural variations and organizational
innovation.
The Relationship between Culture
and Organizational Innovation



Conducting a comparison between Japanese and
American firms, there are many differences, particularly
the importance of the collective over the needs of the
individual.
In Japan it is Herbig and Dunphy (1998) it is important
to minimize differences, preserve harmony, and
reinforce group loyalty.
The American culture has significant differences that
has led to beliefs in “self-orientation”, a primal and
individualist need to survive, and decisions that are
based upon competitive or argumentative analysis.
The Relationship between Culture
and Organizational Innovation

In studies conducted on Japanese and American firms,
it has been found that organizations in Japan have
placed a significant emphasis on collectivistic
manufacturing processes, including quality control and
mass production (Herbig and Dunphy, 1998).
Although these have been beneficial for strategic
growth of Japanese firms, it has “inhibited independent
entrepreneurship and individual creativity, resulting in a
detrimental effect upon radical innovations and
inventions” (Herbig and Dunphy, 1998).
The Relationship between Culture
and Organizational Innovation


Conclusively, it is apparent that national culture can either have a
positive or negative influence on the overall ability of a firm to
follow an entrepreneurial or innovative path. According to
Herbig and Dunphy (1998) cultures valuing creativity will
continue to have a greater number of innovation, and “those
countries that reward technical ability and higher education will
prosper in innovative pursuits”
Furthermore, the societal level of innovation is “directly
proportional to the encouragement and status given to
entrepreneurial efforts within the culture and to the emphasis
given it relative to the survival of the culture” (Herbig and
Dunphy, 1998).
Diffusion


In order to forge a relationship between innovationary
organizations and consumers that adopt these products,
it will be important to determine the functionary
measure that brings these two entities together.
Diffusion, according to Rogers (1976) is “the process
by which a product innovation is communicated and
accepted through certain channels among the members
of a social system over time”.
Diffusion

The diffusionary process
can be further illustrated
by Frambach (1993):
Diffusion

This study has analyzed the various facets of
organizational innovation, however, it is
important to understand how these
organizations diffuse their product to the end
adopter or consumer.
Diffusion

1.
2.
3.
4.
5.
According to Rogers (1983), there are “five characteristics of an
innovation that are generalized in their relation to the degree of
adoption of that innovation in a social system.
Advantage of innovation – this is considered the degree to which an
innovation is superior in perceptive terms
Compatibility of an innovation – this is considered the “degree to
which an innovation is perceived as consistent with current values,
past experiences, and the needs of potential adopters”
Complexity of an innovation – the is the perception of the overall
difficulty related to the specific use of a product or service
Trialability of an innovation – can an innovation be tested or sample
Observability of an innovation – this is nearly related to the
complexity of an innovation, but the definition is more concerned
with the overall observation of an innovation
Diffusion

1.
2.
3.
4.
It is important to explore the attributes that comprise the nature of products and
services that experience successful diffusion based upon individualized strategies of
the firm. These attributes are based upon four key determinants devised by Lilien
and Yoon (1989)
Organizational factors and strategic processes – these factors are controlled by
leadership within an organization, and are developed using participatory actions by
those within the upper echelons of the firm
Production and R&D factors – these factors affect product superiority and the
overall complexity and the “uniqueness” of a product or service. It is important to
have a well documented structure that facilitates managerial involvement in this
process
Marketing factors – marketing consists of an interactionary relationship between the
producer and the consumer. These factors have different effectiveness levels, and
will be further analyzed in a different section of this analysis
Market and environmental factors – these factors include competition within the
market, which is believe to cause “a high level of competition among firms in a
certain industry that may enlarge the pressure on an individual firm to adopt a
certain innovation” (Frambach, 1993).
Interactivity of Buyers and Suppliers

The relationship between buyers and suppliers is
essential for continuity in the diffusion process. Within
this overall paradigm it is important to determine the
validity of this relationship by analyzing a framework by
Frambach (1993), that states “the speed and rate of
adoption of innovation by organizations will be
positively related to the extent that the supplier firm has
interacted with other parties (especially potential
adopters of the innovation) more intensively during the
innovation process”.
Interactivity of Buyers and Suppliers

One of the biggest proponents of the diffusion
process is the media – according to Rogers
(1995) “mass-media channels are more effective
in creating knowledge of innovations, whereas
interpersonal channels are more effective in
forming and changing attitudes toward the new
idea, and thus influencing the decision to adopt
or reject a new idea.
Interactivity of Buyers and Sellers

As the media becomes more involved in the
diffusion process it will lead to more product or
service awareness that has been proposed to
affect overall efficiency related to the
“communication process during each stage in
the new product sales cycle” (Tellefesen and
Takada, 1999).
Interactivity of Buyers and Sellers

As this awareness increases it is important for a
firm to devise strategy that is conducive to an
effective relationship between the producer and
the consumer. According to Forlani and
Parthasarathy (2003), factors including income,
education, the availability of mass media, and
cultural factors will be inclusive within the
overall diffusion pattern
Interactivity of Buyers and Sellers

This pattern can be further explained by the media availability and economic
framework provided by Forlani and Parthasarathy (2003):

As the mass media becomes more ingrained or available in a society it diffusion
becomes rapidly progressive. More importantly a greater mass media presences
“will feature a higher proportions of earlier adopter and (other factors remaining
constant) will move through the earlier stages of the adoption process faster than
markets with low mass media presence” (Forlani and Parthasarathy, 2003).
Interactivity of Buyers and Sellers

In a cross-continent analysis it is apparent that
media development is significant in many Asian
and Western countries when compared to Africa,
which suggests that “Asian countries are likely to
move through the preliminary stages of the
adoption process much faster than their African
counterparts” (Forlani and Parthasarathy, 2003).
Conclusion

The purpose of this study is to show the
possible relationship that exists between
organizational innovation and new product
adoption. From a multinational perspective it
could be deduced that international marketers
studying product diffusion would need to
conduct appropriate analyses before introducing
new products and services into an unexplored
market.
Conclusion
It would seem that innovationary organizations
and consumers have developed characteristics
that would be termed “individualistic”. Some of
the research presented in this study would seem
to be contradictory; particularly one rejected
hypothesis that stated “consumers from more
individualistic cultures are going to display a
relatively higher propensity to innovate as
compared with those from less individualistic
ones”.
Conclusion

It was mentioned in other research that “the
psychological characteristics of independence,
achievement, and nonconformity, all of which have
been found to encourage innovation, are more
common in individualistic societies”. It is possible that
these findings are not representative of an entire
country, and it is possible that this information could be
inconclusive due to France being an individualistic
country (though not as significant as Germany).
Conclusion


This study did provide important information for organizational
firms looking at new markets and opportunities. Creating a
proper organizational culture and climate that uses various media
induced marketing strategies will induce product adoption from
cultures that would be considered to have weak uncertainty
avoidance, low power distance, and weak uncertainty avoidance.
Conclusively, Aubry (2007) “further research is definitely needed
in this field to determine the changes that have occurred in
culture, and how these changes have impacted the overall social
structure of organizations that could lead to greater differences
in the eventual diffusion and adoption process of innovationary
concepts, services, and ideas”.