How National Culture and Policy Impact Innovation Strategies

How National Culture and Policy Impact Innovation Strategies
By: Dr. Bethany Valente

National cultures and policies influence innovation rates, approaches to innovation, and funding. Here’s what innovation leaders need to know.

People often incorrectly interchange national culture and national policy. Here’s how they’re different: National culture is the norms, behaviors, beliefs, customs, and values shared by the population of a nation. It is morally neutral, as societies themselves will develop a common language, concepts of time and space, views of human nature, and more. National policy, however, is a broad course of action designed to achieve national goals. Why is it important to understand the two? The characteristics of a nation’s culture and policies can make or break the innovation pace of the nation’s companies.

National culture influences national policies, both of which affect the national innovation system (NIS) — the networks in public and private sectors that introduce new technologies and spur economic development. The United States, China, India, Russia, and Brazil are a few countries that rely on NIS. These systems yield economic benefits related to growth, jobs, and competitive advantage.

Because national culture influences learning processes, knowledge creation, and knowledge transfer within a marketplace, NIS thrives if the national culture is conducive to growth. The opposite is also true. In my research, I’ve found that the Japanese government is siloed by various ministries that operate fairly independently of one another. This often creates roadblocks to collaboration and innovation.

Understanding the difference between national culture and national policy thus increases awareness of how each relates to and impacts NIS. Once nations examine each concept, they can develop more collaborative systems that foster better innovation.

Us Versus Them

National cultures and policies both influence innovation rates, approaches to innovation, and funding. A culture that promotes collaboration expedites innovation, as companies can solve problems in the marketplace with robust knowledge-sharing. A siloed culture, however, slows innovation by not sharing solutions.

An example of a company in an individualist-based nation that effectively leveraged national innovation systems and related national policies is Pfizer and the COVID-19 vaccine in the United States. Their CEO issued a targeted five-point plan close to the Operation Warp Speed policy announcements. The plan encompassed all members of the innovation ecosystem, which included government agencies and leveraging national policies that opened funding available for the vaccine. The result was Pfizer being first to market with a COVID-19 vaccine.

On the other hand, an example of a collectivist-based nation that has issues with entering the global pharmaceutical marketplace as sustained market leaders is Japan. In my research, multiple participants cited how the government structure in Japan — which facilitates the national innovation system — was too siloed and facilitated collaborations and policies for basic science but struggled with creating more collaborative policies to gain applied scientific breakthroughs. However, participants did acknowledge the Japanese government saw the flaw in the system and did develop some incremental policies to try to move toward a more open national innovation system that encouraged collaborations for applied sciences. It’s not the actual national culture holding back the NIS system; it is the actual ministry government structure that appeared to be creating roadblocks of a more competitive global innovation system.

A final example of the impact of national culture on an innovation project comes from my original research findings. The U.S. and U.K. subsidiaries of the Japanese global biopharmaceutical firm found deal-breaking delays in the West due to the differences in Japanese negotiation styles. For example, participants explained when there were changes to a potential partnership deal, the Japanese headquarters had to come to a consensus from the organization’s bottom up to reach an agreement or a counteroffer, which took substantial time compared to the social norms of the Western and European cultures. The result was the deals never closing or being awarded to firms that adapted to the cultural norms to secure the deal faster and a lost deal in the East.

Understanding the Differences

As you can see, understanding the national culture and policies a company falls under is crucial to understanding its pace of innovation. Here are three ways leaders can utilize this information to guide their innovation strategies and expansion plans:

1. Complete an assessment to uncover each cross-cultural team’s assumptions.

Conduct a training workshop that requires the cross-cultural team to strategize for an up-and-coming project. Keep each team’s culture siloed, but invite one outside member to visit each session to observe cultural differences. Have that person compare the other group’s process with their own culture’s strategy-setting process. Close the session with a compare-and-contrast report.

2. Clearly communicate the cultural assumptions of the innovation project.

Take the information from the assessment and clearly communicate it to the cross-cultural team at the beginning of the project. As the team moves through the process, add checkpoints to encourage communication and bring the subconscious cultural considerations to the forefront. Add the information to cross-cultural guidelines and enforce them with the social norms of the group.

3. Create and enforce communication expectations for cross-cultural teams.

Institute a common language for the team, a common expectation for time and space, and a general understanding of authority and collaboration within the team when embarking on a global innovation project. Also, make sure to communicate that cross-cultural communications and interactions are morally neutral. This will help the idea of national culture resonate with those involved.

National culture develops through several aforementioned elements of society, and it often informs national policy. Importantly, both impact NIS and innovation rates. The more organizations know about the relationship between national culture and national policy and their effects on innovation, the more they can grow.

About the Author

Dr. Bethany Valente is the founder and managing partner of Tempo7 LLC, an innovation strategy consulting firm that develops strategic initiatives and uncovers growth opportunities through the Open Innovation Opportunity Program. Tempo7 LLC helps biotechnology, pharmaceutical, CROs, and legal professionals to become industry leaders in today’s global, dynamic marketplace. She is currently co-authoring an academic article on the topic of national culture, national innovation systems, and open innovation strategy.

Featured image via Pixabay.

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