Cultural change and innovation performance

Major forces seem to have led to cultural background change in the form of incremental change or shock over the last three decades. The fact that certain cultural changes are occurring and that these changes are embodied in social behavior and thus in economic decisions raises the question of whether cultural change affects innovation performance. The relationship between cultural change and innovation performance was explored using an unbalanced panel of decade-level data for 34 OECD countries between 1980 and 2010. Analysis using fixed-effects estimation, different intercepts across countries, and decade time dummies shows that the overall measure of culture is positively related to innovation. Furthermore, exploring the effect of the dimensions of civic culture on innovation shows that the positive effect of culture on innovation stems from the positive effect of trust, control, work ethic and honesty, while obedience negatively affects innovation.