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    Cultural Approaches to Innovation


    © International Trade Centre, International Trade Forum - Issue 1/2001 

    Test cultural compatibility by providing services to foreign firms that are operating in your country.

    The single most common reason for export failure is inattention to cultural factors, a maxim frequently repeated in international business literature. People choose service providers and strategic business partners with whom they feel at ease, and this comfort level is dictated initially by cultural factors. In over half the process innovations reported to ITC by services firms from developing and transition economies, cultural adaptation was cited as 'important'.

    National cultures are numerous, and subcultures are even more so. Increased travel has resulted in a large group of people socialized in more than one culture, and widespread television access gives exposure to different cultural values.

    To be sensitive to these factors, it is useful to have a structure for understanding cultural differences. Below are ten variables which affect cultures and subcultures, and can serve as a framework for reflection.

    Communications style. The degree to which people speak their mind, rather than imply what they mean.

    Activities focus. The relative emphasis on strengthening interpersonal relationships as opposed to completing tasks efficiently.

    Supervisory relations. The extent to which a supervisor takes responsibility for a subordinate.

    Feedback style. How criticism in the organization is received and provided - openly and publicly, or privately and discreetly.

    Degree of control. The extent to which people believe that they can influence their own destiny or change their environment.

    Time orientation. The extent to which people are focused towards the past (tradition) or the future (unknown).

    Technology use. The degree to which people value the use of (information) technologies to expedite services.

    Power distance. The extent to which roles are formalized and differentiated from each other, with one extreme being hierarchical and the other being egalitarian.

    Risk aversion. The degree of comfort with risk taking (with risk avoiding being the other extreme).

    Individualism. The balance between individual preferences and collective or group concerns.

    Differences in cultural values have an impact on both customers and employees of service firms. While cuttural values may become conscious as one moves from culture to culture and hence placed in perspective as culturally relative, they never entirely disappear. Thus, for example, a person raised to believe that hospitality is an overriding obligation will have difficulty dismissing social niceties for the sake of efficiency.


    Strategies to encourage innovation 


    Cultures differ in their readiness to embrace change. In some cultures, risk-taking is valued and "new is better". Children are trained from an early age to investigate alternative approaches and to pose the question "Why not?" In other cultures, training focuses on incorporating and exhibiting traditional values and approaches, often without question. Resistance to innovation may be more pronounced. Traditional cultures, while initially difficult to enter, can offer excellent export opportunities if local business and community services are still relatively underdeveloped. Three strategies that can be successful are discussed below.

    Extend access to basic services. Most governments are challenged to ensure that people living in rural or remote areas of the country receive quality services. For example, innovative tele-health services, such as specialist consultations by tele-phone or on the Internet, may be welcome in a remote community that has no local medical care facilities, but may be resisted in urban areas that have a well-developed in-person health care delivery system.

    Use an incremental, rather than a breakthrough, innovation strategy. The introduction of new business support ser-vices can be more successful if a sense of being comfortable with new information technologies is developed. For example, in an environment where companies still have little or no computer facilities, an office support service could begin by offering basic word-processing services along with storage of the company's electronic files. Gradually other services, such as document scanning and storage, Internet research and e-mail could be added.

    Select a delivery method that minimizes cultural reluctance. Sometimes only one aspect of the service provision is linked to cultural factors, and often it is not a critical feature. For example, most frequent-flyer membership lounges in North American airports no longer announce flight departures so as not to interrupt business meetings in progress; however, in economies where personal assistance is expected, making flight announcements is typically the norm.


    Emphasize benefits 

    Willingness to innovate is more complicated than just being open to taking risks. Since customers are in general engaged at some level in the service delivery process, innovations pose an effort cost for customers in the form of having to learn a new service or service delivery system. The perceived enhancement in benefits received needs to be great enough to offset this cost.

    Test cultural compatibility 

    Cultures vary in the way people are socialized to make decisions. In individualistic cultures, people generally scan a range of information sources (including self-service on-line services) in addition to consulting people they respect in order to decide whether or not an innovation is likely to benefit them. For those from more collective cultures, the decision-making process is more likely to begin with consulting respected and trusted persons, and may or may not include consideration of more impersonal sources of information. In addition, those from collective cultures that value relationships more than efficient task completion are likely to try an innovation simply because it is offered by a service provider to whom they are loyal.

    You can often test cultural compatibility by providing services to foreign firms from your target market that are operating in your country. Many services firms forget that selling to foreigners in their home markets is an export (Mode 2, consumption abroad, according to the General Agreement on Trade in Services). Not only are such sales easier to manage than service delivery abroad, but they can also provide your firm with an opportunity to learn about cultural differences in a context where your customer may be more understanding of your cultural assumptions.


    Culture: relevance to services exporters 

    Our cultural values provide an unconscious world view into which we are socialized and which we use to socialize others. We learn this world view at a very early age, before we acquire linguistic skills. It guides our reflexive behaviour by providing us with guidelines on how to respond in a wide range of situations - how formal to be, how close to stand to someone, what physical contact is appropriate, how much eye contact to maintain, how to demonstrate respect, and so forth. Because of these unconscious internalized guidelines, we are able to live much of our lives without having to make continuous, conscious decisions about how to act. To act appropriately in a new culture, however, we have to ignore our natural reflexes and consciously learn new behaviours.

    The ability of staff to become aware of, and skilled at, culturally appropriate responses will determine how successfully a service firm can introduce service innovations into an export market.


    Innovation, culture and technology 

    A "behind-the-scenes" look at photos in this magazine shows another example of service innovation. In just a few years, technology has revolutionized competition among photo service providers. Web sites with search facilities, and thematic photo CD-ROMs now make it easier for clients to find and use photos. As a result, all of the commercial photos in this magazine now come from digital sources, saving time and money in searching through hundreds of slides or photos sent by mail. One photo databank pioneer has become a leader in export markets through its emphasis on innovation: it masters technology effectively to work with clients at a distance (through easily searchable, thematic CDs and Internet archives, backed up by multilingual reference books) and has re-adjusted photo contents (such as for maps, types of individuals and settings) to suit an international audience.


    Assessing cultural differences 

    For each pair of items below, check the most appropriate response first for your own firm's culture and then for the culture of your target market.

    a) Everyone should have an equal voice in decisions.

    b) Managers can make better decisions than support staff.

    a) Independent thinking is more important than consensus.

    b) Consensus is more important than independent thinking

    a) Staff should be free to experiment as much as possible.

    b) Staff should be closely supervised to reinforce learning.

    a) The employees' first responsibility is to their own well-being.

    b) The employees' first responsibility is to the company's success.

    a) Autonomy is more important than job security.

    b) Job security is more important than autonomy.

    a) Accurate feedback is essential, even if it is embarrassing.

    b) Allowing others to save face publicly is essential.

    a) Individual decisions are better than group decisions.

    b) Group decisions are better than individual decisions.

    a) Rules are made to be broken.

    b) Rules are made to be kept.

    a) Profitable business depends on working efficiently.

    b) Profitable business depends on establishing personal rapport.

    a) Individual differences are expected and accepted.

    b) Individuals are expected to conform to group norms.

    a) Ambiguous situations are intriguing and to be welcomed.

    b) Ambiguous situations are unsettling and to be avoided.

    a) Traditions are to be questioned.

    b) Traditions are to be respected and followed.

    a) People should follow their own intuition.

    b) People should obey religious authorities.

    a) The most important traits are self-expression and creativity.

    b) The most important traits are politeness and respect.

    Total "a" items checked: ____ (Firm) ____ (Target market)

    Total "b" items checked: ____ (Firm) ____ (Target market)


    Scoring and interpretation: 

    1. Count the number of times that your firm's responses differ from those of your target. (Scoring: 1-2 = very similar; 3-5 = moderately similar; 6+ = not very similar.) If your firm and your target are very similar, you should find the cultural aspects of export innovation easy to manage.

    2. Note the number of "a" or "b" responses that you checked for each column. The "a" responses reflect an egalitarian cultural orientation to efficient task completion. The "b" responses indicate a hierarchical cultural orientation to interpersonal relationships. If you have selected predominantly "a" issues in both columns, then you are likely to be able to focus on innovations enhanced by information technology that provide greater efficiency. If you have selected predominantly "b" issues in both columns, then you will benefit by extrapolating from how you innovate successfully in your own culture to possible innovations for your target market.

    3. Note the items on which your choices in the two columns differ. These are the issues that you are likely to find the most challenging to manage.