Organizational Culture as a Determinant of Innovation Capability in Knowledge-Based Firms

Abstract

Innovation capability has been identified as a decisive factor of competitive advantage in knowledge-based firms where intangible assets like; knowledge, skills, and creativity are critical determinants of competitive advantage. Although its significance, the role of organizational culture in the formation of innovation capability has not been fully understood, especially in dynamic and knowledge-intended environment. The proposed study seeks to analyze the level at which various aspects of organizational culture can determine the innovation ability of knowledge-based organizations. The research design adopted was a quantitative research design based on the survey data gathered on the employees of a variety of selected knowledge-based organizations. The statistical techniques such as reliability analysis and regression modeling were used to analyze the data to test the hypotheses proposed. The results indicate that adhocracy and clan cultures strongly positively affect the capability of innovation, and there exists a negative relationship between hierarchical culture and the given capability. The moderate positive effect is observed by the market culture. The research is an addition to the existing body of literature as it presents empirical evidence of the culture-innovation connection and provides practical implications to the study by managers who need to enhance their organizational culture-innovation relationship to boost productivity and drive organizational change.