The effects of single-dominant organizational cultures on the innovativeness of a firm

Abstract

The culture of a firm influences its ability to be innovative. A firm's culture can be diagnosed to be either clan, adhocracy, market or hierarchy cultures. The objective of the paper is to examine how single-dominant cultures influence a firm's innovativeness. Based on the literature review, some hypotheses were formulated and tested using hierarchical regression analysis with data collected from 172 financial institutions. The results show that clan, adhocracy, and market cultures have a positive link with product and process innovations. The practical implication is that managers of commercial firms should develop adhocracy or market cultures if they are to gain a sustained competitive advantage. The theoretical contribution of this paper is that organizational cultures that are externally-oriented foster innovation in the workplace.