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MAKALELER

INNOVATION CHALLENGES FOR TURKISH COMPANIES:

"EFFECTS OF CULTURAL DIMENSIONS ON INNOVATION PERFORMANCE"

Tahsin AZNAVULOĞLU

To accomplish the task of surviving and prospering in a global and competitive century where customer needs change rapidly; the managers/decision makers of organizations must develop a new philosophy or a new future-oriented mindset, a new way of looking at the world around them and the role of their organizations in it and acquire new managerial skills consisting of excellence, innovation and anticipation. Excellence gives organizations a competitive edge. Innovation is the way the organization gains a competitive edge. And anticipation provides the manager with information that allows the organization to be in the right place at the right time with excellent innovative products or services.

Innovation is the process of taking an original and creative idea and converting it into measurable business value to an organization. To create a lot of ideas is not difficult but the difficulty lies in turning ideas into processes and products. Therefore; general approach for innovation by brainstorming and trial-and-error method is not appropriate in this era. In addition; creativity is thought to be depended on talent and abilities of employees. Many researchers think that as employees increase their knowledge and experiences in time, they lose their creative capabilities. Furthermore; innovation process is perceived as unpredictable, unrepeatable and indefinite which is closely related to uncertainty avoidance, i.e. a Hofstede’s cultural dimension that has significant impact on innovation. In countries having high uncertainty avoidance index such as Turkey, companies resist to implement innovation. In this article, the effects of cultural dimensions on innovation performance of a country are explained and inferences for Turkey’s innovation performance are concluded up.

First of all; it is very interesting to summarize the results of a brainstorming session made by Bavois Forum in 2002 called “Success Factors and Ba rriers to Innovation in Switzerland”. Barrier to innovation caused by cultural and social issues (Cultural issue, 37.4%), barrier to innovation caused by political, policy, legal and regulatory issues (Political issue, 24%), barrier to innovation caused by the educational system (Educational issue, 29.9%), barrier to innovation caused by Switzerland's small size relative to other countries (size issue, 5%) and success factor that promotes innovation (success factors 3.7%) are thought to have influences on innovation with corresponding percentage.

In case of changes to the legal, regulatory and educational systems; political and educational issues are tangible that can be directly overcome. Hence almost half of the issues (54%) are tangible. However, cultural and social issues are intangible, since they cannot be directly overcome by decree. Change in this instance requires changes to the values and morals, which collectively make up the culture. Such change is by nature difficult to achieve. Having a small population and a small domestic market in Switzerland, size issues are immutable; i.e. change is not possible.

Cultural issues consist of risk aversion (10.3%), public complacency (10.3%), thought of “innovation is not highly valued” (9.7%), closed ne tworks (6.5%), and provincialism (0.6%). Since cultural issues contribute an important percentage, it is necessary to understand cultural dimensions and their effects on innovation.

Power distance refers to the degree of inequality that exists - and is accepted - among people with and without power. A high PD score indicates that society accepts an unequal distribution of power and people understand "their place" in the system. Low PD means that power is shared and well dispersed. It also means that society members view themselves as equals.

Individualism (IDV) refers to the strength of the ties people have to others within the community. A high IDV score indicates a loose connection with people. In countries with a high IDV score there is a lack of interpersonal connection and little sharing of responsibility, beyond family and perhaps a few close friends. A society with a low IDV score would have strong group cohesion, and there would be a large amount of loyalty and respect for members of the group. The group itself is also larger and people take more responsibility for each other's well being.

Masculinity (MAS) refers to how much a society sticks with, and values, traditional male and female roles. High MAS scores are found in countries where men are expected to be tough, to be the provider, to be assertive and to be strong. If women work outside the home, they have separate professions from men. Low MAS scores do not reverse the gender roles. In a low MAS society, the roles are simply blurred. You see women and men working together equally across many professions. Men are allowed to be sensitive and women can work hard for professional success.

Uncertainty Avoidance Index (UAI) relates to the degree of anxiety society members feel when in uncertain or unknown situations. High UAI-scoring nations try to avoid ambiguous situations whenever possible. They are governed by rules and order and they seek a collective "truth". Low UAI scores indicate the society enjoys novel events and values differences. There are very few rules and people are encouraged to discover their own truth.

Long Term Orientation (LTO) refers to how much society values long-standing - as opposed to short term - traditions and values. This is the fifth dimension that Hofstede added in the 1990s after finding that Asian countries with a strong link to Confucian philosophy acted differently from western cultures. In countries with a high LTO score, delivering on social obligations and avoiding "loss of face" are considered very important.

Three of the dimensions of culture identified by Hofstede; uncertainty avoidance, individualism, and power distance are pertinent to the issue of innovation by many researchers such as S. Venkataraman, James B. Shaw, Richard C. Hoffman and etc. For example, individualism-collectivism has implications for the kind of choices made in the area of rewarding and compensating innovation and innovation participants; uncertainty avoidance has implications for the nature of the innovations pursued-exploratory versus exploitative, high risk versus low risk, radical versus incremental; power distance has implications for the

Organizational specialization often creates a need for a champion to bring together people of a diverse background to work together on an innovation. The national cultural value of individualism influences preferences for how champions should create this innovation group. We argue that people in collectivist cultures are more likely than people in individualistic cultures to prefer appeals for cross-functional support for the innovation effort. In collectivist cultures, long tenure in organizations, intense employee socialization, organizational commitment to employees and their welfare and continual job rotation encourage a degree of loyalty to the organization often higher than that found in individualistic cultures. These policies create a sense of commitment to the organization that makes people in collectivistic cultures more likely than people in individualistic cultures to prefer a champion who appeals for cross-functional support for the innovation across parts of the organization. This argument leads to the first hypothesis: The greater the collectivism of a society, the more people will prefer champions to make cross-functional appeals for support of the innovation effort.

People in high power distant societies tend to adhere more rigidly to organizational hierarchy, to centralize decision making and to disbelieve in participative approaches to management than do people in low power distant societies. Therefore, we argue that people in high power distant cultures are more likely than people in low power distant cultures to prefer champions to work closely with those in authority to approve innovative activities before work is conducted on them. By contrast, in low power distant societies, people prefer champions to adopt participative approaches to management and to create widespread support for an innovation before formal attention by those in authority. This support enables the participants to convince the decision makers that there is broad-based support in the organization for the innovation. The differences between high and low power distant cultures lead us to the following hypothesis about championing behavior: The higher the power distance of a society, the more people in it prefer champions to gather support for the innovation among those in authority before beginning work on an innovation.

People in uncertainty accepting societies are more accepting of new approaches to problem solving. They are also more tolerant of non-conformity to social norms. Therefore, we argue that the more uncertainty accepting a society, the more people will prefer a champion to violate organizational rules, norms and procedures to overcome inertia to new ideas. By contrast, in uncertainty avoiding societies, people will prefer champions to adapt the innovation to the norms and rules of the organization or to alter the rules of the organization to accept the innovation. The differences between uncertainty avoiding and uncertainty accepting cultures lead us to the following hypothesis about championing behavior: The higher the uncertainty avoidance of a society, the more people in the society prefer to ensure that champions work within the organization’s rules and standard operating procedures to develop the innovation.

According to Innovation Scorecards done by Boston Consulting Group in 2009; Singapore (2.45), South Korea (2.26) and Switzerland (2.23) are the innovation leaders in the world. Hong Kong (1.88), Ireland (1.88), Finland (1.87), United States (1.80), Japan (1.79), Sweden (1.64), Denmark (1.60) and Netherlands (1.55) are among top innovator countries. Turkey has an innovation performance of -0.21 according to the survey, which means that Turkey’s