At the mercy of the gods? : an investigation into religiosity, culture and innovation at the national level

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At The Mercy Of The Gods?

An Investigation Into Religiosity, Culture And Innovation At

The National Level

Student name: Robert Payne

Student number: 10856838

Date of submission: 23rd_{June
2017}

Track: Entrepreneurship and Innovation Track 1st_{supervisor:
Dr.
Wietze
van
der
Aa}

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Statement of originality

This document is written by Robert Payne who declares to take full

responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The

Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Abstract

Despite the global prevalence of religion, its shifting national composition and its ability to affect believers’ behaviour, it has not been fully explored in the context of innovation and culture. The purpose of this investigation is to articulate and empirically test the relationships between national religiosity, national

innovation and national culture. This thesis addresses these relationships by articulating the theoretical mechanisms and empirical research that connect: (1) national religiosity and national innovation, (2) national culture and national innovation, and (3) national religiosity and national culture. It is proposed that national religiosity shares an inverse direct relationship with national

innovation. Furthermore, it is suggested that power distance shares a positive relationship with religiosity and a negative relationship with national

innovation, whereas, individualism shares a negative relationship with religiosity and a positive relationship with innovation. Furthermore, power distance and IDV were expected to partially mediate the relationship between national religiosity and national innovation. Cross-‐national research was

conducted using hierarchical regression analyses and Hayes PROCESS analysis to investigate the legitimacy of the proposed hypotheses. The results indicate that national religiosity is significantly negatively correlated with national

innovation. Furthermore, they also suggest that power distance is positively correlated with religiosity and is negatively correlated with national innovation, whereas, individualism is negatively correlated with religiosity and positively correlated with innovation. Finally, individualism was found to partially mediate the relationship between national religiosity and national innovation, whereas, power distance exhibited no mediation effect.

Keywords: innovation, religiosity, culture, Hofstede, Global Innovation Index

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Introduction

This thesis is dedicated to exploring the relationships between national religiosity, national culture and national innovation. As the corporate

competitive environment has become ever more chaotic, the interest in innovation has grown. Innovation is essential for corporations who hope to capitalise on technology, shifting consumer demands, changing markets and shifting structures (Baregheh, Rowley & Sambrook, 2009). Moreover, innovation is key to creating value and maintaining a competitive advantage in today’s volatile environment (Crossan & Apaydin, 2010). If organisations do not change the way they create and deliver value through innovation, they risk their survival and growth rates (Bessant, Lamming & Phillips, 2005).

Organisations have to address many internal and external factors in the pursuit of optimising their innovative capabilities (Hueske, Endrikat & Guenther, 2015). National culture is an external factor that corporations cannot control. However, culture has the propensity to impede or enhance innovation (Kaasa & Vadi, 2010). Therefore, culture can also be conceived as an external factor that corporations must consider if they intend to optimise their innovative

performance. Furthermore, national culture determines the culture of individuals within a society. This has implications for managing individuals within an organisation that contribute to innovation endeavours. Therefore, national culture can also be conceptualised as an internal factor that

organisations must address when optimising internal innovative efforts. Finally, national religiosity represents another external factor that corporations cannot control. However, it is a national characteristic that

corporations would be wise to consider and respect since religion is a significant factor in influencing people’s behaviour around the world. Islam, for example, calls upon Muslims to pray five times per day and Christians attend church once a week. Furthermore, levels of religiosity around the world are not stable. A report by Pew Research Center (2015) in the US found that between 2007 and 2014 the percentage of people describing themselves as religious fell 6 % and those affiliated to no religion rose by 7 %. Changes in the characteristics of society such as this could have significant consequences for national culture as well as individual, organisational and national innovation rates. Such a line of

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investigation could provide invaluable insight for organisations that hope to optimise any innovation-‐related capabilities.

Moderate amounts of literature have investigated the relationship between national culture and national innovation. However, despite the prevalence of religion across the world and the importance of religion to so many diverse nations’ culture, the relationship religion shares with culture and innovation remains considerably unexplored. This thesis adds to existing literature by: (1) investigating the unexplored relationship between national religiosity and national culture, (2) synthesising unconnected literature related to the relationships between national religiosity, national culture and national innovation, and finally (3) integrating these previously separated constructs into a unique testable conceptual framework. This thesis is important since the results have practical implications for managers and organisations that operate in religious national environments. From an academic point of view, it shall be interesting to investigate how the constructs of religiosity and innovation interact, since intuitively they appear to be incompatible. They are incompatible since innovation pushes the boundaries; it has taken us to places we never imagined possible. Religion, on the other hand, treasures the past, values tradition and often denounces scientific progress. It is expected this thesis shall set the foundation for further research investigating related components, whilst simultaneously providing invaluable insight for practitioners.

This thesis has three key aims:

• Investigate if national religiosity has an impact on national innovation

• Investigate whether national culture plays a key role in this relationship

• Discuss how the findings of this study are relevant for practitioners

This thesis aspires to articulate the nature of the relationships between: (1) religiosity and culture, (2) culture and innovation and (3) religiosity and innovation. Thus, the primary research question is:

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Furthermore, sub-‐questions have been formulated to further explore these relationships:

Is there a direct relationship between national religiosity and national innovation?

Does national religiosity have an effect on national culture? Does national culture have an effect on national innovation?

Does national culture mediate the relationship between national religiosity and national innovation?

The thesis will commence with a thorough literature review of all the relevant theory pertaining to the concepts of religion, culture and innovation, culminating in specific definitions of constructs used in this thesis. Next, a review of work concerning the linkages between religiosity-‐culture will be explored. Following this, a preliminary test is carried out to determine which variables would justify further elaboration and inclusion into the final conceptual

framework. Thereafter, literature related to the relationships between culture-‐ innovation and religiosity-‐innovation will be explored. Five hypotheses will subsequently be proposed that contribute to the final conceptual framework. Additionally, two hypotheses are then proposed to investigate the possible mediating effect of culture in the final conceptual framework. After this, an overview of the data and methodology used to empirically test the conceptual framework shall be defined. Finally, the results of the analyses will guide a discussion and conclusion that is framed in the context of the practical implications for practitioners.

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Literature Review

2.1 Concepts

The three central constructs that will be elaborated on in this section are culture, religiosity and innovation. As they are rather broad and used in many different areas of research, a clear definition and delineation is needed in order to avoid any ambiguity of their meanings and thereby interpretation of this thesis.

2.1.1 Religiosity

A difficult aspect of any study on religion or religiosity is the deficiency of a widely accepted definition (Guthrie et al., 1980). A definition could vary from the extent to which people believe in spirits to how often they go to a place of worship. Geertz (1966) succinctly defines religion as: “a system of symbols which acts to produce powerful, pervasive, and long-‐lasting moods and

motivations in men by formulating conceptions of a general order of existence and clothing these conceptions with such an aura of factuality that the moods and motivations seem uniquely realistic" (p. 182). This definition is preferred in the context of this thesis as it pertains to the aggregate national level of religion meaning how these “systems of symbols” (religions) produce powerful,

pervasive and “long-‐lasting moods” (impact culture) “in men” (in a population). Furthermore, this definition relates directly to culture insofar that people that relate to a certain national culture have a shared set of symbols (Steenkamp, 2001). This highlights the influence that religion has on culture, which is a central component of the thesis. The word religiosity refers to the strength of one’s religious feelings or beliefs. Therefore, when conceptualising religiosity at the national level, this thesis will define religiosity as the proportion of the population that subscribes to any such religion.

2.1.2 Innovation

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Schumpeter as he described innovation as: “novel outputs: a new good or a new quality of a good; a new method of production; a new market; a new source of supply; or a new organisational structure, which can be summarised as ‘doing things differently’” (Crossan & Apaydin, 2010, p. 1155). If one wishes to

investigate innovation in a global context, they must compare different nations in their propensity to be innovative. It is important to understand the determinants of national innovation because according to Schumpeter, innovation is what breaks the equilibrium or cycle of markets and industries through “creative destruction” (Śledzik, 2013). Old economic structures are replaced from within to initiate new equilibriums (Elliott, 1983).

There are many different views on what exactly constitutes national innovation and how one could define national innovation performance. Halkos and Tzeremes (2013) propose a national innovation model that is adapted from data extracted from the European Innovation Scoreboard 2007 Database. The model includes input and output factors of national innovation. Input factors include:

• Innovation drivers: structural environment required for innovation to thrive

• Knowledge creation: investments made in R&D creation

• Innovation and entrepreneurship: firm level effort expanded on innovation

Output variables include:

• Applications: added value of innovation coming from labour and business activities (performance measurement)

• Intellectual property: measurement of know-‐how

In a similar fashion, the innovative capacity of a nation can be conceptualised as having both input and output dimensions (INSEAD &

Confederation of Indian Industry, 2010). This INSEAD Global Innovation Index provides a comprehensive multidimensional overview of the innovative capacity of a nation by addressing both dimensions of national innovation. A full model including input and output dimensions can be found in Figure 1 below and is further elaborated on in the data and method section 3.3.

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National innovation could be defined and measured based on the

aforementioned pillars proposed by the INSEAD innovation index. The INSEAD report provides quantitative data for individual nations in each of the variables that are proposed as antecedents of national innovation.

This thesis will utilise both the input and output/outcome dimensions of innovation when conceptualising national innovation. Both elements are

essential in order to gain a comprehensive understanding of innovative

environments in nations. While many studies focus purely on output variables (Shane, 1992; 1993) this thesis will, similarly to Rinne, Steel and Fairweather (2012), conceptualise national innovation more holistically utilising a Global Innovation Index (INSEAD & Confederation of Indian Industry, 2010). When investigating the implications for practitioners, output variables appear to be more conceptually connected to managerial implications. Input variables,

however, provide necessary insight into how nations and organisations perform in their innovative capabilities. For example, the human capacity component of the input pillars will have a profound impact on both national and organisational

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innovation capabilities. This thesis will use the total national innovation score, and thus integrating input and output factors. However, a supplementary investigation will delineate between the two at a later stage in the thesis.

2.1.3 Culture

Culture is a rather difficult concept to define as it encompasses a wide range of areas of research such as anthropology, humanities and sociology each of which have their own unique interpretation of the concept (Kasaa & Vadi, 2010). For clarification purposes for this thesis, the concept of culture will be illuminated and defined.

Taylor and Wilson (2010) define a nation’s culture as a cross-‐section of people’s beliefs, values and preferences that together represent the national “central tendencies” (Taylor & Wilson 2010). However, due to Hofstede’s

prominent presence in cross-‐cultural studies and in this thesis, his definition will be used and is as follows: “the collective programming of the mind that

distinguishes the members of one group or category of people from another” (Hofstede, 2001, p. 9). Furthermore, this definition encompasses the context of this thesis in that we shall be distinguishing one category of people (country) from another category (country). The study pioneered by Hofstede led to the establishment of six cultural dimensions: Power Distance (PD), Individualism (IDV), Masculinity (MS), Uncertainty Avoidance (UA), Long-‐term Orientation (LTO) and Indulgence (IND) (Hofstede, Hofstede & Minkov, 2010).

• Power distance refers to the extent that less powerful members of a society accept the uneven distribution of power across their society. It is also an indication of the acceptance of hierarchy in a society (Hofstede & Hofstede, 2005).

• Individualism refers to the extent that individuals in any given society have a loose or strong connection with others in their society. Individuals who are individualistic in nature will concentrate only on themselves and their immediate close relatives. Cultures that exhibit low IDV are seen to be collectivistic and will exhibit the opposite (Hofstede & Hofstede, 2005).

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• Masculinity refers to the extent that a society prefers competition, assertiveness, achievement and heroism. Femininity, on the other hand, represents values such as cooperation, modesty and caring (Hofstede & Hofstede, 2005).

• Uncertainty avoidance addresses a society’s acceptance of ambiguity and tolerance of unconventional behaviours and ideas. (Hofstede & Hofstede, 2005).

• Long-‐term orientation refers to the extent that individuals uphold

traditions and norms as well as how they view societal change (Hofstede & Hofstede, 2005).

• Indulgence explains the extent to which it is acceptable for individuals to pursue personal gratification, enjoy life and have fun (Hofstede &

Hofstede, 2005).

Shane (1992; 1993) established a link between Hofstede’s dimensions and national innovation, more precisely that the dimensions IDV and PD were found to correlate to the number of innovation patents per capita. He also found that IDV, PD and UA correlated with the number of trademarks. Subsequent studies have investigated the same relationship with differing results (See Table 1 below). Further insight will be provided in section 2.3. Halkos and Tzeremes (2013) found empirical evidence indicating that a low level of PD, UA and MS has a positive effect on national levels of innovation efficiency. The most commonly cited cultural variables for predicting national innovation are the three core variables (IDV, PD and UA) proposed by Shane (1993), however, some research goes beyond this. Tekin and Tekdogan (2015) added another layer by including LTO as a characteristic of nations that typically exhibit enhanced innovation capabilities. However, the key articles in this area of literature are that of Shane (1992; 1993), Gorodnichenko and Roland (2011) and Halkos and Tzeremes (2013). Therefore, in order to narrow the scope of this thesis, variables from the literature that are not consistently cited as influencing national innovation will be excluded. As a result, LTO, MS and other factors not proposed by Hofstede will not be incorporated into the scope of this thesis. This is in line with Rinne et al. (2013) who argued that previous literature has provided little evidence for a

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theoretical link between MS/LTO and innovation. Subsequently, they limited the scope of their analysis to only include IDV, UA and PD. As a result, this thesis similarly will continue to address only the cultural variables of IDV, UA and PD.

Table 1: Theoretical overview of culture-‐innovation

Author (s) Cultural variables proposed to affect innovation

Shane (1992; 1993)

Empirical: IDV, PDI, UA Halkos & Tzeremes (2013) Empirical: PDI, UA, MS Rinne et al. (2013) Empirical: IDV, PD Taylor & Wilson (2010) Empirical: IDV Gorodnichenko & Roland (2011) Empirical: IDV

Herbig & Dunphy (1998) Theoretical: IDV, PDI, UA

Tekin & Tekdogana (2015) Theoretical: IDV, LTO, PD, UA, taking risks, acceptance of change, openness to new information, frequent travel, attitude towards science, value of education to society, religion

2.2 National Religiosity and National Culture

The relationship between national religiosity and national culture remains unexplored in literature. As a result, few theoretical mechanisms or empirical studies directly address the link between religiosity and culture. This section will highlight the direct connections that have been made between the constructs as well as any relevant connections through related constructs.

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2.2.1 Uncertainty Avoidance

A study by Singh (2006) investigated how cultural differences affect consumer innovation. When elaborating on UA she suggested that high UA societies provide fertile environments for religious institutions to flourish. Societies use religious beliefs to overcome the uncertainty about the future and individuals within these societies tend to be highly anxious as a result of

uncertain perceptions of the future (Singh, 2006). These cultures tend to be suspicious of ambiguity and divergent ideas, which is likely to result in less innovative behaviour (Singh, 2006).

Furthermore, Bartke and Schwarze (2008) investigated the relationship between risk-‐adversity (an aspect closely tied to UA) and religion. They found that national attitudes towards risk can be broken down into various factors, one being religiosity and religious orientation. When discussing the implications of believing in an afterlife, Bartke and Schwarze (2008) proposed that such a belief sets in motion rationally driven behaviour orientated towards risk-‐adversity. Religious individuals may restrict their behaviour to be more in line with what the religion deems acceptable. To deviate from this religious behaviour would be considered a risk of their afterlife. Furthermore, some specific rules of religions limit risk-‐taking behaviour such as gambling or drinking (Bartke & Schwarze, 2008). This study culminates with an empirical investigation indicating that individuals that are affiliated with a religion are significantly less risk-‐tolerant than atheists. Attitude to risk is relevant in this context because Shane (1993) claimed that: “the positive relationship between innovation and uncertainty acceptance suggests the importance of tolerating risk and change when engaging in innovative activity” (p. 70). This confirms the prominence of risk-‐taking as a key component of UA in the context of a UA-‐national innovation relationship. So if religion is proposed to impede risk-‐taking, it will subsequently be closely linked to UA.

Moreover, At-‐Twaijri and Al-‐Muhaiza (1996) investigated a sample of homogeneous Arab nations all with similar characteristics in terms of their tradition, culture, language, and political systems but most importantly also in their religious orientation towards Islam. They discovered that these nations

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shared a common cultural profile. They found that the average level for UA amongst these nations was 91, which is exceptionally high on Hofstede’s scale.

The aforementioned literature provides theoretical arguments for why religiosity facilitates UA and it provides empirical evidence that religiosity facilitates greater risk adversity. Therefore, the following hypothesis is formulated:

H1: High levels of national religiosity will positively correlate with national uncertainty avoidance, whereas, low levels of national religiosity will

negatively correlate with national uncertainty avoidance.

2.2.2 Power Distance

Social dominance theory addresses the individual and structural factors that are responsible for fostering group-‐based oppression, prejudices,

stereotyping and most importantly for PD, human propensity to form and perpetuate group-‐based hierarchies (Sidanius, Pratto, van Laar, & Levin, 2004). Sidanius et al. (2004) argued that social institutions (e.g. organised religions) drive group-‐based oppression through social dominance theory. Social

institutions have a tendency to disproportionately channel desirable goods and outcomes (e.g. power, prestige and wealth) to dominant and privileged groups. Furthermore, because institutions distribute resources on such a large scale and in a more stable manner when compared to individuals, this institutional

discrimination can be seen as a major driving force that fosters and maintains group-‐based hierarchies (Sidanius et al., 2004). Considering the legitimacy and significance of religious institutions to so many individuals’ and nations’ sense of identity as well as the general pervasiveness of religion in all societies, it should be expected that the presence of such mechanisms in a religion within a nation will influence the national culture to be more accepting of hierarchies. Therefore, this thesis will suggest that religiosity will result in greater PD by fostering a greater acceptance of hierarchies through social dominance theory.

Basabe and Ros (2005) conducted a study that investigated correlations between two key cultural variables (IDV and PD) and social behaviour. Their

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correlations support the aforementioned literature by proposing a religion-‐ specific relationship between Islam and PD as well as one between

Protestantism and PD. They provided empirical evidence proposing that predominance of Protestantism and predominance of Islam both correlate significantly with PD. The correlations for both religions, however, contrast in the direction of the relationship. Islam was found to positively correlate with PD, whereas Protestantism was negatively correlated to PD (Basabe & Ros, 2005). Therefore, the direction of the relationship of PD with religiosity as a whole is not clear. Hence, the following tentative hypothesis is proposed:

H2: High levels of national religiosity will positively correlate with national power distance, whereas, low levels of national religiosity will negatively

correlate with national power distance.

2.2.3 Individualism

A wealth of literature investigates the theoretical groundings that establish a link between religiosity and IDV. In this area of the literature many different religions are discussed attesting to their relationship with collectivism. Sampson (2000) highlighted Rabbinic Judaism as having a collectivistic

orientation due to its conceptualisation of human existence as being a “person-‐ other dialogue”. Cukur, De Guzman and Carlo (2004) proposed that Judaism, Christianity and Islam originally promoted collectivism and it was only after Christianity was reformed in Europe that it began to exhibit individualistic tendencies. Alkailani, Azzam and Athamneh (2012) corroborated this view on Islam by proposing that when reviewing Arabic history and religion

(predominantly Islam-‐dominated), one can attribute collectivistic tendencies directly to religion. Furthermore, according to Alam and Talib (2015), Islam promotes collective wellbeing and one of the five pillars of the Islamic faith is “zakat”, which refers to the donation of personal possessions to the poor once a year. The emphasis on collective wellbeing and concern with sharing wealth is a stark contrast to the central components of IDV where individuals will focus

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exclusively on themselves and immediate close family (Hofstede & Hofstede, 2005).

Viewing the concept of religion from a more holistic perspective, it can be perceived that the majority of religions reject values of self-‐fulfilment and self-‐ gratification (Cukur et al., 2004), which are values associated with IDV.

Moreover, most religions encourage self-‐sacrifice and focus on spiritual

aspirations (Cukur et al., 2004) rather than materialistic aspirations, which is not viewed as being conducive with an individualistic orientation. Kaasa and Vadi (2010) proposed that a common collectivistic trait for individuals is to connect their sense of identity to groups rather than other characteristics of personality. Therefore, individuals who subscribe to a certain religion can be theorised as being more collective due to their shared commitment to religious institutions or groups. Those who attend a religious institution such as a church, mosque or synagogue integrate an inherently community-‐based activity as an integral part of their life. It would seem logical that individuals that do not attend such institutions would be more individualistic because they do not subscribe to a common community-‐based belief system, thus, they can focus only on

themselves and close family and not worry about others in the religious community.

Compelling empirical studies addressing this religion-‐individualism relationship corroborates the aforementioned theoretical points. According to Sulaiman and Willet (2003), the ‘ideal’ Islamic society should exhibit high

national IDV. However, in reality the opposite was observed when At-‐Twaijri and Al-‐Muhaiza (1996) explored the cultural dimension characteristics of Arab nations, which can be described as being highly religious. At-‐Twaijri and Al-‐ Muhaiza (1996) discovered that these nations all shared a low level of IDV. According to their findings, the average level of IDV amongst these nations was 38, which is particularly low on the Hofstede scale.

Furthermore, a study by Singelis, Triandis, Bhawuk and Gelfand (1995) further delineates the individualism/collectivism dimension into vertical and horizontal elements. It is proposed that under a state of vertical collectivism, inequalities within the collective are accepted. In a state of horizontal

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IDV, inequalities between autonomous members are accepted but are not

accepted under horizontal IDV. Singelis et al. (1995) empirically investigated the relationship between the aforementioned orientations and specific religious beliefs. The results indicated that rationalism (having no religion or being sceptical) was positively associated with horizontal IDV and negatively

correlated with vertical collectivism. Furthermore, Buddhism specifically was discovered as being negatively associated with vertical IDV. Finally, they

proposed that generally Buddhism and Islam exhibit low vertical orientations in these IDV and collectivism orientations. To summarise, both individual religions and religiosity as a whole seem to be associated with more collectivistic values (Singelis et al., 1995). The statistically significant finding of rationalism’s

relationship with innovation is particularly important for this thesis. This finding provides evidence that being more sceptical of religion as a whole is positively associated with IDV and negatively with collectivism.

A study by Mansori, Sambasivan and Md-‐Sidin (2015) addressed the religiosity-‐individual relationship empirically from a consumer perspective. They proposed a conceptual framework (See Appendix 1) that links religiosity to mediating variables of openness to change (self direction and hedonism) and conservation (conformity and tradition). They operationalized religiosity through a ten-‐question survey and consumer innovation scale. Religiosity exhibited a negative correlation with openness to change with a statistically significant coefficient (-‐.269), whereas conservation correlated positively with religiosity, which exhibited a significant coefficient (.417). These mediating factors were then linked to consumer innovativeness and acceptance of

innovations. The aforementioned mediating variables (openness to change and conservation) are relevant to IDV and collectivism because their antecedents conceptually overlap with IDV and collectivism. For example, Mansori et al. (2015) explained that: “conservation values follow the traditions and seek the confirmation from the members of the society for their behaviors” (p. 45). Furthermore, they explained that conformity and tradition are the two key dimensions of conservation. Conformity can also be seen as a core component of collectivism (Hofstede & Hofstede, 2005). The same conceptual overlap can be identified between IDV and openness to change. Mansori et al. (2015) proposed

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that the key dimensions of openness to change are hedonism, self-‐direction and stimulation. Hedonism and self-‐direction in particular have clear undertones and conceptual commonalities with IDV. Although it would be inaccurate to use the concepts of individualism-‐collectivism and openness-‐conservation

synonymously due to the significance of the conceptual overlaps, the findings of the study do provide empirical insight into the religiosity-‐individualism

relationship that will be addressed in this thesis.

The abovementioned literature addresses the religiosity-‐IDV relationship from multiple perspectives, all of which propose a negative influence of religion on IDV. Hence, the following hypothesis is proposed:

H3: High levels of national religiosity will negatively correlate with national individualism, whereas, low levels of national religiosity will positively

correlate to national individualism

For a full literature overview on the relationship between religiosity and culture, see Table 2 below.

Table 2: Literature overview on religiosity-‐culture

Author(s) Findings Importance to

thesis Religiosity – Uncertainty Avoidance (H1)

Singh (2006) Theoretical: Religiosity facilitates UA

Highly important Bartke &

Schwarze (2008)

Empirical: Religiosity facilitates greater risk adversity

Supportive Shane (1993) Theoretical: Connects UA to risk

taking

Supportive Religiosity – Power Distance (H2)

Sidanius et al. (2004)

Theoretical: Religiosity facilitates group-‐based hierarchies and thus

PD

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Basabe & Ros (2005)

Empirical: PD positively correlates to Islam but negatively to

Protestantism

Supportive

Religiosity – Individualism (H3) Sampson (2002)

Theoretical: Judaism facilitates collectivism

Supportive Cukur et al.

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Theoretical: Historically Judaism, Christianity and Islam facilitated collectivism

Religion: rejects self-‐fulfilment and self-‐gratification and encourages self-‐sacrifice

Supportive

Alkailani et al. (2012)

Theoretical: Arabic history connects religion to collectivism

Supportive Alam & Talib

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Theoretical: Islam facilitates collectivism

Supportive At-‐Twaijri & Al-‐

Muhaiza (1996)

Empirical: Arabic nations (highly religious) commonly display low IDV

Supportive

Singelis et al. (1995)

Empirical: Rationalism correlated with horizontal individualism and negatively correlated with vertical collectivism

Highly important

Mansori et al. (2015)

Empirical: Religiosity is correlated positively with conservation and negatively with openness, which conceptually similar to collectivism and individualism

Highly important

The preceding literature review contains studies that vary in their

significance when exploring the relationship between religiosity and culture. For the religiosity-‐UA relationship, Singh (2006) identified the key theoretical

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arguments that connect the two components. Although this study does not provide empirical evidence, it does give an indication of what kind of relationship could be expected.

For the religiosity-‐PD relationship, Sidanius et al. (2004) identified the key mechanism through which religiosity impacts national PD. This provides essential insight for this thesis because no other known study connects these two constructs. Despite the study lacking empirical evidence, it does, however, provide necessary understanding of the possible direction of the relationship. Finally, when investigating the relationship between religiosity and IDV, the work of Mansori et al. (2015) and Singelis et al. (1995) are the most

influential. They provide the most insight because they investigated religiosity or non-‐religiosity (rationalism) as a whole concept in contrast to the

aforementioned studies investigating this relationship from a more theoretical perspective. Less relevant studies in this thesis focused on specific religions, which is not the focus of this thesis. Furthermore Mansori et al. (2015) and Singelis et al. (1995) provided empirical evidence, which further legitimises their propositions.

Following the preliminary literature review, an initial conceptual framework was developed in order to illustrate the interactions between religiosity and culture. See Figure 2 below.

PD IDV Religiosity Innovation H1; H2; H3 UA

Figure 2: Preliminary conceptual framework

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2.2.4 Preliminary Test

In order to avoid elaborating on relationships between variables that are not relevant for the scope of this thesis, a preliminary analysis was deemed essential in this early stage. The preliminary tests includes an initial correlation analysis followed by three hierarchical multiple regression analyses that

measure the ability for religiosity (independent) to predict levels of IDV, PD, UA (three dependent) after controlling for population and GDP per capita. More details about the sources of the data used, how variables were operationalized and the reasoning for controlling data will be elaborated on in section 3.

Furthermore, a full interpretation of the correlation matrix and each hierarchical regression analysis can be found in Appendix 2. The results of the preliminary analysis can be summarised as follows:

• National non-‐religiosity was found to positively correlate IDV, which indicates that religiosity negatively correlates with IDV.

• National non-‐religiosity was found to negatively correlate PD, which indicates that religiosity positively correlates with PD.

• National non-‐religiosity had no significant correlation with UA, which indicated that religiosity has no correlation with UA.

The results of the three hierarchical regression analyses reveal that both PD and IDV display a strong correlation with national non-‐religiosity as

proposed in H2 and H3. Converse to the proposition of H1, a significant

correlation was not found between non-‐religiosity and UA. Although this was not expected, the relationship between UA and religiosity was unexplored in the literature and the theoretical arguments attesting to the direction of this relationship are made indirectly through related constructs such as risk adversity (Bartke & Schwarze, 2008). As a result, it is not surprising that an insignificant relationship has been identified. The analysis consequently confirms H2 and H3 and rejects H1. For the remainder of the thesis, only the variables of IDV and PD will be elaborated on further with respect to their relationship with national innovation. PD and IDV will subsequently be accepted into the conceptual framework, whereas UA will be removed.

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2.3 National Culture and National Innovation

The next section of the literature review will investigate the theoretical mechanisms and empirical evidence that addresses the relationship between national PD, national IDV and national innovation.

2.3.1 Power Distance and National Innovation

Waarts and Van Everdingen (2005) proposed that nations with a high PD orientation often have characteristics having: “centralized decision structures, authority, the use of formal rules, and the sharing of information is constrained by hierarchy.” (p. 604). Shane (1993) asserted that PD constrains innovation in five key areas: acceptance of hierarchy, vertical communication, subordinate control, power centralisation and resistance to change. This section of the literature review will explore these factors as well as many more that have been investigated in previous literature.

Shane (1993) explored the impact of PD on innovation at the national level. Within organisations, PD facilitates hierarchical structure that are

characterised by centralisation of authority and weak informal communication channels between levels of the hierarchy. It is proposed that managers in high PD societies perceive detailed job descriptions with minimal subordinate

autonomy as desirable. However, in the context of innovation, stringent controls that come from strict job definitions or rules impede creative thinking and freedom (Shane, 1993). Furthermore, managers in high PD contexts have a tendency to be resistant to change, especially when it involves changes in status and power. Shane (1993) proposed that managers in high PD context would therefore show more resistance to innovation because innovation is often associated with change.

Whereas Shane (1993) focused on the national level, a study by Yuan and Zhou (2015) investigated theory related to the impact of PD on innovation at the organisational level. They do so by addressing the impact of PD on organisational innovative processes. They proposed that cultural contexts of PD could result in negative group-‐level creative outcomes. They suggested that in high PD contexts

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group members are likely to be afraid to express divergent views, thus, they display more convergent behaviour. Furthermore, in PD contexts, individuals within a group or organisation are more likely to withhold ideas and

perspectives when they inhabit a low-‐level hierarchical position. In a group idea-‐ sharing environment, high PD contexts are commonly selective in allowing specific group members to share their ideas and perspectives. The resulting centralisation of authority, creative activities and creative decision-‐making at the upper echelons of the organisational hierarchy as well as the lack of information sharing are proposed to impede group divergent creativity (Yuan and Zhou, 2015). Although creativity is not conceptually equivalent to innovation, it is widely considered an integral primary component of innovation (Amabile & Pratt, 2016). While the study by Yuan and Zhou (2015) focused on group

creativity, these effects PD on group dynamics can be projected onto the concept innovation as a whole both directly and through the concept of group creativity. Their study also reinforces the contention of Shane (1993) that acceptance of hierarchy and vertical communication act as constraining factors of innovation. Continuing at the organisational level, Aalbers, Dolfsma and Leenders (2015) emphasised the necessity of vertical cross-‐hierarchical ties within an organisation for innovative project teams. They defined cross-‐hierarchical ties as: “ties that team members have directly with other organization members across hierarchical levels and organizational units” (Aalbers et al., 2015, p. 143). Often the upper-‐level members in a hierarchy have access to invaluable

information that lower-‐level members may need for optimal innovation. Aalbers et al. (2015) proposed that team members who enjoy vertical cross-‐hierarchical ties have greater access to this information. Furthermore, vertical cross-‐

hierarchical ties will provide innovative team members and innovative projects with the access to essential resources that are necessary for actualising

innovative initiatives. Moreover, vertical cross-‐hierarchical ties will bring promising possible innovation projects to the attention of the key decisions in ways not possible without such ties (Aalbers et al., 2015). Therefore, these cross-‐ hierarchical ties potentially boost organisational innovation through enhanced idea recognition capabilities. Absence of these vertical ties essentially hinders innovation through sub-‐optimal information sharing, opportunity recognition

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and resource allocation. Aalbers et al. (2015) supported these propositions with empirical evidence conducted in a practical business case study, where the result of which indicated that successful innovation projects were categorised as

having significantly more vertical cross-‐hierarchical ties. These cross-‐ hierarchical benefits are related to the concepts of acceptance of hierarchy, vertical communication and centralised authority that Shane (1993) outlined as key factors in the PD-‐national innovation relationship.

Çakar and Ertürk (2010) investigated the PD-‐innovation relationship from the perspective of SMEs. From an organisational perspective, contexts of high PD encourage employee perceptions that managers should have authority and decision-‐making power. By echoing previous arguments, Çakar and Ertürk (2010) claimed that PD facilitates excessive hierarchy, autocratic leadership, centralised authority and strict control systems, all of which negatively impacts organisational innovation. Furthermore, they attest that low PD contexts are beneficial for innovation because they avoid bureaucracy that can act as a constraint on creativity. Their claim is supported by empirical evidence that PD is negatively related to individual innovation capabilities.

Moreover, Yalcinkaya (2008) investigated the PD-‐innovation relationship from a consumer perspective and postulates that in high PD societies, individuals will adopt new products that are already adopted by their superiors. The

reasoning for this is the emphasis on authority and the dependence on high-‐ status individuals in high PD societies. The lack of purchasing authority, inferior openness to new ideas and limited interpersonal communication in high PD societies ensures slower adoption of new products (Yalcinkaya, 2008). The study by Yeniyurt and Townsend (2003) corroborates these arguments by claiming that cultural environments characterised by a high PD will be less accepting of new products. This paper culminates with an empirical investigation, where a significant negative correlation exists between PD and new product acceptance (Yeniyurt & Townsend, 2003).

Further empirical studies have been conducted formalising the

relationship between PD and national innovation that is also proposed in this thesis. Shane (1992; 1993) conducted cross-‐national empirical analyses that confirmed national levels of PD as being negatively correlated with patents per

At the mercy of the gods? : an investigation into religiosity, culture and innovation at the national level