Cross-national differences in firms undertaking innovation initiatives: An application of institutional anomie theory

In this study, we seek to explain why firms' innovations vary across countries. Drawing on institutional anomie theory (IAT), we test cross-level hypotheses related to firm innovation. Specifically, we apply the fundamental tenets of IAT to argue that innovation is an outcome of positive deviance. Further, we posit that some social institutions (e.g., education, polity) may moderate the relationships between extant cultural dimensions such as achievement, uncertainty avoidance, and in-group collectivism and innovation. To empirically explore these possibilities, we leverage data from 26,859 firms in 27 countries. Through the use of Hierarchical Linear Modeling techniques, we reveal significant interaction effects of in-group collectivism and education, uncertainty avoidance and political stability, and in group-collectivism and political stability on cross-national levels of innovation. Finally, we discuss the theoretical and practical implications of this research and describe avenues for future scholarship in this area.