Individualism, pro-market institutions, and national innovation

Daniel L. Bennett () and Boris Nikolaev ()
Additional contact information
Daniel L. Bennett: University of Louisville
Boris Nikolaev: Baylor University

Small Business Economics, 2021, vol. 57, issue 4, No 24, 2085-2106

Abstract: Abstract Previous research suggests that both formal institutions (e.g., pro-market institutions) and informal institutions (e.g., individualistic cultural values) are critical drivers of innovation. Most studies, however, consider the independent role of either formal or informal institutions. We contribute to this gap in the literature by exploring the potential interaction between informal institutions, measured by Hofstede’s individualism-collectivism index, and formal institutions, measured by the Economic Freedom of the World index (i.e., pro-market institutions). Using cross-sectional data for a diverse sample of 84 countries, we find that both individualism and pro-market institutions are positively associated with innovation. However, the extent to which pro-market institutions promote innovation depends largely on how individualistic a country is and vice versa. For example, more individualistic countries tend to be more innovative, but even the most individualistic countries have below-average levels of innovation when their formal institutional environment lacks market support. At the same time, our findings suggest that the most innovative countries tend to have both strong pro-market institutions and individualistic cultural values.

Keywords: Culture; Economic freedom; Individualism; Collectivism; Informal institutions; Innovation; Pro-market institutions; L26; O3; P16; Z1 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://link.springer.com/10.1007/s11187-020-00396-y Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:57:y:2021:i:4:d:10.1007_s11187-020-00396-y

Ordering information: This journal article can be ordered from
http://www.springer. ... 29/journal/11187/PS2

DOI: 10.1007/s11187-020-00396-y

Access Statistics for this article

Small Business Economics is currently edited by Zoltan J. Acs and David B. Audretsch

More articles in Small Business Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().