Title: Unveiling the role of culture in shaping firm innovation: insights from a multilevel analysis

Authors: Elchin Aghazada; Gaygysyz Ashyrov

Addresses: University of Tartu, 50090 Tartu, Estonia ' Estonian Business School, 10114 Tallinn, Estonia

Abstract: We revisit the relationship between culture and firm-level innovation, employing the two-dimensional cultural model proposed by Kaasa and Minkov (2022). This study is prompted by the shortcomings associated with the conventional cultural model developed by Hofstede (1980, 2001). The Hofstede model has faced substantial criticism due to overestimating the number of cultural dimensions, its conceptual and methodological issues, and lingering doubts about its validity for use. Utilising the Enterprise Surveys dataset, we perform logistic regression with random intercept covering 4,894 companies across 37 countries. Our findings suggest that while the link between the freedom-concern dimension of culture and firm innovation appears statistically insignificant, the odds of firms introducing product and process innovation are higher if they operate in responsibility-oriented cultures rather than those that rely on faith. The results are robust when controlling for economic freedom across the countries.

Keywords: culture; innovation; product innovation; process innovation; survey; multilevel model; freedom; concern; responsibility; faith.

DOI: 10.1504/IJEIM.2025.153428

International Journal of Entrepreneurship and Innovation Management, 2025 Vol.29 No.1/2, pp.67 - 90

Received: 24 Apr 2025
Accepted: 09 Dec 2025
Published online: 07 May 2026 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article