The pulse of a new culture: A study of the impact of cultural integration on corporate innovation

Xingyu  Wan; Xuanming  Zhang

Xingyu Wan School of Insurance, University of International Business and Economics, Peking 100029, China
Xuanming Zhang School of Insurance, University of International Business and Economics, Peking 100029, China

Article ID: 1900

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Keywords: cultural fusion; corporate innovation; executive characteristics; heavy polluters; state-owned enterprises

Abstract

This study investigates the influence of cultural fusion between China and the West, particularly in the context of Western powers’ historical invasions, on corporate innovation. The purpose of this research is to quantify the degree of cultural fusion and its implications for innovation within corporations. Utilizing a regional variance method and entropy approach, the findings reveal several key insights. First, while traditional Chinese culture tends to constrain innovation, Western culture exhibits an inverted U-shaped relationship with corporate innovation, suggesting that cultural fusion acts as a significant driver of innovation. Second, regarding executive characteristics, teams with less international exposure but greater professional diversity demonstrate heightened innovation capabilities under cultural integration. Third, firm characteristics reveal that cultural fusion exerts a more pronounced impact on innovation in state-owned enterprises and firms with lower pollution levels. Additionally, an extended analysis indicates that cultural fusion significantly enhances innovation in firms with moderate innovation levels, improving both innovation inputs and outputs as well as overall quality. This study provides valuable empirical evidence for understanding the dynamic relationship between cultural fusion and corporate innovation, contributing to the broader discourse on innovation in the context of cross-cultural interactions.

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