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.
Aghazada et al. (2025) studied this question.