Firms' collaboration networks benefitting innovation: embeddedness in high- and low-trust culture, Denmark and Iran

The proposition that a firm's networking provides social capital benefitting its innovation is commonly considered a universal in the sense that the effect is believed to be positive in every society and perhaps even equally strong. We hypothesise that benefit differs among societies, depending on a culture of trust, that benefit increases with trust. Our research design compares a high-trust society, Denmark and a low-trust society, Iran, with a sample of 646 firms. Hierarchical linear models corroborate our hypotheses. First, the level of innovation is higher in the high-trust society than in the low-trust society (also when controlling for characteristics of the firms and owner-managers). Second, networking promotes innovation in both countries (also when controlling for other conditions). Third, networking promotes innovation more in the high-trust society than in the low-trust society. This shows how firms' innovation is embedded in networking at micro-level and in culture at macro-level.