Asia Pacific Business Review

ISSN: 1360-2381 (Print) 1743-792X (Online) Journal homepage: http://www.tandfonline.com/loi/fapb20

The impact of espoused national cultural values

on innovative behaviour: an empirical study in the
Chinese IT-enabled global service industry

Rong Du, Lili Liu, Detmar W. Straub & Michael B. Knight

To cite this article: Rong Du, Lili Liu, Detmar W. Straub & Michael B. Knight (2016): The
impact of espoused national cultural values on innovative behaviour: an empirical study
in the Chinese IT-enabled global service industry, Asia Pacific Business Review, DOI:
10.1080/13602381.2016.1156907

To link to this article: http://dx.doi.org/10.1080/13602381.2016.1156907

Published online: 08 Mar 2016.

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 Asia Pacific Business Review, 2016
http://dx.doi.org/10.1080/13602381.2016.1156907

The impact of espoused national cultural values on innovative

behaviour: an empirical study in the Chinese IT-enabled
global service industry
Rong Dua, Lili Liua, Detmar W. Straubb and Michael B. Knightc
a
School of Economics and Management, Xidian University, Xian, China; bJ. Mack Robinson College of Business
Administration, Georgia State University, Atlanta, GA, USA; cCollege of Business Administration, MMIS, Texas
A&M Kingsville, Kingsville, TX, USA
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ABSTRACT KEYWORDS
In this article, we explore the different roles that knowledge sharing China; espoused culture;
and exploitative learning play in employees innovative behaviour, and knowledge sharing;
innovative behaviour;
investigate the different moderating effects of employees espoused
IT-enabled global service
national cultural values on the relationship between exploitative industry; PRC
learning and innovative behaviour in the Chinese IT-enabled global
service firms with different ownerships. We propose a theoretical
model to characterize these antecedents of innovative behaviour. A
structured research survey was conducted and data were collected
from a sample of 484 full-time employees in 3 IT-enabled global service
firms in the PRC. Results indicate that knowledge sharing is positively
associated with innovative behaviour in multinational corporations
and private IT-enabled global service; espoused power distance has
a significant positive moderating effect on exploitative learning
innovative behaviour relationship in state-owned and private firms;
espoused collectivism has a significant moderating effect only in
state-owned firms in China. Last, we explore the implications of our
findings for theory and practice of innovation.

1.Introduction
As the global economy slows in its tracks, Chinese-contracted outsourcing only realized a
year-on-year rise of 22.1% in 2015, which is down from 37% from the 2012 growth reports. As
firms face intense rivalry and customization demands, innovation is considered to be imper-
ative for Chinese IT-enabled global service firms. Employees, in this context, as knowledge
workers, play a significant role in innovation. In particular, employees innovative behaviour
is an important asset for such Chinese firms (Yuan and Woodman 2010). A variety of factors
have been identified which directly or indirectly encourage employees to innovate. These
factors include government support, organizational culture, leader member exchange and
collaboration and knowledge networks (Hogan and Coote 2013; Qu, Qu, and Wu 2015; Varma
et al. 2015; Wang et al. 2014; Yeoh Khar and Mahmood 2013).

CONTACT Michael B. Knight Michael.knight@tamuk.edu

2016 Taylor & Francis
 2 R. Du et al.

For culture, prior research has examined the impact of national and/or organizational
culture on innovation (Hogan and Coote 2013; Peretz, Fried, and Levi 2013). National and
organizational cultures may often adequately explain innovation in macro-level but may lack
precision in explaining behaviour at the individual level (Straub et al. 2002). An individuals
values can be influenced by professional, organizational and other social groups, each of
which has its own culture and value set. For instance, it is very common to assume that as a
nation, China demonstrates the universal cultural characteristic of collectivism (see Warner
2014). Yet, Chinese organizations and individuals may have differences in the degree of col-
lectivism. Moreover, with deepening economic globalization, Chinese workers collaborate
with their colleagues who come from Western countries far more than ever before. Influenced
by the changing situation globally, there is a growing variation in the strength of collectivism
in Chinese workers. Thus, it is inappropriate to use national or organizational cultural values
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to predict individual behaviour. Individuals espoused cultural values could here be used to
predict individual behaviour (Schein 2006; Straub et al. 2002).
Meanwhile, the positive effect of knowledge sharing on innovative activities has been
demonstrated by researchers (Estrada, Faems, and de Faria 2015; Wang and Wang 2012).
However, employees should not only share knowledge, but also integrate and apply knowl-
edge effectively to address the given challenge in an innovation process. Pfeffer and Sutton
(2013) suggested the knowingdoing gap and posit that most shared knowledge is not
effectively applied (Pfeffer and Sutton 2013) and it is the case that employees often fail to use
shared knowledge. Does such knowledge sharing, we may ask, therefore facilitate innovative
behaviour in Chinese IT-enabled global service firms? If so, is this effect direct or indirect?
To provide a clear understanding of the effect that culture and knowledge sharing has on
innovative behaviour in the Chinese IT-enabled global service industry, we investigate the
role of espoused cultural values and exploitative learning on employees innovative behav-
iour. More specifically, we employ individuals espoused national cultural values to mani-
fest the culture differences at the individual level, and investigate their moderating effect
on the relationship between exploitative learning and innovative behaviour. Further, we
explore different roles that knowledge sharing and exploitative learning play in employees
innovative behaviour in Chinese IT-enabled global service firms that function with different
ownership structures.

2. Theoretical background
In this section, Table 1 provides formal definitions for each construct in this research. Further,
we develop a review of knowledge sharing, innovative behaviour and espoused national
cultural values literatures to develop the theoretical model and hypotheses.

2.1. Knowledge sharing

For contemporary Chinese IT-enabled global service firms, knowledge (especially, tacit
knowledge) is unevenly distributed among individuals. Knowledge sharing is a way through
which employees can mutually exchange knowledge they have and contribute to knowledge
application and creation (Gamal Aboelmaged 2012).
Knowledge sharing can take place at individual, group and organizational levels. However,
most explicit and all tacit knowledge is stored within the minds of individuals. Therefore,
 Asia Pacific Business Review 3

Table 1.Definitions of constructs.

Construct
Knowledge sharing
Innovative behaviour
Espoused power distance
Espoused individualism/collectivism
Definition
Employee provides information required by co-workers and educate co-work-
ers with the industry- and firm-specific knowledge (Koh, Ang, and Straub
2004)
Complex behaviour consisting of activities pertaining to both the generation/
introduction of new ideas (either by oneself or adopted from others) and the
realization or implementation of new ideas (Yuan and Woodman 2010)
The degree to which status inequality is accepted (Srite and Karahanna 2006)
The degree to which an individuals social behaviour is driven by personal
rather than collective goals (Srite and Karahanna 2006)

knowledge sharing fundamentally takes place between individuals. Further, Koh, Ang,
and Straub (2004) posited that knowledge sharing refers to exchanging information with
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co-workers and educating them with work-related knowledge. We suggest the collaborative
definition of knowledge sharing: Employee provide information required by co-workers and
educate co-workers with the industry and firm specific knowledge (Koh, Ang, and Straub
2004). Previous studies on knowledge sharing have confirmed that enabling variables such
as employees psychological factors, organizational structure and culture and information
technologies can enhance knowledge sharing (Al-Qadhi et al. 2015; Iebra Aizpura, Zegarra
Saldaa, and Zegarra Saldaa 2011; Kim and Lee 2012; Knight, Abu-Shanab, and Haddad
2014). On the other hand, knowledge sharing can contribute to successful customer rela-
tionship management and innovation, and is helpful to improve the effectiveness of group
work (van Oorschot, Solli-Sther, and Karlsen 2014; Zhang, Zhang, and Wang 2015).
In IT-enabled global service firms, innovation depends heavily on employees knowledge
(explicit and tacit) in the knowledge creation process. Accordingly, knowledge sharing can
be seen as a valuable input for innovation. Nevertheless, shared knowledge is not always
effectively applied. Pfeffer and Sutton (2013) posited this inefficiency as the knowingdoing
gap. Therefore, we incorporate exploitative learning that comprises transmuting and apply-
ing the shared knowledge into our model to investigate its effect on innovative behaviour.

2.2. Innovative behaviour

Drawing on West and Farr (1990), innovative behaviour is defined as the intentional gener-
ation, promotion and realization of new ideas to his or her work role, workgroup or organ-
ization in order to benefit role performance, the group or the organization. Prior research
considers that innovation is a multistage process involving idea generation, coalition building
and implementation (Jafri 2012; Yuan and Woodman 2010). In the context of the Chinese
IT-enabled global service industry, innovative behaviour begins by the identification of a
work-based problem; continues with an idea generation that can be novel and useful; and
finally, implementation-oriented work behaviour wherein employees try to promote the
idea to potential managers and colleagues and realize actual ideas as applicable (Krause
2004).Therefore, we further follow the definition of innovation behaviour as stipulated in
Yuan and Woodman (2010) and Jafri (2012).
A variety of organizational and individual factors have been studied as determinants
of innovative behaviour. Organizational factors, such as structure, as well as culture, can
exert a strong influence on employees innovative behaviour (Ajmal and Helo 2010). Some
researchers have investigated which individual characteristics affect innovative behaviour (i.e.
 4 R. Du et al.

intrinsic interest, expected outcome and intrinsic motivation) (Wisse, Barelds, and Rietzschel
2015; Yuan and Woodman 2010). Nevertheless, few empirical studies are concerned with the
impacts of cultural values on employees innovative behaviours in IT-enabled global service
firms. Different cultural value systems can, we argue, drive people to behave differently.

2.3. Espoused national cultural values

Hofstede (1984) proposes five widely cited dimensions of culture: individualism/collectivism,
power distance, uncertainty avoidance, masculinity/femininity and long-term orientation.
Although he conceptualized these dimensions at the national level, many researchers have
treated these dimensions at the individual level (Srite and Karahanna 2006; Udo, Bagchi, and
Kirs 2012). Srite and Karahanna (2006) incorporated espoused national cultural values into
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the TAM to examine how espoused cultural values affect the technology adoption. Following
their conceptualization, we define espoused national cultural values as the degree to which
an individual embraces the values of his or her national culture (Srite and Karahanna 2006,
681).
Consistent with Hofstedes five sets of dimensions, five dimensions can be identified as
comprising facets of espoused national cultural values: espoused power distance, espoused
individualism/collectivism, espoused uncertainty avoidance, espoused masculinity/feminin-
ity and espoused long-term orientation. These espoused cultural values shape individuals
perception regarding the world around them. Further, these perceptions translate into pat-
terns of behaviour.
Among the five cultural dimensions, two dimensions, i.e. power distance and individual-
ism/collectivism, have been demonstrated to have an impact on innovation and to reveal
the cultural difference between Chinese culture and the Western culture (Lin et al. 2015;
Taylor and Wilson 2012). Accordingly, we argue that espoused power distance and individ-
ualism/collectivism play an important role in employees innovative behaviour. Therefore,
we focus on these two dimensions and their moderating effect on the relationship between
exploitative learning and innovative behaviour at the individual level. Srite and Karahanna
(2006) share that espoused power distance refers to the degree to which status inequality is
accepted and it determines the extent to which the employee accepts that he/she has less
power (Srite and Karahanna 2006).

3. Hypotheses development
As show in Figure 1, we incorporate espoused power distance and espoused individualism/
collectivism to show their impact of espoused cultural values on innovative behaviour.

3.1. Knowledge sharing, exploitative learning and innovative behaviour

For IT-enabled global service firms, innovation is knowledge driven, and depends heav-
ily on external adoption and internal generation of new knowledge (Carlo, Lyytinen, and
Rose 2012). A firms ability to share, store and create knowledge may determine its level of
innovation (Nonaka and Takeuchi 1995). In IT-enabled global service firms, to fulfil tasks,
employees need to borrow skills or experience from their colleagues. Knowledge sharing is
 Asia Pacific Business Review 5

Power
Collectivism
Distance
H4(a, b, c) H5(a, b, c)

Exploitive Innovative
Learning H3 Behaviour

H2 H1
Knowledge
Sharing

Figure 1.Proposed model.

the fundamental means through which employees can acquire knowledge. Therefore, shar-
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ing knowledge can facilitate innovation activities (Ritala et al. 2015). Thus, we hypothesize:
H1: Knowledge sharing is positively associated with innovative behaviour at the individual level.
We note that knowledge needs to be acquired before it can be exploitatively learned.
Employees can acquire knowledge through their own learning and experiences. But inno-
vations increasingly rely on the shared knowledge from others (Wang and Wang 2012). That
is to say, knowledge sharing is an important prior stage for exploitative learning. Thus, we
hypothesize:
H2: Knowledge sharing is positively associated with exploitative learning at the individual level.
The ability to integrate shared knowledge into an individuals own existing knowledge stock
and apply it within a new context is important for innovative activities (Chen, Tao, and He
2012). Pfeffer and Sutton (2013) pointed out the knowingdoing gap and posit that most
shared knowledge is not effectively applied.
Transmuting and applying shared knowledge are different knowledge processes. Drawing
on the study of Lichtenthaler (2009), the construct of exploitative learning is defined as:
employees utilize shared knowledge through the sequential processes of transmutation
and application. In other words, exploitative learning is a two-stage process: transmuting
knowledge and applying it. By means of sharing knowledge, employees renew their knowl-
edge bases. Exploitative learning helps employees match knowledge with problems in the
innovation process, and convert knowledge into a new product or service (Huang, Ma, and
Lee 2015). High levels of exploitative learning increase the efficiency of shared knowledge.
Here, the ability to transmute and apply knowledge is an important antecedent of innovation
(Boland, Lyytinen, and Yoo 2007). Thus, we hypothesize:
H3: Exploitative learning is positively associated with innovative behaviour at the individual level.

3.2. Moderating effects of espoused national cultural values

Chinese IT-enabled global service firms are diverse. There are commonly three pervasive
types of ownership in China state owned, private and foreign corporations (Xia and Walker
2014). Firms vary by institution and management systems based on different ownership
structures (Xia and Walker 2014). Foreign-owned corporations emphasize empowerment,
but state-owned firms use a paternalistic approach to management (Chatzkel and Ng 2013).
Innovative behaviour is partly influenced by the social conditions (erne, Jakli, and kerlavaj
 6 R. Du et al.

2013).Therefore, it is also necessary to make a distinction between the three types of own-
erships distinguishing the impact of employees espoused culture values on innovative
behaviour in Chinese IT-enabled global service firms.

3.2.1. State-owned firms

In China, state-owned firms are organized in pyramid structures with a board of director,
and management roles are filled with political appointees (Cuervo and Villalonga 2000).
Chinese traditional cultural norms based on Confucian values have a profound impact on
many institutions (Warner 2014). State-owned firms may have hierarchical structures and
systematic rules as emphasized in Confucianism. Organizational culture of state-owned
firms is further characterized by high power distance, low individualism and a paternalistic
approach to management, which emphasizes hierarchy, collective goals and orientation to
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the person (Chatzkel and Ng 2013). Further, managers develop task instructions and plans,
and arrange task through the hierarchical system to achieve collective goals.
Employees with high espoused power distance cultural values have concern about the
power differentials and may deem that managers have the ability to reward compliance
and punish non-compliance in state-owned firms in China. Further, that espoused power
distance cultural values may affect the individuals behaviour through compliance (Srite
and Karahanna 2006). Further, Vandenberg, Self, and Jai Hyun (1994) suggested employees
with high espoused power distance cultural values are more likely to conform and that the
compliance effect would be stronger for individuals with high espoused power distance
values (Srite and Karahanna 2006). We suggest that with instructions from the powerful or
high social status managers, employees with high espoused power distance cultural values
will display more innovative activities, i.e. transmuting and applying shared knowledge to
fulfil managers innovative task in state-owned IT-enabled global service firms. Thus, we
hypothesize:
H4a: The relationship between exploitative learning and innovative behaviour is moderated by
the espoused national cultural value of power distance such that the relationship is stronger for
individuals with higher espoused power distance cultural values in state-owned firms.
Affected by the traditional Chinese culture and history, organizational culture of state-owned
firms is characteristic of collectivism. These state-owned Chinese firms have a higher level of
conformity. Further, if these firms have set organizational goals for innovation, we could find
that innovation is expected and backed by social norms (Taylor and Wilson 2012). Goncalo
and Staw (2006) suggest that employees with collectivistic cultural values tend to be more
interdependent and loyal to the group. Further, they focus on meeting the shared standard
so as to maintain harmony in their relationship to the group and during innovative projects,
they are more motivated by collective goals. They will make greater efforts to acquire, recom-
bine and integrate knowledge while matching it to problems in the innovation process.
Thus, we hypothesize:
H5a: The relationship between exploitative learning and innovative behaviour is moderated by
the espoused national cultural value of collectivism such that the relationship is stronger for
individuals with espoused collectivistic cultural values in state-owned firms.

3.2.2. Multinational corporations (MNCs)

The organizational culture of Chinese subsidiaries of the MNCs may have to adjust and blend
into native circumstance. However, Western culture seems to shape and dominate Chinese
 Asia Pacific Business Review 7

MNCs core organizational culture (Halkos and Tzeremes 2008). While MNCs advocate equal-
ity, justice and personal development, organizational culture is characterized by equality
and work orientation. Further, Taylor and Wilson (2012) suggested that employees should
comply with the regulations and norms, not the instructions of the one who has higher
status, whilst managers should engage employees in decision-making, which may increase
their autonomy. Hence, there is often more employee involvement in MNCs.
In MNCs, employees with high espoused power distance values prefer to wait for instruc-
tions and support from their managers rather than work independently. Employees with
low power distance values are more willing to engage in interactions with managers and
decision-making, and then become more motivated (Taylor and Wilson 2012). Further, during
innovation projects, individuals with lower power distance values have shown a high level
of exploitative learning, and generate new ideas or solutions to realize the new production
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or service. Therefore, we hypothesize:

H4b: The relationship between exploitative learning and innovative behaviour is moderated by
the espoused national cultural values of power distance such that the relationship is stronger
for individuals with lower espoused power distance cultural values in MNCs.
As mentioned before, the organizational culture of MNCs emphasizes the orientation to task
and individualism. This may increase MNC performance through the accomplishment of
individual goals. Suggestively, employees can be viewed as independent and possessing a
unique pattern of traits and identity. Individuals are determined by his/her own achievement
rather than in terms of group membership or the position in the group. To achieve goals,
they will strive to innovate. Thus, we hypothesize:
H5b: The relationship between exploitative learning and innovative behaviour is moderated
by the espoused national cultural value of collectivism such that the relationship is weaker for
individuals with espoused collectivistic cultural values in MNCs.

3.2.3. In private firms

Chinese IT global service provision started primarily in the twenty-first century, and the num-
ber of private IT-enabled global service firms has grown quickly. The owners of these firms, as
will most private organizations, assume responsibility for the allocation of resources, support
and ultimately the profits and losses. However, Ji and Dimitratos (2013) and Xia and Walker
(2014) reported that private firms does not have well-developed networks of resources,
e.g. financial or technical support. Further, due to survival pressure (i.e. Organizational
Ecology), private firms are more outcome oriented and stress the virtues of competition
among employees. Meanwhile, they have more flexible structure which in turn increases
efficiency. Accordingly, managers place higher emphasis on individual initiative. Individuals
with lower power distance and individualistic cultural values will take more initiative to make
innovations. Therefore, we hypothesize:
H4c: The relationship between exploitative learning and innovative behaviour is moderated by
the espoused national cultural value of power distance such that the relationship is stronger for
individuals with lower espoused power distance cultural values in private firms.

H5c: The relationship between exploitative learning and innovative behaviour is moderated
by the espoused national cultural value of collectivism such that the relationship is weaker for
individuals with espoused collectivistic cultural values in private firms.
 8 R. Du et al.

4.Methodology
4.1. Instrument development and data collection
The espoused national cultural value of power distance, the espoused national cultural value
of collectivism, the exploitative learning and innovative behaviour are reflectively measured
constructs in this research. Knowledge sharing is multidimensional: reflective and formative.
More specifically, the knowledge sharing (KS) construct consisted of two components: (1)
obtaining knowledge from other colleagues (OKC) and (2) transferring knowledge to other
colleagues (TKC).
Items used to operationalize constructs were developed based on previous established
measures. Specifically, knowledge sharing and exploitative learning were measured using
scales adapted from Koh, Ang, and Straub (2004) and Lichtenthaler (2009), respectively. The
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espoused national cultural values of power distance and collectivism were measured using
scales derived from Srite and Karahanna (2006). Innovative behaviour was measured by
Yuan and Woodmans scale. Appendix A shows items for each construct and their respective
source. Unless otherwise indicated, all items were measured using five-point Likert-type
scale, anchored from strongly disagree to strongly agree. In-depth interviews with research-
ers and practitioners who are the general managers of the IT-enabled global service firms
with work experience in overseas organizations were conducted in order to make sure the
questions were appropriate to IT-enabled global service industry.
We conducted surveys at Beijing Zhongguancun Software Park and Xian Software Park.
Three sets of data were collected by questionnaire surveys (see Appendix 1). The first data-
set was collected at a state-owned IT-enabled global service firm by email through man-
agers of the human resource department (Study 1: state-owned firms). In-depth interview
and questionnaire survey were conducted at two subsidiaries of a multinational IT-enabled
global service firm in Beijing and Xian, respectively. A second data-set was collected (Study
2: multinational corporations) after in-depth interview with the managers. A third data-set
was collected from a private IT-enabled global service firm (Study 3: private firms). All collec-
tions utilized the same questionnaire. The data were evaluated for missing data, suspicious
response patterns and outliers (Hair et al. 2013). At total of 484 questionnaires were collected
with 445 valid for use.

4.2. Data analysis

This research has both formatively and reflectively measured constructs. Thus, we employed
partial least squares (PLS), a structural modelling technique that is suitable for the measure-
ment model with both formatively and reflectively measured constructs and exploratory
research (Cenfetelli and Bassellier 2009; Hair, Ringle, and Sarstedt 2011).

4.2.1. Instrument validation

First, we evaluated the reliability and construct validity of all reflective constructs by adopting
the general recommendations (Fornell and Larcker 1981; King and Teo 1996).
To assess reliability, Cronbachs alpha and composite reliability that are traditional types
of reliability measure (MacKenzie, Podsakoff, and Podsakoff 2011) were calculated. Table 2
shows that the value of Cronbachs alpha and composite reliability for all constructs is greater
than 0.7, which indicated adequate internal consistency (Hair, Ringle, and Sarstedt 2011).
 Asia Pacific Business Review 9

Table 2.Reliability and AVE.

Construct Cronbachs Composite reliability AVE
INB 0.8985 0.9252 0.7128
EIL 0.9042 0.9266 0.6791
IC 0.7279 0.7660 0.5117
PD 0.7979 0.8143 0.5033
OKC 0.9651 0.9773 0.9348
TKC 0.9736 0.9827 0.9499

Table 3.Square root of AVE and correlation between the constructs.

INB EIL PD IC OKC TKC
INB 0.8442
EIL 0.6749 0.8240
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PD 0.1005 0.1610 0.7094

IC 0.2675 0.1963 0.2777 0.7153
OKC 0.5285 0.4017 0.1653 0.1922 0.9668
TKC 0.5269 0.4542 0.1059 0.1789 0.7016 0.97465

Table 4.Loading scores of formative constructs.

Construct Loading score t-value
KS OKC 0.529 34.417
TKC 0.555 27.9

For convergent validity, we examined the average variance extracted (AVE). The value
of AVE for each construct was calculated and shown in Table 2. All the values are higher
than 0.50, which indicates a sufficient degree of convergent validity (Fornell and Larcker
1981). For discriminant validity, the FornellLarcker criterion should be met (Hair, Ringle,
and Sarstedt 2011). The FornellLarcker criterion requires the square root of AVE for each
construct to be greater than the constructs correlations with any other constructs in statis-
tical terms (Fornell and Larcker 1981). As shown in Table 3, the measure model has adequate
discriminant validity.
Following Petter, Straub, and Rai (2007), we assessed construct validity of formative con-
structs through PLS by examining each formative indicators weight, and its significances.
As shown in Table 4, all indicator weights are significant at the 0.01 level. Further, we used
SPSS to check multicollinearity between formative indicators by calculating variance infla-
tion factor (VIF). VIF scores of knowledge sharing were less than 3.3 (1.963), which is one
threshold value frequently espoused.
After above procedures for validating an instrument, we found that our instrument had
acceptable psychometric properties.

4.2.2. Structural model assessment

We used Smart PLS to test the structural model. The path coefficients between two constructs
indicate the strength of the causal relationship, and their significance is determined by the
T-statistic calculated with the bootstrapping technique. Critical T-values for a two-tailed
test are1.65 (significance level=10%), 1.96 (significance level=5%) and 2.58 (significance
level=1%) (Hair, Ringle, and Sarstedt 2011).
 10 R. Du et al.

Exploitive Innovative
Learning 0.467*** Behaviour

0.465***
0.327***
Knowledge
Sharing

Figure 2.Results of the main model.

Power
Collectivism
Distance

0.299*** 0.191***
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Exploitive Innovative
Learning 0.376*** Behaviour

0.205***
0.061
Knowledge
Sharing

Figure 3.Study 1 Results. Note: R02 represents the R2 without moderating effect; R12 represents the R2 with
moderating effect.

Following Chen, Tao, and He (2012), we applied the PLS product-indicator approach to
detect the moderating effect of employees espoused power distance and collectivistic values
on the relationship between exploitative learning and innovative behaviour. In the current
research, the predictor represents exploitative learning (EIL), and the dependent variable
and moderator variables represent innovative behaviour (INB) and espoused power distance
and collectivistic values (PD and IC), respectively. First, as Likert scales were employed in this
study, standardized indicators of predictor and moderator are chosen; then, cross-products
were created to reflect the latent interaction variables (i.e. EIL*IC, EIL*PD).

4.2.2.1. Main model. In particular, we tested the model only containing exploitative
learning, innovative behaviour and knowledge sharing with all of the data from companies
with different ownerships (Main Model). Figure 2 depicts results of the main model, including
the path coefficients and significance values. As results show, knowledge sharing significantly
influenced innovative behaviour directly (0.327***), supporting H1. Meanwhile, knowledge
sharing also significantly affected exploitative learning (0.465***), which in turn significantly
influenced innovative behaviour (0.467***). Thus, H2 and H3 were supported.

4.2.2.2. Study 1. Results (Figure 3) of study 1 show relationships with dashed line were not
supported. This research model explained about 56.1% of variation in employees innovative
behaviour, explaining an additional 25.7% of the variance over the model without moderating
effect. Espoused national cultural values of power distance and collectivism moderated the
relationship between exploitative learning and innovative behaviour (significant at. 01and
0.05, respectively), supporting H4a and H5a. Knowledge sharing didnt have a significant
effect on innovative behaviour in state-owned firms (rejecting H1), but affected innovative
behaviour through exploitative learning indirectly (supporting H2 and H3).
 Asia Pacific Business Review 11

Power
Collectivism
Distance

-0.02 0.045
Exploitive Innovative
Learning 0.527*** Behaviour

0.703***
0.303***
Knowledge
Sharing

Figure 4.Results for Study 2. Note: R02 represents the R2 without moderating effect; R12 represents the R2
with moderating effect.
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Power
Collectivism
Distance

-0.121** -0.09
Exploitive Innovative
Learning 0.382*** Behaviour

0.481***
0.390***
Knowledge
Sharing

Figure 5.Results for Study 3. Note: R02 represents the R2 without moderating effect; R12 represents the R2
with moderating effect.

4.2.2.3. Study 2. For Study 2, this model explained about 70% of variation in employees
innovative behaviour, above a little per cent of the variance over the model without
moderating effect (Figure 4). Contrary to our expectations, the results showed that the
hypotheses proposing the moderating influence of espoused national cultural values of
power distance and collectivism on the relationship between exploitative learning and
innovative behaviour were rejected (H4b and H5b). In addition, the moderating effect of
espoused national cultural value of collectivism was in the opposite direction as hypothesized.

4.2.2.4. Study 3. For Study 3, this model explains about 60.3% of variation in employees
innovative behaviour, though it explains 49.2% of the variance without moderating effect.
Consistent with H4c, the moderating effect of espoused national cultural value of power
distance was significant at 0.05. However, espoused national cultural value of collectivism
didnt significantly moderate the relationship between exploitative learning and innovative
behaviour but in the right direction as hypothesized, thus rejecting H5c.

5.Discussion
This study endeavours to extend research on innovative behaviour by investigating exploit-
ative learning and espoused national cultural values in Chinese IT-enabled global service
industry. First, we explored the relationship between knowledge sharing, exploitative learn-
ing and innovative behaviour. And then, we examined the moderating effect of espoused
 12 R. Du et al.

national cultural values of power distance and collectivism on the relationship between
exploitative learning and innovative behaviour. Three studies were conducted to test the
theoretical model.

5.1. Knowledge sharing, exploitative learning and innovative behaviour

Through the main model (show in Figure 2), our result clearly demonstrates that knowledge
sharing has a significant positive impact on innovative behaviour directly, and it also affects
innovative behaviour indirectly through exploitative learning. However, these relations may
depend on a company ownership structure: (1) in state-owned firms, knowledge sharing
doesnt affect innovative behaviour significantly, and the influence of knowledge sharing is
fully mediated by exploitative learning. That expresses no matter how much knowledge is
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shared among employees, that shared knowledge cannot enhance innovation unless it is
effectively transmuted and applied; (2) in MNCs, knowledge sharing significantly influences
innovative behaviour, and significantly affects exploitative learning. Further, there are sig-
nificant links between exploitative learning and innovative behaviour; (3) in private firms,
knowledge sharing and exploitative learning have almost the same effect on innovative
behaviour. That is, knowledge sharing can facilitate innovation behaviour significantly in
private firms.
As mentioned, organizational culture of state-owned firms is characterized by high power
distance and low individualism. In organizational cultures of this type, employees may prefer
to fulfil requirements and take instructions, while not applying the knowledge to innovate.
Sharing knowledge and innovating are unrelated. The culture of MNCs and private firms
emphasizes high individualism and orientation to outcome, respectively, and these char-
acteristics promote the motivation to act creatively. Therefore, knowledge sharing has a
significant and positive effect on innovative behaviour directly and through exploitative
learning indirectly in MNCs and private firms.

5.2. Power distance and individualism/collectivism

5.2.1. Power distance
The moderating effect of espoused national cultural value of power distance on the rela-
tionship between exploitative learning and innovative behaviour is not always significant
in firms with different ownerships.
The moderating effect of espoused national cultural value of power distance is significant
in state-owned firms, such that the relationship between exploitative learning and innovative
behaviour is stronger for individuals with high espoused power distance cultural value (Study
1). Employees with high power distance believe that it is appropriate to show deference and
unquestioned loyalty to their leaders, and obey directives towards innovation. Contrary to
state-owned firms, the relationship between exploitative learning and innovative behav-
iour is stronger for individuals with low espoused power distance cultural value in private
firms (Study 3). Private firms have a greater tendency towards decentralization autonomy.
Employees with high power distance are not likely to be spurred into extra effort to do
innovation initiatively but to wait for the instructions from leaders.
However, this hypothesized moderating effect is not significant in MNCs. Two possible
explanations may account for this. First, the lower sample size in Study 2 may have reduced
 Asia Pacific Business Review 13

our statistical power to detect significant effects. Second, through the interview, we find
that MNCs have strict assessment and elimination systems, which may increase the internal
motivation of employees with high power distance cultural value to innovate.

5.2.2.Individualism/collectivism
Espoused collectivism value has a significant moderating effect in state-owned firms. Further,
this moderating effect is not significant in two other types of firms. For MNCs, two possible
explanations may account for this dynamic. First, the affiliates of MNCs must recognize the
culture of the host country, and rely on it to adapt the local environment (Shimoni and
Bergmann 2006). Therefore, its organizational culture is significantly affected by multiple
cultures. The culture of MNCs that is influenced by traditional Chinese culture does not
place an emphasis on individualism. Second, project teams are a crucial building block for
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accomplishing IT-enabled global service project. In this context, each employee is consid-
ered as an independent entity, and is encouraged to work collaborating between various
parties involved in the team, e.g. business analyst, programmer and quality assurance man-
ager. Individuals with collectivistic cultural values have tendencies to display cooperative
behaviour in team setting, and more readily internalize group goals (Jung and Avolio 1999).
For private firms, we can explain for this non-significant finding from one possible direc-
tion. In an increasingly global economy, private firms are influenced by Western culture and
management philosophy. Private firms may not have well-developed networks of resources
and have more intense competition. Therefore, private firms may place emphasis on the
development and the achievement of employees. When conflict arises between personal
and companywide goals, it is acceptable that companywide goals should dominate over
personal goals. So, employees with collectivistic cultural values may have a tendency to take
more initiatives towards innovation.

6. Implications for research and practice

6.1. Implications for research
The results show that knowledge sharing does not always affect innovative behaviour sig-
nificantly or directly in firms with different ownerships. This echoes the concern about the
knowingdoing gap, and that shared knowledge is not effectively applied in organizations
(Pfeffer and Sutton 2013). Organizational culture differences may account for observed differ-
ences in results across the three studies. Thus, future research on innovation and knowledge
management must consider organizational culture as they examine the role of knowledge
sharing on innovation.
On the other hand, the current research contributes to the understanding of innovative
behaviour in which power distance and individualism/collectivism are not treated as mon-
olithic concepts at the national level, but at the individual level as espoused value dimen-
sions. Though literature on this relationship suggests that innovation is associated with
lower power distance and individualism (Ambos and Schlegelmilch 2008; erne, Jakli, and
kerlavaj 2013), this study shows that the moderating effects of espoused national cultural
values of power distance and individualism/collectivism are different in firms with different
ownerships.
 14 R. Du et al.

6.2. Implications for practice

Results from this study also have some direct managerial implications. First, IT-enabled global
service firms must pay close attention to exploitative learning as well as knowledge shar-
ing, particularly state-owned firms. Managers often attach great importance to knowledge
sharing but take no account of the knowingdoing gap. Managers should recognize that
increasing knowledge sharing alone may not facilitate innovation effectively. This suggests
managers must built proper incentive structures to stimulate employees to transmute and
apply shared knowledge.
Second, the moderating effects of espoused national cultural values of power distance
and individualism/collectivism on the relationship between exploitative learning and inno-
vative behaviour differ across organizational cultural contexts. This suggests that the man-
agers should recognize the importance of employees espoused national culture and the
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organizational culture. We suggest, for example, in state-owned firms, the manager should
recruit employees high on power distance and collectivism, and implement mechanisms to
foster these cultural values. Meanwhile, with the economic globalization and international
cooperation between China and Western countries, the organizational culture is influenced
by multiple cultures, especially for MNCs and private firms. Thus, it is necessary for manag-
ers to identify the characteristics of the companys organizational culture before designing
recruitment, training and incentive strategies.

6.3 Limitations and suggestions for future research

This study identified opportunity for further research through learned limitations. First, the
current study only examined the moderating effect of espoused national cultural values of
power distance and individualism/collectivism. However, other espoused cultural dimen-
sions, i.e. uncertainty avoidance, masculinity/femininity and long-term orientation, may
affect innovative behaviour. Second, this study has investigated the impact of the cultural
context, i.e. the organizational culture. However, we posit the characteristics of each kind of
organizational culture in different ownership firms based on previous scholarly research and
in-depth interviews with experts and practitioners rather than the real world data meas-
ured through valid instruments. Therefore, future research should examine and identify the
characteristics of each organizational culture by quantitative analysis by the survey data.

7.Conclusions
We have sought in this study to investigate employees innovative behaviour by incorporat-
ing exploitative learning and espoused cultural values of power distance and individualism/
collectivism.
The research integrated espoused collectivistic values and espoused power distance as
moderators of the relationship between exploitative learning and innovative behaviour. In
doing so, we identified that knowledge sharing does not always affect innovative behaviour,
directly or significantly. The researchers also took into account the ownerships of the firms
that associate with different organizational cultures in China and formulate specific hypoth-
eses linking the different ownership forms. We argue that employees who hold specific
 Asia Pacific Business Review 15

espoused collectivistic and power distance values may give more (or less) effort on innovative
behaviour in state-owned, private and foreign firms in China.
Using Smart PLS, we made a quantitative analysis of the survey data collected in IT-enabled
global service firms in Beijing Zhongguancun Software Park and Xian Software Park. The
results indicate that most of our hypotheses were supported, and advance the theoretical
understanding of espoused national cultural values influence in IT-enabled global service
firms, which may also have managerial implications for the practitioners in IT-enabled global
service industry.

Acknowledgements
The authors thank the administrative staff in Beijing Zhongguancun Software Park and Xian Software
Park who helped us with the arrangements for our interviews and surveys. We appreciate our respond-
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ents who answered our questionnaires.

Funding
This research is supported by the National Natural Science Foundation of China through [grant
number 71271164]; Humanities and Social Science Talent Plan in Shaanxi through [grant number
ER42015060002], and partially supported by the Soft Science Research Program in Xian through [grant
number BD33015060002].

Notes on contributors
Rong Du is a Professor at the School of Economics and Management, Xidian University, China. She has
worked as a visiting professor in the Department of Computer Information Systems, Georgia State
University, US, the Department of Information Systems and Computing, Brunel University, UK, and the
MIS Department of Quinn School of Business, University College Dublin, Ireland. Her current research
interests include trust in IT/IS, E-commerce and knowledge management.
Lili Liu is a PhD candidate supervised by Rong Du, majored in Management Science and Engineering,
at the School of Economics and Management, Xidian university, Xian, China. Her research interests
include knowledge management, IT-enabled services outsourcing and cross-cultural management.
Detmar W. Straub is IBIT Distinguished Visiting Professor, Fox School, Temple University, Distinguished
Visiting Professor, Business School, Korea University, and Regents Professor Emeritus of Computer
Information Systems in the J. Mack Robinson College of Business at Georgia State University.
Michael B. Knight is an Assistant Professor of Management in the College of Business Administration
at Texas A&M Kingsville. He holds a PhD in Business Administration for MIS and Organizational
Behaviour. He serves as the editor in chief for the International Journal of Social and Organizational
Dynamics in Information Technology (IJSODIT).

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 Asia Pacific Business Review 19

Appendix A. Constructs measurement

Construct Item Source
Knowledge We transfer knowledge to colleagues (Koh, Ang, and
sharing We share best industry practices with colleagues Straub (2004))
We transfer know-how of the product or service to colleagues
We get necessary information provided by colleagues for us to do the project
work
We acquire knowledge provided by the colleagues
We acquire know-how/work skills provided by colleagues
Exploitative We are proficient in transforming technological knowledge into new products. (Lichtenthaler
Learning We regularly match new technologies with ideas for new products. 2009)
We quickly recognize the usefulness of new technological knowledge for existing
knowledge.
Our employees are capable of sharing their expertise to develop new products.
We regularly apply technologies in new products.
We constantly consider how to better exploit technologies.
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We easily implement technologies in new products.

It is well known who can best exploit new technologies inside our firm.
Power Managers should make most decisions without consulting subordinates (Srite and Kara-
distance Managers should not ask subordinates for advice because they might appear less hanna 2006)
powerful
Decision-making power should stay with top management in the organization
and not be delegated to lower level employees
Employees should not question their managers decisions
A manager should perform work which is difficult and important and delegate
tasks which are repetitive and mundane to subordinates
Higher level managers should receive more benefits and privileges than lower
level managers and professional staff
Managers should be careful not to ask the opinions of subordinates too fre-
quently, otherwise the manager might appear to be weak and incompetent
Collectivism Being accepted as a member of a group is more important than having auton-
omy and independence
Being accepted as a member of a group is more important than being
independent
Group success is more important than individual success
Being loyal to a group is more important than individual gain
Individual rewards are not as important as group welfare
It is more important for a manager to encourage loyalty and a sense of duty in
subordinates than it is to encourage individual initiative
Innovative We search out new technologies, processes, techniques and/or product ideas. (Yuan and Wood-
behaviour We generate creative ideas. man 2010)
We promote and champion ideas to others.
We investigate and secure funds needed to implement new ideas.
We develop adequate plans and schedules for the implementation of new ideas.