Human Resource Development International

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Creating an organizational culture of innovation:

case studies of Japanese multinational companies
in Thailand

Wichuwan Satsomboon & Oranuch Pruetipibultham

To cite this article: Wichuwan Satsomboon & Oranuch Pruetipibultham (2014) Creating
an organizational culture of innovation: case studies of Japanese multinational
companies in Thailand, Human Resource Development International, 17:1, 110-120, DOI:
10.1080/13678868.2013.812330

To link to this article: http://dx.doi.org/10.1080/13678868.2013.812330

Published online: 03 Jul 2013.

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Human Resource Development International, 2014
Vol. 17, No. 1, 110120, http://dx.doi.org/10.1080/13678868.2013.812330

PERSPECTIVES
Creating an organizational culture of innovation: case studies of
Japanese multinational companies in Thailand
Wichuwan Satsomboon* and Oranuch Pruetipibultham

Graduate School of Human Resource Development, The National Institute of Development

Administration, Bangkok, Thailand
(Received 7 April 2013; final version received 25 May 2013)

The purpose of this study is to examine the predominant factors that lead to being an
innovative organization from the employees perspective in Japanese multinational
companies (MNCs) in Thailand. The study employed qualitative case study approach
utilizing semi-structured interviews and a focus group, and involved nine participants
from five different Japanese MNCs operating in Thailand. The study found that
learning and development, participative decision-making, communication and toler-
ance towards conflict and risks, kaizen (continuous improvement) and leadership were
the main factors in promoting innovation in organizations.
Keywords: organizational culture; innovative organization; Japanese multinationals;
Thailand

Introduction
Thailands rapid economic growth and abundance of resources have drawn many foreign
countries to expand their businesses in Thailand. Furthermore, Thailand will play an
important role when the Asian Economic Community (AEC) blueprint goes into action in
2015. Therefore, it is a challenge for Thai and multinational companies (MNCs) to
improve their weaknesses and to create competitive advantages to survive in the intense
competitive world. As a result, innovation is seen as a critical strategy and tool for gaining
a competitive edge and for maintaining the sustainability (Denton 1999; Drucker 1985;
Lin and Liu 2012; Tran 2008).
The government of Thailand aims to promote foreign direct investment (FDI) in
Thailand through several policies. As a result, the number of multinational firms in
Thailand is dramatically increasing and they have made noteworthy contributions to the
Thai economy. In spite of the increasing amount of FDI, Japan is the country that has
accounted for the largest share of FDI in Thailand (Sangiam 2006). Furthermore, Japan is
well known for being one of the worlds innovation leaders. Japan is the country in Asia
that spends the most on research and development (R&D), which accounted for 3.5% of
GDP % in 2008 (World Bank 2012). In 2005, Japan produced 25,415 patents and was
second to only United States of America that produced 45,111 patents (Murphy 2007).
However, the report from the World Intellectual Property Organization (WIPO) showed
that the East Asian countries have the most intense growth in the number of patents. Of all
participants, Japan registered the most patents, showing an annual increase of 212%
(WIPO 2006). Furthermore, in 2006, residents of Japan and the United States of

*Corresponding author. Email: s.wichuwan@gmail.com

2013 Taylor & Francis

 Human Resource Development International 111

America produced the largest share of world patent grants (29.9% and 21.3%, respec-
tively) (WIPO 2006). In addition, a study called by the Economist Intelligence Unit (EIU)
concluded that Japan, Switzerland, the United States of America and Sweden are the
worlds top 4 innovators among the 82 countries (EIU 2007).
Prior studies found that organizational culture is a major factor in organizational
success (Schein 1992), and organizational culture exercises a positive influence on
innovation (Tushman and OReilly 1997). Thus, it is important to understand the
dimensions of organizational culture that lead to organizational innovation. In this
study, we are trying to achieve this goal through examining case studies of Japanese
MNCs in Thailand.

Research purpose and research question

Although numerous studies have investigated the subject of organizational innovation
(Salaman 2001; Davenport and Prusak 1998), the studies focussing on the influence of
organizational cultures on innovation activities are still limited (Becheikh, Landry, and
Amara 2006). Furthermore, the extant research studies have mostly been conducted in the
western context, and their results cannot always be applied to the context of Thailand. The
research questions guiding this study were: (1) What are the dimensions of organizational
culture in Japanese MNCs in Thailand? and (2) How do these dimensions enable
organizational innovation in Japanese MNCs in Thailand?

Organizational culture
Organizational culture is one of the critical factors that foster or inhibit creativity and
innovation within the organization. There are many definitions of organizational
culture. Martin (2002) defined organizational culture as the patterns of interpretation
composed of the meanings associated with various cultural manifestations, such as
stories, rituals, formal and informal practices, jargon, and physical arrangements
(330). Hill (2007) defined it as the norms and values shared within the organization
among employees. Some researchers believe that the development of organizational
culture occurs through an interaction between the founders beliefs and the experience
of employees, and in some cases organizational culture can change as a consequence
of the organizations interaction with the external environment (Martins, Martins, and
Terblanche 2004).

Multinational companies and Japanese management style

Velasquez (2006) defined a multinational company as a company that maintains
manufacturing, marketing, service, or administrative operations in many different host
countries (17). Similarly, Jones (1996) defined a multinational firm as a firm that
controls its operations and resources that generate income located in more than one
country.
Christopher and Sumantra (2002) stated that the Japanese management style empha-
sizes the centralization of assets and resources. Furthermore, Japanese management
practices focus on lifetime employment, seniority wages and promotion and non-specia-
lized career paths. The process of evaluation is long-term oriented because of the lifetime
employment policy. Employees receive broad-based training and they become familiar
with the business functions of the entire organization (Ouchi 1981).
112 W. Satsomboon and O. Pruetipibultham

Definition of innovation
Creativity and innovation are closely associated but they are not the same thing. Some
organizations can generate a lot of ideas but cannot put the ideas into action (Hussey
1997). Creativity is defined in terms of originality (Mascarenhas 2011) whereas innova-
tion consists of transforming a new idea into a new product, process or service, which
leads to gaining profit on the part of business enterprises (Kuniyoshi, John, and Tadao
1988). Zhou and Shalley (2008) defined innovative organizations as organizations where
employees are able to share information and beliefs among each other. It is an organiza-
tion in which employees are empowered and motivated to share ideas in order to increase
organizational performance (Catlin and Matthews 2002). There are several factors that
have been found to have an influence on creating an innovative organization. Vrakking
(1990) stated that technology and resources management, human resource management,
organizational conditions and operational guidance have an influence on the degree of
innovation in an organization.

Previous studies about organizational culture and innovation

Organizational culture has long been recognized as a determining factor in the success of
an organization (Schein 1992). Prior research found that organizational culture has an
influence on the process of innovation within organizations (Chandler, Keller, and Lyon
2000) because the organizational context can serve as a supportive factor for innovation
(Lin and McDonough III 2011; Tushman and OReilly 1997). The study by Amabile et al.
(1996) also supported this notion. The authors pointed out that there were six supporting
scales that influenced creativity. This included: (1) organizational encouragement, (2)
supervisory encouragement, (3) work-group supports, (4) work freedom, (5) sufficient
resources and (6) challenges at work. Similarly, several scholars have indicated that
organizational culture affects creativity and innovation within the organizations through
encouragement, support and implementation (Lock and Kirkpatrick 1995; Martins and
Terblanche 2003). Several dimensions of organizational culture have been found to affect
organizational innovativeness, such as learning and development, participative decision-
making, support and collaboration, power sharing, status differentials and communication
and tolerance for conflict and risk (Hurley and Hult 1998).

Conceptual framework
In this study, we used the framework for organizational culture based on the dimensions
proposed by Hurley and Hult (1998). The conceptual framework, in Figure 1, shows three
dimensions of organizational culture that have been found to have an influence on
innovation (Hurley and Hult 1998):

Learning and development

Learning is a change in a person through experiencing, understanding and conceptualizing
(Marton and Ramsden 1998 cited in Harrison 2009). Learning could lead to the ability to
utilize skills and knowledge (Tidd, Bessant, and Pavitt 1998). The extant research also
supported the idea that training and development in an organization can foster employees
capability to learn new things. The study by Tohidi, Seyedaliakbar, and Mandegari (2012)
showed that organizational learning capability has a positive impact on innovation.
 Human Resource Development International 113

Organizational culture

Learning and development

Innovative
Participative decision-making organization

Communication and tolerance

towards conflict and risk

Figure 1. Proposed conceptual framework of determinants of organizational culture leading to

innovative organization.

Participative decision-making
The term participative decision-making has been associated with other terms, such as
empowerment, involvement, engagement and consultation (Jantan, Nasurdin, and Ahmed
Fadzil 2003). Empowerment is commonly described in terms of the employees self-control,
freedom and autonomy over his or her work and responsibility for decision-making (Mullins
2002). It fosters the utilization of knowledge and skills, and promotes teamwork (Mullins
2002). Empowerment is a vital instrument in increasing organizational productivity and
competitive advantage (Alsop, Bertelsen, and Holland 2006; Fay, Price, and Niehaus 1994).

Communication and tolerance toward conflict and risk

Communication is an important and complex process within the organization. It is the
process in which organizational members create, maintain and change the organization.
Organizations cannot exist without effective communication (Keyton 2005). Tolerance
toward conflict and risk is another major component positively influencing the develop-
ment of creativity in organizations. Creativity can only be stimulated through the culture
in which failures are accepted (Tushman and OReilly III 1997).

Methodology
Research and design methods
In order to understand the dimensions of organizational culture that contribute to innova-
tion, qualitative case study research was considered to be the most appropriate method.
Yin (1984) suggested that case studies are an appropriate method when the investigator
has little control over events, and when the focus is on a contemporary phenomenon
within some real-life context (13). The qualitative case study approach was employed to
investigate contributing factors of organizational culture that lead to innovation in five
Japanese MNCs in Thailand. The qualitative case study could allow the researcher to
explore aspects that have not yet been identified through quantitative studies and enable
the researcher to compare the findings across the cases.

Data collection
The research was conducted based on both primary and secondary data. Primary data was
collected from individual interviews and a focus-group interview. Secondary data was
114 W. Satsomboon and O. Pruetipibultham

collected from books, journals, research papers, company documents and other relevant
materials. Because this study aimed to explore the determinants of organizational culture
that lead to innovative organization, semi-structure interview with open-ended questions
and a focus-group session were used to acquire the primary data.

Scope of the study and participants

The unit of analysis consists of five business organizations in total. Participant
organizations were selected from the Japanese manufacturing industry and service
sectors in Thailand through the purposive sampling and snowball sampling technique.
Two of the five selected case companies were recipients of awards for innovation from
both local and international agencies. Information about the case study companies is
shown in Table 1.
In order to understand the employees point of view on what characterizes an
innovative organization, four employees from different companies were recruited in the
individual interviews and five other employees were recruited to participate in the focus
group. All interviews were conducted in confidentiality, and the names of the interviewees
were withheld by mutual agreement. The participants demographic information is shown
in Table 2.

Table 1. Information about case study companies.

Company H C P J F

Established 1964 1990 2004 1961 N/A

in
Core Automobiles Copiers and Consumer Credit card Business
business and printers finance service consulting
motorcycles
Main Automobiles, Copiers and Financial loan Credit card Business
products motorcycles, printers consulting
power
products
Number of Approximately Approximately Approximately Approximately Approximately
employees 450 10,000 320 2636 47

Table 2. Information about participants.

Name Position Org Location Seniority Age Interview duration

L Staff H Bangkok 4 30 45 minutes (interview)

S Staff
N Interpreter
A Manager
M Interpreter
G Coordinator
B Coordinator
P Assistant Manager
O Sales & Marketing
H Bangkok 3.8 27 45 minutes (interview)
P Bangkok 3.5 28 45 minutes (interview)
P Bangkok 5.2 34 1 hour (interview)
C Korat 3 28 1.5 hours (focus group)
F Bangkok 2 29 1.5 hours (focus group)
F Bangkok 1.5 28 1.5 hours (focus group)
J Bangkok 3 28 1.5 hours (focus group)
J Bangkok 2.4 26 1.5 hours (focus group)
 Human Resource Development International 115

interview questions and interview duration

interview questions were validated by a group of HR experts. Five major issues were
explored: (1) perceived meaning of innovation; (2) past experience related to innovative
projects and activities; (3) the factors that influence innovation; (4) the factors that inhibit
innovation and (5) suggestions for becoming an innovative organization. Each personal
interview lasted from 45 minutes to 1 hour and was tape recorded. All interviews were
conducted face-to-face and first hand in the Thai language. The focus group discussion
lasted around 1 hour and 30 minutes.

Data analysis
The interviews and focus group were transcribed before being categorized for data
analysis. The researchers coded the data and then the results were collapsed into five
themes. These themes will be described in the next section.

Findings
Learning and development
Five of the nine participants stated that learning and development are essential factors that
lead to an innovative organization. Ms. L discussed learning as follows:

Another factor that is also important for innovation is employee training. In my company,
there are many trainings and seminars for employees at every level. I think that not only the
knowledge relevant to the job is important, but we also need to know information about
external markets and the world economy as well. This knowledge will help our staff be
creative and produce something new for the organization.

Participative decision-making
Participative decision-making was mentioned by six of the nine participants. According to
Ms. M, I think the important factor to create innovation is employee empowerment. In
our company, employees are allowed to share their ideas and comments. Japanese who are
in the upper position will listen and implement the ideas.
In hierarchical organizations, the decision-making process usually takes a long time to
complete. Some participants also stated that the management in their companies does not
always listen to ideas or comments from employees, and that this could destroy the
creativity among the employees. Participative decision-making and empowerment are
essential determinants of innovation, as Zhou and Shalley (2008) suggested that top
management should be open-minded, so as to allow employees to share new ideas to
enhance organizational effectiveness.

Communication and tolerance towards conflict and risk

Five participants mentioned communication and tolerance towards conflict and risk as
one of the most important factors in helping organizations become innovative. Ms. L
stated:

All the objectives and goals of the organization should be correctly communicated from top
to bottom. Our company has a regular meeting every month and all managers have to
116 W. Satsomboon and O. Pruetipibultham

participate in the meeting. After the meeting, the managers of each department will inform
their staff of the meeting details. From my point of view, communication from the top level
should be communicated to all levels so that employees can work toward the same
direction.

However, in organizations with a diverse workforce, language can be a barrier to com-

munication. Ms. P told us her experience with the language barrier: many staff members
could not freely raise their ideas because of the communication problem. It would take us
so much time to communicate with one another.
The issue of tolerance toward conflict and risk was also raised by several participants.
Ms. N commented that in my company, when a new idea was presented by the employ-
ees, management was likely to reject it because they didnt want to take a risk. Some
participants also stated that if management is open-minded and willing to encourage new
ideas, the employees will not be afraid of punishment. This is related to what Tushman
and OReilly III (1997) mentioned that creativity can be stimulated through the culture
in which failures are accepted.

Kaizen
In most Japanese companies, kaizen or continuous improvement has been applied to
improving the process, product and service quality of the company. Kaizen has also been
applied not only in manufacturing, but also in service and retail organizations (Jagdeep
and Harwinder 2009). Two of the nine participants mentioned the concept of kaizen as an
important factor leading to the innovative organization. According to Ms. M, who is
working for a Japanese manufacturer, kaizen is one of the methods to improve perfor-
mance and innovation within the organization. Ms. M stated that our company also
follows the kaizen approach. I think that the project helps employees to think system-
atically and creatively.

Leaders and management

Five of the nine participants stated that leaders and management were key persons in
deciding the direction of the companies. Thus, the management was an essential
factor that could lead to or prohibit the companies from being an innovative
organization.
Mr. A reported about the leaders and managerial factors as follows:

In my opinion, managers and supervisors have responsibility not only toward their jobs but
they also have responsibility toward their subordinates as well. In other words, the role of
management is not limited only to managing the employees but playing a role as a teacher (or
coach/mentor) and advisor for their subordinate as well. Such advisory role is essential to
stimulating their creativity.

This is in line with Lin and McDonough III (2011), who stated that leaders play a critical
role in mediating and supporting innovation and change in the organization. Leaders need
to encourage the creativity of employees to explore new ideas and look at problems from
different angles (Amabile 1997).
A summary of the results of the individual and focus group interviews is shown in
Table 3.
 Human Resource Development International 117

Table 3. Summary of the results of individual and focus group interviews.

Factors #1 #2 #3 #4 #5 #6 #7 #8 #9 Total

Learning and development / / / / / 5

Participative decision making / / / / / / 6
Communication and tolerance / / / / 4
toward conflict and risk
Kaizen / / 2
Leaders and management / / / / / 5

Discussion and implications for HRD

The study of the predominant factors leading to innovation in Japanese MNCs found that
organizational culture has an impact on organizational innovation. Our findings provide
support for this relationship. A variety of factors (i.e. learning and development, partici-
pative decision-making, communication and tolerance for conflict and risk, kaizen and
leaders and management) were discussed by nine participants from five Japanese MNCs
operating in Thailand. These results support the theoretical literature (Hurley and Hult
1998; Tushman and OReilly III 1997; Tidd, Bessant, and Pavitt 1998; Lin and
McDonough III 2011) and are consistent with previous empirical studies (Martins,
Martins, and Terblanche 2004). Additionally, our findings also support William Ouchis
theory Z (1981), which indicated seven elements of a type Z organization, including long-
term employment, consensual decision-making, individual responsibility, slow evaluation
and promotion, implicit control with explicit measures, a moderately-specialized career
path and holistic concern. Ouchi identified the main characteristics of the Japanese
managerial practices and concluded that employees want to participate in decision-making
and trust-building processes with all organizational members.
The results of this study have implications for practitioners. With the aim of support-
ing organizational creativity and innovation, HRD practitioners must consider culture as a
major factor in the entire process (Chi Tseng and McLean 2008). In general, organiza-
tional culture that supports creativity and innovation could be developed through the use
of HR intervention such as employee involvement and learning and development.
Our findings showed that participative decision-making and tolerance for conflict and
risk are the essential factors that foster creativity and innovation. This suggests that HRD
practitioners should emphasize on how to create a supportive environment where employ-
ees are allowed to share ideas and are able to actively participate in the decision-making
process. A supportive environment can be created by the acceptance of unplanned creative
ideas and creative solutions. Management should take into account that such creative
ideas should not be rejected outright because they do not align with conventional practice
(Steele and Murray 2004). This corresponds to Martins and Martins (2002) idea that if
the working environment in the organization allows employees to actively participate in a
variety of organizational activities, the chances that employees will be able to generate
new ideas will increase.
In addition, learning and development were found to have a significant relationship
with creativity and innovation in this study. According to Cooke and Saini (2010),
training and development, aimed at developing innovativeness of employees, had a strong
relationship with the firms innovativeness in a number of innovative firms. Our study
showed that employee involvement and continuous improvement projects (kaizen) could
have a positive impact on organizational innovation. Small-group activities or group-
118 W. Satsomboon and O. Pruetipibultham

oriented kaizen activities are one of the kaizen approaches in many Japanese firms (Imai
1986). In line with our findings, kaizen activities allow employees to share their ideas
about the problems, solutions and any other information that they are currently facing.
Thus, HR professionals may include kaizen activities as part of the work processes in
order to provide a chance for communication among employees that, in turn, could enable
them to think more systematically and creatively.
The findings of this paper also have important implications for managerial practices.
This study establishes that the successful implementation of a culture of innovation
requires that leaders should play a key role in this process. In other words, managers
must adopt HR policies and practices that encourage an innovative culture and ensure that
such practices are aligned with innovation strategy. Generally, organizations in which HR
professionals and top management fail to support innovation cannot implement long-term
and successful innovation strategies (Oke and Walumbwa 2012).
Our study has also identified a number of impediments to innovation in the context of
Japanese MNCs in Thailand, including language barriers and national culture differences.
Last, as HRD is not restricted only to organizational settings but also to community
and societal settings (McLean and McLean 2001), this study has implications for the Thai
community. Many countries, including Thailand, have determined to place innovation in
their economic and social-development plans as one of the strategies to drive the nation in
this turbulent economic world (Turpin and Krishna 2007). In particular, this research
could be another case study which could prove to be beneficial for Thai policy-makers at
other levels of the community and society to understand the determinant factors of
organizational cultures that support and inhibit innovation, as well as to improve areas
of innovation in order to effectively strengthen national competitiveness while preparing
for future challenges.

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