A Preliminary Investigation of the Moderating Affects of National Culture and Regulation on the Relationship Between Innovation and Performanve of Information Service Firms

Using Institutional theory, we show that the relationship between an information service firm’s innovation activities and firm performance is moderated by cultural and regulatory distances. Because this involves two different units of analysis, a hierarchical regression scheme was used employing 22 nations and 442 firms. We found that the relationship between R&D and sales is stronger for firms located in nations with less regulatory and cultural distance from our benchmark nation, the U.S