The impact of countries' culture norms and innovations on their adaptive capacity to climate change

Abstract

Innovation has been discussed as a mechanism to help markets adapt to the consequences of climate change but the adoption of innovation is shaped by a set of formal and informal institutions, one of which is national culture norms. In this empirical study, we examine the impact of innovation on adaptive capacity to climate change then investigate how national culture norms enhance or weaken this relationship, using a database of 42 countries across the period of 2009-2020. We find that innovation has a positive effect on countries' adaptive capacity to climate change and the culture dimensions of Uncertainty Avoidance and Future Orientation moderate this relationship, such that countries scoring high on Uncertainty Avoidance and Future Orientation are better able to channel innovation into the adaptive capacity to climate change.Furthermore, while we found that Uncertainty Avoidance and Future Orientation had a direct positive impact on adaptive capacity, the dimension of institutional collectiveness had no significant impact. Implications for policy makers are discussed.