Institutional Antecedents of Creativity and Product Innovation in the Digital Cultural Industries

ABSTRACT This study investigates the external sources of creativity that firms in the digital cultural sectors can utilize to develop innovative products to compete internationally. Drawing on organizational creativity and institutional theories, we aim to explore whether creativity can be nurtured outside firms' boundaries within the network of industry professionals and influenced by institutional factors. Adopting an inductive theory‐building approach, we conduct a qualitative case study of Finnish digital firms in the digital cultural sectors to achieve the objective of the study. Our findings reveal that socio‐cultural and regulatory forces such as startup funding, promotion of interaction within the industry ecosystem, and support for international expansion of Finnish firms nurture collective and collaborative creativity and country‐of‐origin perceptions among industry professionals by enabling their interaction, open knowledge sharing, and free flow of ideas. These processes enhance the creative capabilities of individuals in the industry, which drives them to develop innovative products within their own firms for international markets. This study advances the literature by demonstrating how socio‐cultural and regulatory institutions that are external to organizations jointly contribute to local firms' creative capacity, supporting their national and international competitiveness.