While cultural differences and related formal and informal distances are often described as creating difficulties and complexity, the ability to understand and to adapt to differences or to leverage those for positive outcomes is an important imperative for individuals and firms operating in an international arena. Innovation, the positive outcome in this study, has particularly shown to be vital for success and long-term survivability of organizations. This dissertation investigates both the impact of cultural abilities, and in particular cultural intelligence (CQ), as well as the impact of cultural distance, as part of the larger institutional distance (ID) framework, on innovation on a micro- and macro level of analysis. The first essay is based on a review of the CQ literature and a reanalysis of past studies. Although research on CQ has increased since the introduction of the concept, the measurement has raised theoretical and empirical concerns. Using a meta-analytic process, we reanalyzed past CQ studies in order to make inferences and generalizations of the antecedents and outcomes of cultural intelligence. In the second essay we use the insights gained from Essay 1 regarding the application of the CQ scale and apply it to the context of innovation on a micro-level of analysis. Examining a sample of 220 expatriates in the U.S. we demonstrate the importance of CQ for international opportunity recognition and innovation. Specifically, we find that expatriates high in metacognitive CQ are better able to recognize international opportunities and to exploit marketable innovations. Finally, in the third essay we turn away from micro-level drivers of innovation to examine the determinants of innovation on a macro-level. Hereby, we reconcile controversial findings from the ID and diversity literature and suggest that sometimes, ID (composed of formal and informal distances) may positively affect innovation. The findings from the analysis of 371 offshoring implementations provide empirical support for the positive effect of certain formal and informal distances on innovation. Taken together, the dissertation demonstrates the importance of possessing cross-cultural skills and the ability of appraising differences for micro- and macro level innovativeness while offering suggestions for future research and applications.