Culture-Sensitive Global Strategies

Culture-Sensitive Global Strategies

In this era of globalization, more companies than ever engage in multinational transactions, cross-border trade, international joint ventures, and mergers and acquisitions. They seek competitive advantage by accessing locations, facilities, and customers in different countries and by coordinating activities in the value chain across national borders. While economic considerations create a basis for strategic decision making when determining where, in which countries to locate research, manufacturing, supply chains, or distribution, they are not sufficient for sustainable international growth of a firm. The nature of globalization dictates additional considerations when designing and implementing corporate strategies, namely the cultural environments in different countries. If a company understands national cultures, it can increase local responsiveness to customer needs, strengthen relations with stakeholders in host countries, and develop the most effective leadership behaviors in those cultures. However, this practical approach in turn depends on the ways in which a firm perceives cultures—from an ethnocentric to a polycentric perspective—in other words, according to its cultural predisposition. Hence, international managers seek concepts and instruments that (a) incorporate cultural environments into global strategy making in addition to comparative advantage arguments and (b) imbed cultural sensitivity in the values and decisions of a multinational firm.

This chapter summarizes theoretical developments that bridge the gap between business policy and cross-cultural studies and creates a basis for sound culture-sensitive strategies. First, it traces the emergence of the global component in strategy theory and raises awareness of the cultural dimension of international business expansion. Second, it illustrates recent developments in the behavioral sciences in response to internationalization, namely the growing interest in cross-cultural studies and comparative instruments. Third, the chapter explores implications for multinational companies (MNCs) that stem from these streams of research and attempt to bridge the gap between policy and culture. This chapter also emphasizes contributions to culture-sensitive global strategies by strategy scholars such as Howard Perlmutter, Michael Porter, Yves Doz, as well as by behavioral scholars such as Geert Hofstede, Robert House, and Robert Donaldson. We also suggest practical examples of multinational corporations such as DaimlerChrysler, Honda, Rover, 3M, Unilever, Johnson & Johnson, Nike, and Motorola that successfully capitalize on cultural differences.