Culture as a Context for Multinational Business: A Framework for Assessing the Strategy-Culture 'Fit'

Abstract

This paper develops a framework for assessing the 'fit' between a country's culture and a generic strategy. It utilizes Hofstede's cultural dimensions together with Porter's generic business-level typology to provide a specific two country (China-US) illustration. Culture underpins strategy, affects communications process elements, and influences strategic relationships. By integrating previous research with the framework, we generate guidelines for a multinational business to use in evaluating its possible choices against national cultural dimensions. INTRODUCTION Much business research has been devoted to the 'fit' between business and various circumstances: Identifying conditions for applying generic strategies (Bartlett and Ghoshal 1987); examining national and regional environments (Douglas and Rhee 1989; Porter 1990); matching corporate cultures in joint ventures and mergers (Fedor and Werther 1996; Schneider and Barsoux 1997; Tsang 1998); globalizing (Bartlett and Ghoshal 1989; Kogut and Singh, 1988); and aligning with stakeholders (Harrison and St. John 1996). Recently, however, Buckley and Casson (1998) have called for recognition of new dimensions to corporate strategy (p.22) because of the uncertainty and volatility of the international environment. While multinational business researchers have examined broad strategy/ environment issues, less effort has focused on the link between and the dimensions of national culture. This paper explores the strategy/ culture connection with a two-country illustration involving the Porter (1985) generic typology and the Hofstede (1991) dimensions of culture. It proposes a framework for explicitly considering cultural dimensions with the dual aims of reducing environmental uncertainty and of developing guidelines for improving the multinational business - cultural environment fit. This paper contributes to the multinational business literature in three ways. First, it develops a framework for multinational business use in assessing the 'fit' between a generic and a country culture. Second, it provides insight into partner actions and competitor moves. Third, derived from the framework, it provides specific guidelines for multinational business. PROPOSED FRAMEWORK: STRATEGY/ CULTURAL DIMENSIONS 'FIT' While a number of typologies exist (Chrisman, Hofer, and Bolton 1988; Miles and Snow 1978), the most widely used model relies upon Porter (1985) (Kim and Lim 1988; Miller and Dess 1993) as do current popular strategic management texts, such as Miller (1998) and Thompson and Strickland (1998). Thus, this paper employs the basic Porter (1985) typology. Strategy is not an independent intellectual activity, rather it is a part of a logical think-anddo chain. It derives from planning, leads to action and then loops back to begin the thinkingdoing cycle again. At each link in the process-deriving the mission, developing scenarios, formulating and tactics, executing and evaluating-culture intrudes. Strategy is about figuring out how to win, whatever the game, whatever the rules, whatever the stakes. To simplify the analysis, we focus on one link in the chain, and on one type of generic strategy-cost leadership, or satisfying of customers and beating competitors with low cost and acceptable quality products and services. (Other generic strategies are: Broad differentiation which enables customers to see special value and unique qualities in a firm's products and services; and focused low-cost/ focused differentiation which aims at a narrow target market where buyer needs are distinct in terms of costs or customized requirements). Multinational business research has long acknowledged the importance of national cultural characteristics as determinants of management behavior (Cheng 1989; Rosenweig and Singh 1991). …

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