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Culture and International Business: Recent Advances and Their Implications for Future Research

Author(s): Kwok Leung, Rabi S. Bhagat, Nancy R. Buchan, Miriam Erez and Cristina B. Gibson
Source: Journal of International Business Studies, Vol. 36, No. 4 (Jul., 2005), pp. 357-378
Published by: Palgrave Macmillan Journals
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of International
journal Studies
Business 36,357-378
(2005)reserved
? 2005 Academyof International 0047-2506 $30.00
Business Allrights
www.jibs.net

PERSPECTIVE

Culture and international business: recent


advances and their for
implications future
research

Kwok Leung', Rabi S Abstract


The paper providesa state-of-the-artreviewof severalinnovativeadvances in
Bhagat2, Nancy R Buchan3, culture and internationalbusiness (IB) to stimulate new avenues for future
Miriam Erez4 and research. We first review the issues surroundingcultural convergence and
Cristina B Gibson5 divergence, and the processes underlyingculturalchanges. We then examine
novel constructsfor characterizingcultures,and how to enhance the precision
'Departmentof Management,CityUniversity of of culturalmodels by pinpointingwhen culturaleffects are important.Finally,
HongKong,Kowloon,HongKong;2University of we examine the usefulnessof experimentalmethods, which are rarelyused by
of
Memphis,Memphis,TN,USA;3University IB researchers.Implicationsof these path-breakingapproaches for future
Wisconsin,Madison,WI,USA;4Technion-Israel researchon cultureand IBare discussed.
Instituteof Technology,Haifa,Israel;5University
of California,
Irvine,CA,USA Journalof InternationalBusinessStudies(2005) 36, 357-378.
doi:I0. I057/palgrave.jibs.8400
150
Correspondence:
Dr K Leung, Department of Management, Keywords:cultureandinternational
business;
convergence of cultures;
anddivergence
City Universityof Hong Kong, Tat Chee change;cultural
cultural cross-cultural
dimensions; experiments
Avenue, Kowloon, Hong Kong.
Tel: + 852 2788 9592;
Fax: + 852 2788 9085; Introduction
E-mail:mkkleung@cityu.edu.hk In this new millennium, few executives can afford to turn a blind
Authors' note: This paper is based on a
eye to global business opportunities.Japanese auto-executives moni-
tor carefully what their Europeanand Koreancompetitors are up to
symposium organized by KwokLeung with
the co-authors as participants in the First in getting a bigger slice of the Chinese auto-market. Executives of
Annual Conference on Emerging Research Hollywood movie studios need to weigh the appeal of an expensive
Frontiersin InternationalBusiness at Duke movie in Europe and Asia as much as in the US before a firm
Universityin March2003. The co-authors commitment. The globalizing wind has broadened the mindsets of
have contributed equally to the
development of this paper. executives, extended the geographical reach of firms, and nudged
international business (IB)research into some new trajectories.
One such new trajectory is the concern with national culture.
Whereas traditional IB research has been concerned with econom-
ic/legal issues and organizational forms and structures, the
importance of national culture - broadly defined as values, beliefs,
norms, and behavioral patterns of a national group - has become
increasingly important in the last two decades, largely as a result of
the classic work of Hofstede (1980). National culture has been
shown to impact on major business activities, from capital
structure (Chui et al., 2002) to group performance (Gibson,
Received: 13 August 2003
1999). For reviews, see Boyacigiller and Adler (1991) and Earley
Revised: 20 December 2004
and Gibson (2002).
Accepted: 25 February2005 The purpose of this paper is to provide a state-of-the-art review of
Online publication date: 2 June 2005 several recent advances in culture and IB research, with an eye

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Advances in culture and international business KwokLeunget
358 al

Table 1 A schematic summaryof the paper


Section focus Keyconceptualquestion Keyimplicationfor IBresearch
Culturalconvergence and divergence Are cultures becoming more similar Whether standard business practices will emerge
under the force of globalization?
Culturalchange What are the dynamics of cultural How will business practices change over time?
change?
Novel constructs of culture What is new about culture? New concepts for understanding cultural
differences in business practices
Moderating effects of culture When is culture important? When to adopt standard business practices
Experimentalapproaches How to test the effects of culture Causal inferences about the effects of culture on
experimentally standard business practices

toward productive avenues for future research. It is evidence on the issue and conclude that such an
not our purpose to be comprehensive; our goal is to outlook pertaining to the convergence of various IB
spotlight a few highly promising areas for leapfrog- practices is overly optimistic.
ging the field in an increasingly boundaryless
business world. We first review the issues surround- Evolution of partial globalization
ing cultural convergence and divergence, and the Globalization refers to a 'growing economic inter-
processes underlying cultural changes. We then dependence among countries, as reflected in the
examine novel constructs for characterizing cul- increased cross-border flow of three types of
tures, and how to enhance the precision of cultural entities: goods and services, capital, and know-
models by pinpointing when the effects of culture how' (Govindarajanand Gupta, 2001, 4). Few spoke
are important. Finally, we examine the usefulness of 'world economy' 25 years ago, and the prevalent
of experimental methods, which are rarely term was 'international trade' (Drucker, 1995).
employed in the field of culture and IB. A schematic However today, international trade has culminated
summary of our coverage is given in Table 1, which in the emergence of a global economy, consisting of
suggests that the topics reviewed are loosely related, flows of information, technology, money, and
and that their juxtaposition in the present paper people, and is conducted via government interna-
represents our attempt to highlight their impor- tional organizations such as the North American
tance rather than their coherence as elements of an Free Trade Agreement (NAFTA)and the European
integrative framework. Community; global organizations such as the
International Organization for Standardization
Cultural change, convergence and (ISO); multinational companies (MNCs); and
divergence in an era of partial globalization cross-borderalliances in the form of joint ventures,
An issue of considerable theoretical significance is international mergers, and acquisitions. These
concerned with cultural changes and transforma- inter-relationships have enhanced participation in
tions taking place in different parts of the world. In the world economy, and have become a key to
fact, since the landmark study of Haire et al. (1966) domestic economic growth and prosperity (Druck-
and the publication of Industrialismand Industrial er, 1995, 153).
Man by Kerr et al. (1960), researchers have con- Yet, globalization is not without its misgivings
tinued to search for similarities in culture-specific and discontents (Sassan, 1998). A vivid image
beliefs and attitudes in various aspects of work- associated with the G8 summits is the fervent
related attitudes and behaviors, consumption pat- protests against globalization in many parts of the
terns, and the like. If cultures of the various locales world, as shown in television and reported in the
of the world are indeed converging (e.g., Heuer popular media. Strong opposition to globalization
et al., 1999), IB-related practices would indeed usually originates from developing countries that
become increasingly similar. Standard, culture-free have been hurt by the destabilizing effects of
business practices would eventually emerge, and globalization, but in recent times we have also seen
inefficiencies and complexities associated with heated debates in Western economies triggered by
divergent beliefs and practices in the past era would significant loss of professional jobs as a result of
disappear. In the following section, we review the offshoring to low-wage countries. Indeed, workers

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Advances in culture and international business KwokLeunget al
359

in manufacturing and farming in advanced econo- norms, and ideas about how individuals, groups,
mies are becoming increasingly wary of globaliza- institutions, and other important social agencies
tion, as their income continues to decline ought to function. In fact, Huntington (1996, 58)
significantly. In parallel to the angry protests noted that 'The essence of Western civilization is
against globalization, the flow of goods, services, the Magna Carta, not the Magna Mac. The fact that
and investments across national borders has con- non-Westerners may bite into the latter has no
tinued to fall after the rapid gains of the 1990s. implications for their accepting the former'. This
Furthermore, the creation of regional trade blocs, argument is obvious if we reverse the typical
such as NAFTA, the European Union, and the situation and put Western Europeans and Amer-
Association of Southeast Asian Nations, have icans in the shoes of recipients of cultural influ-
stimulated discussions about creating other trade ence. For instance, while Chinese Kung Fu
zones involving countries in South Asia, Africa,and dominates fight scenes in Hollywood movies such
other parts of the world. Although it is often as MatrixReloaded,and Chinese restaurants abound
assumed that countries belonging to the World in the West, it seems implausible that Americans
Trade Organization (WTO) have embraced globali- and Europeans have espoused more Chinese values
zation, the fact is that the world is only partially because of their fondness of Chinese Kung Fu and
globalized, at best (Schaeffer, 2003). Many parts of food.
Central Asia and Eastern Europe, including the A major argument against cultural convergence is
former republics of the Soviet Union, parts of Latin that traditionalism and modernity may be unre-
America, Africa, and parts of South Asia, have been lated (Smith and Bond, 1998). Strong traditional
skeptical of globalization (Greider, 1997). In fact, values, such as group solidarity, interpersonal
less than 10% of the world's population are fully harmony, paternalism, and familism, can co-exist
globalized (i.e., being active participants in the with modern values of individual achievement and
consumption of global products and services) competition. A case in point is the findings that
(Schaeffer, 2003). Therefore, it is imperative that Chinese in Singapore and China indeed endorsed
we analyze the issues of cultural convergence and both traditional and modern values (Chang et al.,
divergence in this partially globalized world. 2003; Zhang et al., 2003). It is also conceivable that,
'Universal culture' often refers to the assump- just as we talk about Westernization of cultural
tions, values, and practices of people in the West values around the world, we may also talk about
and some elites in non-Western cultures. Hunting- Easternization of values in response to forces of
ton (1996) suggested that it originates from the modernity and consumption values imposed by
intellectual elites from a selected group of countries globalization (Marsellaand Choi, 1993).
who meet annually in the World Economic Forum Although the argument that the world is becom-
in Davos, Switzerland. These individuals are highly ing one culture seems untenable, there are some
educated, work with symbols and numbers, are areas that do show signs of convergence. We
fluent in English, are extensively involved with explore in the following the role of several factors
international commitments, and travel frequently that simultaneously cause cultures of the world to
outside their country. They share the cultural value either converge or diverge, in an attempt to identify
of individualism, and believe strongly in market several productive avenues for future research.
economics and political democracy. Although
those belonging to the Davos group control Role of international trade
virtually all of the world's important international Clyde V Prestowitz Jr., President of the Economic
institutions, many of the world's governments, and Strategy Institute, Washington, DC, observed that
a great majority of the world's economic and most international trade negotiations are in trouble
military capabilities, the cultural values of the (Leonhardt, 2003). These negotiations were success-
Davos group are probably embraced by only a small ful in the last decade, but complex issues have
fraction of the six billion people of the world. emerged that have the potential to derail the
Popular culture, again mostly Western European growth of international trade in the future. For
and American in origin, also contributes to a instance, many representatives of large agricultural
convergence of consumption patterns and leisure countries, such as Brazil and Argentina, notice little
activities around the world. However, the conver- significant progress in the area of trade in interna-
gence may be superficial, and have only a small tional exports. Similarly, countries in East and
influence on fundamental issues such as beliefs, Southeast Asia specializing in exporting complex

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technological products to the West have undergone living. Ethnic groups around the world observe the
significant declines in international trade as a result lifestyles and cultural values of other countries, and
of fiscal crises. They are beginning to question some are interested in adopting part of the lifestyle
whether globalization will bring benefits greater and values, but others reject it completely. The
than regionalization of trade. In recent years, effects of new technologies on improving efficien-
Japan, for example, has expanded trade activities cies of multinational and global corporations are
with China and other East Asian countries rather well known, but it is not known how these new
than with the West. Our review and analysis of the technologies, especially computer-mediated com-
literature suggests that because globalization tends munication and the Internet, might create signifi-
to redistribute economic rewards in a non-uniform cant shifts in the cultural patterns of different
manner, a backlash against globalization may occur ethnic groups.
in countries often confronted with unpredictable To summarize, computer-mediated communica-
and adverse consequences of globalization, causing tion has the simultaneous effects of increasing both
them to revert to their own cultural-specific cultural convergence and divergence. We need to
patterns of economic growth and development explore how its spread is affecting the progress of
(Guillen, 2001). These trends might indicate that globalization in different parts of the world by
globalization is being impeded by tendencies incorporating the role of cultural syndromes,
towards country-specific modes of economic devel- organizational cultures, and other processes, which
opment, making the convergence of IB-related has recently been attempted by scholars such
values and practices difficult to achieve. We do as Bhagat et al. (2003) and Gibson and Cohen
not know much about these dynamics, which (2003). Unfortunately, empirical work on these
definitely need to be explored in future research. processes is scanty, and more research is needed
before comprehensive theoretical statements can
Role of computer-mediated communication be formulated.
Technology, particularly computer-mediated com-
munication, has been hailed as a major force in
creating cultural convergence around the world Role of multiculturalism and cultural identity
and facilitating the spread of IB. Autonomous The broad ideological framework of a country,
business units of global corporations are continu- corporation, or situation is the most important
ously connected, not necessarily in large physical determinant of the cultural identity that people
structures, but in global electronic networks func- develop in a given locale (Triandis, 1994). The
tioning interdependently. Some authors even claim 'melting pot' ideology suggests that each cultural
that physical distance is no longer a major factor in group loses some of its dominant characteristics in
the spread of global business (Cairncross, 2001; order to become mainstream: this is assimilation,or
Govindarajan and Gupta, 2001). Computer- what Triandis (1994) calls subtractivemulticultural-
mediated communication enables users to access a ism. In contrast, when people from a cultural group
huge amount of factual information globally; add appropriate skills and characteristics of other
however, it does not necessarily increase their groups, it may be called integration, or additive
capacity to absorb the information at the same rate multiculturalism.
as the information is disseminated or diffused. In Both of these processes are essential for cultural
addition, information and knowledge are inter- convergence to proceed. However, if there is a
preted through cultural lenses, and the transfer or significant history of conflict between the cultural
diffusion of organizational knowledge is not easy to groups, it is hard to initiate these processes, as in
accomplish across cultural boundaries (Bhagat the case of Israelis and Palestinians. In general,
et al., 2002). although there has been some research on the
Hofstede (2001) observed that not only will typology of animosity against other nations (e.g.,
cultural diversity among countries persist but also Jung et al., 2002), we do not know much about how
new technologies might even intensify the cultural emotional antagonism against other cultural
differences between and within countries. As was groups affects trade patterns and intercultural
noted earlier, the spread of information about cooperation in a business context. The issues of
people's lives in different parts of the world has cultural identity and emotional reactions to other
affected some minorities who compare their fate in cultural groups in an IB context constitute a
life with that of others with a higher standard of significant gap in our research effort in this area.

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Implications of convergence and divergence Scholars of IB should recognize that the issue of
issues convergence and divergence in this era of partial
One message is clear: while convergence in some globalization will remain as a persistent and com-
domains of IB activity is easily noticeable, espe- plex issue whose direction might only be assessed
cially in consumer values and lifestyles, significant on a region-by-region basis. It is also wise to adopt
divergence of cultures persists. In fact, Hofstede an interdisciplinary perspective in understanding
(2001) asserts that mental programs of people the forces that create both convergence and diver-
around the world do not change rapidly, but gence of cultures in different parts of the world. For
remain rather consistent over time. His findings instance, in UnderstandingGlobalization, Schaeffer
indicate that cultural shifts are relative as opposed (2003) has provided an insightful discussion of the
to absolute. Although clusters of some countries in social consequences of political, economic and
given geographical locales (e.g., Argentina, Brazil, other changes, which have significant implications
Chile) might indicate significant culture shifts for IB. The cause-effect relationships of globaliza-
towards embracing Anglo values, the changes do tion and its various outcomes, especially the
not diminish the absolute differences between such cultural outcomes, are not only characterized by
countries and those of the Anglo countries (i.e., US, bi-directional arrows, but are embedded in a
Canada, UK). Huntington, in his The Clash of complex web of relationships. How these complex
Civilizations(1996), presents the view that there is relationships and processes play out on the stage of
indeed a resurgence of non-Western cultures IB remains to be uncovered by IB researchers.
around the world, which could result in the
redistribution of national power in the conduct of Processes of cultural changes
international affairs. The attempt by the Davos In the previous section, we make the point that,
group to bring about uniform practices in various through the process of globalization, cultures
aspects of IB and work culture, thereby sustaining influence each other and change, but whether or
the forces of globalization, is certainly worthwhile. not these changes will bring about cultural con-
However, our analysis suggests that there is no vergence is yet to be seen. In this section, we
guarantee that such convergence will come about delineate a general model that describes and
easily, or without long periods of resistance. explains the complex processes underlying cultural
IB scholars need to understand that although changes. As explained before, IB is both an agent
some countries might exhibit strong tendencies and a recipient of cultural change, and for interna-
toward cultural convergence, as is found in Western tional business to flourish it is important to under-
countries, there are countries that will reject globa- stand its complex, reciprocal relationships with
lization, not only because of its adverse economic cultural change.
impacts (Greider, 1997) but also because globaliza- In line with the view of Hofstede (2001) that
tion tends to introduce distortions (in their view) in culture changes very slowly, culture has been
profound cultural syndromes that characterizetheir treated as a relatively stable characteristic, reflect-
national character.Furthermore,reactions to globa- ing a shared knowledge structure that attenuates
lization may take other forms. Bhagat et al. (2003) variability in values, behavioral norms, and pat-
have recently argued that adaptation is another terns of behaviors (Erezand Earley, 1993).
approach that could characterize the tendencies of Cultural stability helps to reduce ambiguity, and
some cultures in the face of mounting pressures to leads to more control over expected behavioral
globalize. Other approaches are rejection, creative outcomes (Weick and Quinn, 1999; Leana and
synthesis,and innovation(Bhagat et al., 2003). These Barry,2000). For instance, most existing models of
different approaches highlight once again the com- culture and work behavior assume cultural stability
plex dynamics that underlie cultural convergence and emphasize the fit between a given culture and
and divergence in a partially globalized world. Also, certain managerial and motivational practices (Erez
in discussing issues of convergence and divergence, and Earley, 1993). High fit means high adaptation
it is necessary to recognize that the shift in values is of managerial practices to a given culture and,
not always fromnWestern society to others, but can therefore, high effectiveness. The assumption of
result in the change of Western cultural values as cultural stability is valid as long as there are no
well. For example, the emphasis on quality and environmental changes that precipitate adaptation
teamwork in the West is partly a result of the popu- and cultural change. Yet, the end of the 20th
larity of Japanese management two decades ago. century and the beginning of the new millennium

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have been characterized by turbulent political and also showed that the broad cultural heritage of a
economical changes, which instigate cultural society, whether it is Protestant, Roman Catholic,
changes. In line with this argument, Lewin and Orthodox, Confucian, or Communist, leaves an
Kim (2004), in their comprehensive chapter on enduring imprint on traditional values despite the
adaptation and selection in strategy and change, forces of modernization.
distinguished between theories driven by the The process of globalization described before has
underlying assumption that adaptation is the introduced the most significant change in IB, with
mechanism to cope with change, and theories its effects filtering down to the national, organiza-
driven by the underlying assumption of selection tional, group and individual levels. Reciprocally,
and the survival of the fittest, suggesting that changes at micro-levels of culture, when shared by
ineffective forms of organization disappear, and the members of the society, culminate into macro-
new forms emerge. However, although organiza- level phenomena and change the macro-levels of
tional changes as a reaction to environmental culture. In the absence of research models that can
changes have been subjected to considerable con- shed light on this complex process of cultural
ceptual analyses, the issue of cultural change at the change, Erez and Gati (2004) proposed that the
national level has rarely been addressed. general model of multi-level analysis (Klein and
There are relatively few theories of culture that Kozlowski, 2000) could be adopted for understand-
pertain to the dynamic aspect of culture. One ing the dynamics of culture and cultural change.
exception is the ecocultural model by Berry et al.
(2002), which views culture as evolving adaptations The dynamics of culture as a multi-level,
to ecological and socio-political influences, and multi-layer construct
views individual psychological characteristics in a The proposed model consists of two building
population as adaptive to their cultural context, as blocks. One is a multi-level approach, viewing
well as to the broader ecological and socio-political culture as a multi-level construct that consists of
influences. Similarly, Kitayama (2002) proposes a various levels nested within each other from the
systemview to understanding the dynamic nature of most macro-level of a global culture, through
culture, as opposed to the entity view that sees national cultures, organizational cultures, group
culture as a static entity. This system view suggests cultures, and cultural values that are represented in
that each person's psychological processes are the self at the individual level, as portrayed in
organized through the active effort to coordinate Figure 1. The second is based on Schein's (1992)
one's behaviors with the pertinent cultural systems model viewing culture as a multi-layer construct
of practices and public meanings. Yet, concurrently, consisting of the most external layer of observed
many aspects of the psychological systems develop artifacts and behaviors, the deeper level of values,
rather flexibly as they are attuned to the surround- which is testable by social consensus, and the
ing socio-cultural environment, and are likely to be deepest level of basic assumption, which is invisible
configured in different ways across different socio- and taken for granted. The present model proposes
cultural groups. that culture as a multi-layer construct exists at all
These adaptive views of culture are supported by levels - from the global to the individual - and that
empirical evidence. For example, Van de Vliert et al. at each level change first occurs at the most
(1999) identified curvilinear relationships between external layer of behavior, and then, when shared
temperature, masculinity and domestic political by individuals who belong to the same cultural
violence across 53 countries. Their findings showed context, it becomes a shared value that charac-
that masculinity and domestic violence are higher terizes the aggregatedunit (group, organizations, or
in moderately warm countries than in countries nations).
with extreme temperatures. Inglehart and Baker In the model, the most macro-level is that of a
(2000) examined cultural change as reflected by global culture being created by global networks and
changes in basic values in three waves of the World global institutions that cross national and cultural
Values Surveys, which included 65 societies and borders. As exemplified by the effort of the Davos
75% of the world's population. Their analysis group discussed earlier, global organizational struc-
showed that economic development was associated tures need to adopt common rules and procedures
with shifts away from traditional norms and values in order to have a common 'language' for commu-
toward values that are increasingly rational, toler- nicating across cultural borders (Kostova, 1999;
ant, trusting, and participatory. However, the data Kostova and Roth, 2003; Gupta and Govindarajan,

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into the unit because of their creative cognitive


Global Culture style and professional expertise. Their leader also
typically facilitates the display of these personal
National Culture characteristicsbecause they are crucial for develop-
ing innovative products. Thus, all members of this
Top- unit share similar core values, which differentiate
OrganizationalCulture Down
them from other organizational units. Groups that
share similar values create the organizational
Culture
Group culture through a process of aggregation, and local
organizations that share similar values create the
Individual national culture that is different from other
Behavior national cultures.
Values Ot o
Assuiqtions /UP
Both top-down and bottom-up processes reflect
the dynamic nature of culture, and explain how
culture at different levels is being shaped and
reshaped by changes that occur at other levels,
either above it through top-down processes or
below it through bottom-up processes. Similarly,
changes at each level affect lower levels through a
top-down process, and upper levels through a
Figure 1 The dynamic of top-down-bottom-up processes
across levels of culture. bottom-up process of aggregation. The changes in
national cultures observed by Inglehart and Baker
(2000) could serve as an example for top-down
2000). Given the dominance of Western MNCs, the effects of economic growth, enhanced by globaliza-
values that dominate the global context are often tion, on a cultural shift from traditional values to
based on a free market economy, democracy, modernization. However, in line with Schein
acceptance and tolerance of diversity, respect of (1992), the deep basic assumptions still reflect the
freedom of choice, individual rights, and openness traditional values shaped by the broad cultural
to change (Gupta and Govindarajan, 2000). heritage of a society.
Below the global level are nested organizations Global organizations and networks are being
and networks at the national level with their local formed by having local-level organizations join
cultures varying from one nation, or network to the global arena. That means that there is a
another. Furtherdown are local organizations, and continuous reciprocal process of shaping and
although all of them share some common values of reshaping organizations at both levels. For exam-
their national culture, they vary in their local ple, multinational companies that operate in the
organizational cultures, which are also shaped by global market develop common rules and cultural
the type of industry that they represent, the type of values that enable them to create a synergy
ownership, the values of the founders, etc. Within between the various regions, and different parts of
each organization are sub-units and groups that the multinational company. These global rules and
share the common national and organizational values filter down to the local organizations that
culture, but that differ from each other in their unit constitute the global company, and, over time, they
culture on the basis of the differences in their shape the local organizations. Reciprocally, having
functions (e.g., R&D vs manufacturing), their local organizations join a global company may
leaders' values, and the professional and educa- introduce changes into the global company
tional level of their members. At the bottom of this because of its need to function effectively across
structure are individuals who through the process different cultural boarders.
of socialization acquire the cultural values trans- A study by Erez-Rein et al. (2004) demonstrated
mitted to them from higher levels of culture. how a multinational company that acquired
Individuals who belong to the same group share an Israeli company that develops and produces
the same values that differentiate them from other medical instruments changed the organizational
groups and create a group-level culture through a culture of the acquired company. The study
bottom-up process of aggregation of shared values. identified a cultural gap between the two compa-
For example, employees of an R&Dunit are selected nies, with the Israeli company being higher on the

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364

cultural dimension of innovation and lower on the on the Internet; yet, at the same time, they keep
cultural dimension of attention to detail and their own cultural values, their social group, and
conformity to rules and standards as compared their national identity, drawing on each identity
with the acquiring company. The latter insisted on according to what they deem necessary in a given
sending the Israeli managers to intensive courses in context. Through a top-down process, the global
Six-Sigma, which is an advanced method of quality environment - a macro-level construct - affects the
improvement, and a managerial philosophy that development of a bi-cultural identity at the indivi-
encompasses all organizational functions. Upon dual level, by shaping the individual's global
returning to their company, these managers intro- identity, and thus facilitating adaptation to the
duced quality improvement work methods and global world. As discussed before, however, the
procedures to the local company, and caused extent to which a bi-cultural identity develops
behavioral changes, followed by the internalization depends on whether subtractive or additive multi-
of quality-oriented values. Thus, a top-down pro- culturalism is encouraged. This dual nature of
cess of training and education led to changes in identity presents a challenge to the operation of
work behavior and work values. Sharing common multinational firms, as we know little about how
behaviors and values by all employees of the local complex self-identity processes are related to beha-
company then shaped the organizational culture vior and performance in an IB setting.
through bottom-up processes. The case of cultural
change via international acquisitions demonstrated
Factors that facilitate cultural change
the two building blocks of our dynamic model of Culture itself influences the level of resistance or
culture: the multi-level structure explains how a acceptance of change. Harzing and Hofstede (1996)
lower-level culture is being shaped by top-down proposed that certain cultural values facilitate
effects, and that the cultural layer that changes first change, whereas others hinder it. The values of
is the most external layer of behavior. In the long low power distance, low uncertainty avoidance,
run, bottom-up processes of shared behaviors and and individualism facilitate change. Change threa-
norms shape the local organizational culture. tens stability, and introduces uncertainty, and
resistance to change will therefore be higher in
Globalization and self-identity cultures of high rather than low uncertainty
avoidance (Steensma et al., 2000). Change also
Top-down processes from the global culture to the
individual level may lead to changes in the self as threatens the power structure, and therefore will be
cultural values are represented in the self. The self is avoided in high power distance cultures. Finally,
a multi-facet construct that consists of self- and change breaks the existing harmony, which is
social identities. Self-identity differentiates one highly valued in collectivistic cultures, and there-
fore will not be easily accepted by collectivists
person from another, whereas social identity is
based on the groups in which one participates (Levine and Norenzayan, 1999).
A recent study by Erezand Gati (2004) examined
(Tajfeland Turner,1979). Social identity theory has
the effects of three factors on the change process
commonly been examined in relation to member-
and its outcomes:
ship in social groups and national cultures. How-
ever, the global environment creates a new (1) the cultural value of individualism-collecti-
collective and impersonal entity that affects peo- vism;
ple's identity. Global identity means that people (2) the reward structure and its congruence with
develop a sense of belongingness to a worldwide the underlying cultural values; and
culture, by adopting practices, styles, and informa- (3) the degree of ambiguity in the reward structure.
tion that are part of the global culture (Arnett,
2002). However, in parallel, people continue to The change process examined was a shift from
hold their local identity as well, based on their choosing to work alone to a behavioral choice
socialization to their local culture. Arnett (2002) of working as part of a team, and vice versa.
defines these two facets of self-identity as a bi- Working alone is more prevalent in individualistic
cultural identity, in which part of the self-identity is cultures, whereas working in teams dominates the
rooted in the local culture, while another part collectivistic ones. Two sub-cultures from Israel
develops in relation to the global culture. Thus, participated in the study: Arab Israeli citizens,
people all over the world wear jeans, enjoy fried who scored high on collectivism; and Jewish
rice, eat at McDonald's, listen to Discmans, and surf citizens, who grew up in big cities and scored

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significantly lower on collectivism than did the section, we focus on novel conceptualizations of
Arab participants. Results showed that the beha- culture that are emerging in the literature.
vioral choices of the Arab participants remained There are two interesting directions for identify-
more or less unchanged despite different manipula- ing novel cultural constructs in the literature,
tions of rewardcongruence and ambiguity, suggest- which are almost diametric in their orientation.
ing that collectivism was related to resistance to The first development follows in the footsteps of
change. In addition, resistance to change was higher Hofstede in the search of novel trait-like, static
when the rewarded alternative was incongruent cultural dimensions, whereas the second develop-
with their underlying cultural values, and when ment is inspired by breakthroughs in cognitive
the level of ambiguity was high rather than low. psychology, which increasingly portray the human
This study demonstrated that the top-down mind as dynamic, elastic, and situated.
effects on cultural change are moderated by culture
itself, and by the reward system. Changes are more Novel cultural dimensions
likely to occur in individualistic cultures when the The classic work of Hofstede (1980) has revolutio-
reward structure is clear, and when the rewarded nized the research on culture and IB. Subsequent to
behavior does not conflict with the dominant value his original work, Hofstede (2001) has added one
system. Change is first observed in people's beha- more dimension to his framework:Confucian Work
vior, as shown in Erez and Gati's (2004) study. In Dynamism or short- vs long-term orientation, based
the long run, when the new behavioral norms are on the work of the Chinese Culture Connection
being shared by all group members, they filter (1987). The validity of the cultural dimensions
down to the deeper level of cultural values as they identified by Hofstede has been controversial (for a
are represented in the self. The representation of recent debate surrounding individualism-collecti-
new values in the self may subsequently shape a vism, see Oyserman et al., 2002a), but they have
more collectivistic (or individualistic) society. To provided a broad framework that has inspired
sum up, this study tested the dynamic nature of much IB research.
culture by integrating two constructs, multi-level Subsequent to the work of Hofstede, a few global
and multi-layer views of culture, into one dynamic projects have attempted to search for new cultural
model. The multi-level construct helps us under- dimensions. Schwartz (1994) has identified seven
stand how culture is being shaped and reshaped by culture-level dimensions of values: Conservatism,
the dynamic top-down, bottom-up processes, Intellectual Autonomy, Affective Autonomy,
which transmit the effect of one cultural level to Hierarchy, Egalitarian Commitment, Mastery, and
another. The multi-layer construct provides a Harmony. These dimensions have been used to
framework to describe the nature of the cultural predict cultural differences, including locus of
changes. control (Smith et al., 1995) and work-related issues,
In summary, the proposed multi-level, multi- such as the sources of guidance that managers
layer model is useful to IB researchers who are relied on (Smith et al., 2002), and capital structure
interested in modeling and studying the process of (Chui et al., 2002). Smith et al. (1996) have identi-
cultural change along two continua: from the fied two culture-level dimensions from an analysis
global to the individual level, and from the external of managerial values: Egalitarian Commitment vs
layer of behavior to the internal layer of basic Conservatism, and Utilitarian Involvement vs Loyal
assumptions and axioms. Understanding these Involvement. Smith and Bond (1998, Chapter 3)
processes is obviously crucial to the effective have concluded that these different value surveys
operation of multinational business operations. have produced convergent results, lending support
to the validity of the cultural dimensions originally
Novel cultural constructs identified by Hofstede (1980).
In addition to rethinking our general conceptuali- Recently, in an attempt to understand leader-
zation of culture and cultural processes, we encou- ship behavior around the world, House and his
rage researchers to re-examine the specific cultural associates have identified nine culture-level dimen-
constructs utilized in theory and research. A major sions: Performance Orientation, Assertiveness
approach in the literature has been to relate IB Orientation, Future Orientation, Humane Orienta-
phenomena to special cultural characteristics, and tion, Institutional Collectivism, Family Collecti-
to improve upon this approach it is important to vism, Gender Egalitarianism, Power Distance, and
expand our conceptualization of culture. In this Uncertainty Avoidance (Gupta and House, 2004;

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House et al., 2004). The GLOBEproject adopted a the robustness of this structure in over 40 cultural
theory-based approach, and a priori dimensions groups (Leung and Bond, 2004), and this five-
were formulated based primarily on Hofstede's dimensional structure at the individual level has
dimensions, values described by Kluckhohn and already been applied to the investigation of influ-
Strodtbeck (1961) and McClelland (1961), and the ence tactics in an IB context (Fu et al., 2004). A
interpersonal communication literature (Sarrosand culture-level factor analysis based on 41 cultural
Woodman, 1993). Thus, despite the use of different groups has yielded only two factors (Bond et al.,
items to identify cultural dimensions, the results 2004). Dynamic Externalityrefers to beliefs in fate,
are consistent with previous results, and most of the existence of a supreme being, positive functions
the cultural dimensions identified are related of religion practice, which give rise to the label
conceptually and correlated empirically with Hof- 'externality'. However, the content also suggests
stede's dimensions. Assertiveness Orientation and beliefs in effort and knowledge, as well complexity
Gender Egalitarianism are related to Hofstede's in the social world, which gives a dynamic slant to
construct of Masculinity-Femininity, Institutional this construct. Societal Cynicismreflects a negative
Collectivism and Family Collectivism to Individu- view of human nature and a mistrust in social
alism-Collectivism, Power Distance and Uncer- institutions. Correlations with a wide range of
tainty Avoidance to the two Hofstede dimensions country-level indexes support the interpretation
with the same labels, and Future Orientation to of these two dimensions given before. Furthermore,
Long-term Orientation. The usefulness of a more dynamic externality is related to collectivism and
refined typology of the Hofstede dimensions high power distance, but Societal Cynicism is
remains to be demonstrated. Two dimensions are relatively distinct from previous cultural dimen-
independent of the Hofstede dimensions. Perfor- sions. These two dimensions may have significant
mance Orientation seems conceptually related to implications for IB research. For instance, across a
McClelland's (1961) concept of need for achieve- wide variety of cultures, dynamic externality is
ment, and Humane Orientation seems concep- related to the reliance on superiors as a source of
tually related to the Human Nature is Good vs guidance, and Societal Cynicism to job dissatisfac-
Bad dimension of Kluckhohn and Strodtbeck tion. Future research may reveal interesting rela-
(1961). Although these dimensions are not new, tionships between these two cultural dimensions
they may prove useful for understanding some IB and other IB phenomena.
phenomena. Take leadership as an example: we The global projects reviewed above suggest that
know that leaders vary in their task orientation, the Hofstede dimensions are robust, although
and Performance Orientation may be related to a subsequent work has led to some important refine-
general emphasis on task orientation. Leaders also ment and clarification. More importantly, at least
vary in their supervisory style, and Humane three novel dimensions have been identified:
Orientation may be negatively related to close Performance Orientation, Humane Orientation,
supervision. Obviously, relationships with other and Societal Cynicism. We do not know much
variables are also possible, and hopefully future about these cultural dimensions, and their impor-
research will yield theoretically interesting corre- tance for IB research is obviously an important area
lates of these two dimensions. for future exploration.
The most recent large-scale attempt to expand
the dimensional map of culture is the global study A dynamic view of culture
on social axioms orchestrated by Leung and Bond. Current research in cognitive psychology shows
Social axioms are general beliefs that may be that the human mind is fluid and adaptive, and is
conceptualized as generalizedexpectancies,a concept engaged in active, dynamic interaction with the
introduced by Rotter (1966) to characterize locus of environment. This conception of the human mind
control. Leung et al. (2002) have created a social gives rises to a dynamic view of culture, which
axiom survey based on items culled from the contrasts sharply with traditional views that regard
psychological literature as well as from qualitative culture as more or less stable and static. This
research conducted in Hong Kong and Venezuela. dynamic view of culture argues that culture is
Factor analysis of these items has unearthed a five- represented by cognitive structures and processes
factor structure within each of five cultures: Hong that are sensitive to environmental influences. For
Kong, Venezuela, the USA, Japan, and Germany. A instance, Tinsley and Brodt (2004) have provided a
subsequent round-the-world study has confirmed cognitive analysis of cultural differences in conflict

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behaviors. Framesdirect attention to certain aspects Chinese primes, the American primes were able to
of the environment; schemas are knowledge struc- shift the attribution of the Chinese participants in
tures that give meaning to encoded information; the internal direction. In other words, the Amer-
and scriptsare a special type of schema that involve ican primes caused the Chinese participants to act
a temporal sequence and are most relevant for more like Americans in their attributional style.
events and actions. These constructs are dynamic in Peng and Knowles (2003) replicated these findings
the sense that their content and salience are with Asian Americans. When they were asked to
sensitive to environmental influences. Tinsley and recall an experience that highlighted their Amer-
Brodt suggest that these cognitive constructs are ican identity, their attributional style was more in
useful in understanding cross-cultural differences the internal direction than when they were asked to
in conflict behaviors. As an example, whereas recall an experience that made their Asian identity
conflict frames that emphasize self-interest and more salient. In fact, Oyserman et al. (2002a)
mutual interest are appropriate for Americans, a concluded after their meta-analysis of the indivi-
different conflict frame that emphasizes a collective dualism-collectivism literature that priming experi-
or community orientation is more useful in ments such as those described above provide a
describing the conflict behaviors of Asians. Another promising tool to examine the dynamics of cultural
example comes from a connectionist approach to influence. However, future research needs to
leadership and culture proposed by Hanges et al. explore whether priming results are too transient
(2000). In this framework, leadership behaviors are to be robust in the real world, and what the
interpreted with schemas, which involve compo- processes are that underlie these priming effects.
nents such as scripts and beliefs. These components The implications of a dynamic view of culture for
are under the influence of higher-order compo- IB have not been explored. One intriguing possibi-
nents such as values, affect, and self-image. Hanges lity is that cultural differences may be easier to
et al. proposed that this complex, distributed view overcome than previously assumed, if mental
of schemas captures the essence of cultural mean- processes associated with national culture are
ing systems. Given that the components of a relatively fluid, and can be changed and sustained
schema and their associations can change over by appropriate situational influences. For instance,
time as a function of experience and situational Leung and his associates (Leung et al., 1996, 2001b)
influence, this model does not assume static effects have found that local employees in international
of culture, and is well suited for the analysis of its joint ventures in China reported more positive job
dynamic effects. attitudes working with Western expatriate man-
An important implication of this dynamic view of agers than with overseas Chinese and Japanese
culture is that cultural changes are more frequent expatriate managers. These findings contradict the
than previously assumed. A good example is cultural distance argument, which suggests that
provided by the research of Hong et al. (2000). It people from very different cultures have more
is well known that, compared with people from problems working together than people from
individualist cultures, people from collectivist cul- similar cultures. Undoubtedly, this new perspective
tures are more likely to attribute the cause of other will provide the basis for some exciting work on
people's behaviors to external causes such as culture and IB in the future.
situational demands (as opposed to internal causes
such as personality traits) (e.g., Morris and Peng, Understanding when culture matters:
1994). Hong et al. (2000) argued that a dynamic increasing the precision of cultural models
view of culture is indeed valid: a priming technique Beyond exploring new cultural constructs and the
should be able to alter the mindset of people and as dynamic nature of culture, we also argue for the
a result change their attributional style. To test importance of examining contingency factors that
this notion, Hong Kong Chinese, who were collec- enhance or mitigate the effect of national culture.
tivists and inclined to make external attributions Consider the following scenario. A senior human
for others' behavior, were randomly exposed to one resource manager in a multinational firm is charged
of two sets of experimental stimuli: one set with implementing an integrative training program
included American icons such as Superman, and in several of the firm's subsidiaries around the
the other set contained Chinese icons such as the globe. Over the term of her career, the manager has
Monkey King (Hong et al., 1997). Consistent with been educated about differences in national culture
the dynamic view of culture, compared with the and is sensitive to intercultural opportunities and

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challenges. At the same time, she understands the able to draw implications for managers, they
strategic need to create a unified global program cannot reach a high level of precision regarding
that serves to further integrate the firm's basic the specific impacts and the circumstances in
processes, creating efficiencies and synergies across which culture should be a central focus, or when
the remote sites. She approaches the implementa- it might be less critical (Gibson et al., forthcoming).
tion with trepidation. A key challenge is to For example, several studies have found relation-
determine whether the program should be imple- ships between collectivism and individual attitudes
mented in the same manner in each subsidiary or toward teamwork (e.g., Bochner and Hesketh, 1994;
modified according to the local culture at each site. Casimir and Keats, 1996; Eby and Dobbins, 1997;
Put another way, in this complex circumstance, Earley et al., 1999; Kirkman and Shapiro, 2000;
does culture matter? Gibson and Zellmer-Bruhn, 2001). However, do
these cultural proclivities come into play in every
The dilemma circumstance? Might there be situations, such as in
A review of the IB literature, as well as our times of crisis, when members of organizations
experience in working with managers in multi- have fairly universally positive attitudes toward
national organizations, suggests that there are very teamwork?
few instances where culture does not matter at all. The field of international management, there-
Likewise, few people would argue to ignore fore, is faced with a dilemma. On the one hand,
national culture. Research has demonstrated that researchers and managers need to understand
national culture impacts on many different indivi- patterns of individual-level outcomes associated
dual-level outcomes such as perceptions, beliefs, with different national cultures in the world. On
and behavior (Harrison and Huntington, 2000; the other hand, research examining relationships
Hofstede, 2001; Kirkman et al., in press). For exa- between culture and individual outcomes has not
mple, in their comprehensive review of 181 articles captured enough variance to make the specific
published in top-tier journals between 1980 and recommendations that managers need with con-
2002 that empirically assessed the five dimensions fidence (Gibson et al., forthcoming). Thus, recently,
of cultural values identified by Hofstede (1980), scholars have argued that, instead of addressing
Kirkmanet al. (in press) documented 61 studies that whether or not national culture makes a difference,
demonstrated a direct effect of culture on indivi- it is more useful to address the issue of how and
dual outcomes. The authors reviewed relationships when it makes a difference (Leung et al., 2001a;
between cultural values and 10 categories of indi- Earley and Gibson, 2002; Oyserman et al., 2002b;
vidual outcomes: change management behavior, Gibson et al., forthcoming; Kirkmanet al., in press).
conflict management, negotiation behavior, reward
allocation, decision-making, human resource man- Determining when cultural effects occur
agement, leadership, individual behavior in groups, Suppose for the moment that our focus is on
personality, and work attitudes/emotion. assisting the multinational human resource man-
Yet, research and practice provide numerous ager (mentioned earlier) in terms of understanding
examples of instances in which the impact of how certain individual-level outcomes change as a
culture was overshadowed by unique personalities, function of cultures. An important question then
strong leadership, or uniformity of practices (e.g., becomes, 'What are the conditions that increase an
Wetlaufer, 1999; Maznevski and Chudoba, 2000; individual's propensity to think, feel, or behave in
Earley and Gibson, 2002). Furthermore, in many accordance with cultural prescriptions?' Answering
studies culture demonstrates a statistically signifi- this question requires identifying possible moder-
cant relationship with individual outcomes, but the ating conditions. This in itself is a critical task for
strength of the relationship (i.e., the size of the future theory and research, because the stronger the
coefficient) is relatively weak in practical terms, impact of the moderating conditions, the less
indicating that culture does not explain a large predictive culture will be of individual outcomes.
amount of variance in those outcomes, and that, in Gibson et al. (forthcoming) identified a set of mode-
fact, other variables must be considered as impor- rating conditions operating across three different
tant predictors alongside culture (e.g., Peterson categories - individual, group, and situational
et al., 1995; Brett and Okumura, 1998; Gibson, characteristics - that serve to moderate the impact
1999; Clugston et al., 2000; Mitchell et al., 2000; of national culture on individual perceptions,
Kirkman and Shapiro, 2001). While researchers are beliefs, and behavior. Understanding the extent to

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which the factors are present in any given circum- than old, teams in their large sample across five
stance thus provides clues as to whether (or not) multinational firms. Likewise, Eby and Dobbins
national culture will matter in those circumstances. (1997) found that, although collectivism relates to
So, although by no means exhaustive, their frame- performance in teams, the level of team coopera-
work is a useful foundation in the quest for greater tion - an important group-level factor - moderates
precision in cultural theoretical models. this relationship. Thus, culture matters for team
Forexample, an important individual amplifier of performance, but certain group-level characteristics
the impact of national culture on beliefs is the can increase or decrease the impact of culture.
degree to which an individual identifies with the Finally, in addition to individual and group
culture (Gibson et al., forthcoming). Based on social characteristics, Gibson et al. (forthcoming) identi-
identity theory (Turner, 1987) and theories of the fied several situational characteristics that moder-
self-concept (Markusand Kitayama, 1991), it seems ate the impact of culture. An example in the
likely that, when a person views him or herself as a situational category is the impact of the technolo-
member of the national culture, and the culture is a gical environment - specifically, technological
large component of his or her self-concept, culture uncertainty. Researchhas demonstrated that people
will have a strong and pervasive impact on his or tend to respond in accordance with cultural
her beliefs. In every culture, there are people who prescriptions under conditions of uncertainty and
hold beliefs different from those typical. Instead, ambiguity (Meglino et al., 1989; Ravlin et al., 2000),
other sources of self-identity such as educational or and, more generally, that uncertainty provokes
professional affiliation may play a much stronger rigidity (Staw et al., 1981). Thus, technological
role in defining who they are, what motivates them uncertainty likely amplifies the impact of culture
personally, and which values they hold. So, culture on individual perceptions. When there are very
matters more when a person identifies with the specific rules, procedures or equipment for com-
culture;for those who do not, culture is a less potent pleting a task (such as tools for manufacturing and
predictor of their values. Along these same lines, assembly or rules for quality assessment), national
researchers such as Van Dyne et al. (2000) have culture will have less impact. When the task
uncovered evidence that collectivism is positively technology is ambiguous, culture is more likely to
related to organizational citizenship behavior, but be the default. This occurred in an aerospace
certain individual-level factors such as self-esteem product development team that Gibson and Cohen
moderate this relationship. Thus, self-esteem is an (2003) worked with. The team was multicultural,
element that moderates the impact of culture on an and the most substantial cultural clashes occurred
important set of individual behaviors. when the team confronted implementation of
Beyond individual-level factors, an example of a new technology. Members retreated to culturally
group-level moderator is the stage of group devel- prescribed scripts and preferences, and these were
opment that a group is at, powerfully amplifying or at odds. Once the technology had been adopted,
mitigating the impact of national culture on group and through trial and error the clashes were
member behavior (Gibson et al., forthcoming). resolved, cultural proclivities were less of a factor
National culture is often a more readily detectable in provoking conflict.
attribute, and therefore is a potent influence early
on when the group is just beginning to take shape Implications
(Watson et al., 1993; Chatman and Flynn, 2001). Admittedly, individuals' perceptions, beliefs, and
Once group members understand the contribution behavior are influenced by more than one aspect
of other attributes, culture may play less of a role. of culture at any given time, and the moderators
For example, national culture is likely a stronger (or amplifiers) likely work in concert rather than
predictor of group member communication beha- isolation. For example, three of the moderators of
vior during the early stages of a group's tenure, cultural impacts described above - social identifica-
before members come to understand how deep tion, stage of group development, and technological
attributes such as expertise will impact on the uncertainty - can all simultaneously characterize a
group. Indeed, research conducted by Zellmer- given cause-effect relationship between culture and
Bruhn et al. (2002) provides some evidence of this individual outcomes. Consider again the scenario
phenomenon. Information exchange between that opened this section - the senior human
group members was more strongly related to resource manager challenged with implementing
national cultural heterogeneity in young, rather the global training program. If aware of potential

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conditions that amplify the impact of culture, she and change programs. The scenario above implies
might then be able to conduct a more precise that future research must, whenever possible, in-
diagnosis of the circumstances in each subsidiary. clude multiple potential moderatorsat various levels
For example, in the North American subsidiary, of analysis. We are aware of very few past research
teams may comprise many expatriates who do not efforts that have done so, although it seems clear
identify as much with the local national culture, the that moderators may interact in interesting ways.
team may have been in existence for several years Forexample, a situational moderator- technological
and thus be very well developed, and the team may uncertainty - may interact with personality char-
have familiarity with the program. Based on the acteristics, such that it drives only certain indivi-
prior research reviewed here, these factors would duals to behave in ways more consistent with
imply that culture will have less impact in this cultural proclivities; other individuals (with a differ-
subsidiary. In the Indian subsidiary, the human ent configuration of personality characteristics)may
resource manager may find a very different set of behave in ways less consistent with culture under
circumstances, in which all team members identify conditions of technological uncertainty. Future
with the Indian national cultural characteristics,the research should address this issue to provide more
team is early in its stage of development, and the precise guidance for theory development and prac-
technology is ambiguous (i.e., they have no famil- tice. Equally important, a single cultural character-
iarity with the program). In these circumstances, istic does not influence individuals in isolation from
culture will likely matter a great deal, and the other characteristics (e.g., both universalism and
manager would do well to implement the program collectivism likely work simultaneously to influence
in a manner sensitive to the local culture. In our a given behavior or reaction). Thus, it is also critical
experience, most managers are entirely unaware of that future research include configurations of cul-
the impact of culture. The general models developed tural characteristics,rather than a single predictor.
by Adler (1997) and Earley and Erez (1997) are Practically speaking, these suggestions must of
extremely helpful in alerting us to the important course be balanced with constraints around sample
role that culture plays. However, examination of the size, survey length, and analytical techniques for
contingencies mentioned here can add much more complex models.
precision to those recommendations. Still, the point remains that we are in dire need of
Along these same lines, Leung et al. (2001a, b), for more comprehensive specification in our models of
example, caution against two types of attribution cultural impacts. Yes, culture does matter. However,
error that managers can make: universal attribu- there will be certain circumstances when it matters
tions and cultural attributions. The universal attri- more, and others when it matters less. Including
bution errorassumes that all workersshare the same moderators of the impact, such as those high-
orientations, and will respond similarly to manage- lighted here, helps us become much more precise in
rial practices. The cultural attribution errorinvolves our theories. Investigation of these models, some of
establishment of stereotypes based on nationality, which is already under way, will help us understand
and the assumption that all members of a particular and advise when culture must be considered in
nation will behave in accordance with that stereo- managerial initiatives.
type. Leung et al. argue that neither extreme is
productive, and instead suggest that mangers need Experimental approaches to the study of
to be aware of the dangers associated with each type culture
of error.Although it is important to be aware that a The previous sections are concerned with concep-
misunderstanding may be explicated by bicultural tual and substantive issues of culture and IB, but
experience, at the same time it is always advisable to the focus of this final section is methodological.
obtain input from others who share the same culture Specifically, we discuss experimental methodology,
as each party, in order to untangle cultural effects which is sorely underrepresented in IB research, but
from other factors such as personality, group-level which has a unique capacity to provide the
phenomena or situational elements. comprehensive specification in models of culture
To help increase the precision of our cultural called for above. As evidence of the scarcity of
models, then, future research must identify the experimental research in our field, an analysis of
most critical set of moderators, together with the research methodologies used in manuscripts
cultural orientations and outcomes, for particular published in the Journal of International Business
focus in managerial diagnosis, implementation, Studies shows that the ratio of survey- or case-study-

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based research to experimentally based research is in the levels (a moderating influence) of a cultural
greater than 10 to 1.1 Certainly every research orientation (even a primed, temporary one) influ-
methodology has its weaknesses and strengths, but ence behaviors or perceptions.
the narrow focus on survey, ethnography or case The research of Gelfand et al. (2002) examined
studies to understand cultural phenomena to the both the main effects and the moderating effects of
exclusion of experiments is denying our field the individual characteristics on the presence of ego-
balance inherent in a multi-method approach, one centric perceptions of fairness in negotiations
in which the strengths and weaknesses of one within Japan and the US. Using national culture
method are compensated for by another (Leung as proxy for cultural orientation, their results
and Su, 2004). The unique contribution that experi- support robust findings of self-serving biases in
mentation provides comes from its superior ability individualist cultures (Thompson and Loewenstein,
to demonstrate causality: that is, whereas other 1992), where 'the self is served by enhancing one's
methodologies may infer covariation or even spur- positive attributes to stand out and be better than
ious correlation between variables, experimentation others', but find relatively less bias in a collectivistic
provides for the controlled manipulation of a culture, in which 'the self is served by focusing on
hypothesized variable, protecting results from such one's weaknesses to blend in and maintain inter-
interpretations (Leung and Su, 2004).2 The goal of dependence with others' (p 847). However, they
this section is to discuss the contribution that also measured individual self-construals (Markus
experimental research can make to more clearly and Kitayama, 1991), and demonstrate that inde-
define the individual, group, and situational factors pendent self-construals are higher in the United
that moderate the influence of culture on thoughts, States and are positively related to self-serving
feelings, and behaviors, and to more precisely biases. Thus, not only is a main effect of national
pinpoint the boundary conditions where culture culture on egocentric biases demonstrated, but the
(or culture alone) is not likely to have an effect. examination of individual self-construals helps to
explain why such an effect exists.
Investigating the moderating influence Research of this type is especially valuable given
of individual, group, and situational that much of the theory underlying business
characteristics research has been developed and tested exclusively
The essence of experimentation is the ability to in Western contexts. Experimental research focus-
control and manipulate variables in a systematic ing on the moderating influence of individual
manner. Furthermore, the analysis and manipula- characteristics contributes to this literature because
tion may be of a single variable, or of multiple it directly tests whether these processes, biases, and
variables in conjunction: that is, the experiments behaviors are indeed universal phenomena, or
may be univariate or multivariate in either whether they are specific to Western populations.
the dependent or independent variables (Winer, As Oyserman et al. (2002b) point out in their
1991). This quality makes experimentation particu- meta-analysis of research on collectivism/indi-
larly suited to deepen understanding of the indivi- vidualism, cultural priming is one of the most
dual, group, and situational characteristics(singly or promising areas of cross-cultural research.
in conjunction) that moderate culture's influence. The theoretical underpinnings of priming stem
from social cognition research, which shows that
The moderating influence of individual accessible knowledge influences behavior, and that
characteristics temporarily accessible and chronically salient
Cross-cultural experimental literature examining knowledge produce equivalent effects in the labora-
the influence of individual characteristics has tory. Thus, priming techniques 'create an experi-
evolved, yielding greater sophistication and speci- mental analogue of chronic differences between
fication to our understanding of culture's influence. cultural groups by temporarily focusing partici-
Much early cross-cultural work tested only for the pants' attention on different cultural content or
main effects of culture - often using national values' (p 7). Examples of this research would be the
culture as a proxy variable for a given cultural Hong et al. (2000) study mentioned in an earlier
orientation. That work, exploring the influence of section, as well as Kuhnen and Oyserman (2002)
the presence (a main effect) of a given cultural and Aaker (2000), which primed participants with
orientation, laid the groundwork for more complex cues that were or were not congruent with their
experiments to follow, which test how differences cultural orientation (e.g., using pronouns such as 'I'

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Advances in culture and international business KwokLeunget
372 al

and 'me' for an independence priming or 'we' and that intercultural negotiations are more difficult
'our' for an interdependent priming) and examined and less successful than intracultural negotiations
the influence on factors such as cognitive speed and (Graham, 1985; Brett and Okumura, 1998) owing to
accuracy, memory, and attitudes. Results across all the interaction of individual cultural characteristics
the experiments indicate the existence of a chronic and the bi-cultural context of the negotiation.
cultural orientation, and one that is more malleable An interesting twist on priming research is
in the face of a primed orientation. presented by Chatman and Barsade (1995). They
measured participants' levels of cooperativeness
The moderating influence of group characteristics and agreeableness, and manipulated a business
Previously in this paper the importance of under- environment to reflect goals typically associated
standing group characteristics, such as the level of with collectivism or individualism. Results demon-
group development, was discussed. Furthermore,it strate that highly cooperative individuals were
was suggested that, to the extent possible, research more responsive to the norms characterizing their
that can simultaneously examine the moderating organization's culture, such that they exhibited
influence of both individual and group character- greater differences in behavior across the two
istics should be encouraged. The following is an cultural environments. Like research priming indi-
example of such research. vidual characteristics, this research demonstrates
Buchan et al. (2002) demonstrated that differ- that people may behave or think differently when
ences in the definition and method of group faced with situations exhibiting differing cultural
formation prompt variance across cultural orienta- values - and indeed, may modify their own values -
tions in terms of response to ingroup/outgroup thus rendering a whole new set of complex, but
manipulations. In support of research using the theoretically rich, issues to be studied through
minimal group paradigm (Tajfeland Turner, 1979), intercultural experiments.
participants with an individualist orientation were
expectedly biased toward the experimentally
manipulated ingroup in terms of trust and recipro- Experimentation as a tool to understand the
city; however, collectively oriented participants limits of culture's influence
were not (thus a statistically significant interaction Experimentation provides a powerful tool for
between cultural orientation and group manipula- identifying the limits of the influence of culture -
tion emerged). Forindividualists, groups are seen as that is, understanding when cultural values will
temporary and flexible to allow entry and exit in have an influence, and when they will not, a topic
the pursuit of self-interest; for collectivists, groups that we have already discussed in a previous
are permanent, based on personal characteristics, section. Currently, much of the experimental
and preservation of the group takes priority over research in this direction is couched in the context
individual goals (Triandis, 1995). These results of economic games in which the pull of self-interest
deepen understanding of the complex relationship is pitted against the interest of the collective. For
between culture and group relationships, and instance, Roth et al. (1991) conducted two different
indicate when culturally influenced group biases economic games in four countries, and highlighted
are likely to be present. the importance of situational characteristics in
making salient the influence of cultural values.
The moderating influence of situational They demonstrate that behavior in all countries
characteristics converged to the equilibrium in a four-person
Experimental research examining the influence of market game (a situation similar to an auction),
situational characteristics proves especially valuable while behavior in a two-person ultimatum game (a
in clarifying the influence of the 'other' on one's resource allocation problem) deviated from equili-
thoughts, feelings, and behavior, thus promoting brium and, furthermore, differed across the coun-
understanding of the interaction between indivi- tries. This pattern of results suggests the influence
dual and situational characteristics. For example, of differing culturally influenced values regarding
Adair et al. (2001) examined intra- and intercultural what is fair in allocation: because of the structure of
negotiations among Japanese and American man- the economic interactions, fairness concerns were
agers. They demonstrate behavioral differences not salient in the four-person market game, but
across cultures in negotiation (main effects), and, were quite salient when bargaining with a partner
perhaps more significantly, support the conjecture in the ultimatum game.

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373

Similarly, Buchan et al. (2004) actually demon- Yates et al. (Yates et al., 1989, 1998) have shown
strate divergent perceptions of fairness in a repeated that Chinese respondents exhibit extreme over-
ultimatum game in Japan and the US and differing confidence in probability judgments as well as in
behavior across the two countries, but show that general knowledge, as compared with those in the
culturally influenced perceptions of fairness (such US and Japan. They suggest that there may be
as those that may dictate more generosity to the important differences in culturally influenced 'cog-
partner) do not influence behavior once the pull of nitive customs' that account for the cross-cultural
self-interest in the game becomes too strong. variations such as 'rules' (such as memorization)
Kachelmeier and Shehata (1997) investigated the that Chinese children are taught for approaching
influence of individual cultural orientation on the cognitive tasks (Liu, 1986), the rarenesswith which
effectiveness and demand for auditing. Their results Chinese culture demands that people generate
show that collective cultural values are most likely multiple arguments on both sides of an issue, and
to challenge self-interest in conditions of low the typical characterization of decision problems
anonymity. That is, only when a reporting system based on the logic of historical precedence rather
could identify the actions of group members were than on the logic of the decision tree. These
participants from Hong Kong and China more cognitive customs, born out of cultural values and
willing than participants from Canada to forgo reinforced throughout education, may be at the
self-interest. When anonymity was high, partici- core of cross-national variations in overconfidence.
pants from all countries pursued self-interest with An anthropologist-led study in economics exam-
equal intensity. ined bargaining behavior in 12 small-scale cultures
In sum, these experimental studies echo our (e.g., Peru's Machiguenga farmers and Paraguay's
earlier conclusion that there are times when Ache headhunters). This study reveals stark differ-
cultural orientation does not matter. The question ences in behavior across cultures, and addresses the
of the limits of cultural influence represents a influence of market development on cooperative
challenge to cross-cultural research, and experi- behavior (Henrich et al., 2001). Two variables
mentation can play a major role in resolving many account for 68% of the variance in offers across
of the complex issues involved. cultures; cultures with more cooperative activity
(e.g., collective hunting of whales) and market
integration (an index combining the existence
Broadening our understanding of culture of a national language, of a labor market for cash
Recent research highlights the need to broaden our wages, and farming of crops for cash) have sharing
analysis of culture - to perhaps take a closer look at norms closer to equal splits. These results are
manifestations of culture such as folklore, the startling to some theorists in that they suggest
manner in which we are educated, political sys- that real-world, 'enculturated' market experience
tems, and methods of economic exchange - in tempers rather than amplifies the pursuit of
order to fully assess the influence of culture on an self-interest. As researchers are interested in
individual. Examples of experimental studies that understanding the full influence of culture, this
play a role in this broadening are given below. work indicates that we need to take into account
Weber and Hsee (1998) demonstrated that the interplay of more traditional measures of
respondents from China are significantly less risk culture such as collectivism-individualism with
averse than those in the US in financial decisions those that measure market development and level
but more risk averse in social decisions. To of integration.
determine whether these differences were truly As shown by this research, broadening our
cultural, or instead resulted from current economic analysis of culture has enormous potential for
or political circumstances, Weber et al. (1998) increasing understanding of the manner, and the
undertook a study in which participants from multiplicity of ways, in which individuals are
China, Germany and the US rated the risk-taking influenced by their environment. An appropriate
advice imparted in Chinese and American proverbs. summary of this section may be to discuss the
Their results support earlier findings, and suggest public goods research of Yamagishi and colleagues
that the interpretation of proverbs revealed 'long- (see, Yamagishi, 2003, for a summary), which
standing cultural differences in social cohesion and presents a perfect and pressing example of the need
cooperation' that contributed to the explanation of to gain a broader understanding of the influences
these differences in risky behavior (p 183). and implications of culture and the potential that

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Advances in culture and international business KwokLeunget
374 al

experimental research has to do so. Yamagishi's reviewed here are able to provide the conceptual
research consistently demonstrates that Americans and empirical basis for moving into more complex
are more cooperative than Japanese in public good conceptualizations of culture. The several new
situations, and that Japanese are only more coop- perspectives on culture reviewed in this paper all
erative when a system of sanctions and monitoring point to multi-layer, multi-facet, contextual, and
is in place to assure the cooperation of the other systems views of culture. These views converge to
members of the group. On the one hand, Yamagishi suggest that culture entails much more than
(2003, 367) suggests that 'the commonly held cultural dimensions, and culture manifests itself
notion of cross-cultural differences between Japa- in many levels and domains. Some cultural ele-
nese and Americans - the former being collectivists ments are stable, whereas others are dynamic and
and the latter individualists - cease to exist once all changing. Sweeping statements about cultures are
theoretically relevant factors are experimentally useful to the extent that they provide an abstract
controlled'. On the other hand, he also suggests framework for organizing more situated description
that the system of social sanction and monitoring of the effects of cultures. A major challenge for the
may be a particularly collectivist solution to the field is to develop mid-range, dynamic frameworks
problem of fostering cooperation among a group of culture that are sensitive to their nuances in
(Yamagishi et al., 1998). Thus this issue is multi- different contexts.
faceted. Not only are there likely influences of Second, a more complex conceptualization of
individual, group, and situational characteristics culture will necessarily give rise to a more complex
that moderate cultures' impact on thoughts and view of its effects. Culture can be an antecedent, a
behavior in this context. There likely are factors moderator or a mediator, and a consequence, and
such as economic and legal constraints, and its effects may be domain-specific and are subjected
embedded social networks in each society, that to boundary conditions. Much of the research on
themselves are influenced by cultural norms and in culture and IB tends to focus on main effects of
turn are directly or indirectly influencing the culture. The immediate challenge for the field is to
individual. map out other more complex effects of culture
Through careful construction of experiments, systematically and integrate these effects routinely
through precise manipulation of each of the into substantive theories, so that cultural elements
suspected influences, and by drawing on fields constitute a major type of building block for
such as economics, sociology, and anthropology to theoretical models in IB. A recent, highly visible
broaden our understanding of culture, we can begin attempt in this direction is the GLOBE project
to tease out the multiplicity of effects in this discussed before, which attempts to build a model
problem, and others. Essentially, we shall be of leadership with cultural elements as integral
refining our knowledge of the dynamics of the elements of the model.
top-down-bottom-up processes involved in culture Third, the plea for studying the effects of culture
shown in Figure 1. In doing so, we shall be gaining in conjunction with socio-economic-political
a deeper and richer understanding of the nature of variables is not new, but our review has provided
cultural differences, why and when they occur. specific theoretical rationale and concrete direc-
tions for such research efforts. We have shown
Conclusion that cultural change is intertwined with socio-
Research on culture and IB is definitely a 'growth' economic-political variables, and that these
area, because the business world is in many ways contextual variables may also add to, moderate,
becoming one. At least four themes are apparent in and/or mediate the effects of culture. Fortunately,
our state-of-the-art review of current research there is a long tradition in IB research to take the
trends in this area. First, much of previous research effects of such variables into account, and future
on culture and IB has adopted what we view as a research needs to evaluate the effects of culture in
simplistic view of culture, which tends to examine conjunction with the impact of socio-economic-
the static influence of a few cultural elements in political conditions. Culture may relate to socio-
isolation from other cultural elements and con- economic-political variables in complex ways, and
textual variables. For instance, much of the research a simple consideration of their joint effects is
inspired by the Hofstede dimensions falls into this inadequate. A more complete picture of the forces
category, which, in our view, was instrumental in impinging upon IB calls for a precise description of
kickstarting the field. However, the advances these complex relationships.

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Advances in culture and international business KwokLeunqet al
375

Finally, a multi-method approach to research has Notes


been advocated for decades, and for research on 'Evidence from three databases supports this argu-
culture and IB, its importance cannot be exagger- ment. A search of the methodologies as they are
ated. Most research in IB research is correlational in described in the full citation of JIBSarticles (1987-
nature, and we are more or less ignorant when it present) as listed in ABI/INFORM resultsin the ratioof
comes to the causal processes involved. Experi- 13.62:1. A search of JIBS abstracts (1970-2000)
mentation provides a powerful tool for probing appearing in JSTOREprovides the ratio of 11.5:1.
causal relationships, and we need both correla- Finally,a searchwithin the JIBSwebsite gives the ratio
tional and experimental approaches to enrich our of 12.66:1.
understanding of IB phenomena, and to develop 2See Leung and Su (2004) and Buchan (2003)
effective practical advice for international man- for comprehensive discussions comparing cross-
agers. Culture is such a fuzzy concept that we need cultural experimentation with other research meth-
to probe it with all the tools we have at our odologies, and concerning the specific controls
disposal, and we look forward to the bloom of employed in experimental research to strengthen
multi-method approaches for moving the field of causal inferences.
international business research forward by leaps
and bounds.

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About the authors of Management, Journal of International Business
Kwok Leung is Professor of Management at City Studies, and Journal of Cross-Cultural Psychology.
University of Hong Kong. His research areas include She is co-author with P Christopher Earley of New
justice and conflict, international business, and Perspectives on Multinational Teams (Lawrence Erl-
cross-cultural psychology. He is a departmental baum Associates, 2002) and co-editor with Susan G
editor of Journal of International Business Studies, Cohen of Virtual Teams That Work: Creating Condi-
and a consulting editor for several journals, includ- tions For Virtual Team Effectiveness (Jossey-Bass,
ing Journal of Applied Psychology, Organizational 2002).

Acceptedby Arie Y Lewin, Editor-in-Chief,25 February2005. This paper has been with the author for one revision.

Journal of International Business Studies

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