What Goals Do Business Leaders Pursue? a Study in Fifteen Countries
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what Goals Do Business Leaders Pursue? A Study in Fifteen Countries Geert Hofstede* TtLBURG UNtVERSITY Cheryl A. Van Deusen** UNIVERSITY OF NORTH FLORIDA Carolyn B. Mueller*** STETSON UNIVERSITY Thomas A. Charles**** BALL STATE UNIVERSITY The Business Goals Network***** GoalS'in-use of successful busi- Th e re la tive ordering of goals nesspersons were rated by over within these clusters suggested 1,800 junior managers and profes- seven different archetypal business sionals, attending evening MBA leader roles. Perceptions correlated courses at local universities in 15 significantly with national wealth, countries. A hierarchical cluster as well as with dimensions of na- analysis of perceived goals divided tional culture. the countries into seven clusters. *Geert Hofstede is an Emeritus Professor of Organizational Anthropology and Interna- tional Management of Maastricht University and a Fellow ofthe Institute for Research on Intercultural Gooperation (IRIC) and of the Genter for Economic Research [CenlER) at Tilbnrg University, the Netherlands. *Cheryl A. Van Deusen is an Associate Professor of Strategic and International Manage- ment at the University of North Florida, Jacksonville. She is also a Research Associate at the Center for International Business Studies. UNF. *Carolyn B. Mueller is an Associate Professor of Strategic and International Management at Stetson University, DeLand, Florida. Her research interests include cross-cultural management issues and the influence of cuitiu-e on decision-making. *Thomas A. Charles is a Senior Research Analyst at the Bureau of Business Research, College of Business Administration, Ball State University, Muncie. Indiana •*consisting of Dharm Bhawiik ajid Rohert L. Doktor [University of Hawaii at Manoa); Joseph Christie (Saint Louis University, Mitisnuri): Wade Danis (Marquetto University. Milwaukee, Wisconsin); Herb Johnson (Nova Southeastern University, Fort Lauderdale, Florida); An- thony Lee (European Business School, Oestrich-Winkel, Germany): Niels G. Noorderhaven (Tilhurg tJniversity, the Netlierlaiids); Timotliy Reed (University of Colorado. Boulder); Brett L. Scarlett (Royal Melbourno Institute of Technology. Melbourne, AustraliaJ; janine Stiles (Henley Managemonl College. United Kingdom); Botaiiia Tanuro de Barros (Fundagao Dom Cabral, Belo Horizonle. Brazil); lean-Claude Usunier (Univorsite de Lausanne. Switzerland) and Heatlier I.M. Wilson (University of Auckland. New Zealand). JouHNAL OF INTERNATIONAL BUSINESS STUDIES, 33, 4 (Fnuirru QUARTE'K 2002): 785-803 785 BUSINESS GOALS : THE GOALS OF BUSINESS At tbe time such deals are concluded. those responsible tbink too often in Tbrougbout bistory, people from dif- terms of size and price only, sbowing ferent countries and different walks of naive optimism about tbe execution of life bave traded and made productive their decision. Wbile integrating people deals wbile pursuing tbeir own very dif- and operations from different countries ferent goals. Trading partners don't need is a difficult task, it can be and bas been to sbare goals and values. In interna- done successfully wbere tbe goals pur- tional trade, differences in goals are use- sued were clear to everyone. When tbis ful to know but not an impediment. is not tbe case, wbere leading persons Tbis situation changes when busi- involved bold different implicit goals, nesses from different countries enter into attempts at integration at lower levels sbared operations like strategic alli- will fail and tbe new venture is almost ances, joint ventures, acquisitions and certain to get into trouble. Sucb funda- mergers. Tbe management of sucb oper- mental goal disparities often go unrecog- ations needs parties to be of one mind nized or remain taboo. We believe this is about the goals tbe operation pursues. a main reason for tbe failures and disap- Not only do "too many cooks spoil tbe pointing results in international ven- brotb" but tbe success of most ventures tures. depends on interactions witb tbeir envi- ronment; and different environments THE NATIONAL COMPONENT IN hold different expectations. Thus global BUSINESS GOALS: A REVIEW companies acquiring local businesses or OF THE LITERATURE merging witb other global companies Tbe risks and disasters of international may find tbemselves acting as company ventures bave been known for decades. owner in a setting for wbich tbey are ill The road to internationalization is lined prepared. Tbeir new^ bost countries with wrecks. Tbe management literature present tbem witb different expectations prefers describing successes rather than about tbe goals tbey will pursue, wbicb failures, but business sections in daily newspapers continue to announce bro- does bave profound implications for ken dreanis. Some of tbese bave been tbeir relationsbips witb local stakebold- studied in deptb (Grunberg, 1981; Mann, ers like co-owners, sharebolders, em- 1989; Olie, 1996). ployees, unions, customers, suppliers and autborities. One hurdle to be overcome is differ- ent traditions of corporate governance. In spite of tbeir increasing frequency, Equally developed and sometimes neigb- international ventures do not bave a bigb boring coimtries maintain very different success rate. Strategic alliances, if tbey ownership and governance systems, witb do not already break down in tbe nego- little sign of convergence. Pedersen and tiation stage, often fall short of tbeir Tbomsen (1997), studying tbe owner- promises. Joint ventures remain costly ship of tbe 100 largest business corpora- drains on resources and eventually dis- tions in eacb of 12 European countries, appear. International acquisitions are re- reported that in Britain 61% of tbe 100 sold. Mergers announced witb great en- largest companies bad many small sharo- tbusiasm crasb after some years, leaving bolders, in Austria and Italy no large a trail of broken careers and even ruined companies at all bad tbis ownersbip personal bealtb of major proponents. type. Sucb differences are evidently bis- 786 JOURNAL OF INTERNATIONAL BUSINESS STUDIES HOFSTEDE, VAN DEUSEN, MUELLER, CILARLES, BUSINESS GOALS NETWORK torically rooted but they are maintained and Singh (1998), who in a set of for- by different conceptions about the goals eign acquisitions into and from Italy of business. These conceptions are part found the acquired companies' sales of national value systems, which belong growth in the two years after the acqui- to national cultures (Hofstede, 2001). Se- sition to be positively related to the menov (2000) analyzed differences in cultural distance of the partners. They economic governance among 18 devel- suggested that the variety may have led oped Western countries and proved di- to synergy. As the different studies rect links between systems of gover- used different success criteria, their re- nance and Hofstede's (1980) original sults are not fully comparable. In the four cultural value dimensions of Power majority of cases, cultural differences Distance, Uncertainty Avoidance, Indi- seem to spell trouble. vidualism and Masculinity. The literature on business ethics Kogut and Singh (1988) developed a shows extensive proof of the influence of measure of cultural distance between nationality on values, that is feelings of countries based on Hofstede's dimension right and wrong. For example, Schlegel- indices. Their measure has become pop- milch and Robertson (1995) showed that ular in studies of international business, both country and industry affected the for explaining differences in levels of in- ethical perceptions of senior executives vestment abroad and in mode of entry in the U.S.A. and Furopean countries. (like greenfield, joint venture or acquisi- Nakano (1997) found that Japanese and tion), but also for explaining differences U.S. managers differed strongly in their in success rates. Li and Guisinger (1991) ethics orientations. McDonald and Kan found that foreign entries in the U.S.A. from culturally distant countries were (1997) demonstrated differences in ethi- more likely to fail than were those from cal perceptions between expatriate and culturally close countries. Barkema, Bell local managers in Hong Kong. A world- and Pennings (1996) analyzed survival wide survey of business ethics by rates of foreign entries by Dutch compa- Enderle (1997) reported significant coun- nies and found these to decrease witb try differences. Whitcomb, Erdener and cultural distance, but more for joint ven- Li (1998) showed differences between tures and acquisitions than for greenfield Chinese and U.S. managers in scenario- starts, and more for partly owned than based ethical decision-niiaking exercises. for wholly-owned subsidiaries. They ex- Baker and Veit (1998) compared North plained this by the need for "double- American and Pacific Rim (i.e.. Hong layered acculturation" in the riskier Kong, Japan, Singapore and Thailand) cases. Barkema and Vermeulen (1997) in nations and found differences in the eth- an extended set of Dutch foreign entries ical principles of investment profession- found the failure rate of joint ventures to als. Priem, Worrell and Walters (1998) be related to differences in Uncertainty showed differences in moral judgment Avoidance and to Hofstede's new fifth betw^een respondents from ricb and from dimension of Long Term Orientation. poor countries. Stevenson and Bodkin Luo (1999) found the performance of for- eign joint ventures in China to be nega- (1998) even found significant differences tively associated with the cultural dis- in a cross-national comparison of U.S. tance