The Affects Culture Has on the Conduct of Global Business Essay

811 WordsSep 2, 20144 Pages
Drawing on research studies by Kai Li and Dale Griffin of the University of British Columbia and Heng Yue and Longkai Zhao of Peking University, Kathleen Rehbein (2014) raises questions about the role of national culture in predicting corporate risk-taking behavior. If culture does place a role in decision-making, what aspects are more influential? Are the affects direct or indirect? Does its impact vary from corporation to corporation? And should the individual firms’ characteristics be taken into account. Some economists have argued that profits drive decision-making, not factors like culture, which are not easy to measure. But many scholars believe that culture does matter. Li and his colleagues collected date from 7,250 manufacturing firms in 35 countries, from 1997 – 2006 using standard measures of cultural values researched by Geert Hofsted and Shalom H. Schwartz (Kathleen Rehbein 2014). Their study focused on two primary aspects of cultural values: individualism and uncertainty avoidance. The data they collected looked at three different channels through which cultural values can influence risk-taking decisions: individual-, firm-, and country-level effects. At the individual-level, they studied managers with high levels of individualism and low levels of uncertainty avoidance and their attitudes toward risk-taking. Individualistic managers were more likely to want to stand out and outperform other managers. They were also more likely to underestimate the risks involved, so were more comfortable with making risky decisions. They concluded that a high level of individualism and low levels of uncertainty avoidance had a direct influence on the likelihood of risk-taking behaviors in organizations. At the firm-level, Li and his colleagues found that culture had a direct impact on decision-making, as long as the managers in the
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