Cultural friction in leadership beliefs and foreign-invested enterprise survival

Pamela Tremain Koch, Bradley Koch, Tanya Menon and Oded Shenkar
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Pamela Tremain Koch: Seidman College of Business, Grand Valley State University, Grand Rapids, MI, USA
Bradley Koch: Seidman College of Business, Grand Valley State University, Grand Rapids, MI, USA
Tanya Menon: Fisher College of Business, The Ohio State University, Columbus, OH, USA
Oded Shenkar: Fisher College of Business, The Ohio State University, Columbus, OH, USA

Journal of International Business Studies, 2016, vol. 47, issue 4, 453-470

Abstract: Cultural friction posits that cultural differences may be either synergistic or disruptive, but does not specify when or how synergies or disruptions emerge. We theorize that synergies will emerge in foreign-invested enterprises (FIEs) when cultural differences in leadership beliefs are less central to the host nation’s cultural identity; while disruption will occur when differences are in more culturally central leadership beliefs. Analyzing survival data from 274 FIEs in China, we found support for these hypotheses with five of the six GLOBE leadership dimensions. As predicted, differences in the Participative and Team-Oriented dimensions were associated with higher firm death, while differences in the Charismatic, Autonomous and Self-Protective dimensions were associated with firm survival. Our results indicate that while there are areas where differences may indeed need to be accepted or minimized, there are other areas where differences can be beneficial. This requires that managers identify more central aspects of local culture to determine whether to minimize differences or to leverage their synergistic potential.

Date: 2016
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