Knowledge, Bargaining Power, and the Instability of International Joint Ventures

This chapter discusses the validity of management theories across borders. A special emphasis was given to East Asian cultures explaining the recent economic growth of these countries. The four dimensions are discussed at length: power distance, individualism, masculinity and femininity and uncertainty avoidance. A fifth dimension, long-term or short-term orientation, is introduced to explain East Asian cultures. The chapter concludes that existing management theories have a limited validity across cultures, not only because many companies operate in different countries, but also because they operate in different lines of businesses. The managers have to see the relativity of their own cultural framework with that of others. Hofstede's studies called for improved inter-cultural management skills focussing on working rather than on living in other countries. Multinational enterprises must adapt their strategy to different cultural values in the areas in which they operate, just as they adapt their production strategies to different costs arising from locational factors.