Transnational service value creation: influence of national culture

1
Trans-national service value creation influence
of national culture

• Subhashish Samaddar
• Kallol Bagchi
• Somnath Mukhopadhyay

2
Introduction

• Basic research questions
• Hofstedes work on cultural dimensions
• Research Hypothesis
• Countrys Service Sector
• Method and Data
• Results
• Conclusion and Future Research

3
Basic Research Questions

• Does countrys culture influence ountrys service
  level? If so how?

4
Hofstede (1980a,b 1991)

• Culture Collective mental progamming of a
  nation
• Hofstedes 4 Cultural Dimensions
• Power Distance (PD)
• Uncertainty Avoidance (UA)
• Individualism and collectivism (IC)
• Masculinity and Femininity (MF)

5
PD

• To the extent a nation believes in unequal power
  distribution
• High PD value means high acceptance of inequality
  in power distribution
• In a high PD culture management decisions will be
  centralized and hierarchical

6
UA

• To the extent a nation collectively tries to
  avoid uncertain situations in management decision
  making
• Nations with high UA attempts to create mechanism
  that reduces risk taking decisions
• Firms in these nations may have more rigid rules
  and exhibit less tolerance for uncommon ideas and
  behaviors

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IC

• Individualism refers to a loosely coupled social
  network where people take care of themselves. In
  contrast, collectivism refers to a tightly
  coupled social network where the group feeling is
  very strong.
• In national cultures where individualism is
  high, employee loyalty is considered more
  important than efficiency.

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MF

• Masculine cultures are characterized by doing and
  acquiring rather than thinking and observing. In
  the workplace this dimension is reflected in
  merit-based opportunities for high earnings,
  recognition, advancement, and reward

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Research Hypothesis

• H1. The greater the power distance present in a
  national culture, the lower will be the nations
  growth of services market.
• H2. The greater the uncertainty avoidance present
  in a national culture, the lower will be the
  nations growth of services market.

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Research Hypothesis Contd.

• H3. The more individualistic a nations culture
  is, the higher will be the nations growth of
  services market.
• H4. The more masculine a nations culture is, the
  higher will be the nations growth of services
  market.

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Countrys Service Sector

• The service sector consists of the "soft" parts
  of the economy such as insurance, government,
  tourism, banking, retail, education, and social
  services

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Table 1a Data Sources and Their Meanings
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Argentina, Australia, Austria, Brazil, Canada,
China, Colombia, Costa Rica, Denmark, Ecuador,
El Salvador, Finland, France, Germany, Greece,
Guatemala, Hong Kong, Hungary, India, Indonesia,
Iran, Italy, Malaysia, Mexico, Morocco, The
Netherlands, New Zealand, The Philippines,
Poland, Portugal, Russia, South Africa,
Singapore, Slovenia, South Korea, Spain, Sweden,
Switzerland, Thailand, Turkey, UK , US and
Venezuela.
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Sample Data of 4 Dimensions on Selected Set of
Nations (N 43)
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Method

• We ran a correlation with five attributes
  averaged SVA across 2001-2004, PD, UA, IC, and MF
  to infer about our four hypotheses.
• We then analyzed yearly SVA values across two
  dimensions taken together. We clustered each of
  the four dimensions into two groups High (H)
  and Low (L). We analyzed SVA across six
  combinations of 2X2 cultural dimensions with two
  values H and L. We created 6 group
  combinations.

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Correlation Results
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Statistical Test Results of Difference in
Cultural Group Means
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Conclusion

• Our study shows that the cultural dimensions are
  significantly related service activities
  (directions of our first three hypotheses support
  the expected relationship from the previous
  literature)
• The group difference tests indicate that these
  differences are significant. Service managers in
  national and multi-national enterprises (MNE)
  must pay attention to these results when
  analyzing international markets their companies
  are involved with

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Future Research

• Scholars need to connect the service innovation
  (or product innovation) with cultural dimensions.
  
• Connect managerial decision making styles with
  service or product innovations. Depending on the
  findings managers can determine whether they
  should change their style of leadership.