Article Review What Goals Do Business Leaders Pursue? A Study in Fifteen Countries By Geert Hofstede Geert Hofstede discusses in the article the causes of the failure of newly

formed joint ventrues. He says that when the goals of the leaders are not clear to both parties the new venture is alost certain to get into trouble. He says that “such fundamental goal disparitires oftern go unrecognized or remain taboo.”1 It is for this very reason that joint ventures often fail. Hofstede’s five levels of cultural dimensions shed light on the differences of foreign investment. Semenov analyzed the differences in economic governance among 18

developed countries Western countries and proved direct links between systems of governance and Hofstede’s original four cultures value dimensions of Power Distance, Uncertainty Avoidance, Individualism and Masculinity.

Kogut and Singh in the article have found a way to measure cultural distance between countries and a correlation of investment. It showed that for instance the more culturally distant countries from the US the less their investment into the US. It is evident that the higher the cultural distance the less likely the foreign firm will succeed and survive. Barkema and Varmeulen, found that failure of joint ventures was related to the Hofstede’s fifth dimension of Long Term Orientation. “Meaning that the domestic values about sustainability differed greatly from the foreign company. “2 But China for instance is a special

1 Hofstede, G., Van Deusen, C., Mueller, C., & Charles, T. (2002). What Goals Do Business Leaders Pursue? A study in Fifteen Countries. International Business Studies, 33(4), 785-­‐803. 2 Hofstede, G., Van Deusen, C., Mueller, C., & Charles, T. (2002). What Goals Do Business Leaders Pursue? A study in Fifteen Countries. International Business Studies, 33(4), 785-­‐803. 1

case, the study has shown that the operation of foreign ventures in the country is negatively related to the cultural distance between the partners. A reason for this could be that the Chinese government and people are rather ignorant when it comes to sustainability and long term views. Another issue which arises amongst different cultures is the aspect of the Ethics. As it is said in the article, the literature on business ethics shows “Extensive proof of the influence of nationality on values, that is feedings of right and wrong.”3 For instance Schlegelmilch and Robertson showed that both country and industry affected the ethical perceptions of senior executives in the U.S.A and European countries. Nakono found that Japanese and U.S managers differed strongly in their ethics orientation. This is due to the fact that the cultures have diverging beliefs of the importance of the purpose of the business. The results of the study have shown: Growth and continuity of the business are the leading goals for the businessman, this year’s profits personal wealth and power were rated as very important for the businessman, but less important for oneself, and creating something new, profits 10 years from now, staying within the law, responsibility towards society were rated important for the self, but less for the businessman. Based on the results the countries were put in clusters in accordance to the most important perceived goals. Cluster 1a (USA) “the executive had the following order of goals: growth of the business, this year’s profits, personal wealth, power, staying within the law, respecting ethical norms. Cluster 1b (Britain, New Zealand) “the manager” had the following rankings of the goals: this year’s profits, staying within the law, responsibility

3 Hofstede, G., Van Deusen, C., Mueller, C., & Charles, T. (2002). What Goals Do Business Leaders Pursue? A study in Fifteen Countries. International Business Studies, 33(4), 785-­‐803. 2

towards employees, continuity of the business, patriotism, national pride, respecting ethical norms. Cluster 2 (India, Jamaica, Bahamas)”the Family Manager” had the following rankings of goals: continuity of business, family interests, patriotism, national pride, personal wealth, profits 10 years from now, this year’s profits. Cluster 4a (Hong Kong, Hawaii-­‐Asian):the Entrepreneur” had the following rankings of goals: profits 10 years from now, creating something new, game and gambling spirit, growth of the business, honor, face reputation, and finally personal wealth. Cluster 4b (Germany, Netherlands) “the Founder” had the following goals rankings: responsibility towards employees, responsibility towards society, creating something new, game and gambling spirit, continuity of the business, honor, face and reputation. Finally Cluster 5 (China)”the Mandarin” had the following goal rankings: respecting ethical norms, patriotism, national pride, honor, face, reputation, power, responsibility towards society, profits in 10 years time. “The results show that it is more important for the government to focus on the short term whereas for an individual worker it is more important to focus on the long-­‐run.”4 In summary it is right to say that there are no globally universal business goals. One country’s goals are different from its neighbors. Globalization is as said in the article is more of slogan than a reality. As national boundaries are lowered the level individualism rises in order to try and preserve ones culture. When parties are looking into joining a cross-­‐cultural venture they should be

4 Hofstede, G., Van Deusen, C., Mueller, C., & Charles, T. (2002). What Goals Do Business Leaders Pursue? A study in Fifteen Countries. International Business Studies, 33(4), 785-­‐803. 3

very careful and should calculate the possible costs and consequences of doing so.

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