Cultural Factors in Multinational Enterprise Location

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Inhaltsangabe:Abstract: Despite crises and uncertainty in international capital markets, foreign direct investment (FDI) by multinational enterprises (MNE) is booming. The buzzword is globalization. The business world is expected to be moving closer together through more or less recent developments in communication technologies and transportation facilities. The political ideal of democracy along with a liberalization of national economies seems to have finally gained the recognition it deserves as the system that in the end allows for the best utilization of wealth creating endowments. Besides differences in economic development, cultural differences remain as a single important means of distinguishing between people from several nations. The critical issue is that this situation is being recognized and mankind restrains from emphasizing distinctions, and instead focuses an working out compatibility between cultures. Culture has been given the attribute of being responsible for economic performance by several scholars over the past decade. The original aim has been at explaining the continuous growth of the economies of Asian NICs which, however, came to an abrupt and widely unexpected end an 2 July 1997. Still the importance of culture seems to have been underestimated, otherwise the crisis might have been foreseeable. If cultural factors are of significant importance for overall economic performance, i.e. an the macro-economic level, they must be of at least the same importance for the performance of companies that work within the particular culture, i.e. an the micro-economic level. In this case, not only local but international investors in particular are affected by their respective cultural environment as two - or even more - different cultures have to be brought to work together. Obviously, a consensus has to be found between influences from home and host country culture. This situation often is expected to be a threat to the economic performance of the MNE. However, no existing culture in the world today can be viewed as superior to others in all aspects. Moreover, each culture has positive as well as negative factors. A MNE then, if it is able to effectively bring together several cultures in order to achieve one common goal, should be able to make use of the positive sides of the cultures at its different locations. Dunning & Bansal analyze the effects of culture an multinational enterprises applying John H. Dunning's ¿Eclectic [...]