The globalization of operations in Eastern and Western countries: Unpacking the relationship between national and organizational culture and its impact on manufacturing performance

Abstract Understanding national and organizational culture becomes increasingly important in the era of transnational manufacturing. As the world becomes flat and boundaries break down, manufacturers need to understand the proper role of culture in order to obtain competitive advantage. Thus, the current study conducts a multilevel investigation of the impact of eight national and organizational culture dimensions (according to GLOBE framework) on manufacturing performance. An ANOVA comparison of 189 manufacturing plants between Eastern (Japan and South Korea) and Western (Germany, United States, Finland, and Sweden) countries indicates that organizational culture inside plants differs in three dimensions (power distance, future orientation, and performance orientation). Hierarchical Linear Modeling analysis further suggests that organizational culture has more of an effect on manufacturing performance than national culture or the fit between them. In addition, Country Developmental Indexes, both Economic and Infrastructural, do not impact manufacturing performance, reinforcing our conclusion about the weak influence of the national level factors on manufacturing performance. In an era of globalization, these results have practical implications for organizations expanding across national boundaries by developing an internal organizational culture consistent with high performance manufacturing.