In addition, strategic choices at various levels often are influenced by cultural factors, such as a long-term versus a short-term perspective. Hofstede found that most people in countries such as China and Japan generally had a longer-term horizon than those in Canada and the United States.78 Whereas Americans, then, might make strategic choices with a heavy emphasis on short-term profits, the Japanese are known to be more patient in sacrificing short-term results in order to build for the future with investment, research and development, and market share.
Risk orientation was also found by Pan and Tse to explain the choice between equity and nonequity modes.79 Risk orientation relates to Hofstede's uncertainty avoidance dimension. Firms from countries where, generally speaking, people tend to avoid uncertainty (for example Latin American and African countries) tend to prefer nonequity entry modes in order to minimize exposure to risk. Managers from firms from low uncertainty avoidance countries are more willing to take risks and therefore are more likely to adopt equity entry modes.81
Choice of equity versus nonequity mode has been found also to be related to level of power distance. According to Hofstede, a high power distance country
(such as Arab countries and Japan) is one where people observe interpersonal in- equality and hierarchy.82 Pan and Tse found that firms from countries tending toward high power distance are more likely to use equity modes of entry abroad.83
These are but a few of the examples of the relationships between culture and the choices that are made in the strategic planning and implementation phase. They serve to remind us that it is people who make those decisions and that the ways people think, feel, and act are based on their ingrained societal culture. People bring that context to work and it influences their propensity toward or against certain types of decisions.
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