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Bold claims of culture's pull on corporate destiny prove unconvincing

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Does the success of corporate America derive from the "frontier spirit" of the country's earliest settlers?

Do the roots of British industry's collapse lie in a sense of lingering national complacency?

These are assertions made by Kai Hammerich, a Danish headhunter, and Richard D. Lewis, a British linguist, in their new book "Fish Can't See Water: How National Culture Can Make or Break Your Corporate Strategy," published by Wiley.

The title is an allusion to the cultural blindness of executives who, the authors argue, are often unable to see the effect of national cultures on businesses.

Indeed, they claim that culture has been neglected in studies of corporate strategy precisely for cultural reasons: Management writing has been U.S.-dominated, with U.S.-centric case studies.

Central to their thesis is a rejection of Thomas Friedman's notion of a "flat" world, and the idea that companies can have a truly "global" culture. "Virtually all global companies have a single national culture at heart," write Hammerich and Lewis.

National culture matters, they say, because it has "a powerful but often invisible impact on the success of global companies."

At different stages of the corporate life cycle, and particularly in times of crisis, companies will be affected differently according to their country's culture. "Some countries have national traits that are better suited to the early innovative growth phase, while others thrive in the maturity phase."

Nokia's journey – its growth to become Europe's largest technology company and its subsequent decline – is offered as one case study of how national culture can promote and derail a company's success at different stages in its life.

The authors argue that many of the "enabling traits" of Nokia's rapid ascent were rooted in the Finnish psyche. Such factors – namely "hard work, honesty, sticking together to overcome adversity, and fact-orientation over emotions" – allowed Nokia to develop a "classical challenger profile" with a "can-do" cultural dynamic that propelled it to the top of the nascent mobile phone market.

As the market developed, however, Nokia fell victim to a "national tendency for introspection" and "a reluctance to engage emotionally" that allowed it to grow distant from its customers.

In a second example, the British "bias for action" is identified as both an enabler for the postwar success of Austin Motors and later on as a factor that contributed to its demise.

Though successful in its innovations, which included the popular Mini, financial losses followed poor management and a lack of planning.

"The English pragmatic, short-term muddling-through traits that fueled the bias-for-action cultural dynamic also fueled the wing-it cultural dynamic," they write. This "wing-it approach to life" – which Hammerich and Lewis say is inherent in English culture – also contributed to the success and recent failures of the country's financial services industry.

Such bold claims are characteristic of the book.

Some of the examples offered are instructive. One such case is Wal-Mart's neglect of cultural differences in its failed rollout of U.S.-style customer service across its German stores. Yet in other examples the importance of national traits is overplayed to the obvious neglect of economic and political factors.

Although this book successfully offers an alternative to the rationalist perspectives that dominate business strategy thinking, it frequently succumbs to oversimplification and sweeping generalizations.

There are, of course, kernels of truth in all national stereotypes – such as American confidence and German Ordnung – but to rest an explanation of corporate history on cliches falls way short of being convincing.

Adam Palin is a writer for the Financial Times of London, in which this review first appeared.

Copyright © 2014, Los Angeles Times
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