Managing Business in a High Distance Power Culture

In today’s competitive business environment, innovation is critical not only to facilitate differentiation, but also to reduce cost and add value to the customer. Many studies have revealed how innovation is related to culture. With the advent of globalization, business activities become more inter-nationalized and multinational firms are scrambling to enhance their competitive advantages. With competitive advantages being so closely associated with innovation, a number of scholars have started researching why firms from different nations or societies have different innovative behaviors.

Some of the most profitable companies in the world have associated their growth with innovation, which they perceive as the ability to change and reinvent themselves in ways to exploit opportunities. As the effect of cultural values on innovation become more evident, a number of multinational firms have widened their operation and established branches all over the world to exploit the benefit of innovation in order to fuel growth.

While opportunities for doing business in the international arena have led to many success stories, particularly from many large multinational business organizations, there remain a number of challenges.

Sound understanding of the socio-cultural environment and social value differences are critical elements for success in a High Power Distance country. Power distance is the extent to which less powerful members of the society in that country accepts or even expects power disparities with more powerful people. If the power distance is “high”, it means subordinates accept or even welcome the unequal distribution of power of their supervisors. In this type of organization, managers will expect the organizational structure to be quite centralized, with their senior managers making the vast majority of decisions within the organization. Decision making will be highly top-down and there will be very little, if any, employee involvement.

As a global...