The role of strategy and culture in the performance evaluation of international strategic business units

The role of strategy and culture in the performance evaluation of international strategic business units

Priscilla O’Clock


A primary challenge facing many U.S.-based multinational corporations (MNCs) is the evaluation of foreign strategic business units (SBUs). The way an organization evaluates and measures performance determines the motivation behind the decisions and actions of an SBU’s managers. Failure to consider the strategic objectives of an SBU or the cultural identity of its management is an error many MNCs commit when they export the evaluation systems of the parent entity to the foreign SBU. This often results in decisions by the SBU’s managers that are incongruent with corporate goals and objectives.

The consideration of cultural differences is particularly important when the management of an international SBU is delegated to host country personnel. All too frequently, multinational corporations mistakenly evaluate their performance using return on investment (ROI) or one of its variants, such as residual income (RI) or economic value added (EVA), regardless of the business unit strategy. This can lead to management control systems that result in suboptimal decision making, conflicting corporate and SBU objectives, and a negative impact on morale. Return-based measures play a role in evaluating performance, but, used improperly, they perpetuate a short-term orientation and may be inconsistent with the cultural preferences that motivate the local manager.

When developing control systems to evaluate the performance of an international SBU–and rewarding its managers–companies should design performance measures that consider the impact of business unit strategies and cultural differences. In this article, we will present competing business unit strategies and suggest variants to the control system to compensate for these differences. We also will discuss cultural dimensions as identified by Geert Hofstede and make a case that the impact of these cultural differences needs to be incorporated into the design and implementation of management control systems for foreign SBUs. (1) Finally, we suggest performance measures to emphasize and implementation issues to consider when designing accounting control systems that integrate strategic and cultural differences.


There is no one-size-fits-all answer for the effective design of control systems. When an SBU manager’s reward system is matched with the SBU’s strategy, performance will match corporate strategy, and objectives will be enhanced. Failure to match strategy and reward will adversely affect the manager’s motivation and efforts. The strategy for an SBU is dependent on its mission and the consideration of environmental opportunities, internal strengths, and the resources available to accomplish its goals and objectives. (2)

Three approaches to control system design that foster goal congruence are: situation specific, universalistic, and contingency. (3) The situation-specific model views each situation as unique, so application of general rules is not possible. Universalists argue that an optimal control system design will be effective in all settings. The contingency approach, which has become the prominent paradigm, is positioned between these two extremes. It suggests that the appropriateness of the control system depends on the business setting (like the situation-specific approach), but generalization (universalistic approach) can be made across similar settings. If the SBU mission or competitive strategy varies across divisions within the organization, the control system must be modified to capture the relevant performance measures and motivate SBU managers accordingly. (4) Strategic mission or business unit strategies are commonly grouped into the following areas: build, hold, harvest, and divest. (5) Competitive strategies include: low cost, differentiation, focus, defender, or prospector. (6)


The mission of an international SBU is related to lifecycle concepts. A build mission implies the goal of increasing market share and typically applies to any SBU with low market share in a high-growth industry. In order to build a competitive advantage, it may be necessary for the manager to sacrifice short-term earnings and/or cash flow. Also, a build strategy implies an increase in production, which results in additional use of the firm’s resources. Performance measures that focus mainly on profit or return would be in conflict with the overall mission of the SBU. The manager, therefore, should be evaluated and rewarded primarily on achieving a targeted increase in sales or market share, with profitability measures (with a great deal of slack) a secondary objective.

The hold strategy applies to an SBU with a high market share in a high-growth industry. Though profit-oriented accounting performance measures would be appropriate, nonfinancial measures also should be incorporated, such as customer service, maintaining market share, and quality measures.

The goal of a harvest SBU is to maximize short-term cash flows and earnings at the expense of market share (high market share, low-growth industry). These earnings can then supplement other business units that may be in build strategies. To align management decision making with the harvest strategy, the control system should evaluate performance using one of the conventional return measures, such as ROI, RI, or EVA. Measures of cash flow also may be appropriate. Profit and return measures have a much tighter acceptable range and should be adhered to strictly.

In a low-market-share, low-growth industry, the SBU’s strategy may be to divest through a process of slow withdrawal or outright sale. The appropriate control system at this stage is unique to the particular situation. Presumably, the objective is to maximize cash flows. This strategy represents the end of the life-cycle stages, however, and is a unique situation with a limited ability to generalize. Therefore, we will skip the discussion of control models for the divest strategy.


An SBU with a low-cost competitive strategy attempts to achieve lower costs relative to competitors. Typical low-cost actions include taking advantage of economies of scale; learning-curve effects; reducing customer service, research and development, advertising, and/or sales force; and maintaining a stable product line. Strict adherence to cost standards through variance analysis and other measures of operating efficiency, such as cycle time and inventory turnover, would be appropriate measures to evaluate and control performance in this competitive environment. Further, A. A. Thompson and A. J. Strickland, III, suggest that significant cost advantages can emerge from an analysis of an entity’s internal and external value chain. (7) Low-cost participants must be careful, however, because the marketplace will still demand a minimum level of product quality and functionality.

A differentiation strategy focuses the SBU manager’s attention on brand loyalty, customer service, product design, and technology. The goal is to create a product that customers view as unique and exclusive. Product innovation is critical. To create uniqueness, the SBU is likely to have a more diversified set of products or functionally superior products compared to a low-cost competitor, and it must invest in research and product development, technology, marketing, and customer service. Achieving a target ROI does not measure progress effectively within this strategy. While traditional financial performance measures still play a role, nonfinancial performance measures, such as quality, on-time deliveries, customer satisfaction, and number of new products to market, must be emphasized.

An SBU with a focus strategy targets a narrow competitive market within an industry segment. The specific objectives could be either low cost or differentiation. Design of the control system must be tailored to the selected objective.

SBUs with a defender strategy engage in limited product/market research, have limited product lines, and have a stable environment. Defenders compete through cost and quality control. This strategy is consistent with the features of the hold and harvest missions. ROI, RI, and EVA may be effective control measures if they are incorporated with variance analysis, operating efficiency measures, and quality variables.

Prospector SBUs, similar to differentiators, compete by focusing on market development, new product development, and searching (prospecting) for market opportunities. These SBUs are often in a build strategic mission. Profit-oriented performance measures would not capture progress toward goals and objectives. The number of new products to market, customer satisfaction, quality, sales from products developed in the last 24 months, and market share would evaluate and control the manager more appropriately.

As we said, there is no single performance measure or control system applicable across different business unit strategies that provides a basis for aligning management decision making with corporate goals. The specific control system must be modified and aligned with the particular strategy of the SBU. The preferences of the SBU manager in the design of the control system, therefore, must not be ignored. For example, the preferences of international SBU managers for autonomy, level of uncertainty, risk, participation, group versus individual rewards, and short- versus long-term rewards may be influenced by their cultural identity. In turn, consideration of cultural differences in the design of a control system can increase its effectiveness.


These days, more and more MNCs use local management talent to operate a foreign subsidiary rather than relying on “imported” expatriates. (8) U.S. MNCs frequently export the home country control system to the host country SBU but fail to consider the impact of cultural factors. Effectiveness of the management control system depends on whether the local manager of the SBU perceives the control system as aligned with the shared values maintained in the host country. (9) Hofstede defined culture as “the collective programming of the mind that distinguishes the members of one category of people from those of another.” (10) In perhaps the most extensive and most frequently cited research conducted with respect to cultural differences, Hofstede identified five underlying cultural dimensions–power distance, uncertainty avoidance, individualism versus collectivism, masculinity versus femininity, and Confucian dynamism–and assigned scores on them to more than 50 countries. (11) Table 1 shows the relative scores for some of these countries.

Let’s look at these dimensions.

Power distance indicates the extent a society accepts an unequal distribution of power, and this is one of the most important dimensions to consider when designing a control system. A manager of an SBU in a high power-distance culture (Malaysia, Guatemala, Mexico, Singapore, Brazil, Hong Kong) is more likely to accept tight budgetary controls, discretionary bonuses, and subjective performance evaluation. Managers and subordinates in a low power-distance country (Austria, New Zealand, Sweden, U.K., Germany, Canada, U.S.) desire more equity in performance evaluation, less budgetary control, participative budgeting, standardized (perhaps formula-based) rewards, easy access to superiors, and open channels of communication. An autocratic manager in these countries is likely to run into resentment and discontent from subordinates.

Uncertainty avoidance refers to the society’s preference for risk-free, unambiguous situations. A culture with a high uncertainty-avoidance score (Greece, Guatemala, Japan, Chile, Argentina, Spain) reflects a preference for control systems that adhere to clearly defined performance measures with unambiguous links to performance evaluation and reward. A low uncertainty-avoidance culture (Singapore, Hong Kong, Sweden, U.K., Malaysia), on the other hand, is more open to less structured control systems where rewards are either discretionary or include a bonus scheme rather than fixed compensation. With a preference for uncertainty avoidance, security in one’s position is paramount and rigid, and specific rules that reduce uncertainty are generally accepted. Ambiguity in the control system may be perceived as a continuous threat and result in low morale, high turnover, and increased stress and anxiety.

In Hofstede’s research, there appears to be an interaction of power distance and uncertainty avoidance. Though the surveyed countries scatter across all four quadrants, there is a significant grouping of countries in the low power distance, low uncertainty avoidance sector (Sweden, U.K., U.S., Canada) and in the high power distance, high uncertainty avoidance quadrant (Spain, Mexico, Argentina, Chile, Brazil). (12) The countries in the former group prefer participation in the budget process, but they also would accept increased risk in the reward structure. Countries in the latter group represent cultures that accept inequality in the power structure and a lack of participative budgets, but they would demand certain fixed rewards.

Individualism versus collectivism represents the degree that members of a society perceive themselves as individuals rather than as members of a group. Countries with a high score on this dimension (U.S., U.K., Canada, New Zealand, Italy, Sweden) reflect a culture with preferences for individual versus group rewards, independence, and recognition of personal achievement. Tight budgetary controls can be perceived as stifling individual performance. In contrast, a control system with slack budgetary controls and individual rewards imposed on a collectivist culture (Guatemala, Singapore, Hong Kong, Malaysia, Mexico, Greece, Brazil, Chile) would be perceived as contrary to societal norms. Such a system highlights individual differences and promotes competition and interpersonal rivalries, contrary to a preference for group harmony and equality.

Masculinity versus femininity indicates the extent that the “masculine” values of assertiveness, ambition, independence, competitiveness, and male dominance are revered over the “feminine” values of nurturing, interdependence, service motivation, quality of life, and equality between sexes. In Hofstede’s research, the higher a country scored on masculinity, the greater the gap between the values of its men and women. In a high-masculinity country (Japan, Austria, Mexico, Germany, U.K.), managers are more accepting of stretch budgets and would prefer a focus on individual achievement with performance evaluated relative to peers. In a high-masculinity country such as Japan, the high Confucianism factor (discussed next) and relatively low individualism score may mitigate the desire for individual recognition. In addition, anecdotal evidence suggests that managers of SBUs in some high-masculinity countries may be open to stretch budgets, but when they fail to deliver they still expect their fixed reward. In low-masculinity countries (Sweden, Chile, Spain, Singapore, Brazil, Canada), a strong emphasis on bottom-line profitability with little concern for members of the organization will be met with resistance and is therefore counterproductive to achieving SBU goals. Quality-of-life values such as a friendly work environment, cooperation, and intrinsic rewards are likely to be motivational factors combined with a preference for group performance evaluation versus individual, incentive-based rewards.

The fifth cultural dimension, Confucian dynamism, reflects the relative importance of persistence, perseverance, ordered status, and thrift. These characteristics have been interpreted to refer to differences between Eastern and Western cultures and the extent that a culture pursues long-term orientation and growth. A proactive approach prevails in high-Confucianism countries, resulting in a willingness to sacrifice current success in exchange for future profitability. The SBU manager in a country scoring high on Confucianism (Hong Kong, Japan, Brazil) can be motivated by deferred compensation plans with a focus on growth and less emphasis on current financial performance measures. The manager in a low-scoring culture (New Zealand, Canada, U.K., U.S.) is oriented toward the past and present with a preference for evaluation of the unit’s ability to meet short-term financial goals.

The potential exists for conflict in preferences across cultural factors within the same country. In a high uncertainty-avoidance culture, the manager’s preference would be for tight budget control with a fixed performance reward. If the country also scores high on individualism, however, a tight budget control would conflict with the manager’s preference for independence and performance-based rewards. When factors conflict within a single culture, the control system should target congruence with the dominant cultural dimension as well as align with business strategy. (13)


A thorough discussion of each combination of business unit strategies and cultural factors is beyond the scope of this article, but Table 2 does present a summary of both the performance measures to be considered (what) and the manner in which these factors should be determined, budgeted, and rewarded (how) across competing strategies and cultural dimensions.

The performance measures to be considered–the “what”–are factors “a” through “f” in the Table key. The “how” to measure is represented by factors “g” through “z.” The columns of Table 2 list business unit/competitive strategies, and the rows list high or low scores on each of the five cultural dimensions. For example, the first two rows present how evaluations and rewards should be determined for managers of SBUs in countries scoring high or low on individualism. If the country scored high, the reward system should permit slack in the process, reward individual effort, and reward the business unit rather than utilizing company-based rewards (“h” is slack in budgetary controls; “j” is individual rewards; “l” is business-unit versus company-based rewards). Note that for each row the factors related to how (“g” through “z”) are consistent across the respective high or low cultural dimension.

Each cell also integrates the appropriate performance measures (what) to consider across competing business-unit strategies or competitive strategies within this cultural dimension. Within each strategy, these factors are also consistent across all cultural dimensions. For example, when the business unit strategy is hold, the suggested performance measures are: maintain market share (b) and quality and/or customer service measures (d). Thus, each cell of Table 2 considers the joint impact of strategy and culture when indicating the most appropriate performance measurements and evaluations.

For an SBU with a harvest strategy in a culture with high scores on individualism, the suggested measurement tools are return metrics, but these measurements should be calculated and evaluated at the business-unit level rather than being incorporated into measures of overall company performance. In addition, the manager would tend to have a strong aversion to tight or strict standards and would more than likely prefer individual versus group rewards. An SBU pursuing a differentiate strategy in a high-masculinity culture should be evaluated using quality and/or customer service measures and number of new products to market. The manager of this SBU will be motivated by extrinsic rewards and individual evaluation relative to peers.

If an SBU in Mexico, which has high scores in power distance and uncertainty avoidance, has a build mission and a differentiate competitive strategy, the performance measures should emphasize market share as well as quality, customer service measures, and the number of new products brought to market. Cultural dimensions suggest that the manager will accept tight budgetary controls with respect to targets but would like some input in setting these targets. In addition, high uncertainty avoidance predicts the manager will prefer frequent fixed rewards with a short-term orientation. High power distance, however, indicates the manager will be open to subjective evaluations and discretionary bonuses. Where cultural dimensions are in conflict like this, the dominant dimension should be given more weight. A control system that provides for evaluation using a strict profit orientation with no input from the manager into the budget process would be frustrating, dysfunctional, in conflict with both strategic and cultural factors, and probably would result in low morale and decision making in conflict with the SBU’s strategic objectives.

As these examples suggest, the integration of strategy and culture in the design of control systems can be difficult. The complexity of this task increases when a company considers different approaches to the development and the management of international business units. For example, some MNCs may choose to rely heavily on local managers while others may export management from their home country. When local management is used, there can be significant variation in the degree of experience the local manager has within the parent company. A local manager who has extensive experience with the parent entity and has been indoctrinated in the MNC’s home country culture may be less affected by the dominant cultural dimensions in the host country. In each of the examples, the importance of the host country’s dominant cultural dimensions may vary. Similarly, the competitive strategies we discussed may not be all-inclusive. Some MNCs may continue to operate SBUs that would otherwise be divested because they provide a source of raw materials or meet the needs of strategically important customers. In such cases, the parent entity should adopt a control system aligned with the purpose of the SBU.

Evaluating the performance of foreign SBUs and their managers is an imposing task for multinational companies. Critical to the design of management control systems is the need to consider both the mission of the SBU and the cultural identities of its management. We have proposed guidelines related to which performance measures are most appropriate for a given business unit or competitive strategy while providing insight into how control system measures should be implemented across different cultures. Consideration of what to measure–as well as how to measure it–will result in the design of control systems that increase goal congruence and reduce conflict between an SBU and its parent entity. Failure to consider the impact of strategy and culture in the design of control systems can result in dissonance, suboptimal decision making, dysfunctional behavior, and managers who lack motivation and suffer from low morale.

Table 1: Relative Score for Selected Countries on Cultural Dimensions

Uncertainty Power

Country Individualism Avoidance Distance

Argentina 46 86 49

Austria 55 70 11

Brazil 38 76 69

Canada 80 48 39

Chile 38 86 63

70 many 67 65 35

Great Britain 89 35 35

Greece 35 112 60

Guatemala 6 101 95

Hong Kong 25 29 68

Italy 76 75 50

Japan 46 92 54

Malaysia 26 36 104

Mexico 30 82 81

New Zealand 79 49 22

Singapore 20 8 74

Spain 51 86 57

Sweden 71 29 31

United States 91 46 40

Range ** 6-91 8-112 11-104

Mean ** 43.1 65.5 56.8

Median ** 38 68 60

Country Masculinity Confucianism

Argentina 56 NA *

Austria 79 NA

Brazil 49 65

Canada 52 23

Chile 28 NA

70 many 66 31

Great Britain 66 25

Greece 57 NA

Guatemala 37 NA

Hong Kong 57 96

Italy 70 NA

Japan 95 80

Malaysia 50 NA

Mexico 69 NA

New Zealand 58 0

Singapore 48 48

Spain 42 NA

Sweden 5 33

United States 62 29

Range ** 5-95 0-96

Mean ** 48.7 43.7

Median ** 49 2

* NA= Information not available for this country

** The summary statistical information relates to data from all

countries in the Hofstede (1988) research, not just the selected

countries reported above.

Table 2: Performance Evaluation Measures and Control System

Characteristics Integrating Strategy and Culture





Individualism a,h,j,l b,d,f,h,j,l e,f,h,j,l


Individualism a,g,i,m b,d,f,g,i,m e,f,g,i,m

High Power

Distance a,g,o b,d,f,g,o e,f,g,o

Low Power

Distance a,h,n b,d,f,h,n e,f,h,n

High Uncertainty

Avoidance a,g,n,w,z b,d,f,n,w,z e,f,n,w,z

Low Uncertainty

Avoidance a,h,o,v b,d,f,h,o,v e,f,h,o,v


Masculinity a,k,r,y b,d,f,k,r,y e,f,k,r,y


Masculinity a,i,q,s b,d,f,i,q,s e,f,i,q,s


Confucianism a,v,x,z b,d,f,v,x,z e,f,v,x,z


Confucianism a,p,t,u b,d,f,p,t,u e,f,p,t,u





Individualism e,h,j,l c,d,h,j,l a,h,j,l


Individualism e,g,i,m c,d,g,i,m a,g,i,m

High Power

Distance e,g,o c,d,g,o a,g,o

Low Power

Distance e,h,n c,d,h,n a,h,n

High Uncertainty

Avoidance e,n,w,z c,d,n,w,z a,n,w,z

Low Uncertainty

Avoidance e,h,o,v c,d,h,o,v a,h,o,v


Masculinity e,k,r,y c,d,k,r,y a,k,r,y


Masculinity e,i,q,s c,d,i,q,s a,i,q,s


Confucianism e,v,x,z c,d,v,x,z a,v,x,z


Confucianism e,p,t,u c,d,p,t,u a,p,t,u





Individualism d,e,f,h,j,l a,c,d,h,j,l


Individualism d,e,f,g,i,m a,c,d,g,i,m

High Power

Distance d,e,f,g,o a,c,d,g,o

Low Power

Distance d,e,f,h,n a,c,d,h,n

High Uncertainty

Avoidance d,e,f,n,w,z a,c,d,n,w,z

Low Uncertainty

Avoidance d,e,f,h,o,v a,c,d,h,o,v


Masculinity d,e,f,k,r,y a,c,d,k,r,y


Masculinity d,e,f,i,q,s a,c,d,i,q,s


Confucianism d,e,f,v,x,z a,c,d,v,x,z


Confucianism d,e,f,p,t,u a,c,d,p,t,u

a. focus on market share and/or sales growth

b. maintain market share

c. new products to market

d. quality and/or customer service measures

e. cost management/efficiency measures

f. return-based measures (e.g.,ROI,EVA)

g. tight budgetary controls

h. slack in budgetary controls

i. group-based rewards/evaluation

j. individual-based rewards

k. preference for evaluation relative to others

l. business-unit vs. company rewards

m. company-based vs. business-unit rewards

n. formula-based evaluation/rewards/bonuses

o. subjective evaluation/rewards/bonuses

p. pay for performance/contingent rewards

q. performance-based rewards less motivating

r. desire for incentive-based extrinsic rewards

s. intrinsic rewards likely to be valued

t. focus on short-term financial performance

u. past/present orientation

v. future orientation/long planning horizons

w. preference for immediate rewards

x. motivated by deferred compensation

y. acceptance/desire for stretch budgets

z. preference for interactive budget process

(1) Geert Hofstede, “Motivation, Leadership, and Organization: Do American Theories Apply Abroad?” Organizational Dynamics, Summer; 1980, pp. 42-63; Geert Hofstede, Cultures Consequences: International Differences in Work-Related Values, Sage Publications, Newbury Park, Calif., 1984; Geert Hofstede and Michael Harris Bond, “The Confucius Connection: From Cultural Roots to Economic Growth,” Organizational Dynamics, vol. 16, no. 4, Spring 1988, pp. 5-21.

(2) J. Fisher and V. Govindarajan, “Incentive Compensation Design, Strategic Business Unit Mission, and Competitive Strategy,” Journal of Management Accounting Research, vol. 5, Fall 1993, pp.129-144.

(3) J. Fisher, “Contingency-based Research on Management Control Systems: Categorization by Level of Complexity,” Journal of Accounting Literature, vol. 14, 1995, pp. 24-53.

(4) The contingency model proposes that, in addition to mission and competitive strategy, other contingent factors include the external environment, technology, firm diversification and size, and the ability to observe effort and output. Modifications to the control system in this article are limited to discussion of the impact of alternative missions or competitive strategies. In order to generalize a contingency model across similar business situations, however, the cultural dimension (discussed later) must also be similar.

(5) B.D. Henderson, Corporate Strategy, Abt Books, Cambridge, Mass., 1978; R.D. Buzzell and F.D. Wiersema, “Modeling Changes in Market Share: A Cross-sectional Analysis,” Strategic Management Journal, vol. 2, no. 1, January-March 1981, pp. 27-42. These mission-driven strategies are more recently discussed in numerous strategy and accounting textbooks, including: R.N. Anthony and V. Govindarajan, Management Control Systems, 9th Edition, McGraw-Hill/Irwin, Boston, 1998, pp. 583-589.

(6) M.E. Porter, Competitive Strategy, Free Press, New York, 1980; R.E. Miles and C.C. Snow, Organizational Strategy, Structure and Process, McGraw-Hill, New York, 1978. Miles and Snow also consider analyzer- and reactor-type strategies. These strategies are adaptations of defender and prospector and will not be considered. See pages 68-93 for further discussion.

(7) A.A. Thompson and A.J. Strickland, III, Strategic Management: Concepts and Cases, 13th Edition, McGraw-Hill/Irwin, Boston, 2003, pp. 151-163.

(8) R.M. Hodgetts and F. Luthans, “U. S. Multinationals’ Expatriate Compensation Strategies,” Compensation & Benefits Review, January/February 1993, pp. 57-62. R.M. Hodgetts and F. Luthans, “U. S. Multinationals’ Compensation Strategies for Local Management: Cross-Cultural Implications,” Compensation & Benefits Review, March/April 1993, pp. 42-48.

(9) G.L. Harrison, “Reliance on Accounting Performance Measures in Superior Evaluative Style–The Influence of National Culture and Personality,” Accounting, Organizations and Society, vol. 18, May 1993, pp. 319-339; S.J. Kachelmeier and M. Shehata, “Internal Auditing and Voluntary Cooperation in Firms: A Cross-Cultural Experiment,” The Accounting Review, vol. 72, no. 3, July 1997, pp. 407-431.

(10) Hofstede, 1988.

(11) In addition to reporting scores for 50 specific countries, Hofstede (1984) grouped 14 countries into three cultural regions: East Africa, West Africa, and Arabic-speaking countries. Several companies that specialize in global consulting and cross-cultural training rely extensively on the research of Geert Hofstede. For example: ITAP International refers to the work of Geert Hofstede as the “gold standard” of cultural profiles. The company uses the Hofstede cultural dimensions extensively in its programs (see ITIM, one of the leading companies worldwide in the field of management and culture, incorporates the findings of the Hofstede research into its consulting and training practices (see Also see Grovewell LLC ( Hofstede’s (1988) study identified the fifth dimension, “Confucianism,” after analyzing data from 22 countries, 20 of which were overlapped from the 1980 report.

(12) Hofstede (1980) presents a map of countries that cluster into four quadrants: 1) high power distance, high uncertainty avoidance, 2) high power distance, low uncertainty avoidance, 3) low power distance, high uncertainty avoidance, and 4) low power distance, low uncertainty avoidance.

(13) The country scores on cultural dimensions in the Hofstede studies are relative scores. Scales were chosen in such a way that the distance between the lowest- and highest-scoring country was approximately 100 points.

Priscilla M. O’Clock, CPA, Ph.D., is an associate professor of accounting at Xavier University in Cincinnati, Ohio. She can be reached at (513) 745-4245 or

Kevin Devine, Ph.D. is a professor of accounting at Xavier University. He can be reached at (513) 745-2045 or

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