By definition, a multi-domestic strategy is an internationally recognized marketing technique that focuses on commercial efforts and advertising on the local market needs rather than adopting a more global or universal approach (Kihn, 2008). In Brent & Scott’s article Global Versus Multidomestic: Culture’s Consequences on Innovation, the two authors analyze the relationship of firm innovation to national culture, presided firm’s industry of operation. The authors develop and test five hypotheses applying data and information from 536 organizations over ten nations competing in four multi-domestic and four global industries. According to the first hypothesis, the authors assert that in multi-domestic industries, firm innovation is related more negatively to high power distance than in global industries. The second hypothesis asserts that in multi-domestic industries, firm innovation is more negatively related to high uncertainty avoidance than in global industries.
The third hypothesis asserts that in multi-domestic industries, firm innovation is more positively related to individualism than in the global industries. The fourth hypothesis goes on to state that in multi-domestic industries, firm innovation is more negatively related to masculinity t than in the global industries. The fifth and final hypothesis goes on to assert that in global industries, firm innovation and high Confucian dynamism are more positively related compared to multi-domestic industries. The article findings support the five hypotheses. In multi-domestic industries, innovation is more positively related to low uncertainty avoidance, low power distance, and individualism. In global industries, innovation is more positively related to Confucian dynamism. Additionally, there exists no significant effect on the femininity/masculinity and innovation relationship.
The authors’ main aim is to test the national culture influence on firm innovation across the type of industry. The authors analyze this influence regarding the type of industry (multi-domestic versus global). In the general sense, innovation and national culture relationships are more diverse for organizations competing in the multi-domestic industries where the local markets’ needs bear the most significant amount of strategic imperative. On the other hand, Confucian dynamism has a varying profile influence. Confucian dynamism is more linked with a long-term and global orientation.
According to the authors, in multi-domestic industries, firm innovation is more negatively related to power distance compared to global industries. This asserts that power distance has a significant relationship on firm innovation in the multi-domestic industries and cultures with a substantial degree of tolerance to power distribution inequality are prone to be less innovative. In cultures characterized by low power distance, less stiff hierarchies and tendencies to seize up power roadblocks reward and encourage innovation. In the same sense, in multi-domestic industries, innovation is enhanced for cultures with low uncertainty avoidance. In the event when there is uncertainty and measures to limit or buffer competition are not employed, organizations become more innovative and apply the uncertainty to serve them best.
Companies that compete in global industries go beyond national boundaries and jurisdictions obtain balance and can better handle risk and uncertainty, due to competitive and organizational dynamics. This asserts that global industries firms have varying national-level and innovation dynamic components that have a less significant effect on strategic outcomes and behavior. According to the authors, in the industry context, individualism is a major predictor of firm innovation. Highly individualistic cultures promote risk-taking while at the same time awarding entrepreneurial practices. Strategic needs have to lean on the local market needs in industries based on country-by-country competition. Although innovation may be influenced by the national culture of the home country firms in global industries, national culture in multi-domestic industries may influence competition, consumer behavior regulation, and firm behavior in those markets.
Brent B. Allred, K. Scott Swan (2004). Global Versus Multidomestic: Culture’s Consequences on Innovation. Management International Review. Volume 44: 81-105.
Kihn, Lili-Anne (15 December 2008). “Strategies, Decentralization, and Controls in Internationalized Finnish Firms”.
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