How Much Does National Culture Constrain Organizational Culture?

The assumption of strategy approaches like the resource based view is that, despite environmental constraints, ample room remains for organizations to differentiate on the basis of organizational culture (together with related human resource practices) to achieve sustained competitive advantage. In contrast, other perspectives assume that management practice and organizational culture mirror, or are constrained by, national culture. To the degree that such a constraint exists, within-country variance in culture should be small and between-country variance large. In statistical terms, the first question is: what is the magnitude of the effect size for country? The larger the effect, the more likely it is a constraint. Second, what portion of the country effect size is due to differences in national culture? My review finds that most of the variance in organizational cultures is not explained by country; of the variance that is explained by country, only a minority is due to national culture differences. As such, there may be more room for organizational differentiation than typically recognized. Third, under what circumstances will country and national culture effects be larger or smaller? I present a model suggesting more room for differentiation in countries having greater individual level variance in cultural values and related variables.