Does Nationality Still Matter? the Importance of Nationality to Organisational Performance Depends on the Sector. in Some, It Seems to Have Little Bearing. in Others, It Is Still a Critical Factor

By Moore, Karl; Amar, David | European Business Forum, Spring 2008 | Go to article overview

Does Nationality Still Matter? the Importance of Nationality to Organisational Performance Depends on the Sector. in Some, It Seems to Have Little Bearing. in Others, It Is Still a Critical Factor


Moore, Karl, Amar, David, European Business Forum


Does nationality Still matter? It does--though less than it used to.

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On the one hand, national identity is not a major driver of business performance: successful global companies come from a variety of countries, and no nationality dominates across sectors. The car industry used to be dominated by US companies, but now Detroit is fighting for its life against German, Japanese, Korean, and Chinese competitors. In pharmaceuticals,, Swiss (Hoffman-Laroche, Novartis) and French (Sanofi-Aventis) competitors are outperforming major US ones (Pfizer, Johnson & Johnson, Eli Lilly). In consumer foods, companies such as Nestle are doing quite well against the Nabiscos of this world. And in the mobile phone industry, where competition is ferocious, Nokia dominates the likes of Motorola or Samsung. The same dynamics are in play in plasma and LCD TVs, where Samsung competes rather well against LG Electronics or Matsushita and Sony.

On the other hand, though, national identity remains important. It just depends on the sector. Most MBA programs teach as core concepts Michael Porter's "five forces model" and George Yip's "four drivers industry globalisation potential model" (market, government, cost and competition), emphasising the importance of the industry variable. We believe that this emphasis is correct.

In many industries, success seems to originate from a fortuitous alignment of strong national cultural characteristics combined with distinct historical competencies. Indeed, there are things at which some national cultures seem particularly proficient.

For example, Japanese-owned care companies tend to do much better than other national or non-national-owned companies because of their strong competencies in technology and engineering, as well as a culture of continuous improvement. Though these are not exculsively Japanese characteristics--indeed other firms are trying to copy-these approaches--they are built on existing Japanese strengths. Thanks to these founding competencies and systemic cultural traits, Toyota has risen inexorably to world leadership, taking over from former innovators such as GM, Ford, and Mercedes.

Similarly, it is no accident that US biotech companies do significantly better than other national or non-national owned companies. Their success is explained by the US's strengths in venture capital and its universities' lead in biology and medicine. Only in the US are investors willing to take the sort or risks that biotech requires. A combination of cultural and competence factors explains why US "bio-pharma" companies dominate their sector.

In the luxury goods sector, companies owned and governed from Italy and France tend to do much better than other national companies. Those countries' historical attachment to the crafts, and their "art de vivre" cultures, goes some way toward explaining why, French and Italian companies excel in the sensual areas of "les arts de la table, la gastronomie et le vin". They companies may now be owned from elsewhere, but these companies remain French and Italian in their heart and soul. …

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