Strategic Management of Cross-Cultural Governance in Enterprise Internationalization

Abstract

This study looks at how companies manage across cultures as they go global. It systematically examines how cultural differences affect how well a company is run and what strategies can be used to deal with these differences. Based on Hofstede's cultural dimensions theory and institutional theory, this study analyzes important literature from 2020 to 2025 to create a framework for understanding the relationship between culture, institutions, and performance.

Using Toyota as a case study, along with data from the World Bank's governance indicators and Toyota's annual reports, the study focuses on how cultural differences affect the success of Toyota's subsidiaries in other countries in complex ways. The study finds that:

1.  Differences in power distance and uncertainty avoidance have a noticeably negative correlation with how well a company is run (β=-0.32, p<0.01).
2.  The quality of the institutional environment can change the negative effects of cultural conflict. For example, for every standard deviation increase in the rule of law, the negative effect of cultural distance decreases by 23%.
3.  Toyota's governance model, which combines global standards with regional adaptations (like family-style collective decision-making in Southeast Asia), can greatly reduce cultural conflict, leading to an 18% increase in regional revenue growth.

This study gives multinational companies a matrix of governance strategies based on cultural dimensions, filling a gap in research on how to manage culture in a dynamic way.