Conflict in foreign subsidiaries of Japanese and western multinational corporations: The impact of cultural distance and differences in home-host country combinations

Abstract

This article investigates the degree of conflict between different groups of employees in MNC subsidiaries in relation to different home-host country combinations. More specifically, we compared the degree of conflict of Western subsidiaries in Japan and Japanese subsidiaries in the West. We based our comprehensive investigation on data from 617 US and German subsidiaries in Japan as well as Japanese subsidiaries in the USA and Germany (and, for comparative reasons, US subsidiaries in Germany and German subsidiaries in the US). Possibly rather surprisingly, our results indicate that different degrees of cultural distance between home and host country do not lead to different degrees of conflict in MNC subsidiaries. We suggest that expected conflicts, due to substantial cultural differences, induce employees to actively counteract such problems, leading ultimately to a reduction of real conflicts. Furthermore, while previous literature suggested that in particular Japanese subsidiaries in the West are prone to a high degree of conflicts, our findings suggest that Western subsidiaries in Japan are even more conflict-laden. This should caution Western companies against complacency when operating in Japan.