Abstract
As south-south investments increase so do the issues experienced by investing companies. One of these is the impact of culture. This article analyzes the effects of the subsidiary country culture on an investing firm’s organizational culture and the managerial practices used to address them. Data is gathered from cultural databases, a company-wide survey and semi structured interviews. Descriptive statistics are used to reveal country and organizational culture differences, with content analysis to expose management responses. There is a clear difference between the firm’s Vietnamese and Peruvian workers, with the company’s practices more amenable to the Vietnamese employees. Recognition of this has resulted in a number of initiatives to reduce its impact. The study’s results offer suggestions that may be valued by other foreign companies interested in operating in Peru and may be especially relevant to Southeast Asia and Asian companies interested in investing in or looking to start operations in Latin America.
Highlights
As the world became increasingly globalized around the turn of the century, firms from emerging economies began investing outside their borders
While Foreign Direct Investment (FDI) flows remain dominated by firms from developed economies, global FDI flows are increasingly being made by firms from emerging economies (UNCTAD, 2019a; UNCTAD, 2019b)
Trade and FDI flows between Asia and Latin America are on the rise, fueled in part by bilateral trade agreements together with the recent completion of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement between eleven countries around the Pacific Rim: Canada, Mexico, Peru, Chile, New Zealand, Australia, Brunei, Singapore, Malaysia, Vietnam and Japan
Summary
As the world became increasingly globalized around the turn of the century, firms from emerging economies began investing outside their borders. It is estimated that this so called south-south investment will generate one-third of global FDI outflows by 2025 (Saha et al, 2020). As emerging economy firms enter other emerging markets, they come face to face with host country operating risks. One of these risks has to do with culture and the management of cultural differences between host and subsidiary country personnel to create an optimal organizational culture and ensure subsidiary performance (Singh et al, 2019)
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