The Influence of National Culture on the Use of Management Consultants

Abstract

The current paper aims at explaining variations in the “make-or-buy” decision when it comes to management consultants across national contexts. Within Europe, spendings on consultants vary from 0,1% of GDP in e.g. Poland to 1,2% of GDP in the UK. The current paper presents a model based on transaction costs economics identifying differences in the cultural dimensions Uncertainty Avoidance and Masculinity as central explanatory factors. The model is tested on data on the volume of management consulting services as % of GDP in 22 European countries. The results indicate that a country’s preference for Uncertainty Avoidance is negatively related to the use of management consultants. This is explained in relation to the higher perceived uncertainties and thus transaction costs in high Uncertainty Avoidance cultures. We also find that the cultural dimension Masculinity-Femininity moderates the relationship between uncertainty avoidance and the use of consultants such that the negative effect of uncertainty avo...