The effect of national culture on SME competitive dynamics

Abstract

This paper advances knowledge of how national culture affects firm behavior. From the perspective of Hofstede’s cultural dimensions and Meyer’s culture scales, we predict differences in the awareness-motivation-capability framework of competitive dynamics across four national cultures. A survey sample of 263 small- and medium-sized enterprises (SMEs) in France, India, Kenya, and the United States provides evidence of the hypothesized competitive differences. The cultural traits of individualism and indulgence often lead to a reduced sense of competitiveness. Moreover, within individualistic cultures, motivation is linked with an uptick in competitive ability but a decline in competitive consciousness, implying that companies in such cultures tend to take action without extensive deliberation. This investigation addresses two significant gaps in research. Firstly, it combines the research areas of competitive dynamics and culture, which have not previously been intertwined in empirical studies, despite culture's known influence on various business practices. Secondly, it sheds light on how varying levels of competition impact businesses by bridging the gap between research on competitive dynamics and SMEs.