Strategic behavior and national culture: the case of the banking industry in Jordan.

EXECUTIVE SUMMARY

This paper examined the relationships between national culture and strategic behavior in the banking industry in Jordan and U.S. The study first developed a strategic posture and secondly a cultural profile for the top management of the research domain. The strategic

posture suggested the readiness for strategic response from managers. The degree of readiness was correlated with the constructed cultural profile of the managers and financial performance of the banks. The study found significant relationships between certain national cultural strategic characteristics, (risk propensity, time orientation, and openness to change, uncertainty avoidance and managerial perception of control over the environment) strategic behavior and financial performance.

INTRODUCTION

Despite the socio-political and economic volatility of the Arab world and its economic potential, there is little research exploring the strategic orientation of Arab management. The distinct characteristics of the Arab culture, inevitably invite the question: What type of strategic posture optimizes Arab management performance? Does national/regional culture impact strategic behavior? Do attitudes towards planning reflect underlying cultural values, norms, assumptions and beliefs. There are a limited number of studies conducted about strategic management practices and theories in Arab countries (Al-Faleh, 1987; Al-Shaikh and Hamami, 1994; Kassem, 1989; Khan and Al-Buarki, 1992) and the few who have tried have had difficulties in implementing them (Kassem, 1989). The perceptions of time, change, and risk as they relate to national culture have suggested (Hofstede, 1980, 1980b, 1993) an important role in decision-making, thus, rendering the relationship of culture and strategic planning critical in establishing optimal performance of the Arab firm. This study will provide an exploratory launch ad to suggest the relationship between strategic behavior, national culture and financial performance. The research domain selected to operationlize the research was the banking industry of Jordan because of accessibility and the necessity to have respondents in top decision-making capacities.

The initial approach of this study was to establish a managerial profile based on established cultural characteristics and previous research on cross-cultural management. Secondly, we wanted to build a strategic posture profile for our respective research population based on developed typologies and previous research. Considering that firms engage in a variety of strategic activities and top decision-makers exercise strategic choices based on internal capabilities and perceived exogenous threats and opportunities, we wanted to explore the relationship between the strategic activities, cultural characteristics, and performance. We constructed a research model to facilitate the conceptualization of the variables and their relationships (Figure 1).