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Article Excerpt
Around the world, manufacturers base their planning decisions on similar internal factors, such as previous sales, machine and labor capacity, and inventory levels. They are subject to many of the same external factors, such as customer order backlogs, customers' future plans, and sales forecasts. But companies in different countries may give greater or lesser priority to these factors depending on cultural differences. A statistical analysis based on data collected by the Global Manufacturing Research Group for six countries (U.S., Canada, Hungary, Italy, Taiwan, Lebanon) found that cultural factors do, indeed, influence the relative importance assigned to these internal and external factors affecting decision-making. The role of customer preferences and attention to the customer should be particularly interesting to those who manage supply chains or work with companies in other countries.
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Introduction
Production plans at companies are based on intertwining internal and external factors. Internal factors affecting production planning include previous sales, machine capacity, labor capacity, and inventory levels. Customer order backlogs, customers' future plans, and sales forecast are external factors. The decision to begin actual work on an order is also based on several internal and external factors. External factors are customer orders and the importance of customers. Production plans, detailed production schedules, parts shortage lists, inventory levels, and idle labor or equipment are internal to companies and affect start-of-work decisions.
A firm's response to external influences defines its customer interactions and orientation. Recognizing the importance of both internal and external influences is critical to success. Examining these interactions from a global perspective provides insights into the role of national culture on the interaction with customers in the production process.
Data for this study were collected by the Global Manufacturing Research Group (GMRG), a group of researchers who began surveying manufacturers around the globe 20 years ago. GMRG collected several rounds of data worldwide over time. Vastag (1993) describes the motivation and methodology of these surveys. The data have been used to study a variety of issues comparing similarities and differences among companies in different countries as evidenced by list of Global Management Research Group Publications (http://www.gmrg. org/Publications.html, 2008). For example, Vokurka et al. (2007) used GMRG data from companies in the United States, Canada, Hungary, Italy, Lebanon, and Taiwan to examine whether total quality management and just-intime initiatives affect manufacturing flexibility. The research found that companies identifying themselves as flexible across product, volume, and delivery were implementing JIT and TQM, suggesting the continuing value of these techniques. Although the study indicates the importance of TQM and JIT across countries and cultures, the issue of cultural differences in manufacturing is not specifically addressed.
This study is the first to consider cultural differences in manufacturing planning and scheduling within the framework of cultural differences. Understanding cultural differences is increasingly important in a world characterized by outsourcing and global manufacturing. Analysis of GMRG survey data indicates the importance of customer or external factors in production, as explained by cultural differences.
Literature Review
There is a well-developed literature portfolio on the role of cultural differences and their influence on business practices. Hofstede et al. (1990) developed a framework that explains how an individual's national culture affects the way this person operates a firm. Hofstede studied a large database of IBM employees from 1967 to 1973 covering more than 70 countries.
Hofstede's cultural dimensions included power distance, individualism, masculinity and uncertainty avoidance. Power distance is the extent to which less powerful members accept unequal distribution of power. Individualism is the degree to which individuals are integrated into groups. Masculinity is assertiveness and competitiveness. Uncertainty avoidance is the degree of tolerance for uncertainty and ambiguity. Another cultural dimension added later to the Hofstede framework is a long-versus short-term orientation.
Hofstede et al. (2002) conclude that people of a nation have "patterns of thinking, feeling and acting that differentiate one country from another and continue to be transferred from generation to generation." The cultural differences between employees of various nations may directly affect how a firm is managed in those nations. Given the implications of Hofstede, it seems likely production planning and scheduling would also exhibit cultural differences.
Hofstede's paradigm for explaining and examining cultural differences has been used in various disciplines and studies. Soares et al. (2007) provide an overview of the extensive literature in marketing using Hofstede's construct. Studies also examine culture differences in forecasting, Enterprise Resource Planning (ERP) implementation, logistics, and the relevance of the Baldrige constructs.
Literature in other disciplines and a developing group of studies in operations, logistics, and supply chains recognizes the role of cultural differences in management decisions and production. This study adds to the literature because it looks at cultural differences in the production planning and scheduling process as they pertain to the customer or external factors.
The Hofstede framework was used by Murcia and Whitley (2007) to examine ERP implementation in Columbia compared with Switzerland, countries with very different cultural dimensions, based on Hofstede. The dimensions of power distance and uncertainty avoidance were important in this study. High uncertainty avoidance and high power distance adversely affected ERP implementation and helped explain differences between Swiss and Columbian companies. Forecasting practices in seven different countries is the focus of a study by Wacker and Sprague (1998). This study considered how a country's cultural traits affect various aspects of forecasting. The study looked at forecasting in Germany, Japan, Mexico, New Zealand, Spain, Sweden, and the United States. It found differences in managerial behaviors that affect the process of forecasting. The research concludes these differences can be explained within the Hofstede framework.
Logrosen (2004) focused on companies' approaches to differences in quality management in the global environment. The study reviewed the role of cultural differences using Hofstede's construct. The research considered the influence of legal and political factors along with the role of labor unions, but cultural differences were the most significant. Differences in quality management were linked to the Hofstede dimension of power distance. In a separate study, Logrosen (2003) found cultural differences using Hofstede influenced total quality management. In that study, uncertainty avoidance and individualism versus collectivism were the most important cultural influences explaining differences.
The Baldrige award and its standards are often used to develop models of quality in other countries. Flynn and Sladin (2006) consider whether or not those standards are relevant in other cultures. The results suggest national culture is important in the effectiveness of the Baldrige criteria. One conclusion is that quality awards need to be tailored to reflect differences in national cultures.
Hofstede also provides the framework for a study by...
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