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When culture meets compliance

Published: 2013-10-07

Assistant Professor John Gray and

PhD candidate Brett Massimino

Companies continue to explore the viability of establishing their operations in foreign locations -- but does such a strategy have an effect on operational performance? A study by Fisher's John Gray (pictured left) and PhD candidate Brett Massimino found that cultural differences between the location of a firm's headquarters and that of its operations can play a significant role in process compliance (the procedures by which a company functions).

The study, which examined 1,554 pharmaceutical manufacturing plants located primarily in 34 nations, revealed two telling indicators of process compliance:

  • A language difference between the location of a firm's headquarters and that of its manufacturing plant consistently results in decreased process compliance at the plant level
  • Evidence directly linking national culture differences to a company's process compliance is limited, suggesting that a nation's culture has a minimal direct effect on operations performance

Gray's research concluded that certain similarities between a firm's plant and its headquarters – like language and some dimensions of culture -- can lead to improved compliance performance. The findings were notable in that most plants were in Western nations.