Cultural Preferences in the Choice of Coordination Mechanisms- a Comparison of Sweden and China.

Abstract: The purpose of this paper is to analyse cultural influences on the choice of coordination mechanisms. Based on the Globe report, propositions are developed on how different cultural dimensions affect the choice of coordination mechanisms. Market mechanisms are proposed to be preferred in cultures characterized by a high level of performance orientation, assertiveness, in-group collectivism and low levels of institutional collectivism, power distance and uncertainty avoidance. Societies with the opposite profile are expected to have a bias in favour of hierarchical mechanisms. Based on the propositions, the cultural clusters identified in the Globe report are analysed and categorized according to their relative preferences for market or hierarchical mechanisms. Finally, an experimental study was performed to study cultural biases in choice of coordination mechanisms. In the experiment, two groups of students of Swedish and Chinese origin performed roles as principals and agents in a multi-task situation. According to the previous analysis Swedish students were expected to show a strong preference for hierarchal mechanisms whereas Chinese students were expected to have preference for market mechanisms. The result supported these predictions.