The inf luence of organizational variables on the transferability

of management practices:
An examination of traditional and learning manufacturing
environments in Mexico
Carolina Gomez
a,
*
, Annette L. Ranft
b,1
a
Department of Management and International Business, College of Business Administration, Florida International University,
University Park, Miami, FL 33199, USA
b
Calloway School of Business and Accountancy, Wake Forest University, Winston-Salem, NC 27109-7285, USA
Received 16 February 2000; accepted 24 October 2001
Abstract
This study examines two plants in Mexico operating under different management practicesone as a traditional, control-oriented
manufacturer, another pursuing an organizational learning approach. Individual behaviors and an organizational-level factor related to
learning are examined both quantitatively and qualitatively to understand their impact on the transferability of different management practices
that are more or less congruent with Mexican cultural values. Significant differences were found between the two plants in both individual
behaviors and on the organizational-level factor, providing support for the implementation of different management approaches in Mexico.
Support for innovation, the organizational-level factor, was a good predictor of individual behavior differences, indicating that it may
moderate the impact of national value differences on the transferability of management practices. Semistructured interviews revealed a range
of human resource management policies that seem to affect the success of a learning approach. Implications for researchers and managers are
discussed.
D 2003 Elsevier Science Inc. All rights reserved.
Keywords: Organizational learning; Transferability of management practices; Mexico
1. Introduction
When investing in foreign operations, managers of mul-
tinational corporations (MNCs) need to decide what strategy
and management techniques to follow in their subsidiaries. In
the case of foreign direct investment (FDI) in Mexico,
managers may focus on Mexico as a low-cost manufacturing
alternative and pursue a cost-leadership strategy (Stanford,
1995). Nevertheless, research on MNCs increasingly points
to the importance of a global learning focus that offers more
flexibility and competitiveness (Bartlett and Ghoshal, 1989).
To stay competitive, many US organizations are increasingly
moving towards management approaches that promote
organizational learning (Fiol and Lyles, 1985; Hult, 1998;
Sinkula, 1994; Slater and Narver, 1995; Stanford, 1995). For
example, Hult (1998) found that in sourcing relationships, an
organizational learning approach resulted in improved custo-
mer satisfaction, sourcing relationship commitment and re-
duced cycle times. Different strategies require different
organizational processes and employee behaviors. Well-
defined jobs and tight supervisory monitoring may be most
appropriate with a low-cost strategy. In contrast, a learning
strategy may rely more on employee involvement and
participation.
It is critical for managers determining management
strategies for overseas operations to understand whether
and under what conditions different practices can be
transferred to another culture. The issue of transferability
becomes salient because employee involvement and other
practices or processes that facilitate learning rely on
specific behaviors that may be congruent with some
cultures but less congruent with the cultural values of
0148-2963/03/$ see front matter D 2003 Elsevier Science Inc. All rights reserved.
doi:10.1016/S0148-2963(01)00332-0
* Corresponding author. Tel.: +1-305-348-3269; fax: +1-305-348-
6146.
E-mail addresses: gomezc@fiu.edu (C. Gomez), ranftal@wfu.edu
(A.L. Ranft).
1
Tel.: +1-336-758-5098; fax: +1-336-758-6133.
Journal of Business Research 56 (2003) 989997
other countries. If management practices are culturally
bound (Adler, 1997; Hofstede, 1980), then management
practices could only be implemented when they are con-
gruent with the cultural values of a country. For example,
traditionally, practices such as employee involvement have
been thought of as congruent with participative cultures
such as the United States, and are believed to be less
congruent with more authoritarian cultures such as the
Mexican culture. This lack of congruence may make
participative management practices more difficult or im-
possible to successfully implement in Mexico (Stanford,
1995). Interestingly, there have been examples of compan-
ies that have implemented forms of employee involvement
and work teams in Mexico (Gowan et al., 1996; Stephens
and Greer, 1995). The Mexican emphasis on collectivism
may be a positive factor leading to the ease of imple-
mentation of teams despite an authoritarian facet of Mex-
ican culture (Gomez et al., 2000; Gowan et al., 1996;
Nicholls et al., 1999; Osland et al.,1999). Other researchers
believe that a newer generation of workers and managers
in Mexico has different expectations that may include more
participation (Kras, 1995). As noted by Osland and Bird
(2000), it is important to take into account the specific
context rather than rely on broad-based cultural stereotyp-
ing. Such contexts may reflect a different picture than what
conventional wisdom would paint.
The research issue examined in this study extends
previous research on the transferability of management
practices across cultural boundaries. Specifically, we com-
pare two plants in Mexico, one with a control-oriented
strategy and one with a learning strategy. We measure both
individual behaviors and an organizational-level variable to
ascertain if differences in management strategies are re-
flected in employee behaviors and to examine whether the
organizational variable can help explain such behavioral
differences. The goal is to examine whether learning strat-
egies, increasingly used by US companies, can be trans-
ferred to Mexico despite the differences in cultural values of
these two countries.
2. MNCs and learning strategies
Researchers and practitioners are placing an emphasis on
learning as critical to companies in achieving a compet-
itive advantage (Fiol and Lyles, 1985; Slater and Narver,
1995; Ulrich et al., 1993). In todays environment of change
and uncertainty, Bartlett and Ghoshal (1989) argue that
learning should occur in subsidiaries in multiple countries
and be diffused throughout the firm. Some subsidiaries
under this new focus will no longer be seen only as means
to production but also as important collaborators in building
the organizations competitive advantage (Bartlett and Gho-
shal, 1989).
Organizational learning is a multidimensional concept
including both process and structural elements (Hult, 1998;
Sinkula et al., 1997). Literature examining organizational
learning derives from multiple disciplines including psycho-
logy, sociology, strategy, anthropology, and management
science with each disciplinary paradigm contributing to our
understanding of organizational learning (Easterby-Smith,
1997). To understand this phenomenon in the context of
foreign operations of a MNC, we must first understand
specific organizational processes and employee behaviors
that relate to learning.
The organizational learning literature has a rich and
developing history in the field of management (e.g., Cyert
and March, 1963; Argyris and Schon, 1978; Nonaka, 1994).
A learning organization has been defined as one skilled at
creating, acquiring, and transferring knowledge, and at
modifying its behaviors to reflect new knowledge (Garvin,
1993, p. 80). This definition relies on behavioral change as
evidence of learning. Other authors have noted that learning
may not result in behavioral change, yet, increases the
knowledge base of the firm and ultimately the range of
possible behaviors available to the organization (Huber,
1991; Sinkula, 1994; Slater and Narver, 1995). These
definitions reflect a key concept in organizational learning:
single-loop versus double-loop learning (Argyris and Schon,
1978). Single-loop or adaptive learning relates to incremen-
tal improvements made to improve efficiency of existing
operations and contributes to the fine tuning of core cap-
abilities. However, these core capabilities can become
obsolete over time (Leonard-Barton, 1992). Double-loop
or generative learning results in the development of new
capabilities that may replace obsolete capabilities (Argyris
and Schon, 1978; March, 1991). Double-loop learning
implies an entrepreneurial stance, or a climate of innovation
to generate new ideas (Hurley and Hult, 1998). A firms
competitive advantage rests in its ability to manage these
two types of learning.
Both types of learning occur through diverse processes.
Garvin (1993) associates learning with both systematic
problem solving and experimenting with new approaches.
Yeung et al. (1999) discuss learning through direct experi-
ence (via experimentation and continuous improvement)
and experience of others (via knowledge acquisition and
benchmarking). Hubers (1991) framework describes sev-
eral phases including knowledge generation, knowledge
dissemination, interpretation, and the commitment of learn-
ing to memory so that new capabilities are institutionalized
and can withstand individual turnover in the firm (Moorman
and Miner, 1998). Regardless of the process through which
learning occurs, there appears to be an agreement that
knowledge and learning starts with the individual (Argyris
and Schon, 1978; Hult and Ferrell, 1997; Nonaka, 1994;
Sinkula, 1994). The challenge, then, is to design an organ-
ization that internally encourages innovative behaviors
among its employees and facilitates the diffusion of the
knowledge generated. An organization must engender learn-
ing activities such as innovation and experimentation (Gar-
vin, 1993; Huber, 1991; Ulrich et al., 1993; Yeung et al.,
C. Gomez, A.L. Ranft / Journal of Business Research 56 (2003) 989997 990
1999) to ensure the ongoing generation of ideas. Open com-
munication processes are critical for both the process of
generating ideas (by disclosing problems, discussing ideas/
solutions, etc.) and for the dissemination of ideas through
rich vertical and horizontal communication (Daft and Huber,
1987; Daft and Lengel, 1984; Ulrich et al., 1993). In a
MNC, such communication may need to occur within a
subsidiary, as well as throughout the organization. In ana-
lyzing the successful implementation of learning strategies
in foreign affiliates, differences in individual behaviors
related to learning and the necessary communication open-
ness should be apparent.
3. The transferability of management practices
Several researchers have conducted etic studies on cul-
tural differences (Kluckhohn and Strodtbeck, 1961;
Schwartz, 1992; Trompenaars and Hampden-Turner, 1998;
see Smith and Bond, 1999 for a comprehensive review).
Research has supported the influence of cultural values on
management theories. For example, Hofstedes (1980)
research on work-related values have been used extensively
to understand cultural differences in management (Brockner
et al., 2001; Gomez et al., 2000; Earley, 1993). Therefore,
many researchers argue that the values of a country must be
compatible with a management practice for the successful
transfer of such a practice (Adler, 1997; Hofstede, 1980).
Applying this theory, Roney (1997) compares the values of
the Polish culture with the underlying values of TQM to
understand areas of incongruence that could lead to problems
in implementing TQM. For example, Roney notes incon-
gruence between the deterministic TQM philosophy and the
fatalistic Polish culture. Assessing the compatibility between
the values underlying a management practice and those of a
national culture can help assess the ease of implementation of
a management strategy in a culture.
Our study examines two manufacturing plants in Mexico
that are part of the same MNC. One plant follows a control-
oriented approach to management, while the second pursues
a participative, learning approach to management. Consist-
ent with Roneys (1997) approach, by analyzing the Mex-
ican culture, we can gain a better understanding of its
congruence with each management style. For example, the
history of conquest by the Spaniards (Condon, 1985) and
the subsequent imposition of the Roman Catholic Church
(Kras, 1995) may have led to an acceptance of large power
differences in Mexico (Hofstede, 1980). Kras (1995) qual-
itative accounts provide further evidence of an authoritarian
culture at work. Research conducted in Mexico by Morris
and Pavett (1992) comparing two identical plants in the US
and Mexico found a democratic participative management
system in the US and an authoritarian management in
Mexico. Despite differences in management styles, no
differences were found in employee productivity. Therefore,
a control-oriented strategy appears to be congruent with the
Mexican values. Moreover, Mexico ranks high on uncer-
tainty avoidance (Hofstede, 1980) or the degree to which
members in a society feel uncomfortable with ambiguous
situations. Experimentation implies decision making under
uncertain outcomes. Consequently, following the congru-
ence logic, it seems that significant differences in employee
behaviors would not be found when comparing learning
versus control management strategies in Mexico. That is, a
learning strategy would be incongruent and thus not suc-
cessful in Mexico.
Other research, however, has shown initial evidence that
multinationals are able to transfer management practices
despite value differences. According to Teagarden and Paik
(1993), MNCs from different countries apply different hu-
man resource approaches ranging from a mechanistic con-
trol approach (focused on controlling employee behavior)
to a developmental approach (integrating control with
employee motivation and development) in their Mexican
subsidiaries. In addition, Stanford (1995) compared ma-
nagement techniques being used by managers in the United
States and US expatriate managers in Mexico. No significant
differences were found; hence, it appears that expatriate
managers were implementing participative management
practices in Mexico. Others (Pelled and Hill, 1997; Vargas
and Johnson, 1993) also note that participative management
is being implemented with positive effects in Mexico.
Finally, Osland (1997) has reported on the implementa-
tion of management practices such as TQM in other Latin
American countries.
Different explanations have been offered for these find-
ings such as: changes in worker/manager expectations due
to modernization (Kras, 1994), influence from other cultures
(Stanford, 1995; Kras, 1994, 1995), or other facets of the
Mexican values that facilitate these newer management
techniques (Gowan et al., 1996; Nicholls et al., 1999).
Therefore, we predict differences in employee behaviors
in the two plants based on their management strategy.
Hypothesis 1: Significant differences on individual level
behaviors such as communication openness and learning/
experimentation will be found when comparing plants
implementing learning versus control management practices.
Many contextual variables may influence management
practices in foreign subsidiaries. For example, Kostova
(1999) proposes both organizational and relational context
variables that influence the implementation of strategic
organizational practices. Managers may work with organ-
izational factors to facilitate the transfer of management
practices across cultural boundaries. Given that inter-
national human resource management seeks to develop
practices that provide fit between the management style
and the overall business strategy while effectively dealing
with cultural differences (Teagarden and Paik, 1993),
human resource practices may be an important factor in the
transferability of management practices. For example,
C. Gomez, A.L. Ranft / Journal of Business Research 56 (2003) 989997 991
research has noted the importance of human resource
practices such as rewards in building organizational cultures
(Kerr and Slocum, 1987). Such practices have the ability to
affect employee behavior by instilling certain values that
make up the organizational culture. An organizations
culture influences shared practices (Hofstede et al., 1990)
and, therefore, individuals are influenced by the values of
both their country and organization.
Managers can affect the organizations internal culture so
as to influence employee behaviors. For example, support
for innovation, or the degree to which individuals view the
organization as open to change, supportive of new ideas
from employees, as well as diversity, has been found to be
positively associated with innovative behavior (Scott and
Bruce, 1994). Hence, differing levels of support for innova-
tion could be a contextual variable that influences employee
behaviors in these plants. Therefore, the level of support for
innovation is predicted to differ in the two Mexican plants in
this study. We also propose that support for innovation will
help explain individual behaviors and, therefore, moderate
the effects of national culture:
Hypothesis 2: Significant differences on organizational
level variables such as support for innovation will be found
when comparing a plant with a learning strategy to a plant
with a traditional management strategy.
Hypothesis 3: Support for innovation will explain differ-
ences in individual behaviors related to organizational
learning.
4. Methods
This study focuses on two Mexican subsidiaries of a US
MNC. Both survey-based and interview data were collected.
Such a multimethod approach is strongly recommend-
ed when dealing with complex crosscultural phenomena
(Wright, 1996). Likewise, there has been a call for qualitat-
ive research examining organizational learning in an inter-
national context (Easterby-Smith, 1997). The qualitative
component may provide insight on elements that could have
been missed in previous research regarding the implementa-
tion of management practices abroad.
4.1. Sample
Management in the US parent organization was asked to
identify highly profitable manufacturing subsidiaries in
Mexico and describe the strategies and management style
of these subsidiaries. Two successful manufacturing sub-
sidiaries were selected, a manufacturing plant in the north-
ern part of the country utilizing a control oriented strategy
(Plant A) and a plant in the eastern coast using a learning
strategy (Plant B). We believe that the sample is appropriate
to test the hypotheses proposed due to the direct comparison
of two plants, despite the small sample size.
Plant A was a large labor-intensive manufacturing plant
that produced motors for furnaces and air conditioners. The
plant began operations as a subsidiary of the MNC in 1979.
The general manager was of Mexican origin, but most other
managers were US expatriates. There were four layers of
management: the general manager, functional area manag-
ers, supervisors, and coordinators. The plant had approxi-
mately 1600 employees working three shifts, 6 days a week.
Overall, the organization was very successful constantly
exceeding its goals. Plant A was managed in the traditional
control-oriented style.
Plant B was a technology-driven manufacturing plant
that produced plastics. There were approximately 170
employees working at the plant. The plant was started in
1991 as a joint venture between a Mexican and an American
partner. By 1995, the plant was bought out by the American
partner. During the first four years, the Mexican partner was
in charge of management and local Mexican managers
headed this plant. In 1994, the company moved to self-
managed work teams with the functional roles (human
resources, safety, maintenance, etc.) divided among team
members and the team leader role rotated every three
months. At the time of the visit, the plant was down to
three managers and was considered such a success as a
learning organization that customers and managers from
other subsidiaries around the world are often flown in to
visit and learn about the subsidiarys practices.
4.2. Data collection
Surveys, semistructured interviews, and observations
were used to gather data. In each plant, semistructured
interviews were conducted with top managers and human
resource managers. Managers were specifically asked to
describe their subsidiarys strategy. Subsequently, manag-
ers were probed about behaviors and cultural differences
related to organizational learning and about organizational
factors that inhibit or facilitate the implementation of
organizational learning. Since the MNC as a company
advocates organizational learning, it was considered ap-
propriate to ask all managers these questions. A total of
13 managers and facilitators were interviewed in their
native language. The term facilitators is specific to Plant B
and refers to individuals who used to be managers but
have since transitioned to their new role of facilitators.
Plant tours were also conducted to understand the task/
technology at hand and the organizations cultures.
Finally, quantitative survey data was gathered from em-
ployees on their behaviors and on the organizations
support for innovation.
The survey was translated and backtranslated to ensure
accuracy and was pretested with Mexican students. Surveys
were distributed to a randomly selected sample of employees
in each plant. In Plant A, 96 of 110 surveys were returned for
an 87% response rate. In Plant B, 87 of 110 surveys were
returned for a 79% response rate.
C. Gomez, A.L. Ranft / Journal of Business Research 56 (2003) 989997 992
4.3. Measures
For all scaled survey measures, respondents were asked
to respond on a five-point Likert-type scale ranging from
strongly disagree to strongly agree.
4.3.1. Individual focus on learning/experimentation
Isabella and Forbes (1994) work on the individual
learning mindset was used as a basis to develop a learn-
ing/experimentation measure that reflected an individuals
focus on learning/experimentation. There are existing or-
ganizational learning scales that, while valid, did not tap
individual employee behaviors, the construct of interest in
this study. For example, several scales measure a unit or
organizations orientation toward learning (Sinkula et al.,
1997; Hult, 1998) and not individual behaviors related to
learning. Therefore, the scale that we developed for this
study included eight items that did not measure organiza-
tional learning but rather reflected individual behaviors
that are related to organizational learning. The scale in-
cluded items such as I am constantly seeking new ways
to do my work and I try learning new things while
I work.
4.3.2. Communication openness
Eight items of an existing measure of communication
openness was used to measure the degree to which informa-
tion is shared in the organization (Rogers, 1987). The Com-
munication Openness Measure was designed to measure
communication among superiors, subordinates, and peers
and included items such as In this organization, supervisors
frequently ask subordinates for suggestions. In addition,
three items were added that focused on the degree to which
people were open about information in the organization. The
items were: People share information with one another,
People speak openly to supervisors, and People share
information openly with coworkers.
4.3.3. Support for innovation
Scott and Bruces (1994) research indicated that an
important variable related to innovative behavior was sup-
port for innovation. The six-item scale included statements
such as Creativity is encouraged here, and Around here,
people are allowed to try to solve the same problems in
different ways.
4.3.4. Demographic data
Demographic data including gender, age, education, full-
time work experience, and tenure with the company were
collected and descriptive statistics are provided in Table 1.
For all demographics, a test of significant differences was
calculated for plant differences. As reported in Table 1, the
demographic profile of the sample varied significantly by
plant for gender, age, years of education, and years of full-
time work experience but not employee tenure. Specifically,
Plant A had a larger percentage of women, a younger
workforce, and employees with less formal education and
with less experience working full time.
5. Results
5.1. Data analysis
A principal components factor analysis was conducted
since some new items were developed. A four-factor solution
obtained with a varimax rotation explained the data in the
most meaningful way. A cutoff of 0.40 and loadings on
different factors were used to delete items from measures.
Factor one represented vertical communication between
managers and employees. The final factor contained five
items with a Cronbachs alpha of 0.86. Factor two represents
support for innovation. The final measure had a Cronbachs
alpha of 0.79. Factor three reflected horizontal communica-
tion between employees. This factor was made up of four
items that had a Cronbachs alpha of 0.78. Finally, the fourth
factor was the learning/experimentation factor. The six-item
learning/experimentation scale had an alpha of 0.70. All
scales met the minimum required alpha level of 0.70 or
greater (Nunnally, 1978).
Table 2 provides descriptive statistics for the variables
measured. As expected, the means for each of the variables
are higher in Plant B. Correlations indicate that Plant B
(Plant = 1) is positively correlated with support for innova-
tion and vertical communication and not with horizontal
communication or learning/experimentation behaviors.
Table 1
Demographic profile for sample by plant
Plant A (%) Plant B (%)
Gender (c
2
=7.41)**
Male 72.3 88.5
Female 27.7 11.5
Age (c
2
=15.79)**
Under 25 44.1 19.5
2630 26.9 41.4
3135 15.1 27.6
3640 8.6 4.6
4145 5.4 3.4
Over 45 0.0 3.4
Mean S.D. Mean S.D.
Years of formal
education ( F= 22.44)***
12.38 2.50 14.15 2.47
Years of experience
working full time
( F= 4.48)*
8.14 6.51 10.00 5.03
Tenure in organization
( F= 0.45)
4.73 4.21 5.06 1.66
F tests were used for interval-scaled variables and Pearson chi-square tests
for categorically scaled variables.
* P<.05.
** P< .01.
*** P< .001.
C. Gomez, A.L. Ranft / Journal of Business Research 56 (2003) 989997 993
To test Hypotheses 1 and 2, a multiple analysis of var-
iance (MANOVA) was conducted to examine differences
between the two plants. Subsequent univariate analyses of
variance (ANOVAs) were used to determine specific differ-
ences. As reported in Table 3, the MANOVA for the five
variables yielded significant results on the Pillais trace
criterion test for the two plants [F(4,178) = 19.40, P< .001].
Subsequent ANOVAs showed significant differences
between the two plants in vertical communication and
support for innovation. Differences between the two plants
on the learning/experimentation dimension approached sig-
nificance ( P< .10), while differences along the dimension of
horizontal communication were not significant.
To test Hypothesis 3, a subsequent multivariate analysis
of covariance (MANCOVA) was conducted using support
for innovation as a covariate to examine the impact of this
organizational level variable on employee behaviors asso-
ciated with organizational learning. The results from the
MANCOVA, reported in Table 4, reveal that when control-
ling for support for innovation, significant differences
between the two plants still remain on individual level beha-
viors [Pillais trace, F(3,178) = 13.65, P< .01]. Support for
innovation, however, explains a large portion of the variance
in horizontal communication (t = 6.03, P> .001), vertical
communication (t = 3.37, P < .001), and learning/experi-
mentation (t = 2.26, P< .05) as reflected by the univariate
ANCOVA F test reported in Table 4. Thus, support for
innovation was a strong indicator of openness to commun-
ication and learning/experimentation.
5.2. Qualitative results
Our interviews provide rich contextual information on
behaviors, values, and organizational initiatives related to
learning. First, managers noted a number of behaviors that
were necessary for organizational learning to occur such as:
work in teams, the ability to come up with ideas, open
communication, individual initiative, and self-direction.
These behaviors supported those chosen for the quantitative
portion of this study.
When asked about values of the Mexican culture that may
inhibit or facilitate learning, some of the expected values
were confirmed. For example, managers noted that the
workers have been accustomed to authoritarian management
that impacts their self-direction and openness in commun-
ication. Some managers noted that due to either cultural
values or differentials in education levels, Mexican workers
were less willing to take risks and challenge authority. An
unexpected characteristic of the Mexican workforce that was
attributed to the young age of the workforce was their
Table 3
Multivariate analysis of variance
F
Support for
innovation
Horizontal
communication
Vertical
communication
Learning/
experimentation
Plant 58.15*** 0.25 16.99*** 3.69
y
Pillais trace criterion; df = (4,178); F= 19.40; P<.001.
Univariate F tests resulting from subsequent ANOVAs.
All effects have df = (1,180).
* P< .05.
** P<.01.
*** P< .001.
y
P< .10.
Table 4
Multivariate analysis of covariance
Horizontal
communication
Vertical
communication
Learning/
experimentation
Plant ( F values) 6.25** 4.10* 0.33
Support for innovation
(t values)
6.03*** 3.31*** 2.26*
Pillais trace criterion; df = (3,178); F= 13.65; P< .001.
Univariate F tests resulting from subsequent ANCOVAs.
All effects have df = (1,180).
* P< .05.
** P< .01.
*** P< .001.
y
P< .10.
Table 2
Pearson correlation matrix
Means Horizontal Vertical
A B
Plant Climate
communication communication
Plant support
for innovation
3.49 4.40 .49***
Horizontal
communication
4.00 4.07 .04 .38***
Vertical
communication
4.18 4.57 .29*** .35*** .39***
Learning/
experimentation
4.10 4.28 .14
y
.21** .12 .24** *
* P< .05.
** P< .01.
*** P< .001.
y
P< .10.
C. Gomez, A.L. Ranft / Journal of Business Research 56 (2003) 989997 994
willingness to learn new things. Another surprising char-
acteristic was the creativity of Mexican workers. Interest-
ingly, most managers in Plant B noted few cultural values
that they considered inhibited learning. However, they did
explain that they translated US programs, not in terms of
language, but culturally. For example, a continuous
improvement fair was developed in Plant B for employees
to show the results of their projects. The managers believed
this made learning more congruent with the Mexican culture
since employees could proudly show their work. In addition,
the facilitators and employees in plant B referred to their
culture as a combination of Mexican and US cultures.
When asked what a company could do to facilitate lear-
ning, managers noted the following organizational initia-
tives: ongoing training, constant communication, employee
involvement, clear and consistent goals, rewards and recog-
nition for desired behaviors, and the use of teams. Finally, we
asked about specific barriers that inhibited the learning
process. The managers from Plant A noted two major
barriers the education level of their workers and turnover.
The education level available was relatively low, and turn-
over was noted to reach 60% annually. Ongoing training of a
workforce with high turnover increases costs significantly.
In addition to the interviews, observations made in each
plant can be used to confirm plant differences and under-
stand the factors that shaped the organizational culture (as
reflected in support for innovation). Plant A had four
heavily staffed layers of management, the general manager,
functional area managers, supervisors, and coordinators.
Labor was divided into different tasks such that employees
worked individually on repetitive tasks. The engineers in the
operations department were responsible for the development
of new processes, methods, and innovations. Employee
involvement was limited to managements communication
of organizational goals and results. Basic skill training was
provided to employees and, recently, the training program
had started to include two days on company values.
In contrast, Plant B was a flat organization (with few
managers) that was organized into self-managed work teams.
The move to teams began in 1992 with a program where
teams of workers became responsible for the maintenance of
their equipment. Subsequently, specific criteria were set for
different levels of self-management and when teams became
fully self-managed, a celebration took place. The human
resource policies helped create a learning culture. For
example, to attract and retain skilled employees (with a high
school education), management chose to pay a premium
wage. To support the team emphasis, team members were
involved in the selection process. Once employed by the
plant, 30 days of training was provided to each employee in
topics such as math, statistics, technical skills, as well as
training on required skills to work in teams conducting
meetings, problem solving, presentations skills, etc.
During our visit, teams were having their quarterly meet-
ings where they presented their results and accomplishments.
The teams also discussed plant-wide issues. It was only then
that the general manager became involved to provide an
organizational perspective. This was an example of formal
communication that occurred during quarterly meetings. The
limited layers in management and employee involvement
encouraged informal communication. Observations con-
firmed the management strategies of the subsidiaries includ-
ing the differences in employee behaviors reflected in the
quantitative data. Additionally, it was evident that the align-
ment of human resources practices and management strategy
was key to a learning culture in Plant B.
6. Discussion
Our results lead to three major conclusions. First, there
were differences in employee behaviors related to organiza-
tional learning between the two Mexican subsidiaries of this
MNC. Second, there were significant differences between
these two plants in support for innovation, an organizational
level factor. Finally, support for innovation explained some
of the differences between the plants in individual behaviors
of communication and learning/experimentation.
Our first conclusion, that the two plants differed in
employee behaviors related to learning, provides evidence
that MNCs implement different management strategies in
their subsidiaries abroad, even management strategies that
are believed to be incongruent with the national culture in
which the subsidiary is located. In addition to the behaviors
measured in this study, it is important to note that this
learning plant was deemed successful by corporate manage-
ment. Such perception of success in the eyes of management
provides further support for the ability to transfer manage-
ment practices to countries with different values.
The findings are consistent with and extend Stanfords
(1995) research on the implementation of participative
management in Mexico to include behaviors related to
learning as reported by employees. Our study asked em-
ployees, rather than managers, about their learning behav-
iors on the job. One could argue that the US expatriate
managers in Stanfords study may have provided socially
desirable answers, yet, our study provides evidence from the
employees perspective as well. Our findings show that
employees report acting or behaving differently with differ-
ent management strategies.
It is important to note that the marginally significant
differences between the plants on learning/experimentation
were surprising given the researchers observations of the
differences that existed in the workers behaviors in each
plant. We realized that the term experimentation is not
used widely in Plant B since they deal with dangerous
chemicals. Instead, they use the term ongoing improve-
ment. Unfortunately, this was not the terminology utilized
in the measures. Future research should pretest critical
measures with a small sample from the specific population
to be studied to ensure such problems with terminology are
caught early on.
C. Gomez, A.L. Ranft / Journal of Business Research 56 (2003) 989997 995
Similarly, the lack of significant differences in horizontal
communication was surprising given that Plant B is organ-
ized in work teams that are constantly communicating while
work is more individually oriented in Plant A. We can think
of two reasons for this finding. First, research shows that
Latin American cultures tend to have a strong interpersonal
orientation that may lead to more communication (Albert,
1996). Another possible explanation lies in the collectivist
orientation of Mexico (Hofstede, 1980). Researchers have
found that the feeling of family is often transferred to the
company, leading Mexicans to view their workgroup as
family (Stephens and Greer, 1995), and, hence, experience a
collectivistic work environment (Gowan et al., 1996). Plant
A, due to its high turnover, promoted employees bringing
friends and family to apply for work; therefore, workers
may have been working with their friends and family. Plant
B consistently held company-sponsored events such as
bowling championships that included the employees fam-
ilies to further develop the family-like atmosphere in the
workplace. It seems that the family-oriented collectivistic
orientation was transferred to the company in both plants.
Our second and third conclusions need to be interpreted
jointly. We found that there were significant differences in
the level of support for innovation, and that support for
innovation was a good predictor of the behaviors in each
plant. These findings are the most interesting contribution of
this research since they provide support for the importance
of organizational-level variables that can be used to manage
foreign subsidiaries. Support for innovation is reflective of a
specific organizational culture. Managers can help create a
culture that supports innovation and learning by designing
human resource management systems that reward innov-
ative behaviors. Researchers have accurately operational-
ized organizational culture as both an independent and a
dependent variable. As an independent variable, managers
can shape it. By instilling values in employees that guide
their behaviors, organizational cultures can serve as a
control mechanism in MNCs (Jaeger, 1983). The use of
human resource practices such as socialization, training, and
rewards (Kerr and Slocum, 1987; Solomon, 1993) can relay
the values of an organization.
Even though the managers/facilitators in Plant B did not
view the Mexican culture as a barrier to learning, they noted
the importance of translating US programs to be cultur-
ally congruent. Research should study this process of
translation. Additionally, there are external factors not
related to cultural values per se that appeared to influence
learning. In Plant A, the largest barriers to learning by
managers were not the national value differences but rather
the educational level and the employee turnover (partly
driven by regional differences in Mexico).
In addition, Plant B was a relatively new plant when they
implemented many of these management practices, and,
hence, implementation came with relative ease. Changing
the culture of an existing older plant is more difficult
because of resistance to change. Similarly, research has
indicated that the technology or industry can have an effect
on the organizational culture (Blauner, 1964; Phillips,
1994), and the plants were in different industries using
different technologies. Both these variables should be
explored in future research.
For some time, researchers have conducted studies that
have shown how national culture influences management
practices. This study begins to shed light onto how
organizational-level variables that are malleable by manag-
ers can moderate the impact of national culture. Future
research should continue to study the processes used in
implementing management practices abroad so as to con-
tinue to reveal other important variables. In addition,
researchers should measure or take into account external
variables such as levels of education and mobility of the
workforce to better understand the context of the cultural
environment being studied.
Acknowledgements
We would like to thank the CATO Center for Applied
Business Research at the University of North Carolina for
their financial support on this project.
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