The field of comparative management studies includes research activities undertaken to identify and explain similarities and differences among business strategies, management systems and social behavior in different work contexts (e.g., geographic areas, cultures or industries). Comparative management studies is one of several research approaches that have been used to learn more about cross-cultural management practices and researchers in this field are particularly interested in identifying elements of organizational design theory and practice that are universal, and thus can be found in all cultural contexts, and elements that will necessarily be different due to the impact of culture and other environmental conditions. Practitioners of comparative management studies must be neutral in their preferences between different countries and cultures and avoid assuming that a particular cultural orientation or management style is better than any other for handling a specific situation and their goal is to conduct an objective and comprehensive comparison of two or more distinguishable management styles and identify characteristics and patterns that can inform and educate all managers.
One of the most useful byproducts of cross-cultural management research is the identification of culture-based differences that can be expected to have a significant impact on the selection and effectiveness of particular management styles and processes in a specific cultural context. Among the cross-cultural differences that are commonly cited and analyzed are the following:
- Centralization of authority: Variations among cultures have been identified with respect to the degree to which authority for making important business decisions is centralized with a small group of senior managers as opposed to delegating authority downward in the organizational hierarchy (i.e., "decentralization").
- Risk tolerance: Cultures vary with respect to the level of uncertainty and risk that managers are willing to comfortably tolerate and manage. In some cases, managers are highly risk averse and devote a significant amount of time and resources to controlling and minimizing risks. At the other extreme, however, there are managers in certain cultures who aggressively take on higher levels of risk.
- Reward systems: Some cultures prefer the use of reward systems that are based on measuring and motivating individual achievement while other cultures generally rely on incentives that reward desired collective behavior of groups.
- Level of formality: Cultures vary in the degree to which they prefer to rely on formal management procedures.
- Level of cooperation: Cultures differ in their preference for emphasizing cooperation among managers and employees as opposed to encouraging competition within the company to find the most efficient way to achieve the company’s objectives.
- Organizational loyalty: In some cultures there is a high level of identity with and loyalty to the company while in other cases the loyalties of employees lie with their occupational group or profession as opposed to any specific employer.
Information regarding these types of differences can be used in a number of ways by managers of global businesses. For example, when negotiating a business arrangement with a foreign partner understanding the level of formality regarding management procedures that is commonly expected in the partner’s cultural environment may determine the level of detail that is acceptable in terms of requirements of reports and other regular communications during the course of the relationship. Attitudes regarding cooperation and reward systems are important when the success of a particular project or joint venture depends on the ability of persons from different cultures to work effectively with one another toward a common objective. Finally, managers can use information regarding managerial styles and processes employed in other countries to improve their own skills and may identify insights that can be applied in their own organizations.