• Thus. • As the psychic distance between nations increases. business culture and institutional framework make up a ‘psychic distance’ as perceived by managers. it becomes more difficult for firms to acquire knowledge from abroad. geographical proximity and cultural affinity could help knowledge transfer between countries and organizations. a clash between national cultures may jeopardize the international transfer of knowledge.• What is appropriate knowledge in one country may not suit the needs of the firm in other countries. • By contrast. . • Factors such as different language.

• Governments can help improve a nation’s ability to learn ‘best practices’ from successful societies by providing a suitable environment. it is important to be aware of the incompatibilities between foreign management practices and local social and cultural characteristics. • However. through educational and training policies. . • This is particularly important for developing countries.

.Developing Countries and Foreign Knowledge and Practices • The question of transfer of management practices is of crucial importance esp. • Many of these countries in an attempt to upgrade their organizational systems and to improve their performance. • If these imported techniques are not modified and adapted to the local conditions. for the less developed nations. the trnasfer will almost certainly fail. both in cultural terms and in terms of the availability of human skills. import various management techniques from the more advanced industrialized nations. without due regard to their own socio-cultural and technological conditions.

the transfer of management practices should not replace but in fact complement the local practices that are a culmination of specific context of a particular society. . for developing nations. to build on their own resources and develop compatible indigenous management practices. • Thus. in parallel with learning from abroad. • Current development efforts should focus on building institutional capacity through the encouragement of local self-reliance.• It is imp.

the process of transfer from capitalist countries to ex-communist ones is a great deal more complicated than when the transfer takes place between two capitalist countries.Ex-Communist Countries and Foreign Knowledge and Practices • Many companies in the ex-communist countries of central and eastern Europe are tempted to import some of the capitalist countries management practices. • In addition. multinationals with wholly-owned subsidiaries or joint ventures located there are keen to take their home-grown practices with them. • However. .

companies didn’t perform certain functions at all. • The difference between capitalist and communist countries is not only that of style but also of substance.• This is because in capitalist countries companies generally perform similar functions but maybe in different ways. when they were under communist rule. • Whereas. . • But in ex-communist countries. many if these functions were either out of the co. in the ex-communist countries. R&D. accounting. manufacturing co. in any capitalist country will have functions such as marketing. • For ex: An avg.’s control or were not performed at all. HRM.

and to train their employees to work in new ways. by contrast. cos. • When importing new management and organizational practices from abroad. cos. have to start by adapting their existing functions to their new domestic economic conditions. .• In addition. based in a capitalist country have already developed these functions in accordance with its existing socio-economic structure. then learn to perform new sets of functions which would be necessary to survive in the market. • In ex-communist countries. may only need to make certain adjustments to make them workable. the cos.

• Therefore. . • Culture. which may not necessarily be eradicated by an imposed regime. there is yet another complication : the cultural heterogeneity of these countries. attitudes and beliefs. in terms of values. when deciding to transfer its home grown practices to central and eastern European countries. is a deeply-rooted construct.• From a western multinational’s perspective. the effect of national cultures as well as former political economic structures of the ex-communist countries must be taken into account when transferring organizational knowledge there to elsewhere.