The study on the cultural aspects of multinational enterprises (MNEs) has a rich and growing literature, although the economic and institutional analysis on this subject is still in its nascency. This paper is, to the best of my knowledge, the first attempt to apply Greif’s (1994) “cultural beliefs” model to a comparative institutional analysis of the nature of MNEs.

As a matter of fact, there is fairly general agreement among scholars on the point that Japanese MNEs share certain collectivistic culture, as opposed to the individualistic culture of Anglo-Saxon MNEs (Ouchi 1981; Hofstede 1980, 1991). Although there is plenty of description about cultural aspects of Japanese MNEs in this line of literature, what is lacking is a formal tool to illustrate the essence of this subject systematically and analytically. This paper may be viewed as an attempt to provide a bridge to a more formal analysis of cultural dimensions of MNEs employing Greif’s (1994) model as an analytical benchmark.

To put the matter simply, there are two hypotheses in this paper. The first hypothesis is that Japanese MNEs share collectivistic cultural behaviors in the sense of Greif’s (1994) model and have a tendency to send more directors from the headquarters to their foreign affiliates than other individualistic MNEs do. The second hypothesis is that (i) cultural integration gradually occurs between Japanese affiliates in the U.S. and American affiliates in Japan from 1998 and 2003, and (ii) the integration is mainly caused by the behavioral change in Japanese affiliates in the U.S. These are the hypotheses to be examined empirically later on.

This paper concludes by presenting evidence consistent with these hypotheses: concerning the first hypothesis, Japanese MNEs have a significant tendency to send more directors (both the top of the board of directors (BOD) and directors as a whole) from the headquarters to their foreign affiliates than American MNEs do. In addition to this, so far as the appointment of the top of the BOD is concerned, Japanese auto-related MNEs are segregated and collectivistic in the sense of Greif’s (1994) model that they are more likely to send the top of the BOD from their headquarters. The similarity between Japanese MNEs and Greif’s (1994) collectivist societies are also confirmed in respect of (i) pay for directors (in other word, agents) and (ii) valuation on information sharing.

So far as the second hypothesis is concerned, the results of the paper indicate that, over the five years from 1998 to 2003, the distribution of behavioral characteristics of Japanese MNEs moves towards the ones of American MNEs while there are still decisive differences between them in 2003. This finding is consistent with Kuran and Sandholm’s (2003) study which describes the process of cultural integration based upon the evolutionary models.

The rest of the paper is organized as follows. Section 2 provides a definition of cultural beliefs, and then shows some important implications of Greif’s (1994) cultural beliefs model. Section 3 describes the data source, the sample selection, the variables and the specification of the empirical models. Section 4 summarizes and interprets the empirical results. Some discussions on the empirics and other broader issues are presented in section 5. Section 6 concludes the paper and suggests some directions for further research.

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