Management of Multinational Corporations

Social structure and religion of a society greatly influences the culture of that country. There are two basic patterns of social structure: emphasis on individual or group, and social stratification. Individualistic societies favor capitalism, but may lack teamwork and cooperation. Society may be stratified on the basis of caste or class. Caste and class conflicts need to be minimized to reduce industrial disruptions. The teachings of the dominant religion of a country can also influence its culture and thus its suitability for international business.

Hofstede's model of culture identifies four dimensions along which the culture of a country can be classified: power distance, masculinity vs. femininity, uncertainty avoidance and individualism vs. collectivism. Employees of MNCs must be trained and educated to develop an understanding of cultural differences. This will help them improve their performance. According to some critics, MNCs do more harm than good to the culture of the host country. MNCs also interfere in the politics of developing countries and attempt to influence their governments to formulate policies that favor them.