Culture, institutions and international strategy Michael A. Hitt ⁎ , Victor Franklin 1 , Hong Zhu 1 Department of Management, Mays Business School, Texas A&M University, College Station, TX 77843-4221, United States Received 31 December 2004; accepted 4 February 2006 Available online 30 May 2006 1. Introduction National culture has become an increasingly important factor for companies doing business across country borders (Leung et al., 2005). Therefore, it is a significant topic of concern for multinational corporations (MNCs) and international management scholars alike. It is of special concern for the formalization and implementation of an international strategy. As chronicled by many scholars, firms now must operate in an era of increasing globalization (e.g., Hitt et al., 1998). Certainly, many firms operate in regions of the world rather than across global markets (Maitland et al., 2005). Yet, firms still must be concerned with global markets, with competitors from other regions of the world that might enter their markets and with economic and political developments in other countries that have the potential to affect the global economy and the markets in which they operate (Hitt et al., 2007). Thus, even partial globalization heightens the importance of different national cultures (Leung et al., 2005). While a few decades ago the discussions centered on international trade, more recent attention is given to the flows of information, technology and goods throughout the world. Hence, the focus is increasingly on the global economy. The development and diffusion of information technology and especially the Internet have facilitated the development of the global economy and global competition (Hitt et al., 2007). The implementation of free trade agreements (e.g., NAFTA), development of the European Union (EU) and the transition of many centrally planned economies to more open market economies (e.g., Russia, China) have facilitated an increasing globalization of business (Hitt et al., 2004). While globalization of business has increased, it has not resulted in universal cultures (Leung et al., 2005). Thus, it has heightened the importance of identifying and understanding the impact of cultural differences on international strategies. To some degree the concerns have been Journal of International Management 12 (2006) 222 – 234 ⁎ Corresponding author. Tel.: +1 979 458 3393; fax: +1 979 845 3420. E-mail address: mhitt@cgsb.tamu.edu (M.A. Hitt). 1 Tel.: +1 979 458 3393; fax: +1 979 458 3420. 1075-4253/$ - see front matter © 2006 Elsevier Inc. All rights reserved. doi:10.1016/j.intman.2006.02.007