Competition or Cooperation: Cultural Perspectives on N-Effect and Proximity-to-a-Standard M.A. Y.D. Madurapperuma, University of Colombo, Sri Lanka Kim Kvung-min, Silla University, Korea Pradeep Dharmadasa, University of Colombo, Sri Lanka With the escalating globalization of business activities, the issue of how business organizations adapt to cultural differences in host countries and deal with cross-cultural management prac- tices becomes increasingly important for human resource and marketing managers. The failure to take cultural differences into account has been :he cause of many businesses’ lack of suc- cess across national borders (Miroshnik, 2002; Ricks, 2006). Management practices, strate- gies, structures, as well as technologies that are suitable in one culture may lead to undesirable consequences in another (Miroshnik, 2002). For example, task-driven managerial practices may deliver expected outcomes in countries where the culture promotes competitiveness, whereas it would not be the case in countries where a culture encourages cooperativeness. This study uses the theories of N-effect and proximity-to-a- standard to capture the degree of competitiveness and cooperation among individuals of different cultural settings of the chosen countries. The N- effect is the discovery that increasing the number of competitors (N) can decrease competitive motivation (Garcia and Tor, 2009) meaning that individuals behave more competitively when the number of competitors is small. Proximity-to-a- standard specifies that individuals behave more competitively when they perceive themselves to be close to a reference standard. An organization’s culture cannot be separated from the national culture of its country. Often, firms involved in international business (multina- tional and transnational firms) attempt to adapt their operations in foreign lands to the local SAM Advanced Management Journal — Autumn 2016 culture (Miroshnik, 2002). Most economic, man- agement, and social theories provide insights into the ways in which firms sustain their com- petitive advantage in culturally diverse business environments. They provide ways of promoting a competitive environment among businesses and departments as well as between co-workers of a same organization. Hofstede (1980) identi- fied four variants to work and national cultures, namely individualism-collectivism(I-C), power distance, uncertainty avoidance, and masculin- ity/femininity. Fie also pointed out that national cultures demonstrate more work-related values and attitudes, so that work practices are differ- ent. However, as economic and organizational practices evolve, the validity of cultural theories may no longer apply across time and places (Miroshnik, 2002). Social changes linked to economic development and urbanization, for example, bring about cultural changes that allow individuals not only to be free from traditional sources of social influence, but also to be more autonomous in their decision-making. This pro- cess of modernization causes firms to confront many operational issues, even within their own country. It emphasizes the importance of vigi- lance and staying abreast of cultural changes. As mentioned, the consequences of cultural relativity on management practices should be considered seriously by firms operating across cultures. Individuals from individualist or col- lectivist work culture have different attitudes towards task-driven assumptions of competition. For instance, marketers may assume that the most effective way of increasing sales volume 47