1 Spring 2008 Issue DOES NATIONALITY STILL MATTER? (1) KARL MOORE & DAVID AMAR The importance of nationality to organisational performance depends on the sector. In some, it seems to have little bearing. In others, it is still a critical factor. Does nationality still matter? It does – though less than it used to. On the one hand, national identity is not a major driver of business performance: successful global companies come from a variety of countries, and no nationality dominates across sectors. The car industry used to be dominated by US companies, but now Detroit is fighting for its life against German, Japanese, Korean, and Chinese competitors. In pharmaceuticals, Swiss (Hoffman-Laroche, Novartis) and French (Sanofi-Aventis) competitors are outperforming major US ones (Pfizer, Johnson & Johnson, Eli Lilly). In consumer foods, companies such as Nestlé are doing quite well against the Nabiscos of this world. And in the mobile phone industry, where competition is ferocious, Nokia dominates the likes of Motorola or Samsung. The same dynamics are in play in plasma and LCD TVs, where Samsung competes rather well against LG Electronics or Matsushita and Sony. On the other hand, though, national identity remains important. It just depends on the sector. Most MBA programs teach as core concepts Michael Porter’s “ five forces model” and George Yip’s “ four drivers industry globalisation potential model” (market, government, cost, and competition), emphasising the importance of the industry variable. We believe that this emphasis is correct. In many industries, success seems to originate from a fortuitous alignment of strong national cultural characteristics combined with distinct historical competencies. Indeed, there are things at which some national cultures seem particularly proficient. For example, Japanese-owned car companies tend to do much better than other national or non-national- owned companies because of their strong competencies in technology and engineering, as well as a culture of continuous improvement. Though these are not exclusively Japanese characteristics – indeed other firms are trying to copy these approaches – they are built on existing Japanese strengths. Thanks to these founding competencies and systemic cultural traits, Toyota has risen inexorably to world leadership,