The Relationship between the Managerial Philosophy of Peace Culture and Corporate Financial Performance: Mediating Effect of the Differential Cross-Cultural Management

This study investigates the mediating effect of the ”Differential Cross-Cultural Management” on the relationship between the ”Managerial Philosophy of Peace Culture” and the ”Corporate Financial Performance” by using the evidence of the Japanese, US and Taiwanese subsidiaries in Thailand. Previous studies focus on the evidence of the subsidiaries in Taiwan and China. However, the cultural differences between Taiwan and China are not very large. Thailand is one of the largest countries in The Association of Southeast Asian Nations (ASEAN). From the year of 2006 to 2011, the amount of accumulated foreign direct investment in Thailand is more than 150 billion US dollars. Japan, US and Taiwan have been the top three countries of foreign direct investment in Thailand. However, few studies focus on identifying the relationship between the Managerial Philosophy of Peace Culture and the Corporate Financial Performance in Thailand. A questionnaire survey of managers was conducted in the Japanese, US and Taiwanese subsidiaries in Thailand from April 1, 2012 to September 30, 2012. Regression Analysis is applied to test and estimate the causal relationship between the Managerial Philosophy of Peace Culture and the Corporate Financial Performance of the subsidiaries. The Differential Cross-Cultural Management is used as a mediator of the model. The results of the survey show that the Japanese subsidiaries in Thailand use ”the third culture management”, which is a combined cultural management of the parent country and the host country. The US subsidiaries use ”the first culture management”, which is the parent cultural management. The Taiwanese subsidiaries in Thailand use ”the second culture management”, which is the host cultural management. On average, the order of the Corporate Financial Performance of the sampled subsidiaries is the Japanese, US and Taiwanese subsidiaries. The Japanese subsidiaries stress the most on the Managerial Philosophy of Peace Culture. The results suggest that multinational enterprises (MNEs) which apply the Managerial Philosophy of Peace Culture and use third cultural management can have the highest Corporate Financial Performance. Taiwanese MNEs should change their management into the third culture management to achieve better Corporate Financial Performance.