....___order_200430529(26)-1.doc - I IMPACT OF CULTURE RISK...

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I IMPACT OF CULTURE RISK MANAGEMENT FOR MNCS PROSPECT OF CHINESE COMPANIES OPERATING IN SAUDI ARABIA Name: Course title: Instructor’s name: Date:
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II ABSTRACT This dissertation focuses on the analysis of the impact of cultural risk management on the operations of Chinese multinational corporations that have subsidiary firms in Saudi Arabia. The main objective of this research study is to provide a framework that is based on legitimate empirical findings for effective approaches of managing cultural risks, which are adoptable by Chinese MNCs that intend to establish subsidiary firms in Saudi Arabia. The study is based on both primary and secondary research. Secondary research involved gathering legitimate and relevant information from previous publications that are credible such as books and professional journals and reports. Primary research on the other hand involved gathering data from appropriate respondents through questionnaire and in-depth interviews. The study involved a total of 115 respondents with 100 of them answering the questionnaires and the remaining 15 taking part in the in-depth interviews. The study found that cultural risk is inevitable for MNCs. However, it highlighted that partnering with local firms, engaging the host government, hiring employees from the local communities, supporting educational programs on multiculturalism, and educating international employees on the culture of the host county prior to establishing subsidiary operations are some of the cultural risk management approaches that are adoptable to improve efficiency in the operations of MNCs.
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III DECLARATION
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IV STATEMENT OF COPYRIGHT
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V ACKNOWLEDGEMENTS
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VI TABLE OF CONTENTS ABSTRACT .................................................................................................................................... II DECLARATION ........................................................................................................................... III STATEMENT OF COPYRIGHT .................................................................................................. IV ACKNOWLEDGEMENTS ............................................................................................................ V TABLE OF CONTENTS ............................................................................................................... VI LIST OF TABLES .......................................................................................................................... X LIST OF ABBREVIATION .......................................................................................................... XI PDI: Power Distance Index ............................................................................................... XI IDV: Individualism verses Collectivism ............................................................................ XI MAS: Masculinity versus Femininity ............................................................................... XI UAI: Uncertainty Avoidance Index ................................................................................... XI PRA: Pragmatic versus Normative .................................................................................... XI IVR: Indulgence versus Restraint ...................................................................................... XI CNPC: China National Petroleum Corporation ................................................................ XI 1. CHAPTER ONE: INTRODUCTION ................................................................................... 1 1.1. Introduction ................................................................................................................................... 1 1.2. Aims and Objectives of the Study ................................................................................................. 4 1.3. Research Questions ....................................................................................................................... 5 1.4. Rationale of the Study ................................................................................................................... 5 1.5. Research Methodology .................................................................................................................. 7 1.6. Research Framework ..................................................................................................................... 7 1.6.1. Overview of the Current State of Knowledge ........................................................ 7 1.6.2. Gaps in the Knowledge .......................................................................................... 9 1.6.3. Research Strategy ................................................................................................. 10 1.7. The Organization of the Study ..................................................................................................... 10 2. CHAPTER TWO: LITERATURE REVIEW AND THEORETICAL BACKGROUND. .13 2.1. Introduction ................................................................................................................................. 13 2.1.1. Multinational Corporations .......................................................................................................... 14 2.1.2. Risk Management ........................................................................................................................ 17 2.1.2.1. Risk Management Process ................................................................................ 17 2.1.2.2. Risk Management Approaches ......................................................................... 19 2.1.3. Enterprise Risk Management ....................................................................................................... 20 2.1.4. Risk Management in International Business ................................................................................ 22 2.1.5. Hofstede Cultural Dimensions ..................................................................................................... 25 2.1.5.1. Power Distance Index (PDI) ............................................................................. 26 2.1.5.2. Individualism verses Collectivism (IDV) ......................................................... 26 2.1.5.3. Masculinity versus Femininity (MAS) ............................................................. 27 2.1.5.4. Uncertainty Avoidance Index (UAI) ................................................................ 28 2.1.5.5. Pragmatic versus Normative (PRA) ................................................................. 29
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VII 2.1.5.6. Indulgence versus Restraint (IVR) ................................................................... 30 2.2. Theoretical Background .............................................................................................................. 31 2.2.1. Agency Theory ..................................................................................................... 31 2.2.2. Institutional Theory .............................................................................................. 34 2.2.3.
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