Cultural Awareness in Knowledge Transfer to China — The Role of Guanxi and Mianzi

Cultural awareness can be understood as the degree of knowledge about the way of thinking and behaving of people from a different culture. Different contexts in politics, economics, and society have shaped people’s conceptions of culture in international management (Doktor, Tung and Von Glinow, 1991; Sackmann and Phillips, 2004). Difficulties often occur between managers and subordinates of the same multinational enterprise (MNE) who are from different cultures because of basic differences in how individuals respond to one another’s behaviour (Shaw, 1990). This can be further complicated by the cultural diversities and organisational complexities outside the MNE in the host country, termed task environment by Thompson (1967). Foreign firms are often disadvantaged in comparison to host firms due to gaps in understanding the host culture (Calhoun, 2002). The handling of cultural diversities inside and outside the firm can affect technology transfer (Tung, 1994) and firm performance (Darby, 1995; Li and Karakowsky, 2002; Marcoulides and Heck, 1993). Indeed, the ability to manage cultural differences is seen as an example of a firm’s sustainable competitive advantage (Oliver, 1997).