What matters for the future? Comparing Globe's future orientation with Hofstede's long-term orientation

Abstract

Purpose

This paper aims to compare the future orientation (FO) society practices dimension of the Globe model with Hofstede's long-term orientation (LTO) by testing their causal effects on three firm-level variables: cash holdings, long-term investments and acquisitions. In doing so, this research challenges the already taken-for-granted assumption in the empirical research that the two dimensions are equivalent.

Design/methodology/approach

Hierarchical linear modeling (HLM) was used to test the hypotheses on 7,065 firms across 49 countries between 2000 and 2017.

Findings

The findings show that the causal impacts of FO society practices and LTO on a given construct are not consistent. Although LTO increases cash holdings, the impact of FO society practices on this variable is insignificant. Additionally, unlike FO society practices, which significantly increases long-term investments and acquisitions, LTO does not influence long-term investments and decreases acquisitions.

Originality/value

This study is valuable since it addresses the confusion surrounding the similarities and differences between FO society practices and LTO. Despite the dissimilarity also emphasized by Globe, Hofstede claims that they are equivalent, and the great majority of the empirical literature has assumed them to be equivalent in their analyses. Addressing this confusion, this research provides further empirical evidence that these two dimensions are dissimilar. The additional important contribution of the study is theorizing and examining the impact of FO society practices and LTO on the firm-level outcomes that reflect their temporal orientation (i.e. long-term investments and acquisitions), which is surprisingly neglected in the literature.

Citation

Alipour, A. (2021), "What matters for the future? Comparing Globe's future orientation with Hofstede's long-term orientation", Cross Cultural & Strategic Management, Vol. 28 No. 4, pp. 734-759. https://doi.org/10.1108/CCSM-08-2020-0163