Strategic Options to Cultural Risk Management: A Theoretical Framework

Abstract

This paper outlines a view of cultural issues, connecting it to the risk literature. Culture, as a risk-driver of the firm, has not previously been fully explored. International business scholars tend to ignore either the external or the internal aspects of a firm's cultural environment, emphasizing only one side: either cultural diversity issues within the organization or host country cultural challenges. Using strategic management, this paper suggests that cultural risk should consider both out there according to product-market-positioning concepts and in here with the resource-based view of the firm to capture the essence of the firm's cultural dynamics. This paper proposes a theoretical framework to assess cultural risks under an enterprise-wide risk management (ERM) process to better manage such risks. The suggested framework can serve as a tool to benefit researchers as well as practitioners.