International Journal of Intercultural Relations 35 (2011) 604– 613

Contents lists available at ScienceDirect

International Journal of Intercultural Relations

j ourna l ho me pag e: www.elsev ier .com/ locate / i j in t re l

Managerial characteristics, operational observations, and smallbusiness performance: A comparison of US and Mexican ventures

Warren Watsona,∗, Danielle Coopera,1, Robert Pavurb,2, Jose Luis Neri Torresc,3

a Department of Management, University of North Texas, P.O. Box 305429, Denton, TX 76203, USAb Department of Information Technology and Decision Sciences, University of North Texas, P.O. Box 305249, Denton, TX 76203, USAc Facultad de Contabilidad y Administraciòn, Universidäd de Colima, Av. Universidad 333, 28016 Colima, Colima, Mexico

a r t i c l e i n f o

Article history:Accepted 7 December 2010

Keywords:US and Mexican venturesSmall business effectiveness

a b s t r a c t

To contribute to our cross-cultural understanding of small business ventures, we investi-gate manager reports of small business effectiveness in the United States and Mexico. Weexamine the influence of organizational policies, managerial characteristics, and manage-rial process observations on reports of business effectiveness. Data were gathered fromventures in both countries, and results showed differences in interpersonal processes,business structure, and gender. Implications for future research are given.

© 2010 Elsevier Ltd. All rights reserved.

1. Introduction

The United States and Mexico have a lengthy, involved commerce relationship in which Mexico is a key trading partnerof the United States (Bureau of the Census, 2009). Profiles of the two countries, such as characteristics of each nationality’sculture, have been examined (Stephens & Greer, 1995), but less is understood about how cultural differences associate withmanaging small businesses in each country. An overview of recent research has categorized cross-cultural comparisons intotwo approaches, those in which culture is an independent variable combined with mediator relationships as a sequence toperformance, and comparisons in which culture is a moderating variable between various factors and performance (Tsui,Nifadkar, & Ou, 2007). In this investigation, we apply these research approaches to conduct a between cultures comparisonto extend our understanding of managerial points of view in US and Mexican small businesses.

We are interested in manager observations of business characteristics and business effectiveness. The notion that man-agers have a viable perspective from which to evaluate their firms’ activities has merit. For instance, managers acquire aunique viewpoint regarding producing a current income stream and positioning their firms for future growth. Objectivemeasures that are generally obtainable in archival data for large, publicly traded firms are not available for most smallbusinesses. Investigations continue to define what constitutes success and failure of small businesses, where bottom lineassessments, for example, the amount of time in business, are often a key metric (Rogoff, Lee, & Suh, 2004). Manager attribu-tions about business performance affect how they interact with employees and how they make decisions (Green & Mitchell,1979; Watson & Michaelsen, 1984), and this attribution viewpoint is supported across cultures (Mezulis, Abramson, Hyde,& Hankin, 2004). We are not arguing for the accuracy of manager evaluations of their business operations but that culture,

∗ Corresponding author. Tel.: +1 940 565 3140.E-mail addresses: watson@unt.edu (W. Watson), cooperd@unt.edu (D. Cooper), pavur@unt.edu (R. Pavur), jlnerito@ucol.mx (J.L.N. Torres).

1 Tel.: +1 940 565 4487.2 Tel.: +1 940 565 3107.3 Tel.: +52 312 316 1073.

0147-1767/$ – see front matter © 2010 Elsevier Ltd. All rights reserved.doi:10.1016/j.ijintrel.2010.12.003

W. Watson et al. / International Journal of Intercultural Relations 35 (2011) 604– 613 605

interpersonal processes, and other factors affect their perspectives, that is, their attributions regarding their operations(Zacharakis, Meyer, & De Castro, 1999).

Small business in the United States (SBA, 2009) and Mexico continue to constitute a significant percentage of eachcountry’s revenue (Mexican Census, 2004; Photius, 2009). In order to investigate the effects of manager characteristics andobservations in the US and Mexico, we establish equivalence metrics between the cultures for comparative interpretationon measurement dimensions previously used in the US (Fischer, 2004). Equivalence is established by showing there is aninvariant structure between the two countries using a SEM model for the measures (Byrne, 2006). Using these metrics,we conduct analyses to describe characteristics between, within, and interactions with the two management perspectives.We investigate variables of organizational policy, manager characteristics, manager process observations, and reports ofbusiness performance in order to develop our cross-cultural understanding of small business in the US and Mexico.

2. Business ventures and culture

Three decades ago Hofstede began examining cultural characteristics in terms of nationality by utilizing the dimensionsof: uncertainty avoidance, power distance, individualism, and masculinity (1980). Power distance indicates a tolerance forrole differences between supervisor and employee, and masculinity reflects the ways in which cultures show gender differ-ences. Individualism (versus collectivism) reflects the relationship between the individual and the collective, and uncertaintyavoidance describes a tolerance for uncertainty and reflects a concern with saving face and avoiding anxiety. Hofstede’sresearch reveals that Mexican nationals tend to be more power distance-oriented, more masculine, and collectivistic, whileUS nationals tend to be more individualistic and more tolerant of uncertainty (Hofstede, 2000). Hofstede (1980) concludesthat an examination of organizational and management problems between nations must be evaluated within the culturalcontext. Subsequent research has shown some support for these dimensions, but other research has revealed there is muchmore complexity with these descriptions (Ailon, 2008; Allik & Realo, 2004; Greer & Stephens, 2001). Allik and Realo (2004)examined individualism that included description of trust and organization membership, and stated that previously estab-lished cross cultural dimensions may need more development in their construct boundaries. In addition, the GLOBE culturalcomparison model describes US and Mexican gender egalitarianism as being in the same grouping (Javidian, Dorfman, deLuque, & House, 2006). Nevertheless, there is a significant degree of cross-cultural research supporting Hofstede’s work. Wewill examine small business ventures in the US and Mexico in terms of managerial characteristics and cultural influenceby applying Hofstede’s categories and additional perspectives which may offer additional support for the utility of thesegroupings.

While financial capital and time in operation traditionally have been applied to evaluate venture viability, managerdemography and their interpersonal processes are becoming useful for understanding venture performance (Boone & vanWitteloostuijn, 1996; Chandler & Hanks, 1998; Watson, Stewart, & BarNir, 2003). Interpersonal processes influence ventureperformance and are included in defining the work relationship (Bird, 1989; Kamm & Nurick, 1993; Timmons, 1999). Inaddition, demography models illustrate how demographic elements of organizational members can affect business outcomes(Jackson et al., 1991; Pfeffer, 1983). Written plans for business operation that depict operational vision also are consideredimportant for venture success (Timmons, 1999; Vesper, 1996), and we are interested in models that demonstrate the effect ofcultural and managerial viewpoints within this framework. We will apply previously generated cultural research dimensionsin examining managerial characteristics and observations and their relation to reports of business activities.

3. Between culture comparisons

Mexicans report more collectivism than do respondents in the United States, both in academia and in business, while moreindividualism is reported in the US (Fernandez, Carlson, Stepina, and Nicholson, 1997; Greer & Stephens, 2001; Hofstede,2000). People from individualistic cultures are lower in the need for affiliation and focus more on tasks than relationships(McGlelland & Boyatzis, 1984). Maintenance activities such as encouragement and conflict management are valued moreby collectivists (de Forest, 1994; Kim, Park, & Suzuki, 1990). Employers in Mexico value respect and agreement, and teamoutput, and in the US, workers focus more on individual achievement (Stephens & Greer, 1995).

The impact of interpersonal processes in business ventures has a significant influence on the business operation and hasbeen shown to be critical regarding venture success (Timmons, 1999; Watson, Ponthieu, & Critelli, 1995; Webster, 1976).Interpersonal processes have been characterized in terms of those that are relational and those that are task-oriented. Balesand Strodtbeck (1951) illustrated the importance of socio-emotional and task reactions, and Schein (1988) described task andmaintenance behaviors that focus on team synergy and directive behaviors that are exhibited by an individual or subgroup. Atask-focused perspective involves accomplishing task-related goals, and a socio-emotional perspective involves a relationalorientation, and both sets of activities are required for maximum group effectiveness (Sanchez-Burks, Nisbett, & Ybarra,2000). Interpersonal process effectiveness research within an organizational context has targeted member effort (Hackman,1990), group decision strategies (Vroom & Yetton, 1973), interpersonal quality (Schmitt & Klimoski, 1991), communication(Katzenbach & Smith, 1993), and conflict management (Schwarz, 1994).

Small business interpersonal processes affect ventures’ performance (Bird, 1989; Kamm & Nurick, 1993). An importantissue is how do interpersonal activities vary due to cultural influences? People from individualistic cultures are more likelyto value task inputs such as work quality and continual improvement than people from collectivistic countries (Kim et al.,

606 W. Watson et al. / International Journal of Intercultural Relations 35 (2011) 604– 613

1990). Relational activities such as encouragement and conflict management are likely to be valued more by collectivists(de Forest, 1994; Kim et al., 1990). Since the Mexican culture is prone toward collectivism and the US more individualistic,we propose:

H1a. Mexican small business managers are more likely to engage in relational activities than US small business managers.

H1b. US small business managers are more likely to engage in task activities than Mexican small business managers.

Uncertainty avoidance reflects the extent to which members of a culture attempt to cope with anxiety by reducingambiguity. Hofstede’s index for uncertainty avoidance includes employment stability, rule orientation, and stress. In Mexico,there is less tolerance of uncertainty (Hofstede, 1980), which refers to intolerance for the ambiguous and undefined (Ailon,2008), and in the US there is more acceptance of ambiguity. A focus here is on rules and comfort with the circumstance.Drawing from the difference on this dimension, US organizations will have fewer written rules, while organizations in Mexicowill have more written rules (Navarrete & Pick, 2003). We propose that:

H2. Mexican small business managers are more likely to have specific written rules for venture development than US smallbusiness managers.

4. Interpersonal processes as a mediator between culture and perceived performance

Interpersonal processes are activities that venture managers enact to operate their businesses. Organizational researchershave examined interpersonal processes such as member coordinated effort (Hackman, 1990), member skills utilization(Hoffman, 1965), and team decision strategies (Vroom & Yetton, 1973). Other interpersonal processes involve perceptions ofteam performance and member commitment (Schmitt & Klimoski, 1991), and effective problem-solving and conflict man-agement (Schwarz, 1994). The extent that venture managers perform these processes well is considered to affect businessperformance (Watson et al., 1995, 2003). Task and maintenance behaviors are well-accepted processes that tend to exist inmost interactive contexts where participants seek a quality goal across time (Bales & Strodtbeck, 1951). Task type behaviorsinvolve setting goals, quality work, and striving for improvement (Watson et al., 2003). Relational type behaviors includeconflict management and synergy processes that allow participants to achieve more together than individuals operatingalone (Hill, 1982; Schein, 1988). These behaviors significantly impact venture effectiveness.

Tsui et al. (2007) describes effects of interactions between interpersonal processes and culture on perceived performance.We suggest that interpersonal processes may also act as a mediator between culture and perceived performance. Whileculture may directly affect performance, it may have an even greater impact through manager behaviors. Mediation occurswhen we establish an association between culture and reports of performance, and then show the culture has an associationwith the interpersonal process, and that the interpersonal process also has a relationship with the reports of performance(Kenny, Kashy, & Bolger, 1998; MacKinnon, Fairchild, & Fritz, 2007). We predict that due to their cultural context, Mexicanmanagers are likely to engage in more maintenance and relational behaviors. We also propose that US managers will beinfluenced by the US cultural context to engage in more task quality and directive behaviors because of their emphasis onoperational and monitoring processes (Sanchez-Burks et al., 2000). Task and relational actions affect the success of businessventures (Ancona & Caldwell, 1992; Timmons, 1994). Thus, we predict that culture will influence interpersonal processfocus, which will in turn affect reports of venture performance. We predict:

H3a. The effect of culture on perceived performance will be mediated by relational activities.

H3b. The effect of culture on perceived performance will be mediated by task activities.

5. Moderators to culture and venture performance

The masculinity/femininity dimension refers to the value placed on traditionally male or female values. Masculine valuesemphasize competitiveness, assertiveness, and the accumulation of material possessions, while feminine values focus moreon relationships and quality of life (Hofstede, 2000). Hofstede described masculinity as greater in Mexico than in the US, andFernandez et al. (1997) found that in the US masculinity scores showed a shift toward the femininity side of the dimension,while masculinity scores in Mexico increased slightly. House’s work with the intercultural GLOBE leadership project classifiesthe US and Mexico in the same gender egalitarian grouping (Javidian et al., 2006). While there is not definitive agreementregarding gender roles in the US and Mexico, substantial arguments exist to suggest a reasonable possibility of this culturalstyle difference (Christie-Mizell, 2006; Hofstede, 2000; Javidan & House, 2001). Therefore, we pose the following researchquestion:

RQ1: Does culture moderate the effect of gender on perceived venture performance?

Uncertainty avoidance involves the avoidance of anxiety and ambiguity through authority and rules. Since Hofstede’sinitial classifications, the US has moved toward increased uncertainty avoidance, while Mexico has remained on the higherside of this dimension. This positioning is probably influenced by significant economic concerns in both countries (Fernandez

W. Watson et al. / International Journal of Intercultural Relations 35 (2011) 604– 613 607

et al., 1997). Even so, the US remains lower in uncertainty avoidance than Mexico (Hofstede, 2000). We expect that uncer-tainty avoidance will result in differing tendencies to develop specific written rules for business development. Perhapsresponses to uncertainty may also play a role in the effects of having a written plan on perceived performance. We offer thefollowing research question:

RQ2: Does culture moderate the effect of written rules for venture development on performance?

6. Method

6.1. Subjects

The data were obtained from 201 small businesses managers (US = 102, MX = 99). In the US, 71 males and 31 femalesparticipated in the survey, and in Mexico, 62 males and 37 females participated. In the US, the average age of respondentswas 44.12 (sd = 12.27) and the average years of work experience was 14.31 (sd = 7.35). In Mexico, the average age was40.91 (sd = 12.11) and the average years of work experience was 11.60 (sd = 8.01). All participants stated that they were theprimary manager and were involved in the day-to-day operation of their business. In the US, 20.6% of the businesses wereretail and 24.5% were services, while in Mexico 54.1% of the businesses were retail and 35.9% were services. The remainderof participating businesses was spread across wholesale, manufacturing, and construction for both countries.

6.2. Survey procedure

Upper level entrepreneurship students in the business school at a southwestern university in the United States and in thebusiness school at a southwestern university in Mexico were given a class assignment to obtain a completed survey fromtwo different small businesses in their metropolitan area. The businesses all consisted of more than 4 employees and lessthan 60 employees. The survey was completed by the primary manager of each business who participated in the day-to-dayoperation. The survey was composed of demographic questions, items regarding business policy and performance, and itemsabout interpersonal processes. Students would contact the business and deliver the survey in person to the manager. Themanager completed the survey at that time, or the student made an appointment to return and collect the survey withinone week.

7. Measures

Data were gathered on gender, age, years of work experience, and if the participant was the manager of the businesswho is involved in the day-to-day operation. Another item inquired whether or not the manager had a written plan for theoperation and development of the business.

7.1. Interpersonal processes

The measure for interpersonal processes in small businesses (Watson et al., 2003), consisted of ten items that definedtwo factors: relational activities (5 items, Cronbach alpha = .80 for US and .78 for MX) and task activities (5 items, Cronbachalpha = .82 for US and .81 for MX) which were on a five point Likert-type interval scale. The verbal anchors for the processitems ranged from “not at all” to “very little” to “moderately” to “extremely well.” These items described how the managerworks with their employees. The relational activities factor contained items such as coordinating interaction, demonstratingflexibility, openly sharing information, being cooperative, and focusing on common goals. The task activities factor containeditems such as goal setting, improvement procedures, problem-solving efficiency, quality standards, and effective leadershipfunctions. Managers also responded to seven items on a seven point Likert-type interval scale about facets of businessperformance such as: sales growth, cash flow, market share, return on sales, return on investment, return on assets, andprofit. The verbal anchors for the performance items ranged from “low,” to “average,” to “high.”

7.2. Reports of business performance

The performance items were standard metrics used in reports of venture performance and were considered to be a onedimension summed item measure (Timmons, 1994; Vesper, 1996). The Cronbach alphas for these items were MX = .83 andUS = .81. A confirmatory factor analysis was conducted on the 7 items for the Mexican group and for the US group. Bothsubsamples resulted in only one factor with an eigen value greater than 1.

7.3. Equivalence and common method variance

We took steps to ensure cross-cultural measurement equivalency with the interpersonal process and the business per-formance instruments. Following Bond (1988), survey items were first de-cultured by standardizing item responses withineach culture. Deculturing metrics involves standardizing responses to each variable within each culture separately. The

608 W. Watson et al. / International Journal of Intercultural Relations 35 (2011) 604– 613

Table 1Descriptives and correlations.

Variables Mean sd 1 2 3 4 5

US sampleAge 44.12 12.27 1Years in business 12.58 10.14 0.43 1Business performance 24.41 4.49 0.02 0.12 1Relational processes 34.78 5.33 0.01 0.03 0.05 1Task processes 33.62 5.35 0.15 0.08 0.21 0.23 1

MX sampleAge 40.91 12.11 1Years in business 11.63 8.75 0.33 1Business performance 22.46 6.19 −0.21 0.06 1Relational processes 33.64 7.77 0.09 0.01 0.04 1Task processes 30.38 7.31 0.03 0.02 0.25 0.21 1

Any correlation greater than .2 is significant at p < .05.

correlation between any two variables within a given culture is not affected, but the cultural effect is taken out since theaverage score for the two variables in each of the cultural samples is zero.

This approach is used to remove cultural differences in approaches to using scales, such as acquiescence and variability.We also used a de-centered approach for translation of the total survey, and we oversaw the translation of the instrument intoSpanish, and then its independent back-translation into English. We then pilot tested the Spanish version of the questionnairewith 4 Mexican faculty fluent in both languages, who volunteered to review both the English and Spanish versions of thesurvey. Throughout this process, ambiguities in the Spanish version, or inconsistencies between it and the English version,were noted and corrected. We then tested for factor invariability on the two dimensions of the interpersonal process itemsbetween the two cultures (Byrne, 2006). The factors presented in previous research (Watson et al., 2003) were applied in aMexican and then a US model and item comparisons were made. By following Byrne’s (2006) procedure, the factors showan invariant factor structure for both countries (CFI = .91 and RMSEA = .07). Descriptive statistics for the above data are inTable 1.

The data from the survey were gathered at one point in time. Returning to these ventures at a later date to gather thisinformation at two points in time was not feasible due to the demands of their operations. We did conduct the followingsteps to reduce biases including common method variance (Podsakoff, MacKenzie, Lee, & Podsakoff, 2003). Confidentialitywas insured for each respondent. Each participant was identified with a number for that business. This diminished socialdesirability, respondent leniency, and taking on perceptions consistent with the researcher. Also, the Mexican and US facultyteams that developed the survey items and who verified the translations examined scale items for ambiguity, vague concepts,complicated syntax, focusing on one issue per item, and simplicity. Bi-polar scales were avoided, and different endpointswere used on the process and performance scales. Often, even return rates are not reported in survey research (Podsakoff &Organ, 1986). We had a 65% return rate for US businesses and 68% return rate for Mexican businesses, which is higher thanmost, because students made appointments with managers to collect the data. In some cases managers were too busy to fillout the survey or did not want to comply for other reasons. Our factor structure analyses of survey variables also support aninvariant factor structure between the two countries’ respondents. Mitchell (1985) also states that anything that changesthe test or the test context should reduce method variance. In this case, our ventures came from a wide variety of businesses,which should cancel chance imbalances (Isaac & Michael, 1990). For these reasons, we believe that a common format doesnot jeopardize the credibility of the statistical findings.

8. Analysis of data

Hypotheses 1 and 2 were tested with a logistic regression model (X2 = 29.38, df = 5, p < .01) with nationality as the depen-dent variable (see Table 2). The analysis of the coefficients of the logistic regression model supports Hypotheses 1a and 1b.The analysis reveals that Mexican small business managers are significantly more likely to engage in relational activities thanUS small business managers (Wald = 8.91, p < .01). The analysis also shows that US small business managers are significantly

Table 2Between nation logistic regression.

Variables B S.E. Wald df Sig.

log.gender(l) 0.254 0.383 0.439 1 0.508age 0.005 0.015 0.124 1 0.725vent.syn −0.147 0.049 8.918 1 0.003vent.dir 0.19 0.051 14.192 1 0.001log.pln.dev(l) −1.36 0.381 12.119 1 0.001Constant −1.611 1.268 1.616 1 0.204

X2 = 29.38, df = 1, 5; R2 = 23%, % classified correctly = 66.5.

W. Watson et al. / International Journal of Intercultural Relations 35 (2011) 604– 613 609

Table 3Task activities mediating nationality and performance.

perform Coef. Std. Err. t p > |t| [95% Conf. interval]

Dependent variable regressed on independent variablelognation 1.969736 .822983 2.39 0.018 .3448008 3.594671cons 22.4881 .5801919 38.76 0.000 21.34254 23.63365

df = 1, 165, F = 5.73, p < .05, R2 = 4%

vent dir Coef. Std. Err. t p > |t| [95% Conf. interval]

Mediator regressed on independent variablelognation 2.980493 .9981447 2.99 0.003 1.009711 4.951276cons 30.38095 .7036786 43.17 0.000 28.99158 31.77033

df = 1, 165, F = 8.92, p < .01, R2 = 6%

perform Coef. Std. Err. t p > |t| [95% Conf. interval]

Dependent variable regressed on mediator and independent variablevent dir .2039418 .062383 3.27 0.001 .0807644 .3271193lognation 1.361889 .8211644 1.66 0.099 −.2595287 2.983306cons 16.29215 1.977359 8.24 0.000 12.38778 20.19651

df = 2, 164, F = 8.38, p < .01, R2 = 10%

Total effect mediated = 30.86%. Sobel Z = 2.21, p < .05.

more likely to engage in task activities than Mexican small business managers (Wald = 14.19, p < .01). Hypothesis 2 assumedthat Mexican small business managers are more likely to have specific written rules for venture operation and developmentthan US small business managers. This hypothesis was supported by examining a test of the model’s coefficient for plans foroperation and development (Wald = 12.11, p < .01).

Hypothesis 3a predicted that relational activities would mediate nationality and reports of business performance. This wascalculated in a causal mediated regression model (Fischer, 2004) that was not significant according to Sobel tests. Hypothesis3b stated that task process activities would mediate nationality and reports of business performance. This mediated modelwas significant (Sobel Z = 2.21, p < .05; Total effect mediated = 30.86%) (see Table 3). The initial regression resulted in culturebeing correlated with reports of business performance (t = 2.39, df = 165, p < .05). Following this, culture was correlated withtask activities (t = 2.99, df = 165, p < .01). The overall model showed that culture contributed to explaining the variation inperformance at the 10% significance level (t = 1.66, df = 164, p < .1), and task activities significantly contributed to predictingperformance (t = 3.27, p < 01).

Research question 1 posed an interaction between gender roles and culture on reports of business performance. Thisinteraction was supported at the 10% significance level (F = 3.17, p = .07, R2 = 5%) (see Fig. 1). In MX female managers reported

Fig. 1. Interaction of gender and nationality on performance.

610 W. Watson et al. / International Journal of Intercultural Relations 35 (2011) 604– 613

Fig. 2. Interaction of specifics plans for development and nationality on performance.

higher levels of business performance than males, but not significantly. In the US male managers reported higher levelsof business performance than females (males: M = 24.97, sd = 4.39; females: M = 22.96, sd = 4.49; t = 1.99, df = 91, p < .05).In the US male managers had significantly more years of business experience than female managers (males: M = 13.45,sd = 12.31; females: M = 8.79, sd = 8.59; t = 2.12, df = 91, p < .05), but there was no significance difference between genders forMX managers.

Research question 2 posed the interaction between specific plans for business development and culture on reports ofbusiness performance. This interaction was significant (F = 4.11, p < .05, R2 = 16%) (see Fig. 2). In the US, managers that hadspecific plans for development reported significantly higher business performance (plans: M = 25.70, sd = 4.30; no writtenplans: M = 23.33, sd = 4.48; t = 2.56, df = 89, p < .05). In MX, managers that had specific plans for development also reportedsignificantly higher business performance (plans: M = 24.39, sd = 5.41; no written plans: M = 18.80, sd = 5.83; t = 4.16, df = 77,p < .01). The difference in the means of the plans and no written plans for MX (5.59) is almost twice that for US (2.37), whichhelps to explain why the difference for MX is significant at the .01 level and the US is significant at the .05 level.

9. Discussion

Small businesses provide substantial revenue in Mexico and the US, and the growth of small business research in theUS and Mexico comes from the impact of these organizations. We examine these cultures to extend our understanding ofmanagerial points of view in US and Mexican business ventures. We investigate elements between, within, and interactionswith the two management perspectives. We apply variables of organizational policy, manager characteristics, managerinterpersonal process, and reports of business performance in order to enhance our cross-cultural understanding.

9.1. Between cultures

Interpersonal processes of task and relational activities are critical behaviors in most collaborative efforts. Mexicans areconsidered more collectivistic than individuals in the US and tend to be more relational in their interpersonal orientations.Individualism seems to be more predominant in the US, and thus US individuals tend to be more task-oriented than Mexicans.In our between cultures model, Mexican managers are more likely to emphasize relational actions in working with employeessuch as: coordinating interaction, demonstrating flexibility, openly sharing information, being cooperative, and focusingon common goals. US managers are more likely to emphasize task actions in working with others such as: goal setting,improvement procedures, problem-solving efficiency, and quality standards. This finding has been observed in other contextsin cultural research and now is described in small businesses in both countries.

We also made comparisons between small businesses in the two cultures that related to differences in uncertaintyavoidance. In Mexico there is less tolerance of ambiguity and of undefined circumstance, and in the US there is greatertolerance of less rule orientation and stress. Mexican managers showed a stronger likelihood to have specific written plans

W. Watson et al. / International Journal of Intercultural Relations 35 (2011) 604– 613 611

for development of their business than did US small business managers. The specificity of written plans may lower ambiguityand uncertainty for the Mexican small business managers by providing more detailed and explicit goals.

9.2. Interpersonal processes as a mediator to culture on perceived performance

The interpersonal processes of task activities mediated culture on reports of business performance, and culture wascorrelated with reports of performance. When task activities were included as a mediator to the model it had a significantrelationship with culture and performance such that the initial significance level of culture’s contribution to explainingperformance was lowered after task activities was added to the model. Task activities are relevant to both cultures, butfor US managers, the emphasis on task is greater, which then influences their reports of performance. The overall modeldemonstrated that for US managers, indicating more task activities, such as goal setting, improvement procedures, andproblem-solving efficiency, led to higher estimates of business performance. US managers’ task orientation is now furtherdefined by these specific characteristics that affect their estimates of performance. Mexican managers’ reports indicated lesslikelihood for task activities and lower estimates of performance. Relational processes did not mediate this model. These pro-cesses are correlated with performance in both cultures, but did not show the causality of culture to process to performance.

9.3. Moderators to culture and venture performance

Cross-cultural research by Hofstede (2000) shows that in Mexico, masculinity is a more predominant influence in thesociety, while in the US femininity is more accepted. Research question 1 is an inquiry regarding the interaction of cultureand gender on reports of business performance. There is a significant interaction between culture and gender on estimates ofperformance. In the US, male managers report higher levels of business performance than female managers. In Mexico, femalemanagers report slightly higher performance than male managers but the difference is not significant. Interestingly, despitelower cultural levels of masculinity, gender showed more of an effect in the US than in Mexico. In the US, male managershave significantly more years of business experience than female managers, but a significant difference between genderson business experience did not exist among Mexican managers. The difference in work experience may have influencedestimates of performance, since more business experience could result in better management practices. This finding shouldbe examined in future research.

The second research question examined the interaction of culture and specific written plans on reports of performance.In Mexico there has been less tolerance for ambiguity and stress than in the US. Our assumption was that having specificwritten plans for business development would lessen manager views of ambiguity, thus the question of possible moderationon performance. There was an interaction between culture and having a written plan for development. In the US having awritten plan related to higher estimates of business performance. In MX having a written plan also meant higher estimatesof business performance. The difference in the means of the performance items for having written plans for MX is almosttwice that for US. These findings suggest that written plans are important in both cultures, but they tend to have more impactin MX.

10. Limitations and future research

We discussed common method variance and the steps that we took to reduce its potential effects. Another potentiallimitation of the study was a lack of participant training for understanding the measurement variables. Corroboration ofour outcome measures by outside observers (e.g., other researchers, venture customers, venture competitors) would be aninteresting validity check. Even so, these findings are taken from active small business managers and, therefore they arereports of their observations of business activities. It would be extremely difficult for observers to investigate the varietyof businesses represented here, but case studies would enrich the nature of our assumptions. In addition, even though wesupport our use of venture performance metrics, more research should be conducted in defining performance outcomes forsmall businesses. Business performance, business policy operations, and organizational effectiveness are primary indices forfirm success, and we believe that more fine grained, comprehensive measures of venture performance (cf. Robinson, 1999),and control of the potentially confounding effects of economic circumstances and industry characteristics would enhancefuture research.

All ventures in the sample appeared to be viable concerns. Even so, it would be helpful to have a sufficient sample ofbusinesses that were fighting to stay open, and even those firms in the process of closing in order to examine potentialsurvival bias. Nevertheless, it is very difficult to identify and gather data from such businesses. The few partnerships thatwe saw that might be jeopardized with failure would not discuss any details of their operation with us. As with other areasin entrepreneurship, this avenue should be explored.

Despite the wide range of firm types represented in the sample, there may be limitations to the generalizability of theinferences from the study. All of the firms were small businesses and, in a number of cases, would be considered lifestyleventures. Since most ventures had been in operation for a number of years, this information raises questions about theapplicability of the results to new, high growth ventures. New ventures may function differently than established operations(Kamm & Nurick, 1993; Timmons, 1999), and older firms often have relatively limited additional growth prospects (Hanks,Watson, Jansen, & Chandler, 1993). A broader timeline for gathering data would clarify these concerns.

612 W. Watson et al. / International Journal of Intercultural Relations 35 (2011) 604– 613

11. Conclusion

The use of between culture analyses, mediation analyses, and moderation analyses show promise in a comparative inves-tigation of US and Mexican managers of business ventures. Mexican managers are more likely to use relational interpersonalprocess activities than are US managers, while US managers are more likely to use task activities than Mexican managersthat then correlate with their relative estimates of business performance. Adding to this viewpoint, Mexican managers alsoshowed more of a connection for having written plans for development in their ventures. Having specific plans may lowerlevels of ambiguity that is ascribed to the Mexican culture.

A mediation model enhanced understanding of interpersonal processes and performance estimates. With US managers,there is a positive association to task process activities, and the task activities are then associated more with higher reportsof venture performance than with Mexican managers. Relational activities do have a correlation to performance for bothcountries, but they do not add to the culture with performance connection. We see that the task processes influence managerviews of venture outcomes in the US more than with Mexican managers in the sense of being an indirect effect in the culture-to-task activities-to performance causal argument. While both interpersonal processes are important to both cultures, theinfluence of task activities is more critical in the US, while in Mexico tolerance of ambiguity is lower.

Culture has a significant interaction with gender and the presence of written plans regarding business performance. Inexamining the gender interaction, we see that male US managers indicate higher performance than female managers in theUS, which may come from male managers being older and having more business experience in their current venture. Thisfinding does not hold for Mexican managers. Also, there is a significant interaction with written plans for development andculture. In both Mexico and the US, written plans for business development correlate with performance estimates, but inMexico the association is stronger than in US.

Overall, both cultural groups of managers see task and relational activities as important regarding performance. USmanagers are more likely to “look” at task activities and then these observations influence their estimates of performance.Relational activities also are important to US management but it is not part of the above sequence and may be the process“glue” that helps hold the task work together. Mexican managers could assume that the task and relational processes allwork together in a more nonlinear mix to operate the businesses, that is, they are important in their own right.

Male managers in the US evaluate their ventures as being higher performing than females, but males have more yearsof experience that could correlate with skill levels. In both cultures, managers associate written business plans with higherventure performance, but in Mexico, this emphasis is approximately double that of the US managers. Mexicans in generalprefer less ambiguity in business and society, and having the more specific detail may manage this concern in small businessventures.

References

Ailon, G. (2008). Mirror, mirror on the wall: Culture’s consequences in a value test of its own design. Academy of Management Review, 33(4), 885–904.Allik, J., & Realo, A. (2004). Individualism-collectivism and social capital. Journal of Cross-Cultural Psychology, 35(1), 29–49.Ancona, D. G., & Caldwell, D. F. (1992). Bridging the boundary: External activity and performance in organizational teams. Administrative Science Quarterly,

37(4), 634–666.Bales, R. F., & Strodtbeck, F. L. (1951). Phases in group problem solving. Journal of Abnormal and Social Psychology, 46, 485–495.Bird, B. J. (1989). Entrepreneurial behavior. Glenview, IL: Scott, Foresman and Company.Bond, M. H. (1988). Finding universal dimensions of individual variation in multicultural studies of values. Journal of Personality and Social Psychology, 55,

1009–1015.Boone, C., & van Witteloostuijn, A. (1996). Industry competition and firm human capital. Small Business Economics, 8(5), 347–364.http://www.census.gov/2009.Byrne, M. B. (2006). Structural equation modeling with EQS (2nd ed.). Mahwah, NJ: Lawrence Erlbaum Associates., pp. 225–249Chandler, G. N., & Hanks, S. H. (1998). An examination of the substitutability of founders’ human and financial capital in emerging business ventures. Journal

of Business Venturing, 13, 353–369.Christie-Mizell, C. A. (2006). The effects of traditional family and gender ideology on earnings: Race and gender differences. Journal of Family and Economic

Issues, 27(1), 27–38.de Forest, M. (1994). Thinking of a plant in Mexico? Academy of Management Executive, 8(1), 33–40.Fernandez, D. R., Carlson, D. S., Stepina, L. P., & Nicholson, J. D. (1997). Hofstede’s country classification 25 years later. Journal of Social Psychology, 137(1),

43–54.Fischer, R. (2004). Standardization to account for cross-cultural response bias: A classification of score adjustment procedures and review of research in

JCCP. Journal of Cross-Cultural Psychology, 35, 263–282.Green, S. G., & Mitchell, T. R. (1979). Attributional processes of leaders in leader -member interactions. Organizational Behavior and Human Performance, 23,

429–458.Greer, C. R., & Stephens, G. K. (2001). Escalation of commitment: A comparison of differences between Mexican and U.S. decision-makers. Journal of

Management, 27(1), 51–78.Hackman, J. R. (1990). Groups that work and groups that don’t. San Francisco: Jossey-Bass., pp. 1–35, 479–504.Hanks, S. H., Watson, C. J., Jansen, E., & Chandler, G. N. (1993). Tightening the life cycle construct: A taxonomic study of growth stage configurations.

Entrepreneurship Theory and Practice, 18(2), 5–30.Hill, G. W. (1982). Group versus individual performance: Are N + 1 heads better than one? Psychology Bulletin, 91, 517–539.Hoffman, L. R. (1965). Group problem solving. In L. Berkowitz (Ed.), Advances in experimental social psychology (pp. 99–132). New York, NY: John Wiley and

Sons.Hofstede, G. (1980). Culture’s consequences: International differences in work-related values. Beverly Hills, CA: Sage.Hofstede, G. (2000). Culture’s consequences, comparing values, behaviors, institutions, and organizations across nations. Thousand Oaks, CA: Sage Publications.Isaac, S., & Michael, W. B. (1990). Handbook in research and evaluation (2nd ed.). San Diego, CA: EdITS Publishers.Jackson, S. E., Brett, J. F., Sessa, V. I., Cooper, D. M., Julin, J. A., & Peyronnin, K. (1991). Some differences make a difference: Individual dissimilarity and group

heterogeneity as correlates of recruitment, promotions, and turnover. The Journal of Applied Psychology, 76, 675–689.

W. Watson et al. / International Journal of Intercultural Relations 35 (2011) 604– 613 613

Javidan, M., & House, R. J. (2001). Cultural acumen for the global manager: Lessons from GLOBE. Organizational Dynamics, 29, 289–305.Javidian, M., Dorfman, P. W., de Luque, M., & House, R. J. (2006). In the eye of the beholder: Cross cultural lessons in leadership from project GLOBE. Academy

of Management Perspectives, 20(1), 67–90.Kamm, J. B., & Nurick, A. J. (1993). The stages of team venture formation: A decision-making model. Entrepreneurship Theory and Practice, 17(2), 17–27.Katzenbach, J. R., & Smith, D. K. (1993). The wisdom of teams: Creating the high-performance organization (pp. 27–42).Kenny, D. A., Kashy, D. A., & Bolger, N. (1998). Data analysis in social psychology. In D. Gilbert, S. Fiske, & G. Lindzey (Eds.), The handbook of social psychology

(4th ed., Vol. 1, pp. 233–265). Boston, MA: McGraw-Hill.Kim, K. I., Park, H., & Suzuki, N. (1990). Reward allocations in the United States, Japan, & Korea: A comparison of individualistic and collectivistic cultures.

Academy of Management Journal, 33, 188–198.MacKinnon, D. P., Fairchild, A. J., & Fritz, M. S. (2007). Mediation analysis. Annual Review of Psychology, 58, 593–614.McGlelland, D. C., & Boyatzis, R. E. (1984). The need for close relationships and the manager’s job. In D. A. Kolb, I. M. Rubin, & J. M. Mclntyre (Eds.),

Organizational psychology: Readings on human behavior in organizations (4th ed., pp. 81–86). Englewood Cliffs, NJ: Prentice-Hall.http://www.inegi.org.mx/est/contenidos/espanol/proyectos/censos/ce2004.Mezulis, A. H., Abramson, L. Y., Hyde, J. S., & Hankin, B. L. (2004). Is there a universal positivity bias in attributions? A meta-analytic review of individual,

developmental, and cultural differences. Psychological Bulletin, 130(5), 711–747.Mitchell, T. R. (1985). An evaluation of the validity of correlational research conducted in organizations. Academy of Management Review, 10, 192–205.Navarrete, C. J., & Pick, J. B. (2003). Cross-cultural telecommuting evaluation in Mexico and the United States. The Electronic Journal of Information Systems

in Developing Countries, 15(5), 1–4.Pfeffer, J. (1983). Organizational demography. In L. L. Cummings, & B. M. Staw (Eds.), Research in organizational behavior (pp. 299–357). Greenwich, CT: JAI

Press.http://www.photius.com/rankings/economy/gdp per capita 2009 0.htmlPodsakoff, P. M., & Organ, D. W. (1986). Self-reports in organizational research: problems and prospects. Journal of Management, 12, 531–544.Podsakoff, P. M., MacKenzie, S. B., Lee, J. Y., & Podsakoff, N. P. (2003). Common method biases in behavioral research: A critical review of the literature and

recommended remedies. Journal of Applied Psychology, 88(5), 879–903.Robinson, K. C. (1999). An examination of the influence of industry structure on eight alternative measures of new venture performance for high potential

independent new ventures. Journal of Business Venturing, 14, 165–187.Rogoff, E. G., Lee, M., & Suh, D. (2004). Who done it? Attributions by entrepreneurs and experts of the factors that cause and impede small business success.

Journal of Small Business Management, 42(4), 364–376.Sanchez-Burks, J., Nisbett, R. E., & Ybarra, O. (2000). Cultural styles, relational schemas and prejudice against outgroups. Journal of Personality and Social

Psychology, 79(2), 174–189.Schein, E. H. (1988). Process consultation Reading, MA: Addison-Wesley.Schmitt, N. W., & Klimoski, R. J. (1991). Research methods in human resources management (pp. 227–252).Schwarz, R. M. (1994). The skilled facilitator: Practical wisdom for developing effective groups. San Francisco: Jossey-Bass., pp. 20–24.Stephens, G. K., & Greer, C. R. (1995). Doing business in Mexico: Understanding cultural differences. Organizational Dynamics, 24(1), 39–55.Timmons, J. A. (1994). New Venture Creation: Entrepreneurship In The 1990s (4th ed.). Homewood, IL: Irwin.Timmons, J. A. (1999). New venture creation: Entrepreneurship in the 1990s (5th ed.). Homewood, IL: Irwin.Tsui, A. S., Nifadkar, S. S., & Ou, A. Y. (2007). Cross-national, cross-cultural organizational behavior research: Advances, gaps, and recommendations. Journal

of Management, 33, 426–478.Vesper, K. H. (1996). New venture experience. Seattle: Vector Books., pp. 1–19.Vroom, V. H., & Yetton, P. W. (1973). Leadership and decision making. Pittsburgh: University of Pittsburgh Press.Watson, W. E., & Michaelsen, L. K. (1984). Task performance information and leader participation behavior: Effect on leader-subordinate interaction,

frustration, and future productivity. Group and Organization Management, 9, 121–144.Watson, W. E., Ponthieu, L., & Critelli, J. W. (1995). Team interpersonal process effectiveness in venture partnerships and its connection to perceived success.

Journal of Business Venturing, 10, 393–411.Watson, W. E., Stewart, W. H., & BarNir. (2003). The effects of human capital, organizational demography, and interpersonal processes on venture partner

perceptions of firm profit and growth. Journal of Business Venturing, 18, 145–164.Webster, A. (1976). A model for new venture initiation. Academy of Management Review, 1(1), 26.Zacharakis, A. L., Meyer, G. D., & De Castro, J. (1999). Differing perceptions of new venture failure: A matched exploratory study of venture capitalists and

entrepreneurs. Journal of Small Business Management, 37(3), 1–14.