Effects of cross-cultural factors in global services production

Globalization is one of the main trends of our time. Simultaneously, the status of services in the software industry is becoming more significant. Service production is spreading all over the world in the global environment, creating international working teams where different cultures´ working methods meet. In these situations, the cultural differences related to ways of communication and making business might be experienced. Cross-cultural factors also affect the strategic division of the production processes in different countries. The cultural characteristics of a country might be more ideal for some production processes than for others. The focus of this paper is on the globalization of software services. The purpose is to verify the hypothesis of importance of cross-cultural factors in global service production by studying four Finnish software service companies. The findings suggest that cultural factors have a considerable effect on the global service production due to the people-oriented nature of the service business. The found critical cross-cultural factors are presented with suggestions to provide businesses with a way to avoid the pitfalls of cultural differences. The paper is a part of an ongoing research project STEP, jointly run by Tampere University of Technology Pori unit and the University of Jyväskylä.