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International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com6(a) If the national culture of a parent company and subsidiary company is same in performanceorientation that will enhance the performance of the firm going for international diversification.6(b) If the national culture of a parent company and subsidiary company is different in performanceorientation that will negatively affect the performance of the firm going for internationaldiversification.Luo and Peng (1999) argue that differences in national culture tend to lower performance when MNEsenter new markets. Cultural clash can happen in case of different national cultural of parent andsubsidiary company (Brock, Barry, & Thomas, 2000). Very, Lubatkin, and Calori (1996) observed theinfluence of national culture in merger and post acquisition performance of cross national firms. Wedidn’t succeed to find a very good support for human orientation because it’s a new dimension identifiedin GLOBE study and not much work has been done on this dimension of culture. We now propose thefollowing proposition regarding human orientation dimension on the basis of our hypothetical frame workused in this study.PROPOSITION:7National culture dimension of human orientation moderates the relationship between internationaldiversification strategy and performance.7(a) If the national culture of parent company matches the human orientation of subsidiary companythat will enhance the performance in case of international diversification.7(b)If there is a difference in human orientation of parent and subsidiary organization ,theperformance will be affected negatively in case of international diversification.DISCUSSIONFrom the above review and proposition we came on the main point that firms should first identify theirdiversification zone as per culture of its own country and than go to the relevant zone countries fordiversification. That will lead towards cultural support in post integration period and hence will improvethe chances for successful integration that is mandatory for excellent firm performance. Countries thatmismatch in national culture dimension can face problems in post diversification integration and that willnegatively affect firm performance.The strategy literature showed a little support of this notion as Harrison, McKinnon, Panchapakesan, andLeung (1995) suggest that nations with same l cultural background should collected together and shouldbe compared with other groups not having similar cultural background. In view of hofsted national culturedimensions, New Zealand (NZ) and Australia are in same group by score. And examples of mismatch arelike a parent company is from Japan with low individualism and subsidiary is from Australia with highindividualism. Organizations from different cultural settings may face resource sharing problem whileinvolved in diversification or merger acquisition. We have divided the hofsted’s score into threecategories and identified three different diversification zones. Firm should first identify that in which zoneit is grouped as per hofsted’s score and than top management must look to diversify the firm in a samezone .The cultural fit between the two companies while operating in same national culture will supportpost diversification integration and would be the cause for enhanced performance in case of internationaldiversification. In case of our propositions the firms operating in different diversification zone will notperform better due to problems encounter of cultural clash and problems in post diversificationintegration. We divided hofsted score into three ranges lower range, medium range and higher range andidentified three diversification zones.2013©Academy of Knowledge Process95