Title

Wal-mart goes to Germany: Culture, institutions, and the limits of globalizations

Abstract

Wal-Mart's failed entry into the German retail market represents a puzzle for theories of globalization, which assert that more efficient producers will drive out poorly performing competitors, producing profits for themselves and gains for consumers. Wal-Mart's ability to dominate its input network and to provide low-cost leadership through lean production has often been seen as the global example of creating efficiencies in the retail sector. In 2006, however Wal-Mart abandoned an eight-year effort to become a dominant player in Germany's retail market. I argue that efficiency is not absolute, but rather context-specific and socially constructed. Domestic culture and institutions interact to constrain convergence towards a single business model in the retail sector. In the end, it was not the rigidity of German market conditions-such as high labor costs or union power-that led to failure, but rather the inflexibility of Wal-Mart's strategy in coping with complex local conditions.

Publication Title

German Politics and Society

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