When multinational managers attempt to transfer best practices across cultures, the challenges inherent in cross‐cultural transfer may actually diminish competitiveness, instead of enhancing it. Multinational managers need to understand the cultural context of best practices, both at the source and at the target, in order to overcome these challenges and facilitate the transfer process. The challenges to effective transfer of best practices between cultures may arise because of the kinds of variances between cultural environments. These variances may pertain to concepts, perceptions, standardization, gradation and validation, substitutability and decision rules. Unmediated transfer of best practices across cultures may produce distortions in perceptions, understanding, interpretation and motivation of customers, competitors, employees and market players in the global markets. These distortions may in turn lead to conflicts and resistance and adversely impact the cost structure, revenue mix and profitability options. Understanding the cultural context and adapting best practices in tune to the recipient culture can be an invaluable tool to preempt or respond effectively to competitive challenges in the global markets.
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