Based on the institutional vs the individual view of culture and the theory of individualism–collectivism in explaining the in-group–outgoup distinction that people make in different cultures, we predicted that Chinese people would make less cooperative decisions than Australians in mixed-motive business situations in which no formal or informal sanction systems were in place. We also predicted that Chinese would be less cooperative with foreigners than with fellow Chinese when they were in a foreign territory, whereas Australians would be equally cooperative with members of both groups. Data from two cross-national experiments provided general support for these predictions. Moreover, the results of Study 2 showed that the nation effects on cooperative decision-making were mediated by individual cultural orientation on vertical and horizontal individualism. The theoretical and practical implications of these findings are discussed in the context of cross-cultural business settings. Journal of International Business Studies (2005) 36, 622–636. doi:10.1057/palgrave.jibs.8400169
