Cultural Distance in International Ventures

Vaccarini, Katiuscia; Spigarelli, Francesca; Tavoletti, Ernesto; Lattemann, Christoph

doi:10.1007/978-3-319-62193-7

Cited by 4 publications

(3 citation statements)

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“…The systematic negative effect attributed to CD (i.e. the discordance assumption) has been challenged as there seems to be evidence that in some cases cultural differences might lead to innovation and superior performance (Boschma, 2005; Vaccarini et al, 2017). The illusion of symmetry has been addressed by studies that indicate that depending on the observers’ perspective, the effects of CD might in fact be asymmetric (Correa da Cunha, 2019; Magnani et al, 2018; Selmer et al, 2007).…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

“…KS composite index) which seems to emphasize the liability implications of CD (Beugelsdijk et al, 2018). Nevertheless, a few more recent studies have shown that in some cases, CD can lead to positive outcomes (Boschma, 2005; Vaccarini et al, 2017), which might depend on a combination of different dimensions of CD in specific directions (Stor, 2021), therefore emphasizing the nonequivalent and asymmetric characteristics of the construct (Correa da Cunha, 2019; Magnani et al, 2018; Selmer et al, 2007; Shenkar, 2001; Zaheer et al, 2012).…”

Section: Final Considerationsmentioning

confidence: 99%

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Toward a more in-depth measurement of cultural distance: A re-evaluation of the underlying assumptions

Cunha

Farrell

Andersson

et al. 2022

Int'l Jnl of Cross Cultural Management

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Some 20 years ago, Shenkar (2001) criticized several of the underlying assumptions of the cultural distance (CD) construct. Despite this, researchers continue to use the same metric which fails to address many of the underlying problems. As a result, CD studies seem to generate results which are often contradictory. Rather than rejecting the distance metaphor, the main objective of this study is to provide a more in-depth measure of CD that addresses the assumptions of linearity, symmetry, equivalence, and discordance. We propose that, while the size of the cultural distance between home and host countries may be relevant for some dimensions, it is incomplete, as it does not account for the distinct characteristics of the cultural dimensions, the direction toward countries with different profiles and the contextual settings of the study. We test our hypotheses on a sample from the Orbis database consisting of foreign subsidiary firms from Latin America, other emerging markets from outside the region, and from developed countries operating in 10 of the largest economies in Latin America. Our dataset includes 4226 firm-year observations and a combination of 168 home and host countries. Latin America provides a suitable context for this study, not only because of the diversity of firms from different contexts operating in the region, but also because the region allows us to investigate the influence of home country history and tradition on firms’ ability to conduct business in different cultural contexts. Our assessment of CD shows in a precise manner that size together with direction might be adequate for describing the effects of some dimensions of CD on firm performance, while for other dimensions, it is clearly a matter of country profile. By combining our metric with different national culture frameworks, future studies would be able to complement and strengthen our findings and conclusions.

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Section: Literature Review and Hypothesesmentioning

confidence: 99%

Section: Final Considerationsmentioning

confidence: 99%

Toward a more in-depth measurement of cultural distance: A re-evaluation of the underlying assumptions

Cunha

Farrell

Andersson

et al. 2022

Int'l Jnl of Cross Cultural Management

View full text Add to dashboard Cite

show abstract

“…However, a few recent studies indicate that cultural diversity create opportunities and advantages to firms (Vaccarini et al 2017). Moreover, qualitative (Selmer et al 2007;Magnani et al 2018) and quantitative studies (Correa da Cunha et al 2022a) have shown that the effects of CD can be asymmetric.…”

Section: Directional Cultural Distance (Dcd) Hypothesismentioning

confidence: 99%

Formal vs. Informal Institutional Distances and the Competitive Advantage of Foreign Subsidiaries in Latin America

2022

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By focusing on the tacit and explicit characteristics of informal and formal institutional distances, this study investigates the competitive advantage of foreign subsidiary firms from developed countries and emerging markets operating in Latin America. Following recent research on distances in international management, this study measured the size and direction of distances and computed formal institutional distances based on the world governance indicators from the World Bank, whereas informal institutional distances are calculated using the four original dimensions of Hofstede. Considering that culture is tacit, whereas formal institutions are explicit, it is argued that these differences affect the ability to convert experience dealing with cultural and formal institutional conditions in the home country into firm specific advantages (FSAs) in a foreign host country. These assumptions are tested quantitatively using data from the Orbis database, a sample that includes over 4200 firm-year observations covering 10 of the largest economies in Latin America. In a departure from previous studies investigating the implications of FID direction, it is shown that the effects in specific directions are different for foreign subsidiaries from developed countries and from emerging markets. The results reveal that emerging market firms are at an advantage when operating in less developed host countries, whereas foreign subsidiaries from developed countries can adjust more positively when operating in host countries with strong formal institutions. On the other hand, the effects of the different CD dimensions depend on the direction towards host countries with specific cultural profiles. These findings indicate that foreign subsidiaries from emerging markets have a clear advantage in dealing with institutional voids in Latin America (i.e., FID towards less developed host countries), whereas the effects of CD are the same for all firms. This suggests that the cultural profile of the host country is what really matters.

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Implications, Future Directions, and Conclusion

Peng

2020

International Marketing and Management Research

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Cultural Distance in International Ventures

Cited by 4 publications

References 0 publications

Toward a more in-depth measurement of cultural distance: A re-evaluation of the underlying assumptions

Toward a more in-depth measurement of cultural distance: A re-evaluation of the underlying assumptions

Formal vs. Informal Institutional Distances and the Competitive Advantage of Foreign Subsidiaries in Latin America

Implications, Future Directions, and Conclusion

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