Hofstede, Schwartz, or managerial perceptions? The effects of different cultural distance measures on establishment mode choices by multinational enterprises

Drogendijk, Rian; Slangen, Arjen

doi:10.1016/j.ibusrev.2006.05.003

Cited by 347 publications

(260 citation statements)

References 45 publications

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“…By now, the cross-cultural frameworks of Hofstede, Schwartz and GLOBE jointly shape contemporary international business and management research on cultural value differences (Stahl & Tung, 2015). Both Schwartz' and GLOBE's dimensions are increasingly used in cultural distance research as alternatives to Hofstede-based cultural distance measures (Drogendijk & Slangen, 2006;Siegel et al, 2012;Koch et al, 2016;Shin et al, 2016).…”

Section: Suggestion Ii: Integrate Additional Cultural Dimensionsmentioning

confidence: 99%

An overview of Hofstede-inspired country-level culture research in international business since 2006

2016

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(2006) impact on the field. Our review shows that their ideas have informed and inspired their own and other scholars' work and have led to significant progress in the way in which Hofstede's framework has been used in international business in the last decade. Here, we specifically focus on the country-level culture studies and assess how research has implemented Kirkman et al.'s three main recommendations -to explore cultural dimensions beyond those introduced by Hofstede, to distinguish between country effects and cultural effects, and to show not only if culture matters but also how much it matters. In addition to the overview, we provide a comprehensive test of these recommendations showing how they can be put into research practice underscoring the theoretical and empirical relevance of the original 2006 article. Our commentary concludes with additional ideas on further strengthening Hofstede-inspired research at the country level of analysis.

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Section: Suggestion Ii: Integrate Additional Cultural Dimensionsmentioning

confidence: 99%

An overview of Hofstede-inspired country-level culture research in international business since 2006

2016

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“…The most common measure is based on Hofstede's (1980) cultural dimensions, which are power distance index (PDI), individuality-collectivism (IDV), masculinity-femininity (MAS), and uncertainty avoidance index (UAI). Despite many criticisms, there is extensive evidence of the validity and reliability of Hofstede's national cultural scores (Drogendijk & Slangen, 2006;Kogut & Singh, 1988;Morosini & Singh, 1994). Following previous literature (Kogut & Singh, 1988;Morosini, et al, 1998), we calculate a composite measure of cultural distance as:…”

Section: Measurement Of Predictor Variablesmentioning

confidence: 99%

“…This composite index has been widely used in the international business literature (Barkema, et al, 1996;Flores & Aguilera, 2007;Lee, Shenkar, & Li, 2008;Loree & Guisinger, 1995;Meschi & Riccio, 2008;Park & Ungson, 1997;Thomas & Grosse, 2001;Tihanyi, Griffith, & Russell, 2005). Although other measures of cultural distance have been suggested (Barkema, et al, 1996;Drogendijk & Slangen, 2006;Park & Ungson, 1997;Ronen & Shenkar, 1985;Schwartz, 1994;Shenkar, 2001), Drogendijk and Slangen (2006) show that "it may be premature to dismiss Hofstede's work as outdated or as inaccurately reflecting national cultures". We also calculate the cultural distance between the home and host country on each individual cultural dimension, as suggested by Shenkar (2001 representing one third (34%) of all Indian deals in our sample.…”

Section: Measurement Of Predictor Variablesmentioning

confidence: 99%

The motives and performance of cross-border acquirers from emerging economies: Comparison between Chinese and Indian firms

Nicholson

Salaber

2013

International Business Review

165

155

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During the recent decade, the world has witnessed the rapid growth of MNEs from emerging economies. Their increasing participation in cross-border mergers and acquisitions has raised great attention in the extant literature. This study evaluates the value creation from these cross-border transactions from two representative emerging countries, namely China and India, and determines factors that result in the different performance of these international acquisition activities. Crossborder acquisitions conducted by these countries' companies indeed lead to significant shareholder wealth creation. Furthermore, Indian shareholders are more likely to benefit from deals in small cultural distance countries, while Chinese investors gain from the cross-border expansion of manufacturing companies. Location also affects the performance of cross-border acquisitions, with acquisitions into developed countries generating higher returns to shareholders. Our sample consists of 203 Indian and 63 Chinese cross-border deals over the period 2000-2010 and our results hold after controlling for various deal-level and firm-level characteristics.

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“…For instance, Kim and Gray (2009) provided empirical evidence that Hofstede's metrics outperformed GLOBE in explaining governance choices in Korea. Furthermore, Drogendijk and Slangen (2006) found that Hofstede's measures of culture outperformed the explanatory power of managerial perceptions in explaining establishment mode choices by parent firms. They concluded that Bit may thus be premature to dismiss Hofstede's work as outdated or as inaccurately^ (Drogendijk & Slangen, 2006: 362).…”

Section: Moderating Variablementioning

confidence: 99%

Ownership mode, cultural distance, and the extent of parent firms’ strategic control over subsidiaries in the PRC

et al. 2016

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Previous studies often associated a specific type of ownership mode with the extent of control a parent firm may have over (strategic) decision-making in a foreign subsidiary, suggesting that parent firms should have higher control over wholly-owned subsidiaries (WoS) than international joint ventures (IJVs). Building on principal agent theory, we argue that in the Chinese context higher ownership levels do not necessarily have a positive effect on the extent of control over the foreign subsidiary. We further argue that cultural distance between the parent firm and the subsidiary moderates this relationship. We test our hypotheses using data from a sample of 156 foreign subsidiaries in the People's Republic of China (PRC) and find strong support for our arguments. Our findings show that in WoS parent firms reduce their extent of control, while in IJVs parent firms increase their extent of control. Moreover, we find that extent of control over WoS (IJVs) declines (increases) when cultural distance increases. Our results have significant theoretical implications for international business (IB) research as they challenge existing views with regard to the relationship between ownership mode and control as well as the moderating effect of cultural distance.

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Hofstede, Schwartz, or managerial perceptions? The effects of different cultural distance measures on establishment mode choices by multinational enterprises

Cited by 347 publications

References 45 publications

An overview of Hofstede-inspired country-level culture research in international business since 2006

An overview of Hofstede-inspired country-level culture research in international business since 2006

The motives and performance of cross-border acquirers from emerging economies: Comparison between Chinese and Indian firms

Ownership mode, cultural distance, and the extent of parent firms’ strategic control over subsidiaries in the PRC

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