Cultural distance and the process of firm internationalization : A meta-analytical review and theoretical implications.

Item Type Journal paper
Abstract

This paper presents the most comprehensive review and meta-analysis of the literature on cultural distance and firm internationalization to date. We analyze the effects of cultural distance on key strategic decisions throughout the entire process of internationalization. For the preinvestment stage, we examine the decisions on where to invest (location choice), how much to invest (degree of ownership), and how to organize the foreign expansion (entry and establishment mode). For the postinvestment stage, we examine the decisions of how to integrate the foreign subsidiary into the organization (transfer of practices) as well as the performance effects of cultural distance at both the subsidiary and the firm level. We find that firms are less likely to expand to culturally distant locations but if they do, they prefer greenfield investments and integrate subsidiaries more through transfer of management practices. Cultural distance does not seem to affect how much capital firms invest and whether they enter through a joint venture or full ownership. Interestingly, cultural distance has a strong negative effect on subsidiary performance but no effect on the performance of the whole multinational company. In addition, we find that the effects of cultural distance are not sensitive to time, but they are sensitive to the cultural framework used (e.g., Hofstede vs. Global Leadership and Organizational Behavior Effectiveness) and the home country of the company (developed vs. emerging market). Based on our study, we feel confident to offer some theoretical insights, recommendations for improving the validity and reliability of cultural-distance research, and ideas for future research.

Authors Beugelsdijk, Sjoerd; Kostova, Tatiana; Kunst, Vincent E.; Spadafora, Ettore & van Essen, Marc
Journal or Publication Title Journal of management : JOM
Language English
Subjects business studies
HSG Classification contribution to scientific community
Date 8 September 2017
Publisher Sage Publ.
Place of Publication London [u.a.]
Volume 44
Number 1
Page Range 89-130
ISSN 0149-2063
ISSN-Digital 1557-1211
Publisher DOI 10.1177/0149206317729027
Depositing User Prof. Dr. Marc van Essen
Date Deposited 24 Aug 2017 08:26
Last Modified 06 Jun 2019 14:24
URI: https://www.alexandria.unisg.ch/publications/251435

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Beugelsdijk, Sjoerd; Kostova, Tatiana; Kunst, Vincent E.; Spadafora, Ettore & van Essen, Marc (2017) Cultural distance and the process of firm internationalization : A meta-analytical review and theoretical implications. Journal of management : JOM, 44 (1). 89-130. ISSN 0149-2063

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https://www.alexandria.unisg.ch/id/eprint/251435
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