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The Effect of Cultural Distance on Entry Mode Choice, International Diversification, and Mne Performance: A Meta-Analysis

Published on May 1, 2005in Journal of International Business Studies7.72
· DOI :10.1057/palgrave.jibs.8400136
Laszlo Tihanyi32
Estimated H-index: 32
(OU: University of Oklahoma),
David A. Griffith44
Estimated H-index: 44
(SPbU: Saint Petersburg State University),
Craig J. Russell22
Estimated H-index: 22
(OU: University of Oklahoma)
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Abstract
Although a growing literature indicates that cultural distance – that is, differences between national cultures – is an important determinant of organizational actions and performance, both empirical and theoretical concerns abound. In this study, the relationships of cultural distance with entry mode choice, international diversification, and MNE performance are examined by meta-analyzing data from 66 independent samples, with cumulative sample sizes ranging from 2,255 to 24,152. Regression results failed to provide statistical evidence of significant relationships between cultural distance and entry mode choice, international diversification, and MNE performance. The examination of moderator effects, however, yielded important results. We found a strong negative association between cultural distance and entry mode choice for US-based MNEs. The cultural distance–international diversification relationship was negative for high-technology industries, while it was positive for other industries. Cultural distance also had a strong positive effect on MNE performance for developed country investments. A similar, strong positive relationship was found between cultural distance and international diversification in studies with more recent samples. Results of this study indicate that substantial additional research is needed before the role of cultural distance is fully understood.
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  • References (97)
  • Citations (653)
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References97
Newest
Published on Jul 1, 2003in Journal of Management Studies5.84
Keith D. Brouthers30
Estimated H-index: 30
(TU: Temple University),
Lance Eliot Brouthers28
Estimated H-index: 28
(UTEP: University of Texas at El Paso)
In this study, we suggest that disparities between service and manufacturing firms' international entry mode choices can be explained by differences in their reaction to transaction cost based variables and by the influence of risk and trust propensity. We find that: (1) due to the investment intensive nature of manufacturing, environmental uncertainties and risk propensity influence manufacturers' mode choices; while (2) behavioural uncertainties, trust propensity and asset specificity influenc...
Published on Apr 1, 2003
Christopher A. Bartlett30
Estimated H-index: 30
,
Sumantra Ghoshal51
Estimated H-index: 51
BUSINESS The Ultimate Resource(TM) Manager is delighted to be able to bring to the attention of its readers this comprehensive new published work, which captures in one impressive volume a wealth of business information for the business literate manager. This is an authoritative 2.5 million word world almanac covering 24 industry sectors. It includes a comprehensive dictionary of business terms and a resource section that guides readers to books, organisations and web sites that provide a larger...
Published on Jan 1, 2003in Management International Review2.69
Keith W. Glaister31
Estimated H-index: 31
Since the mid-1970s, the incidence of alliance formation between partners from advanced industrial economies has accelerated (Anderson, 1990; Hergert and Morris, 1988; Glaister and Buckley, 1994). A major driving force for alliance formation is the recognition by many managements that in, an intensely competitive international business environment, self-sufficiency alone will not bring success, but the ability to compete will be considerably improved with the help of partners (Inkpen, 1995: 1). ...
Published on Nov 1, 2002in Organization Science3.26
Daphne W. Yiu18
Estimated H-index: 18
,
Shige Makino24
Estimated H-index: 24
The study of foreign entry-mode choice has been based almost exclusively on transaction-cost theory. This theory focuses mainly on the impacts of firm- and industry-specific factors on the choice of entry mode, taking the effects of country-specific contextual factors as constant or less important. In contrast, the institutional perspective emphasizes the importance of the influence of both institutional forces embedded in national environments and decision makers' cognitive constraints on the f...
Published on Oct 1, 2002in Strategic Management Journal5.57
Yadong Luo64
Estimated H-index: 64
(UM: University of Miami)
This study examines how contract, cooperation, and performance are associated with one another within international joint ventures (IJVs). We argue that contract and cooperation are not substitutes but complements in relation to IJV performance. An IJV contract provides an institutional framework guiding the course of cooperation, while cooperation overcomes the adaptive limits of contracts. Our analysis of 293 IJVs in a dynamic market demonstrates that previous cooperation bolsters contractual ...
Published on Oct 1, 2002in Management International Review2.69
Kwangsoo Kim1
Estimated H-index: 1
,
Jong-Hun Park3
Estimated H-index: 3
Introduction Performance is a major focus in research on alliances (Gulati 1998). Researchers have studied this issue both at the alliance level (e.g., Beamish 1994, Dussauge/Garrette 1995, Glaister/Buckley 1999, Lyles/Baird 1994) and at the partner level (e.g., Chan et al. 1997, Dyer 1996, Hagedoorn/Schakenraad 1994). The alliance-level studies are concerned with the performance of an alliance itself, whereas the partner-level studies are concerned with the outcomes of alliance participation br...
Published on Sep 1, 2002in Journal of International Business Studies7.72
Jody Evans11
Estimated H-index: 11
(Melbourne Business School),
Felix Tinoziva Mavondo30
Estimated H-index: 30
(Monash University)
We develop a reconceptualization and operationalization of psychic distance that broadens the concept. We then empirically test this operationalization and investigate the relationship between psychic distance and organizational performance. Our results suggest that psychic distance, as a summary construct, explains a significant proportion of the variance in financial performance and strategic effectiveness. However, disaggregation of the construct substantially increases its explanatory power....
Published on Sep 1, 2002in Journal of International Business Studies7.72
Pol Herrmann13
Estimated H-index: 13
(Iowa State University),
Deepak K. Datta30
Estimated H-index: 30
(KU: University of Kansas)
Based on the upper echelons theory, this study of 126 CEO successions and 271 foreign market entry events examines the relationships between successor CEO characteristics and choice of entry mode. Results indicate that CEO position tenure, throughput functional background, and international experience are associated with full-control entry modes. Additionally, these relationships were observed in the subgroup of high-performing firms but not in the low-performing subgroup.© 2002 JIBS. Journal of...
Published on Sep 1, 2002in Journal of Management Studies5.84
Gerald E. Fryxell18
Estimated H-index: 18
(PolyU: Hong Kong Polytechnic University),
Robert S. Dooley11
Estimated H-index: 11
(OSU: Oklahoma State University–Stillwater),
Maria Vryza2
Estimated H-index: 2
This study empirically examines the moderating effects of age and partner trust on the relationship between control mechanisms and perceptions of performance in 129 US-based international joint ventures (IJVs). A reliance on formal control mechanisms and general managers' perceptions of IJV performance were found to be positively related in younger IJVs, but this relationship became negative in more mature IJVs. In addition, social control mechanisms and perceptions of IJV performance were posit...
Published on Jul 1, 2002in Management International Review2.69
Jeffrey J. Reuer1
Estimated H-index: 1
Abstract * This paper examines the determinants of US multinationals' decisions to buy out or sell off their international joint ventures (IJVs). The paper brings out the importance of a parent firm perspective on the phenomenon of IJV dynamics, suggesting that the venture be viewed within the context of the parent firm's corporate strategy. * The empirical findings provide evidence of an incremental, convergent process of corporate reconfiguration. Key Results * Firms tend to increase their res...
Cited By653
Newest
Published on May 15, 2019in Journal of International Business Studies7.72
Birgitte Grogaard5
Estimated H-index: 5
(BI Norwegian Business School),
Asmund Rygh4
Estimated H-index: 4
,
Gabriel R.G. Benito24
Estimated H-index: 24
(BI Norwegian Business School)
We use internalization theory to analyze the establishment and entry mode decisions of state-owned (SOE) and privately owned (POE) enterprises. We enrich internalization theory by building on insights from economic theory of corporate governance and taking into account particular characteristics of SOEs such as non-economic motivations, long-term orientation, and different risk preferences. We examine foreign entries over a 10-year period in the Canadian oil and gas industry. This single-country...
Published on Jan 1, 2018in Journal of Purchasing and Supply Management3.09
Li Wan (University of Udine), Wan L + 1 AuthorsGuido Nassimbeni22
Estimated H-index: 22
Abstract The role of the country, either home or host, in firms' internationalization has been widely analysed in the International Business field. A large number of studies have shown that home country shapes many aspects of firms' internationalization processes such as investment decisions, location selections, and entry modes. However, these studies mainly focus on the firms' foreign expansion. Little is known about the relations between firms’ home country and reshoring processes. This paper...
Published on Apr 16, 2019in Journal of International Business Studies7.72
Stefano Elia9
Estimated H-index: 9
(Polytechnic University of Milan),
Marcus Møller Larsen9
Estimated H-index: 9
(CBS: Copenhagen Business School)
+ 0 AuthorsLucia Piscitello17
Estimated H-index: 17
(Polytechnic University of Milan)
We explore when and why decision makers choose international entry modes (e.g., hierarchies or markets) that deviate from internalization theory’s predictions. By applying a cognitive perspective on entry mode decision making, we propose that the performance of prior international activities influences decision makers’ behavior in different ways than assumed in internalization theory. More specifically, due to a representativeness bias, underperforming (overperforming) past ventures influence th...
Published on Mar 1, 2018in Journal of Business Research4.03
Filippo Albertoni2
Estimated H-index: 2
(Polytechnic University of Milan),
Stefano Elia9
Estimated H-index: 9
(Polytechnic University of Milan),
Lucia Piscitello17
Estimated H-index: 17
(Polytechnic University of Milan)
Abstract Experience, meant as the repetition of the same action, is considered a predictor of the entry mode choice in foreign markets because it allows reducing uncertainty. However, repetition does not necessarily increase the expected performance, depending on the learning stemming from previous experiences. Focusing on offshoring decisions, namely the choice between captive and outsourcing entry mode, we distinguish between the inertial repetition of routines vs. the mindful repetition of pr...
Published on 2019in Scientometrics2.77
Cristina López-Duarte11
Estimated H-index: 11
(University of Oviedo),
Marta Suárez16
Estimated H-index: 16
(University of Oviedo),
Belén González Díaz5
Estimated H-index: 5
(University of Oviedo)
Cross-national distance among countries has been of central interest in International Business and Management research. Therefore, different efforts have been made to develop models/measurements to address this issue. In this article we identify the models/measurements of cross-national distance developed since the beginning of the 2000 decade. After briefly presenting each model’s distinctive features, we assess their impact on the research field based on a wide range of bibliometric techniques...
Published on Aug 31, 2019in Production and Operations Management2.17
Manjul Gupta2
Estimated H-index: 2
(FIU: Florida International University),
Sushil Gupta17
Estimated H-index: 17
(FIU: Florida International University)
Furkan Amil Gur1
Estimated H-index: 1
(NIU: Northern Illinois University),
Joshua S. Bendickson3
Estimated H-index: 3
(University of Louisiana at Lafayette),
Shelby J. Solomon (UWF: University of West Florida)
Published on Aug 3, 2019in Asia Pacific Journal of Tourism Research1.44
Taotao Deng6
Estimated H-index: 6
(SUFE: Shanghai University of Finance and Economics),
Yukun Hu (SUFE: Shanghai University of Finance and Economics), Yang Yang15
Estimated H-index: 15
(TU: Temple University)
ABSTRACTThis paper examines how bilateral distances shape Chinese enterprises' outward foreign direct investment (OFDI) in tourism in Belt and Road (B&R) countries. The results indicate that while geographic distance is not a key factor explaining the location choice of Chinese tourism OFDI in B&R countries, cultural distance hinders this location choice in a linear and monotonic way. Chinese enterprises prefer B&R countries with a short institutional distance from China for OFDI in tourism to a...
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