Goudarz Azar and Rian Drogendijk
This paper aims to examine the relationship between cultural distance (both perceived and objective), innovation and firm export performance.
Abstract
Purpose
This paper aims to examine the relationship between cultural distance (both perceived and objective), innovation and firm export performance.
Design/methodology/approach
Hypotheses were tested here by structural equation modeling using data from 186 export ventures into 23 international markets by Swedish companies.
Findings
The results indicate that managers’ perceptions of substantial cultural differences as well as objective cultural differences (gauged using Hofstede’s (1980, 2001) scores for dimensions of national culture) and subsequent environmental uncertainty when expanding into culturally distant markets triggers strategies for interacting and integrating with the market environment. These include producing and adopting innovations to processes and products and to organizational strategy, structure and administrative procedures to cope with the new environment and overcome uncertainties. These innovations and the associated competitive advantages improve firm export performance.
Originality/value
Despite much research into the relationship between firm internationalization and innovation, little attention has been paid to the effect of the characteristics of the foreign markets (specifically cultural differences) on firm innovation strategies. Moreover, much research has been devoted to the effect of innovation on firm export performance, but such research has mainly focused on one type of innovation, i.e. technological innovation, while the influence of organizational innovation on firm export performance has been basically ignored. The present study validates the explanatory of cultural distance (both perceived and objective) in relation to innovation strategies (technological and organizational) and export performance.
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Goudarz Azar, Georgios Batsakis, Rian Drogendijk, Ashkan PakSeresht and Ruoqi Geng
In this research, we designed and implemented a unique vignette experiment to study the effect of managers' perceptions of institutional distance on foreign location choice, as…
Abstract
Purpose
In this research, we designed and implemented a unique vignette experiment to study the effect of managers' perceptions of institutional distance on foreign location choice, as well as the moderating effect of managerial international experience and preferred entry mode on this relationship.
Design/methodology/approach
We employ an experimental vignette methodology (EVM) approach applied in the context of Chinese managers to test the causal relationships depicted in our hypotheses. In this way, we measure the decision-makers' perceptions ex ante, i.e. in conjunction with and prior to a decision about a foreign location choice.
Findings
Our findings show that managers' ex-ante perceptions of institutional distance negatively affect decisions on foreign location choice. Also, we find that managerial international experience and preference for high commitment entry modes mitigate the negative effect of managers' perceptions of institutional distance on foreign location choice.
Originality/value
This research study adds to our understanding of the effect of managers' perceptions of institutional distance and managerial contingencies on foreign location decisions. Further, it advances novel experimental design in international business research in general and on foreign location choice in particular.
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Rian Drogendijk and Lena Zander
What we know is that the concept of cultural distance is frequently used, hotly debated and for many intuitively appealing. Suffering from a series of illusionary properties, it…
Abstract
What we know is that the concept of cultural distance is frequently used, hotly debated and for many intuitively appealing. Suffering from a series of illusionary properties, it is argued to have outlived its usefulness. What we need to know is how to conceptualize the complexity of culture as a multi-dimensional, multi-level concept, taking context into account to measure quality rather than quantity (or distance). It is our ambition to do justice to the idea that cultural diversity not only leads to friction or problem creation, but also to enrichment and to generation of solutions. We discuss cultural conceptualizations and suggest cultural profiling and cultural positioning as alternative ways of comparing and contrasting critical cultural differences.
Goudarz Azar and Rian Drogendijk
Our study explores the performance implications of deviations in managers’ perceptions of “cultural distance” – one of the most important concepts in International Business…
Abstract
Our study explores the performance implications of deviations in managers’ perceptions of “cultural distance” – one of the most important concepts in International Business research – when expanding into foreign markets. Despite much research on “cultural distance,” few researchers have paid attention to the effect of deviations in managers’ perceptions of cultural distance on firm performance. This is important since managers formulate strategies for responding to the environment based on their perceptions of the firm’s environment. These perceptions, however, do not always coincide with actual environmental characteristics. Therefore, formulating strategies based on inaccurate data may result in erroneous forecasts, missed opportunities and, ultimately, business failure. We explore this empirically by comparing managers’ perceptions of cultural distance to export markets of Swedish SMEs to cultural distance measures based on secondary data and relate deviations of perceptions to the performance of these SMEs. Our results show that the larger the deviations of managers’ perceptions of cultural differences from “actual differences” as expressed in Hofstede scores on cultural dimensions, the lower the performance expressed in firms’ sales. The implications of the study are discussed.
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Desirée Blankenburg Holm, Rian Drogendijk, Jukka Hohenthal, Ulf Holm, Martin Johanson and Ivo Zander
Purpose – We examine the fundamental assumptions and features of the Uppsala model of internationalization and argue that we need to look beyond this model for studying…
Abstract
Purpose – We examine the fundamental assumptions and features of the Uppsala model of internationalization and argue that we need to look beyond this model for studying internationalization processes in the multinational corporations (MNCs) of today. The purpose of our paper is to identify gaps and neglected issues regarding MNCs' internationalization processes that demand further theoretical and empirical study.
Methodology – Our approach is conceptual: based on the most cited model on internationalization, the Uppsala model, we approach the complex internationalization processes that continuously go on in modern MNCs. We use related bodies of literature, on MNC structure and strategy, headquarters–subsidiary relationships, MNC subsidiary strategy and development, and opportunity seeking and entrepreneurship, to fill in the gaps and develop the emerging research themes.
Findings – We identify the following three issues that need further investigation: the opportunity recognition process preceding internationalization processes in MNCs, the internationalization of multiple products within the confines of the growing MNC, and the internationalization of foreign MNC units.
Research limitations – In this paper, we open up new research fields, but do not offer empirical studies to inform us about these relevant issues. Future research should study these issues empirically, preferably through case study methodologies and/or with longitudinal designs.
Originality – The contribution of our paper is its identification of three research issues in relation to internationalization processes of modern MNCs, which we argue are neglected by contemporary research.