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Edited by Alain Verbeke and Hemant Merchant
Chapter 16: The tenuous link between cultural distance and international strategy: navigating the assumptions of cross-cultural research
International strategy researchers have often considered ‘national culture’ to be important for explaining firm performance. Much of the credit for this inclusion can be attributed to Hofstede’s seminal 1980 book, Culture’s Consequences: International Differences in Work-related Values, which – importantly – provided researchers with numerical scores on various dimensions of national cultures for several countries/regions worldwide. The inclusion of culture in empirical research received a further boost a few years later when Kogut and Singh (1988) published their now famous cultural distance index (henceforth K & S index), which is based on Hofstede’s data. Indeed, despite several criticisms of Hofstede’s work (e.g. see McSweeney, 2002; Oyserman et al., 2002), as well as ample recognition that national culture is but one element in the institutional profile of a country (Kostova, 1997), international strategy researchers continue to include this important construct in their empirical work. Implicit in such use is the notion of a link between culture and firm performance, broadly defined. In other words, without explicit attention to culture, intercultural ‘problems’ arise that jeopardize performance or, at minimum, severely dilute it (Ricks, 2006). Conversely, attention to cross-cultural issues helps to better navigate these challenges and thus improves performance. Indeed, applied research about how to globalize managerial mindsets (e.g. see Earley and Mosakowski, 2004; Javidan et al., 2010) underscores just that very point. It seems that the influence of culture not only is not expected to diminish in an increasingly globalizing world (Ghemawat, 2001); the concept of national culture is expected to increase its impact on internationally oriented scholarly research (Leung et al., 2005) in far-reaching ways.
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