Subject:
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NON-RU research Onderzoek niet-RU |
Organization:
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Economische theorie en economisch beleid Politicologie t/m 2019 |
Journal title:
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International Journal of Human Resource Management
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Abstract:
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Extant practice in international management is to measure cultural distance as a nationto-
nation comparison of country means on cultural values, thereby ignoring the cultural
variation that exists within countries. We argue that these traditional mean-based
measures of cultural distance should take within-country cultural variation into
account. Therefore, we propose the use of variance-based measures of cultural
distance. To illustrate our argument, we examine total US foreign affiliate sales in more
than 40 host countries over the 1983–2008 period, complemented with data from the
World Values Survey. We analyze the effects of three cultural distance measures: the
Kogut and Singh (1988) mean-based index of cultural distance, the Kogut and Singh
(1988) index conditioned by host-country cultural variation and a variance-based
measure that takes into account both home- and host-country cultural variation. Our
findings indicate that, when within-country cultural variation is taken into account, the
explanatory power of the Kogut and Singh (1988) index is substantially decreased. In
addition, our variance-based measure of cultural distance outperforms the Kogut and
Singh (1988) measure in the explanation of foreign US sales. We therefore suggest to
move from mean-based to variance-based measures of cultural distance, thereby taking
the cultural variation within countries into account.
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