Cultural Distance and Cross-Border Replication of China Multinational Corporations

Abstract

The growing research interest in sociocultural issues in relation to global economic activity motivates this article to postulate a set of behavioural mechanisms that contribute to the debate on cultural distance and Multinational Corporations (MNC) cross-border replication production of economic activity. The empirical tests draw on a data base comprising 289 managers (R&D and product development professionals) employed by China MNC (CMNC) subsidiaries operating across 150 countries. First, the results reveal a negative relationship between cultural distance and CMNC cross-border replication. Second, the negative coefficients are moderated by social norms, reciprocity, and prosocial behaviours in cooperation. Finally, in using the moderator and mediator in the analysis, the results demonstrate that the mediator variables (capacity for cross-cultural adaptation, and language) positively lead to CMNC replication, and subsidiary operating years and managerial experience significantly moderate cultural distance. The findings support the model that contributes to the extant literature by demonstrating sociocultural determinants of economic growth.