Cultural distance and customer orientation strategy of Chinese service MNEs under the belt and road initiative

Abstract

PurposeThe purpose of this paper is to explore mechanisms of cultural distance in the base of Chinese Service Multi-National Enterprise (MNE) settings. When attempting to enter overseas markets, many service MNEs face challenges caused by the cultural distance between the home and host countries. Culture distance attracts much attention in academia and industry. However, there are few empirical works to examine how cultural distance affects customer orientation strategies in a global supply chain. This paper aims to answer the following research question: How is the effect of cultural distance on customer acquisition and customer retention strategies, and the effect of customer orientation strategies on the performance of service-oriented MNEs controlled by Chinese capital along the Belt and Road Initiative?Design/methodology/approachThis paper examines the effect of cultural distance on the customer acquisition strategy and customer retention strategy, and the effect of customer orientation strategies on the performance of Chinese Service MNEs. A large-scale empirical study of Chinese Service MNEs operating in overseas markets is performed and questionnaires were distributed and collected. This paper uses Hofstede's method (Hofstede, 2010), Schwartz's method (Schwartz, 2003) and House et al.'s method (House et al., 2004) to calculate cultural distance. By using each kind of method, this study calculates the absolute culture distance and relative culture distance respectively.FindingsThe results suggest that cultural distance negatively affects customer orientation strategy, customer acquisition strategy positively affects performance and the interaction of customer acquisition and customer retention positively affects performance.Research limitations/implicationsThis study aims to contribute to the existing literature with a more fine-grained understanding of the inclusion of customer orientation strategy of Chinese Service MNEs in global supply chains.Practical implicationsThe findings outline several important implications that Chinese Service MNEs seeking to expand to overseas markets.Originality/valueThis paper contributes a novel, combined perspective of culture distance and customer orientation strategy.

The Asymmetric Utility of Cultural Distance in International Business based on the Cultural Bias

“…What's more, some related empirical studies concluded the discrepancy effects of the equally cultural distance on different countries, proving the existence of asymmetry [56][57][58][59]. Inconsistent conclusions appear in fields of export market selection [60][61][62], location choice of foreign direct investment (FDI) [15][16][17]63], entry mode choice of multinational enterprises [14,35,36,45,64,65], offshore governance choice [41], venture capital investment performance [66,67], acquisition performance [37,68,69], organizational performance [33,70,71], new product development performance [72]; H. [73,74], international expansion patterns [75,76], and so on.…”

Unlocking the gender diversity–group performance link: the moderating role of relative cultural distance

“…Third, the mainstream international management research still includes the composite cultural distance index proposed by Kogut and Singh (1988) to synthetically evaluate cultural distance (e.g. Ding et al, 2022;Lee et al, 2021;Li et al, 2021). Indeed, this index is one of the most popular measures based on Hofstede's country-level cultural dimension deviation (which is consistent with our choice of adopting Hofstede's theoretical framework).…”

Cultural intelligence and sales performance in online insurance marketing: evidence from a Chinese insurance firm

“…Consumers from different cultural backgrounds will have different service expectations and product preferences. Thus, the firms' customer orientation strategy could be negatively affected by the cultural difference (Li et al, 2021), so be the salespeople's performance. Salespeople with high metacognitive CQ tend to have information acquisition skills and consciously understand the customers in different regions before and during interactions.…”