Performance effects of “added cultural distance” in the path of international expansion: the case of German multinational enterprises

Hutzschenreuter, Thomas; Voll, Johannes

doi:10.1057/palgrave.jibs.8400312

Cited by 169 publications

(129 citation statements)

References 56 publications

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“…Prior research highlights the role that both ownership-and establishment modes play in determining the survival of overseas subsidiaries (Benito, 1997;Hennart, Kim, & Zeng, 1998;Li, 1995). We thus control for whether a retailer has expanded through an acquisition by including a dummy that takes the value of ''1'' if a retailer has acquired another retailer or the assets of another retailer in a particular year, and ''0'' otherwise (similarly, see Hutzschenreuter & Voll, 2008). To capture the effects of different ownership strategies, we include a dummy variable to control for whether a retailer enters overseas markets through international franchise, given the importance of franchising in the retail sector.…”

Section: Methodsmentioning

confidence: 99%

“…Given indications of the effect of cultural distance on the survival for foreign subsidiaries (Barkema, Bell, & Pennings, 1996), we incorporate the measure of added cultural distance by calculating the cultural distance between a newly entered country and all countries in which a firm already operates and then taking the smallest of these distances (Hutzschenreuter, Kleindienst, & Lange, 2014;Hutzschenreuter & Voll, 2008). To calculate this measure, we use the formula developed by Kogut and Singh (1988) and the cultural values reported by Hofstede (2001).…”

Section: Methodsmentioning

confidence: 99%

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Explaining the effect of rapid internationalization on horizontal foreign divestment in the retail sector: An extended Penrosean perspective

2018

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We adopt a Penrosean perspective to study the effect of rapid international expansion on the subsequent divestment of international operations. We draw on regional strategy theory and differentiate Penrosean managerial resources by their geographical fungibility to argue that the effect of rapid international expansion on the divestment of international operations varies with the regional patterns of firms' international expansion and international experience. We test our hypotheses using two-stage least squares (2SLS) estimation on data that capture the international expansion and divestment of retailers over the period [2003][2004][2005][2006][2007][2008][2009][2010][2011][2012]. Journal of International Business Studies (2018).

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Section: Methodsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Explaining the effect of rapid internationalization on horizontal foreign divestment in the retail sector: An extended Penrosean perspective

2018

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“…The Kogut and Singh (1988) index has been used widely in the research of international business (e.g. Gómez-Mejia and Palich, 1997;Ojala and Tyrväinen, 2007;Hutzschenreuter and Voll, 2008). However, various scholars have become increasingly critical of the index and of Hofstede's underlying work (Shenkar, 2001), especially with regard to the internal validity of the dimensions and the construction of the numerical scales.…”

Section: Cultural Distancementioning

confidence: 99%

Standardisation vs. adaption: a conjoint experiment on the influence of psychic, cultural and geographical distance on international marketing mix decisions

Kraus

Meier

Eggers

et al. 2016

EJIM

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This paper delivers new insights into how psychic, cultural and geographical distance influence international marketing mix decisions on the basis of a choice-based conjoint analysis with 96 managers from Switzerland and Liechtenstein. In this experiment, the managers had to decide whether the four Ps of the marketing mix have to be adapted or standardised for international markets (neighbouring country/European country/non-European country). Overall we found that psychic, cultural and geographical distance 128 S. Kraus et al.have a significant moderating effect on the degree of marketing mix adaptation: the larger the distance towards a market, the more inclined the managers are to make a decision that involves a larger degree of adaptation of the four Ps towards the simulated markets. The marketing mix elements product and promotion tend mostly to be adapted when cultural distance increases, while the elements price and distribution are more adapted when psychic distance is high.

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“…The more the host country's culture differs from the culture of the firm's home country the higher these costs might be. Cultural distance is also emphasized by Hutzschenreuter and Voll (2008) as a driver of additional complexity in international expansion which evidently reduces firm performance.…”

Section: Costs Of International Randd Activitiesmentioning

confidence: 99%

The Contribution of International R&D to Firm Profitability

Peters

Schmiele

2011

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp11002.pdf Non-Technical SummaryIncreased globalisation and competition caused more and more firms to relocate part of their R&D activities to foreign countries. This recent trend towards the internationalisation of R&D is motivated by expected gains through a better access to new knowledge, markets and more efficient production technologies. On the other hand, additional costs, e.g. for organising and coordinating dispersed activities, arise from the decentralisation of corporate R&D.Up to now, the empirical literature provides no evidence whether benefits do outweigh the financial and organisational costs of these international ventures. This research tries to fill this gap. Thus, the main question this paper tries to answer is whether international R&D activities increase firms' future profitability.In order to shed light on the relationship between international R&D activities and firm's profitability, we compare firms that have both domestic and international R&D with firms that perform R&D only at the home country as well as with firms that do not carry out own R&D activities. Since the internationalisation of R&D is a growing phenomenon in a sense that not only more firms are going abroad but that also the number of foreign R&D centres has raised for many firms, we furthermore evaluate how the degree of internationalisation affects profitability. The degree of internationalisation is measured by the number of countries in which a firm performs R&D abroad.Our research makes use of information that is provided within the Mannheim Innovation Panel (MIP). The MIP is the official annual innovation survey among German firms, and it is the German contribution to the European-wide harmonised Community Innovation Surveys (CIS). Based on more than 1300 observations, we first of all find that firms performing R&D in year 2005 make significantly higher profits in future years than firms without innovation activities. However, the stimulating effect on profitability is about twice as high for firms with domestic and foreign R&D compared to firms that perform R&D only in their home country.We can therefore conclude that firms which innovate globally are not only able to realise the benefits of these international ventures but that they are also able to limit the costs and risks.We furthermore provide evidence that firms with internationally more dispersed R&D operations achieve high...

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Performance effects of “added cultural distance” in the path of international expansion: the case of German multinational enterprises

Cited by 169 publications

References 56 publications

Explaining the effect of rapid internationalization on horizontal foreign divestment in the retail sector: An extended Penrosean perspective

Explaining the effect of rapid internationalization on horizontal foreign divestment in the retail sector: An extended Penrosean perspective

Standardisation vs. adaption: a conjoint experiment on the influence of psychic, cultural and geographical distance on international marketing mix decisions

The Contribution of International R&D to Firm Profitability

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