The Relation Between Cultural Distance and Vietnamese Enterprises’ Export Intensity

Abstract

This paper aims to study the relation between cultural distance and export volume of Vietnamese enterprises. Based on Transaction Cost Theory developed by Hennart (1991), the author hypothesizes that the further the cultural distance between Vietnam and its import partner, the lower the export intensity is. The survey data of Viet Nam Statistics Office on 162 export firms are used to test the proposed hypothesis. Empirical results from Tobit non-linear regression indicate that the hypothesis is strongly supported after characteristics of enterprises are controlled. Managerial implications are also suggested in this paper.

The Role of R&D Intensity on the Export Intensity of Enterprises in Transition Economy: The Case of Vietnam

“…When entering the international market, it is inevitable that Vietnamese firms will interact with many countries which have cultural dissimilarities to Vietnam. These differences will determine how easy it is for domestic firms to enter export markets (Vo, 2015b). Transaction cost theory (Hennart, 1991) stresses that the cultural difference between two countries influences the export strategies of firms operating in one country and exporting to the other.…”

“…Obstacles due to cultural differences are one of the main causes of the increase in management costs associated with consumer culture research and the costs of transferring firms' advantages to foreign markets (Hennart & Park, 1993;Dunning, 2000). Therefore, it is expected that the greater the cultural difference between Vietnam and the importing country, the lower the export intensity of enterprises exporting to the country (Vo, 2015b).…”

“…This database covers six dimensions of governance quality that were identified by Kaufmann et al (2006). The study also utilised Hofstede, Hofstede, and Minkov's (2010) cultural dimensions dataset obtained from Geert Hofstede's website 2 to measure the informal institutional distance between Vietnam and each of the 27 importing countries (Vo, 2015b;Vo et al, 2018;Vo et al 2021b).…”

“…Dependent variable (Y) refers to the export intensity of firms operating in Vietnam, which is measured by the percentage of export sales in firm's total sales (Filatotchev et al, 2008;Goldar, 2013;Marques, 2015;Vo, 2015aVo, , 2015bNguyen & Le, 2019). The values of this variable vary from 2% to 100%, with greater values representing higher export sales.…”

“…In addition to R&D intensity, export intensity is significantly influenced by other firm-level and country-level factors (Filatotchev et al, 2008;Goldar, 2013;Vo, 2015aVo, , 2015bVo et al 2021a, b), including:…”