Do we need to distance ourselves from the distance concept? Why home and host country context might matter more than (cultural) distance

Anne-Wil Harzing*, Markus Pudelko

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

54 Citations (Scopus)

Abstract

We scrutinize the explanatory power of one of the key concepts in International Business: the concept of (cultural) distance. Here we focus on its effect on entry mode choice, one of the most researched fields in international business strategy. Our findings might, however, be equally be relevant for the field of International Business as a whole. Our analysis is based on a review of 92 prior studies on entry mode choice, as well as an empirical investigation in over 800 subsidiaries of MNCs, covering nine host and fifteen home countries across the world. We conclude that the explanatory power of distance is highly limited once home and host country context are accounted for, and that any significant effects of cultural distance on entry mode choice might simply be caused by inadequate sampling. Entry mode studies in particular, and International Business research in general, would do well to reconsider its fascination with distance measures, and instead, focus first and foremost on differences in home and host country context. We argue that serious engagement with deep contextualization is necessary in International Business research to pose new and relevant questions and develop new and innovative theories that explain empirical phenomena.
Original languageEnglish
Pages (from-to)1-34
JournalManagement international review
Volume56
Issue number1
DOIs
Publication statusPublished - Feb 2016
Externally publishedYes

Keywords

  • Cultural distance
  • Entry mode choice
  • International business
  • Home country
  • Host country

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