| 1. |
- Correa da Cunha, Henrique, et al.
(författare)
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Are we talking about country profile or distance?
- 2019
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Ingår i: Balancing Globalization & Local Priorities.
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Konferensbidrag (refereegranskat)abstract
- Since its introduction in International Business research, Distance has been an important topic but recently there is an ever growing concern related to the country profile and distance conflation. Studies investigating the implications of distances should include a sufficiently diversified sample. In order to provide adequate assessments for the implications of country profiles and distances, it is essential to consider that firms may be affected in different ways depending on the direction of the distances. We argue that the asymmetric effects of distances might result not only from the ability of foreign subsidiary firms adapting to the host country’ conditions, but also on the characteristics of the host country environment that may be more or less receptive to foreign firms’ operations. We test these assumptions in Latin America due to its diversity in terms of cultural and formal institutional conditions and also because it includes a great number of emerging market and developed country foreign subsidiaries. Data comes from Orbis database, totaling 1466 subsidiary firms being 1216 from developed countries and 250 from emerging markets operating in 10 host countries in Latin America and a combination of 168 different home and host countries over a period of 3 consecutive years ranging from 2013 to 2015. By measuring distances in opposite directions independently we are able to verify the asymmetric effects of both Cultural and Formal Institutional Distances. Additionally, results show that the expertise in dealing with formal institutional conditions at the home country can be converted more easily into firm specific advantages in foreign host countries whereas cultural distances seem to affect firms in similar ways, depending more on the cultural characteristics at the host country than by the distances between home and the host countries.
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| 2. |
- Correa da Cunha, Henrique, 1978-
(författare)
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Asymmetry and the moderating effects of formal institutional distance on the relationship between cultural distance and performance of foreign subsidiaries in Latin America
- 2019
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Doktorsavhandling (övrigt vetenskapligt/konstnärligt)abstract
- This study investigates how Cultural and Formal Institutional distances and their interaction affect the performance of multinational foreign subsidiaries in Latin America. It is shown that using Kogut and Singh (1988) index or attributing the positive and negative signals to distances in opposite directions fail to capture asymmetric effects as it assumes either symmetry or opposing symmetry. To overcome such limitations, I propose an alternative measurement, which allows capturing the asymmetric effects of distances on the performance of foreign subsidiary firms. To test the main research question, I run a panel data model including 1466 subsidiaries, being 1216 from developed and 250 from developing countries, totaling 168 combinations of different home and host countries for a period ranging from 2013 to 2015.Cultural Distance is measured using Hofstede (1980) dimensions and Formal Institutional distances are calculated using the six World Governance Indicator’s variables. Findings show that when the direction of cultural and formal institutional distances is included, the effects on performance are in fact asymmetric. Moreover, not all formal institutional distances affect in a negative manner the performance of developed country subsidiaries operating in less developed countries as these firms seem to know how to interpret and respond to different regulatory quality conditions in the host countries. Latin American firms are in advantage when dealing with formal institutional distances while being affected in the same manner by cultural distances if compared to other emerging market firms from outside Latin America. Emerging market firms are affected in a positive manner while operating in less developed countries and in a negative way when institutions in the host country are superior to its home country. Finally, results show that formal institutional distance positively moderates the relationship between cultural distance and performance particularly when formal institutional distance is towards less developed countries. It can be concluded that despite the fact that cultural values remain fairly stable over time, the contextual changes in terms of formal institutions (and formal institutional distances among countries) will modify the way cultural distance affects the performance and the competitiveness of firms around the world.
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| 3. |
- Correa da Cunha, Henrique, et al.
(författare)
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Institutional Distance Moderating Effects on Cultural Distance and Performance Relationship : Asymmetry of Distance and the Case of Foreign Multinational Subsidiaries in Latin America
- 2019
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Ingår i: International Business in an Unsettling Political and Economic Environment, Copenhagen, Denmark, June 24-17, 2019.
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Konferensbidrag (refereegranskat)abstract
- We investigate how Cultural and Formal Institutional distances affect the performance of foreign multinational subsidiaries in Latin America. We measure distance in opposite directions separately in a way that allows verifying its asymmetrical properties. Data is from Orbis database and includes 1466 foreign subsidiaries and 168 combinations of home and host countries for a period ranging from 2013 to 2015. Findings reveal that not all formal institutional distances affect the performance of developed country subsidiaries in a negative manner when operating in less developed countries as these firms know how to interpret and respond to different regulatory quality conditions in the host countries. We show that Latin American firms are in advantage dealing with formal institutional distances while they are affected in the same manner by cultural distances when compared to emerging market firms from outside Latin America. Subsidiaries from emerging markets are affected in a positive manner when operating in less developed countries and in a negative way when in more developed host countries. Results show that formal institutional distances may be easier to convert into firm specific advantages when compared to cultural distances. Formal institutional distances moderate in a positive manner the relationship between cultural distance and performance.
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| 4. |
- Correa da Cunha, Henrique, et al.
(författare)
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The Direction of Cultural Distance and the Performance of Foreign Subsidiaries in Latin America
- 2020
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Ingår i: Academy of management proceedings. - New York : Academy of Management.
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Konferensbidrag (refereegranskat)abstract
- Despite being an important construct, there is an ever-growing concern related to the conceptual and methodological aspects of the Cultural Distance (CD) construct. Critiques suggest that several important properties of CD might have been neglected. While most studies focus on the magnitude (size) of CD, we argue that the construct is incomplete as it does not account for the direction and the specific characteristics of each cultural dimension. Furthermore, although cultures may not be compared in terms of better or worse, when it comes to the implication to foreign subsidiary firms, some cultural characteristics in the host country can be more or less favorable to doing business. We use panel data including foreign subsidiaries from developed countries, emerging markets and Latin America operating in 10 host countries in Latin America totaling 4226 firm-year observations and a combination of 168 home and countries. The asymmetric effects for the direction of CD are highlighted as some cultural characteristics in the host country seem to affect firms in similar ways regardless of cultural similarities between home and host countries. While firms from the region do not seem to be in advantage in dealing with CD, the positive and significant effects for the Power Distance dimension reveals the legitimate use of power attributed to developed country firms operating in Latin America. The asymmetric effects are highlighted as some cultural characteristics in the host countries can be more or less favorable for foreign subsidiary firms to do business. The study highlights important characteristics of CD and points venues for future research."
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| 5. |
- Correa da Cunha, Henrique, et al.
(författare)
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The Interplay of Formal Institutional and Cultural Distances and the Financial Performance of Foreign Subsidiaries in Latin America
- 2023
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Ingår i: International Journal of Financial Studies. - Basel : MDPI. - 2227-7072. ; 11:2
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Tidskriftsartikel (refereegranskat)abstract
- We investigate how formal institutional distance (FID) moderates the cultural distance (CD) and financial performance relationships of foreign subsidiaries of firms. Following recent research, we estimate the asymmetric effects of CD by considering its size and direction towards host countries on the opposite poles of each cultural dimension’s scale. We propose that a limited understanding of the formal institutions in the host country, as measured by the magnitude and direction of the FID, can positively moderate the CD–performance relationship. This is mainly because foreign subsidiary firms may be more reliant on their capacity to navigate the less formal (and more implicit) aspects of the host country’s institutional environment, such as their ability to cope with the CD. We use foreign subsidiary data from the Orbis database, which includes 22 developed and 22 developing home countries and over 1400 foreign subsidiaries operating in 10 of Latin America’s largest economies (host countries) from 2012 to 2015 (a period of 3 years). Findings confirm the asymmetric effects of CD; however, by considering the direction of FID, our findings reveal that the more FID is directed towards host countries that are less developed, the more significant the effects of CD on financial performance. These findings contribute to our knowledge of how formal and informal institutional distances interact by showing that the greater the FID towards less developed host countries, the more pronounced the effects of CD. © 2023 by the authors.
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| 6. |
- Correa da Cunha, Henrique, et al.
(författare)
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The moderating effects of formal institutional distance on the relationship between cultural distance and performance : The case of foreign subsidiaries in Latin America
- 2018
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Konferensbidrag (refereegranskat)abstract
- This study investigates how Cultural and Formal Institutional distances and their interaction affect the performance of subsidiary firms in Latin America. We show that using Kogut and Singh (1988) index or attributing the positive and negative signals for distances in opposite directions fail to capture asymmetry as it treats distance as either symmetric or opposing symmetric. In order to overcome this limitations distance in opposite directions are measured separately and independently in a way that allows verifying its asymmetrical effects. Tests include 1466 subsidiaries and 168 combinations of home and host countries for a period ranging from 2013 to 2015. Findings confirm that formal and cultural distances are asymmetric as the effects depend on the direction. Moreover not all formal institutional distances affect in a negative manner the performance of developed country subsidiaries operating in less developed countries as these firms know how to interpret and respond to different regulatory quality conditions in the host countries. We show that Latin American firms are in advantage dealing with formal institutional distances while they are affected in the same manner by cultural distances when compared to other emerging market firms from outside Latin America. Findings indicate that emerging market firms are affected in a positive manner when operating in less developed countries and in a negative way when institutions in the host country are superior to its home country. Finally, results show that formal institutional distances moderate in a positive manner the relationship between cultural distance and performance.
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| 7. |
- Correa da Cunha, Henrique, et al.
(författare)
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Toward a more in-depth measurement of cultural distance : A re-evaluation of the underlying assumptions
- 2022
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Ingår i: International Journal of Cross Cultural Management. - London : Sage Publications. - 1470-5958 .- 1741-2838. ; 22:1, s. 157-188
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Tidskriftsartikel (refereegranskat)abstract
- Some 20 years ago, Shenkar (2001) criticized several of the underlying assumptions of the cultural distance (CD) construct. Despite this, researchers continue to use the same metric which fails to address many of the underlying problems. As a result, CD studies seem to generate results which are often contradictory. Rather than rejecting the distance metaphor, the main objective of this study is to provide a more in-depth measure of CD that addresses the assumptions of linearity, symmetry, equivalence, and discordance. We propose that, while the size of the cultural distance between home and host countries may be relevant for some dimensions, it is incomplete, as it does not account for the distinct characteristics of the cultural dimensions, the direction toward countries with different profiles and the contextual settings of the study. We test our hypotheses on a sample from the Orbis database consisting of foreign subsidiary firms from Latin America, other emerging markets from outside the region, and from developed countries operating in 10 of the largest economies in Latin America. Our dataset includes 4226 firm-year observations and a combination of 168 home and host countries. Latin America provides a suitable context for this study, not only because of the diversity of firms from different contexts operating in the region, but also because the region allows us to investigate the influence of home country history and tradition on firms’ ability to conduct business in different cultural contexts. Our assessment of CD shows in a precise manner that size together with direction might be adequate for describing the effects of some dimensions of CD on firm performance, while for other dimensions, it is clearly a matter of country profile. By combining our metric with different national culture frameworks, future studies would be able to complement and strengthen our findings and conclusions. © The Author(s) 2022.
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