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International Business Business & Cultural Distance

International Business

Business & Cultural Distance

In the tutorial pack for this week is an article by Laszlo Tihanyi, David A. Griffith and Craig J. Russell published in the Journal of International Business Studies

entitled ‘The Effect of Cultural Distance on Entry Mode Choice, International Diversification, and MNE Performance: A Meta-Analysis’. In addition, there is an

interview of Carlos Ghosn, CEO of the Renault-Nissan Alliance published in the Academy of Management Learning & Education, discussing the benefits of cross-cultural

differences.

The paper by Tihanyi, et al. (2005) is a meta-analysis on cultural distance, it reviews all the empirical papers looking at the effect of this phenomenon and seeks to

establish the patterns of causal relationships between cultural distance and entry mode choices, diversification and performance. Do not focus on the technical side of

the paper but rather on the formulation of the hypotheses, the findings and the discussion.

The interview of Carlos Ghosn is a good introduction to a practical business case in which cultural distance is part of the organizational culture: the Renault-Nissan

merger. While most of the scientific literature has stressed the negative impact of cultural distance, there is also a rationale for harnessing cultural differences.

Read the two articles and come to the tutorial prepared to discuss the following questions:

1. What is cultural distance, why should managers of multinationals be interested in this phenomenon and how is it theoretically expected to affect firms’ behaviors?

2. How can the authors hypothesize both a positive and a negative relationship between cultural distance and MNE performance?

3. What are the 4 main findings of the Tihanyi et al (2005) paper regarding moderators? How can you explain them?

4. In the example of the Renault-Nissan merger, how is the cultural distance between the two partners source of a competitive advantage? How can managers actually

harness those cultural differences to build a competitive advantage?
Which contextual moderators can explain the benefits of cultural distance in this particular situation?

5. What is the conclusion of Tihanyi et al (2005) regarding the relevance and the definition of culture in the field of business? What can we add after reading the

interview of Carlos Ghosn?

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