The Aspects of Culture and Its Effect on Entry Mode Decisions
| Tilburg University | THE ASPECTS OF CULTURE AND ITS EFFECT ON ENTRY MODE DECISIONS |
Bachelor Thesis 2010
Name: G.M.J. Smit
ANR: 619284
Supervisor: S. Xu
Date: 11th of June 2010
Word count: 7904
Organization & Strategy
Management Summary
What cultural factors influence the decision of ownership of subsidiaries from the conventional perspective or asymmetric perspective? This problem statement is the main area of research in this study. To be able to answer the problem statement several research questions have been studied
The decision for a mode of entry can depend on many different aspects. This research has been focusing on the cultural side of the entry mode decisions. The conventional point states that cultural differences are symmetric and measures these differences between countries with the cultural distance. Also a different view on cultural differences is given which comes from the side of the asymmetric perspective. This perspective states that cultural differences are not symmetric between countries. They see the measurement of institutional distance as a complementary measurement for cultural distance but a replacement for cultural distance has not been found yet. These two perspectives are the major force driving this research.
It is important to know what kind of influence these two different perspectives have on the entry mode decisions. From the conventional point of view it shows that when firms are faced with high cultural distance from their host country export, franchise and wholly owned subsidiary are avoided and a joint venture is preferred. The asymmetric point of view, taken with the institutional distance shows the same outcomes. Firms which have low institutional distance with the host country are more likely to choose export and franchise and wholly owned subsidiaries when equity is involved.
Preface
In this report you will find the results of a study on the effects of culture on the entry mode
Bachelor Thesis 2010
Name: G.M.J. Smit
ANR: 619284
Supervisor: S. Xu
Date: 11th of June 2010
Word count: 7904
Organization & Strategy
Management Summary
What cultural factors influence the decision of ownership of subsidiaries from the conventional perspective or asymmetric perspective? This problem statement is the main area of research in this study. To be able to answer the problem statement several research questions have been studied
The decision for a mode of entry can depend on many different aspects. This research has been focusing on the cultural side of the entry mode decisions. The conventional point states that cultural differences are symmetric and measures these differences between countries with the cultural distance. Also a different view on cultural differences is given which comes from the side of the asymmetric perspective. This perspective states that cultural differences are not symmetric between countries. They see the measurement of institutional distance as a complementary measurement for cultural distance but a replacement for cultural distance has not been found yet. These two perspectives are the major force driving this research.
It is important to know what kind of influence these two different perspectives have on the entry mode decisions. From the conventional point of view it shows that when firms are faced with high cultural distance from their host country export, franchise and wholly owned subsidiary are avoided and a joint venture is preferred. The asymmetric point of view, taken with the institutional distance shows the same outcomes. Firms which have low institutional distance with the host country are more likely to choose export and franchise and wholly owned subsidiaries when equity is involved.
Preface
In this report you will find the results of a study on the effects of culture on the entry mode
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