Title

The Diminishing Effect of National Cultural Distance on Subsidiary Control

Document Type

Article

Publication Date

6-2008

Abstract

This paper explores the diminishing influence of national cultural distance on two subsidiary control issues, expatriate staffing and parent company ownership level of the foreign subsidiary. Previous studies have produced conflicting findings: one stream of research argues that when cultural distance is greater firms increase their level of control; while the other stream suggests that greater cultural distance is associated with a loosening of control. To reconcile these discrepant outcomes we hypothesize and find that subsidiary age moderates the effect of cultural distance on expatriate staffing and ownership. Cultural distance has a significantly greater impact on subsidiary control mechanisms for newer subsidiaries than for older subsidiaries. Implications for future research are discussed.

Journal

Journal of International Management

Journal ISSN

1075-4253

Volume

14

Issue

2

First Page

93

Last Page

107

Digital Object Identifier (DOI)

10.1016/j.intman.2007.08.003