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 Title
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