m 1 Culture dis 613

marketing aspects of cultural distance

Carlos M. P. Sousa

There is a general consensus in the literature that when firms decide to enter foreign markets, they must adjust to a different cultural environment and be prepared for challenges, such as differences in language, lifestyles, cultural standards, consumer preferences, and purchasing power, among others (see GLOBAL MARKETING STRATEGY; CROSS-CULTURAL PSYCHOLOGY OF CONSUMER BEHAVIOR; STANDARDIZATION/ADAPTATION OF INTERNATIONAL MARKETING STRA- TEGY; BASE OF THE PYRAMID MARKETS: CULTURE INSIGHTS AND MARKETING IMPLICATIONS). To assess these differences between countries, a new body of literature has emerged around the concept of cultural distance, which has been used to measure the scope and scale of these differences. The assumption is that cultural differences between the home and the foreign markets create a distance, which, in turn, influences the activity of the firm in the international arena. As a result, few concepts in the international-marketing literature have gained broader attention than ‘‘cultural distance.’’ This concept has been identified as a key variable in explaining the behavior of firms in a vast array of areas including entry-mode choice, foreign-market selection, level of control (see MARKET ENTRY AND EXPANSION), international-marketing strategies (see GLOBAL MARKETING STRATEGY: PERSPECTIVES AND APPROACHES), and performance (see EXPORT PERFORMANCE). Mixed empirical results, however, have been found in the literature regarding the importance of this construct. Whereas some studies have found cultural distance to significantly influence the activity of the firm in the international arena (Barkema and Vermeulen, 1997), other studies have found no significant or clear relationship (Mitra and Golder, 2002).

Various reasons have been proposed to explain these inconclusive results. On the one hand, some scholars have argued that the preferences and tastes of consumers in different countries are converging to a global norm (Levitt, 1983), and hence the effect of cultural distance is likely to

dilute progressively. The notion that national cultures are converging appears to be plau- sible considering the emergence of the Internet, greater ease of information flow, and more frequent/easier international travel. However, this argument is disputed by Barkema and Vermeulen (1997), who use data spanning almost three decades (1966–1994) in their study, and find that the effect of cultural distance does not decrease over time, that is, that cultural values and distances remain stable. This may be due to the fact that such changes concern conver- gences in superficial appearances of culture (i.e., symbols, heroes, and rituals) and that they do not necessarily signal a convergence in the values embedded in national cultures (Hofstede, 2006).

The inconsistencies could also be attributed to the difficulty that exists in the conceptualization and operationalization of the cultural-distance construct. For instance, as Sousa and Bradley (2006, 2008) note, many authors have used cultural distance and psychic distance (see MARKETING ASPECTS OF PSYCHIC DIST- ANCE) interchangeably with no clear distinction between them, a contamination that has been disputed by these authors and which may undermine the validity of the research (see RESEARCH RELIABILITY AND VALIDITY). Cultural distance has been defined as the degree to which cultural values in one country are different from those in another country (Sousa and Bradley, 2006). Accordingly, it should be used to assess differences in national culture. Several frameworks have been advanced and used in the measurement of the extent to which different cultures are similar or different, such as that of Kluckhohn and Strodtbeck (1961) and Ronen and Shenkar (1985). However, the most widely used framework is that of Hofstede’s (1980) cultural dimensions. To arrive at a measure of cultural distance, Kogut and Singh (1988) were the first to combine Hofstede’s dimensions into one aggregate measure of cultural distance among countries, and many studies have subsequently used this formula or an adapted version, as a measure of cultural distance. However, while a tangible and convenient tool, the Kogut and Singh index has been liable to the same criticism as that leveled against Hofstede’s value

Wiley International Encyclopedia of Marketing, edited by Jagdish N. Sheth and Naresh K. Malhotra. Copyright © 2010 John Wiley & Sons Ltd

2 marketing aspects of cultural distance

dimensions, for example, nonexhaustiveness, outdated data, assumptions about the linearity, additivity, and normal distributions of scores (Shenkar, 2001). As a result, there has been an increasing call in the literature to develop new measures (see VALIDITY AND RELIABILITY) to operationalize cultural distance as it may be unrealistic to expect that a single measure can fully discern the underlying differences across countries (Tihanyi, Griffith, and Russell, 2005). Some recent studies may offer some interesting alternatives to measure cultural distance (Schwartz, 1994) and should, therefore, be explored in future studies.

Bibliography

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Hofstede, G. (1980) Culture’s Consequences: International Differences in Work-related Values, Sage Publications, Beverly Hills.

Hofstede, G. (2006) What did GLOBE really measure? Researchers’ minds versus respondents’ minds. Journal of International Business Studies, 37 (6), 882–896.

Kluckhohn, F.R. and Strodtbeck, F.L. (1961) Variations in Value Orientations, Row, Peterson, Evanston.

Kogut, B. and Singh, H. (1988) The effect of national culture on the choice of entry mode. Journal of Inter- national Business Studies, 19 (3), 411–432.

Levitt, T. (1983) The globalization of markets. Harvard Business Review, 61 (3), 92–102.

Mitra, D. and Golder, P.N. (2002) Whose culture matters? Near-market knowledge and its impact on foreign market entry timing. Journal of Marketing Research, 39 (3), 350–365.

Ronen, S. and Shenkar, O. (1985) Clustering countries on attitudinal dimensions: a review and synthesis. Academy of Management Review, 10 (3), 435–454.

Schwartz S.H. (1994) in Individualism and Collectivism: Theory, Method and Applications (eds U. Kim H.C. Triandis C. Kagitçibasi et al.), Sage Publications, Thousand Oaks, pp. 85–119.

Shenkar, O. (2001) Cultural distance revisited: towards a more rigorous conceptualization and measurement of cultural differences. Journal of International Business Studies, 32 (3), 519–535.

Sousa, C.M.P. and Bradley, F. (2006) Cultural distance and psychic distance: two peas in a pod? Journal of International Marketing, 14 (1), 49–70.

Sousa, C.M.P. and Bradley, F. (2008) Cultural distance and psychic distance: refinements in conceptualisation and measurement. Journal of Marketing Management, 24 (5/6), 467–488.

Tihanyi, L., Griffith, D.A., and Russell, C.J. (2005) The effect of cultural distance on entry mode choice, international diversification, and MNE performance: a meta-analysis. Journal of International Business Studies, 36 (3), 270–283.