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Institutional Distance Moderating Effects on Cultural Distance and Performance Relationship: Asymmetry of Distance and the Case of Foreign Multinational Subsidiaries in Latin America
Universidade Regional de Blumenau, Blumenau, Brazil.
Universidade Regional de Blumenau, Blumenau, Brazil.
Universidade do Vale do Itajaí, Itajaí, Brazil.
Halmstad University, School of Business, Engineering and Science, Centre for Innovation, Entrepreneurship and Learning Research (CIEL), Centre for International Marketing and Entrepreneurship Research (CIMER).ORCID iD: 0000-0002-8194-2053
2019 (English)In: International Business in an Unsettling Political and Economic Environment, Copenhagen, Denmark, June 24-17, 2019, 2019Conference paper, Published paper (Refereed)
Abstract [en]

We investigate how Cultural and Formal Institutional distances affect the performance of foreign multinational subsidiaries in Latin America. We measure distance in opposite directions separately in a way that allows verifying its asymmetrical properties. Data is from Orbis database and includes 1466 foreign subsidiaries and 168 combinations of home and host countries for a period ranging from 2013 to 2015. Findings reveal that not all formal institutional distances affect the performance of developed country subsidiaries in a negative manner when operating in less developed countries as these firms know how to interpret and respond to different regulatory quality conditions in the host countries. We show that Latin American firms are in advantage dealing with formal institutional distances while they are affected in the same manner by cultural distances when compared to emerging market firms from outside Latin America. Subsidiaries from emerging markets are affected in a positive manner when operating in less developed countries and in a negative way when in more developed host countries. Results show that formal institutional distances may be easier to convert into firm specific advantages when compared to cultural distances. Formal institutional distances moderate in a positive manner the relationship between cultural distance and performance.

Place, publisher, year, edition, pages
2019.
Keywords [en]
Institutional distance, cultural distances, subsidiary performance, moderation, Latin America
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hh:diva-40073OAI: oai:DiVA.org:hh-40073DiVA, id: diva2:1332328
Conference
AIB 2019 Annual Meeting, Copenhagen, Denmark, June 24-27, 2019
Available from: 2019-06-28 Created: 2019-06-28 Last updated: 2019-08-13Bibliographically approved

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf