This paper’s purpose is to give an overview of how distance in management research is measured and to overview the strong critique the corresponding measures have to face. The paper’s investigation brought several findings: firstly that frameworks in which distance constructs develop are too wide in their definition and that these frameworks are insufficiently connected to each other what impedes the improvement of the strong criticised but in management research essential constructs. Secondly the paper illustrates the widespread disagreement among researchers and literature. The paper gives suggestions how distance measures could be improved and contributes to a more "outside of the box thinking" by considering the whole distance construct. Furthermore it helps to build unbiased opinions of the thematic by not taking a side or giving suggestions whether on construct is superior towards another.
Due to rising internationalization of businesses and the circumstance of having business partners, suppliers and clients placed all around the world, companies are fronting challenges like diversities in lifestyles, languages, cultural values and norms, consumer preferences and buying power. So it is not surprising that these differences or distances became an increasingly important topic in international management research. Distance aspects are important for companies in evaluating and improving their international strategies in nearly every field of business, especially when it comes to expansions in foreign investments through direct investments, international transactions and joint ventures.
In purpose to be able to identify the extent of difference between countries, that Hymer called "liability of foreignness", management scholars evolved a broad range of quantitative and qualitative distance measures based on different assumptions and methods. But although the concepts play an important role in international management research and although they are widely used in international business practice to support or to improve companies’ decision-making process, they face strong criticism and contradiction.
Table of Contents
0. Abstract
1. Introduction
2. Most Common Concepts
2.1 Cultural Distance
2.1.1 Cultural Indices and Hofstede’s Cultural Dimensions
2.1.2 Shalom Schwartz’s Framework of Cultural Dimensions
2.1.3 Ghemawat’s Managerial-Based Framework
2.1.4 Cultural Clusters – The Empirical Framework of Ronen and Shenkar
2.2 Institutional Distance
2.3.1 Institutional Distance – A Regulative and Normative Approach
2.3.2 Institutional Distance – A Multidimensional Approach
2.3 Psychic Distance
2.4 Linguistic Distance
3. Critical Review of Common Distance Concepts
3.1 Critical Review of Cultural Distance
3.2 Critical Review of Institutional Distance
3.3 Critical Review of Psychic Distance
3.4 Critical Review of Linguistic Distance
4. Discussion and Limitations
5. Executive Summary
Research Objectives and Themes
This thesis aims to provide a comprehensive review of prevalent distance constructs in international management research, specifically focusing on cultural, institutional, psychic, and linguistic dimensions. The primary objective is to critically evaluate these measures, identify their underlying methodological assumptions, and assess the validity of their frequent application in existing literature.
- Theoretical overview and measurement methodologies of distance constructs.
- Critical analysis of hidden assumptions and potential biases in distance indices.
- Discussion of the merits and limitations of various frameworks (e.g., Hofstede vs. Schwartz).
- Evaluation of the conceptual overlap and distinction between cultural and psychic distance.
Excerpt from the Book
2.1 Cultural Distance
Shenkar (2012) states that the cultural distance construct is one of the concepts that received largest recognition in international business literature and that it has been used in many research areas, from organisational changes and restructuring to foreign extensions and technology transfers (Gomez-Mejia & Palich, 1997). It is an often used paradigm of researchers who study foreign direct investments concerning entry mode and market entry strategies, performance of foreign direct investments (Barkema, Bell and Pennings, 1996 and Kogut and Singh, 1988) or joint ventures performance (Pothukuchi, Fariborz, Jaepil, and Seong, 2002).
Summary of Chapters
0. Abstract: Provides a concise overview of the paper's purpose in reviewing distance measures and highlighting the significant academic critique these constructs face.
1. Introduction: Discusses the rising importance of distance in international business due to globalization and the resulting need for robust quantitative and qualitative measurement tools.
2. Most Common Concepts: Introduces the four primary distance categories—cultural, institutional, psychic, and linguistic—detailing the dominant theoretical frameworks used to operationalize them.
3. Critical Review of Common Distance Concepts: Analyzes the theoretical and methodological weaknesses inherent in existing distance measures, focusing on issues like symmetry, linearity, and national homogeneity assumptions.
4. Discussion and Limitations: Synthesizes the critical findings, arguing for more "outside the box" approaches and better integration between competing distance frameworks.
5. Executive Summary: Concludes that while distance constructs are often criticized, they remain essential tools in international management that necessitate further refinement and improved conceptual boundaries.
Keywords
Cultural Distance, Institutional Distance, Psychic Distance, Linguistic Distance, International Management, Kogut and Singh Index, Hofstede, Liability of Foreignness, Foreign Direct Investment, Research Methodology, Organizational Isomorphism, Managerial Perception, Institutional Economics, Multidimensional Approach.
Frequently Asked Questions
What is the core focus of this thesis?
The thesis focuses on how distance measures are applied in international management research and critically assesses the validity and limitations of these constructs.
What are the central themes discussed?
The central themes include cultural, institutional, psychic, and linguistic distance, alongside a critical examination of their methodological assumptions and practical application.
What is the primary goal of the author?
The goal is to provide a review of common distance measures and explain the strong critique they face, encouraging more rigorous "outside the box" thinking in future research.
Which scientific methodologies are reviewed?
The paper reviews quantitative indices (such as the Kogut and Singh index and Euclidean distance) as well as theoretical frameworks like Ghemawat’s CAGE and the GLOBE model.
What does the main body of the work cover?
It provides an in-depth review of conceptual frameworks followed by a critical assessment section that challenges assumptions like spatial homogeneity and mathematical symmetry in distance measurement.
Which keywords best characterize this work?
Key terms include Cultural Distance, Institutional Distance, Psychic Distance, International Management, and Research Methodology.
Why is the Kogut and Singh index specifically analyzed?
It is analyzed because it is the most widely adopted measure in the field, despite being frequently criticized for relying on outdated four-dimensional cultural models.
What is the "psychic distance paradox"?
It refers to the empirical finding that a perception of differences between home and foreign markets can sometimes improve performance, contrary to the expectation that closer distances are always easier to navigate.
How does the author view the institutional distance construct?
The author views it as a multidimensional approach that complements cultural distance, though it currently suffers from a lack of standard, unified measurement definitions.
- Citar trabajo
- Adrian Schmid (Autor), 2013, Evaluation of Distance Measures in International Management Research, Múnich, GRIN Verlag, https://www.grin.com/document/494285
