Culture and Performance of IJVs 1
CULTURE AND THE PERFORMANCE OF INTERNATIONAL JOINT
VENTURES: A CRITICAL ASSESSMENT OF THE EMPIRICAL
LITERATURE
INTRODUCTION
There is a large literature discussing the conceptual and empirical relationships
between “cultural distance” and the performance of international strategic alliances
(ISAs), particularly the performance of international joint ventures (IJVs). Virtually all
studies theorize that cultural distance is an important factor influencing the outcomes of
ISAs generally and IJVs, specifically.1 Most studies hypothesize that greater cultural
distance between partners will contribute to poorer performances of IJVs, other things
constant (Das and Teng, 2003; Luo, 2001); however, some authors suggest that cultural
diversity may contribute to more creative discussions and innovativeness among partners
that actually leads to improved IJV performance (Brown, Rugman and Verbeke, 1989;
Earley & Mosakowski, 2000).
Despite different definitions and applications of culture, there is general
consensus, at least among organizational researchers, that culture refers to patterns of
beliefs and values that are manifested in practices, behaviors, and various artifacts shared
by members of an organization or a nation (Hofstede, 1980). IJVs involve two or more
organizations that are embedded in (at least) two different national contexts, and the
organizational culture of the partner firms is nested in the national culture (Pothukuchi,
Damanpour, Choi, Chen, & Park, 2002). Therefore, the impact of culture (and cultural
distance) on IJV performance is likely to involve both national and organizational
Culture and Performance of IJVs 2
cultural attributes. Yet, only a few studies have examined the impact of organizational
culture on IJV performance, and even fewer the combined effects of national and
organizational-level cultural distance.
While there are many differences amongst the relevant empirical studies,
including differences in theory and measurement of the cultural distance and performance
variables, as well as in model specification and estimation techniques, one broad
conclusion can be drawn. Namely, there is no consistency in statistical results linking
measures of cultural distance to measures of IJV performance. In particular, many studies
report no statistically significant linkage between the two measures, and those that do
find statistically significant relationships report inconsistent signs. Specifically, some
report a positive relationship, while others report a negative relationship. Hence, some
studies find that IJV performance is better when cultural distance is smaller, while others
find exactly the opposite relationship.2
The purpose of this paper is to provide a deeper and more critical evaluation of
the empirical literature relating IJV performance to cultural distance than has hitherto
been provided. There are several available studies that review the relevant empirical
literature in a fairly comprehensive manner (Beamish and Lupton, 2009; Nippa, Beechler
and Klossek, 2006; Ren, Gray and Kim, 2009; Reus and Rottig, 2009; Robson, Leonidou
and Katsikeas, 2002; Shah and Swaminathan, 2008;). However, except for Reus and
Rottig (2009), they offer only qualitative assessments of the studies reviewed and provide
no quantitative analysis to identify whether and how the structure of the underlying
models linking cultural distance to performance might affect the statistical relationship
between the two variables. Furthermore, by considering evidence on a range of factors
Culture and Performance of IJVs 3
influencing IJV outcomes, the focus of most of these studies is much broader than the
strict linkage between cultural distance and IJV performance.3
In this paper, we review a large sample of empirical studies of IJV performance
and undertake quantitative analyses of the results reported in those studies. Our specific
focus is on the impacts of different measures of cultural distance on IJV performance. We
go beyond existing surveys of the literature by evaluating quantitatively whether the
precise specifications of the cultural distance and performance variables influence the
observed statistical relationship between those two variables. We also evaluate whether
differences in modeling the linkage between cultural distance and IJV performance are
systematically related to the observed empirical results. While a full scale meta-analysis
is not undertaken given the wide diversity in measures of key variables across the studies
we review, our structured quantitative analysis offers new insights into whether and how
the empirical relationship between cultural distance and IJV performance is influenced by
differences in model specification and variable measurement.4
Our paper proceeds as follows. The next section of the paper provides a brief
review of the empirical literature on cultural distance and performance and identifies
several hypotheses that have been advanced in light of the observed findings. Section 3
discusses our sampling procedure to identify relevant articles for review, as well as our
procedure for collecting data from the articles. Empirical findings from our analysis of
the information extracted from the sample articles are reported in Section 4. In the final
section of the paper, we synthesize the findings from our empirical analysis and outline
the direction that modeling and estimating the cultural distance- IJV performance
relationship should take in the future.
Culture and Performance of IJVs 4
EARLIER REVIEWS OF THE LITERATURE
As noted above, a number of literature reviews have been previously published
focusing on empirical studies of the determinants of IJV performance, including the
influence of cultural distance. While many studies focusing on IJV behavior and
performance include some discussion of the impact of culture, it is convenient to
“benchmark” our analysis against other relatively comprehensive literature reviews.
Robson, Leonidou and Katsilkeas (2002) review some 91 articles drawn from a
variety of different sources, most commonly the leading journals in international business
and management. While the authors were concerned with a variety of potential drivers of
IJV performance and not just cultural distance, they summarize empirical findings
specifically relevant to the influence of socio-cultural distance. They conclude that the
impact of socio-cultural distance on IJV performance is unclear. In particular, findings
differ across measures of IJV performance. Except for a few studies, there is consensus
that partners’ cultural distance is inversely related to IJV stability, while no significant
link exists between socio-cultural distance and financial IJV performance. For multidimensional IJV performance measures, one major study finds that socio-cultural
similarity improves performance, while others find either no association, or a positive
association, between socio-cultural distance and performance.
Nippa, Beechler and Klossek (2006) present a qualitative review of empirical
studies of the success factors in IJVs. Their review spans the period 1991-2005 and is
based on a review of top-ranked empirically oriented management journals. The studies
they review examine success factors for Sino-foreign joint ventures, as well as success
Culture and Performance of IJVs 5
factors of IJVs in countries other than China. Although cultural distance between foreign
and local parents is the single most empirically tested factor in the studies reviewed,
findings regarding correlations between cultural distance and performance are mixed. On
balance, cultural distance is not a consistently important factor influencing IJV
performance. Rather, personal relationships, trust and cooperative decision-making are
the most important predictors of success in both samples of IJVs.
Ren, Gray and Kim (2009) review 54 studies published in empirically oriented
management journals. They identify five different IJV performance measures and ten
important determinants of performance including cultural differences. They conclude that
the impact of similarity of partners’ national cultures on IJV performance is uncertain and
suggest that the impact of cultural distance on IJV performance might depend upon how
cultural distance is measured. Specifically, they argue that because organizations are
embedded in the larger societies in which they operate, research on cultural differences of
IJVs should examine both the national and organizational cultures of the IJV’s parent
firms.
Beamish and Lupton (2009) review some 86 articles published between 1982 and
2006. While they did not focus specifically on the linkage between cultural distance and
joint venture performance, they conclude that available research on the impact of cultural
differences on IJV performance has produced mixed results. They suggest that the
inconclusive results may reflect the fact that different cultural traits are moderated to a
greater or lesser extent by actions undertaken by one or both partners. For example, in
some IJVs, issues related to cultural differences may be mitigated by training expatriate
managers adequately before sending them on assignment to a foreign joint venture. This
Culture and Performance of IJVs 6
assertion is similar to Shah and Swaminathan’s (2008) suggestion that the linkage
between cultural differences and IJV performance is indirect. Specifically, cultural
differences mediate the partner selection process which, in turn, helps determine the
magnitude of the key factors influencing strategic alliance performance.
Finally, Reus and Rottig (2009) conduct a full scale meta-analysis of IJV
performance determinants using a sample drawn from 66 studies published in a variety of
academic journals, book chapters and working papers. The study focuses specifically on
the roles of cultural distance, hierarchical control, partner conflict, and commitment in
determining IJV performance. A hypothesized path model where cultural distance
increases conflict leading to negative performance is advanced and tested. The results
indicate that cultural distance between partners of IJVs tends to increase the likelihood of
conflict, which, in turn, adversely affects performance (although this latter relationship
was not significant for a subsample of Chinese IJVs).
There is no support for a direct relationship between cultural distance and
performance in IJVs in the Reus and Rottig study. The authors also examine various
measures of cultural distance and performance and conclude that the way the variables
are specified influences the directionality and strength of the estimated relationship
between cultural distance and IJV performance. Specifically, the Kogut-Singh composite
index shows a positive link to performance, whereas “subjective” measures are
negatively related to performance. However, studies using other (than Kogut-Singh)
objective cultural distance measures report a significant negative relationship between
cultural distance and performance, whereas studies utilizing subjective measures of both
Culture and Performance of IJVs 7
cultural distance and performance show a significant positive relationship between
cultural distance and performance.
In summary, broad reviews of the relevant literature conclude that there is no
consistent and statistically significant relationship between cultural distance and IJV
performance. While the result is surprising given the attention paid to culture in the IJV
literature, little systematic effort has been made to reconcile the inconclusive empirical
findings with the strong theoretical emphasis on the importance of culture as a
determinant of IJV performance5.
The studies reviewed above suggest possible reasons for a failure of empirical
studies to find a significant and consistent linkage between cultural distance and IJV
performance. One is that national culture is an inappropriate basis for identifying cultural
distance, notwithstanding that measure’s prominence in the international business
literature. A second is that cultural distance might be a relevant determinant of certain
performance outcomes, but not others. A third, and more complex possibility, is that there
is no direct linkage between cultural distance (however defined) and IJV performance
(however measured). Rather, cultural distance might have an indirect influence on
performance by influencing strategic choices, such as partner selection or the focus of the
IJV’s activities, or by conditioning the interaction between IJV partners. Cultural distance
might also moderate the influence of other factors that help determine performance, such
as partner trust, while the impact of cultural distance might be itself moderated by
variables such as previous IJV experience or organizational culture. However, available
studies, by and large, do not evaluate these possibilities in any comprehensive manner.
Culture and Performance of IJVs 8
Our review of the literature will attempt to shed some additional light on reasons
why existing empirical studies of the cultural distance-IJV performance relationship have
failed to support the theoretical importance accorded the relationship. In particular, it will
focus on whether empirical results are sensitive either to the specification of the key
variables or to the specification of the underlying model. On the basis of this review, we
provide concrete suggestions as to how future research might provide more consistent
findings.
PROCEDURE AND ATTRIBUTES OF THE SAMPLE
Our procedure for identifying relevant empirical articles involved a keyword
search of 67 journals which were candidates to contain empirical studies of the
relationship between cultural distance and IJV performance. The journals were selected
from the “General and Strategy” category of Anne-Wil Harzing’s comprehensive
“journal quality list”, as well as several additional journals that we identified based upon
knowledge of their subject content. Matching keyword searches were made in the titles,
abstracts, keywords and subject terms of all articles that appeared in these journals from
the first issue onward. This search resulted in full or almost full coverage for the large
majority of the journals identified and generated an initial pool of 1184 potentially
relevant studies.
We then narrowed the pool of studies by focusing on those which reported results
from some type of regression analysis, so that signs and levels of statistical significance
could be identified for the relevant cultural distance coefficients. In the final stage of the
selection process, all three authors evaluated which of the remaining articles should be
Culture and Performance of IJVs 9
included in the final sample based upon a reading of the text. The included articles
needed to report coefficient estimates from regression models, where one or more
measures of IJV performance was the dependent variable and where cultural distance
was specified either as a control variable, an antecedent variable, or a moderating variable
in the model. Furthermore, only articles with an explicit focus on IJVs were included.
This procedure yielded a final sample of 63 articles published in 15 different journals.
The distribution of sample articles by journal and by publication year is summarized in
Table 1. Full references to the sample articles are reported in Appendix One.
-----------------------Insert Table 1 about here
-----------------------Important broad attributes of the underlying empirical studies reviewed are summarized
in Tables 2-5.
-----------------------Insert Table 2 about here
------------------------The bold rows in Table 2 show that whereas the vast majority of studies (81%)
focus on cultural distance at the national or regional level6, 10% employ measures to
reflect distance at the organizational level, while 17% employ measures reflecting both,
i.e. measures reflecting national cultural distance experienced at the organizational level
or measures in which some items reflect the national level and some reflect the
organizational level. The percentages sum to more than 100, reflecting the fact that a few
studies apply more than one measurement level of cultural distance.
Culture and Performance of IJVs 10
The unbolded rows in Table 2 show the specific measures of cultural distance that
have been used. The predominant use of the Kogut-Singh composite index based on
Hofstede’s (1980) dimensions of national cultural distance stands out. Almost half the
studies in our sample have employed this measure in one or more regression models. The
second most frequently used measure is national or regional dummy variables, followed
by individual Hofstede dimensions of national cultural distance. Only two studies have
applied a Kogut-Singh index based on nine Globe dimensions (House et al., 2004).
Summing across all three categories in Table 2, around one-third of the sample uses
subjective measures of cultural distance.
---------------------------Insert Table 3 about here
---------------------------Table 3 summarizes specifications of the dependent variable used in our sample
of studies. Financial, non-financial or both constitute the broad set of IJV performance
measures identified. Financial measures include variables such as stock price change and
ratios obtained from financial statements, as well as subjective assessments of financial
performance.
Non-financial measures include subjective assessments of performance such as
knowledge acquisition, design capability, marketing success and distribution efficiency.
Finally, the multi-dimensional category contains measures reflecting financial
performance and non-financial performance, either with several separate items related to
these dimensions or through a subjective assessment of overall performance which
necessarily reflects multiple dimensions.
Culture and Performance of IJVs 11
The measures of performance in our sample of studies are almost evenly
distributed across the three bolded categories. The mode of performance assessment is of
potential importance. Hence, we distinguish between subjective and objective modes of
assessment, as reported in Table 3. While subjective performance measures predominate,
they are mainly associated with the non-financial and multi-dimensional categories.
Measures assessing the financial dimension of performance are mostly objective.
-------------------------Insert Table 4 about here
-------------------------Table 4 reports the specifications of the cultural distance - performance
relationships used in the sample studies. In almost two-thirds (65%) of the cases in which
one or more explicit measures of cultural distance were used, cultural distance was
specified as a control variable. In 41% of the studies, cultural distance was specified as an
antecedent variable in a direct (reduced form) equation in which one or more measures of
performance were regressed against cultural distance, as well as other variables. Only a
few studies specify the cultural distance – performance relationship as either being
moderated by other variables (11%) or specify cultural distance itself as a moderator
(14%). Only one study specifies a model in which the linkage between cultural distance
and performance is mediated through another relationship such as the choice of a
“trustworthy” IJV partner.
----------------------Insert Table 5 about here
-----------------------
Culture and Performance of IJVs 12
ANALYSIS OF RESULTS
Table 5 provides an overall summary of the findings of the studies we review and
also serves as a template for subsequent tables providing detailed analysis of those
findings. In the three columns of Table 5 labeled “Tests”, the results for each individual
relevant finding in the empirical studies are reported. Specifically, the first column
reports the number of estimated coefficients for the cultural distance variable that were
positive and statistically significant. The second column reports the number of estimated
coefficients that were statistically insignificant. The third column reports the number of
statistically significant negative coefficients. It should be noted that some of the
estimated coefficients included in Table 5’s results were obtained using a single sample
and the same specifications of the culture and performance variables. Nevertheless,
estimated values for the cultural distance coefficient could vary with the inclusion or
exclusion of the other variables in the regression model.
Relying simply on a count of individual estimated coefficients potentially distorts
the results, since the same specifications estimated numerous times have a high implicit
weight in the overall results. Therefore, we also report results aggregating overall tests
where the same basic specification was used for the estimated equation. Specifications
employed in our sample were considered to be the same when the same performance and
cultural distance measures are used for the same dataset. So, for example, if a study
reports statistical results for the following two equations: 1) return on assets = country
dummy + control variable 1; 2) return on assets = country dummy + control variable 1 +
control variable 2, and the equations are estimated using the same data set, the estimated
coefficient for the country dummy variable is counted only once. Specifically, if both
Culture and Performance of IJVs 13
equations report a positive coefficient, we add one unit to the column labeled “+.” If both
report a negative coefficient, we add one unit to the column labeled “-.” If one is
reported positive and the other reported negative, we add one unit to the column labeled
“+/n.s./-.”
The results aggregated across specifications are reported in the three columns
labeled “relations.” The first column reflects the number of estimating equations for
which all tests show positive and significant coefficients for the cultural distance
coefficient. The second reflects the number of models for which at least some of the
estimated coefficients are insignificant or of mixed sign. The third column reflects the
number of models for which the relevant coefficients are significant and negative. The
last column of Table 5 reports the number of studies underlying the results summarized in
Table 57.
The results presented in Table 5 show that regardless of whether individual
coefficients or individual estimating models form the basis of the analysis, the impact of
cultural distance on IJV performance is statistically insignificant in the majority of cases.
In fact, approximately 75% of the estimated coefficients, as well as the differentiated
equation, report statistically insignificant results. Moreover, for the significant results,
there is an even split between positive and negative estimated coefficients. The high
proportion of insignificant results, as well as the relatively high proportion of positive
results, supports the broad conclusion that no consistent and statistically significant
relationship between cultural distance and IJV performance has been identified in the
empirical literature.
Culture and Performance of IJVs 14
While prior studies offer potential reasons for insignificant and inconsistent
findings, those reasons have not been consistently evaluated. Our analysis therefore turns
to evaluating the main explanations suggested in the literature.
Measures of Cultural Distance
One explanation for the inconsistent and insignificant results described above
relates to the measurement of cultural distance. A popular notion is that national culture
may not be the appropriate basis for identifying cultural distance, and, in fact, some
studies reflect this notion by using measures of organizational cultural distance or
measures of both national culture and organizational culture distance.
-----------------------Insert Table 6 about here
-----------------------Table 6 summarizes statistical results when stratifying the studies based on
measures of cultural distance. As shown, 38 out of a total of 39 estimated positive and
significant coefficients are associated with studies using measures of cultural differences
at the national level. The positive coefficients are inconsistent with the dominant
hypothesis in the IJV literature that cultural distance harms IJV performance. To be sure,
an almost equal number of estimated coefficients are negative and statistically significant;
however, the results of the relations tested reveal that national cultural distance is more
often positive and significantly related to performance than negative and significant (30
compared to 21). On the other hand, when cultural distance is measured at the
organizational level, the findings are more consistent with the hypothesis that cultural
distance is negatively related to IJV performance. Nevertheless, the dominant finding in
Culture and Performance of IJVs 15
Table 6 is, once again, that the estimated cultural distance coefficients are, for the most
part, statistically insignificant whatever the measure of cultural distance.
Another possible explanation of the inconsistent findings with respect to the
national culture variable is that the measures of national cultural distance used fail to
properly reflect the appropriate underlying theoretical construct (see Drogendijk and
Slangen, 2006; Mezias et al., 2002). To investigate this explanation, the unbolded rows in
Table 6 present results for each of the main individual measures applied at the bolded
levels of analysis. Comparing the outcomes associated with each of the four objective
measures of national cultural distance reveals that a large proportion of results are
statistically insignificant when the Kogut-Singh composite index is used. This lends some
support to the notion that there are positive and negative influences which may be
offsetting when aggregate indices of differences are used (Steenkamp, 2001). At the same
time, the Kogut-Singh index shows the most support for the purported negative
relationship between cultural distance and performance in IJVs compared to other
national level measures, lending some support to its relevance (see Drogendijk and
Slangen, 2006).
Another noteworthy observation is that a large proportion of the results are
positive when country region dummies are used. One explanation for this outcome may
be that these dummies pick up national differences other than cultural differences. For
instance, it is likely that differences in technological development will be reflected in
country dummy variables, especially if firms from both developed and developing
countries are involved in the alliances. Differences in technological development may
have a positive influence on performance, especially if performance is measured from the
Culture and Performance of IJVs 16
perspective of the developing country partner. A sufficiently large positive effect might
overshadow any negative effect of cultural distance. If this explanation is true, we would
expect that positive results would appear primarily in situations in which the partner from
which the distance is measured is a developing country partner and the partners to which
the distance is measured are developed, as well as developing countries (mixed). In such
cases, a large cultural distance to the developed partners could be associated with higher
performance.
--------------------------Insert Table 7 about here
--------------------------To assess this explanation, Table 7 presents the results using dummy variables
(regional or country) as measures of cultural distance. The partner reported the furthest to
the left is considered the base from which the distance is measured. Since it is also in
most instances the focal partner, it will typically be the partner from whose perspective
performance is measured. Table 7 reports that a large proportion of the positive
coefficients for the country/region dummy (13 of 19 in total or 68%) arises when the
developing country is the base from which the distance to a mix of developed and
developing countries is measured. It also shows that no negative coefficients are
estimated for the country/region dummy. We caution that the finding is based on very
few studies, thus limiting our interpretation of the results, and it is possible that a similar
effect would be found for other measures of national cultural distance, since they will
likely be correlated to some extent with country/region dummy variables.
Culture and Performance of IJVs 17
Tables 8 and 9 report results for the Kogut-Singh index based on Hofstede’s
dimensions, as well as results for individual Hofstede scores stratified in the same manner
as in Table 7. Tables 8 and 9 do not show any patterns supporting the preceding
interpretation of the country/region dummy variable. Specifically, there is no
preponderance of positive coefficients for paired developing-developed (mixed)
countries. Hence, measures of national distance based on Hofstede’s dimensions do not
duplicate the information contained in country/region dummy variables.
--------------------------------Insert Tables 8 and 9 about here
----------------------------------The analysis of the results associated with various measures of cultural distance
therefore indicates that the specification of the construct might influence the results.
Specifically, a fairly high proportion of positive results are identified for country dummy
variable measures of cultural distance. However, it is possible that country dummy
variables are measuring attributes other than culture. Cultural distance is clearly a subtle
construct that can be specified and measured at multiple levels (Nielsen, 2010).
Accordingly, attention must be paid to issues of alignment of theory, measurement and
analysis when cultural distance is included in models of IJV performance.
Measures of Performance
A second major explanation given for the insignificant and inconsistent results for
the cultural distance-IJV performance linkage is that cultural distance is a relevant
determinant of some performance outcomes, but not others. To investigate this
Culture and Performance of IJVs 18
possibility, we include Table 10 which presents the results stratified on the basis of
performance measures.
---------------------------Insert Table 10 about here
---------------------------The bold rows in Table 10 indicate that the financial measures used seem to be
associated with a higher proportion of positive results than do non-financial or
multidimensional measures. On the contrary, non-financial measures seem to be
associated with a particularly high proportion of negative results. It is premature to
conclude that results differ as a consequence of the performance measure used, since the
mode used to assess performance is correlated to some extent with the measure of
performance. Specifically, financial performance is often assessed through objective
measurement modes, whereas multidimensional measures are always assessed through
subjective modes.
The unbolded rows in Table 10 show a stratification of results according to the
mode of assessment. The proportions of positive results for subjective and objective
modes of financial performance are fairly similar, implying that the high proportion of
positive results for financial performance is independent of whether objective or
subjective modes of assessment are used. Turning to the non-financial measures of
performance, it is interesting to note that objective measurement modes, such as measures
of stability, are associated with relatively low proportions of insignificant results and
relatively high proportions of negative results. Hence, the mode of assessment (i.e.,
Culture and Performance of IJVs 19
objective versus subjective) seems to be important when non-financial performance is the
outcome measure.
Overall, the analysis of the various performance measures seems to support the
suggestion that the way in which performance is measured can affect the estimated
cultural distance-performance linkage; however, our analysis also demonstrates that the
interaction between performance dimensions and modes of assessment complicates any
evaluation of that linkage. Still, the proportion of non-significant findings across all
types of performance measures and assessment modes is almost three times the number
of significant findings, which highlights once again how little consistent empirical
support can be identified for a direct relationship between cultural distance and IJV
performance in the literature.
Model Specifications
As discussed earlier, a number of researchers have suggested that inconsistent and
insignificant findings for a direct relationship between cultural distance and IJV
performance reflect the reality that the “appropriate” specification of the relationship is
more complex. We evaluate this suggestion in Table 11. Specifically, Table 11 stratifies
the results obtained in the empirical literature by the five possible specifications
discussed earlier.
-----------------------Insert Table 11 about here
------------------------Table 11 shows that few empirical results exist for specifications other than for a
direct relationship between cultural distance and performance; however, comparing the
Culture and Performance of IJVs 20
proportions of insignificant results, non-direct specifications of the cultural distanceperformance linkage have produced about the same proportion of insignificant results as
direct specifications. Hence, altering the specification of the estimating equation does not
necessarily produce more significant results, regardless of the choice of moderating,
moderated or mediating variable; however, we must caution that the number of studies
using non-direct specifications is very limited.
Overall, the results in Table 11 again highlight the weak empirical support for any
systematic relationship between cultural distance and IJV performance. Of interest is the
observation that while the largest number of negative associations between cultural
distance and performance is reported for direct relationships, there seems to be a
difference between studies that include cultural distance as a control variable versus an
antecedent variable. Among tests with significant findings, cultural distance as a control
variable is almost four times as likely to influence performance negatively as compared to
positively, whereas when entered as an antecedent variable, cultural distance is almost
equally likely to exert a positive or negative influence on performance.
Taken as a whole, our analysis provides some support for the explanations found
in the literature of the inconsistent and largely insignificant relationship between cultural
distance and IJV performance. Specifically, our review shows that the estimated
empirical relationships between cultural distance and IJV performance are influenced by
the measurement, analysis and modeling of key constructs. When cultural distance is
linked to IJV success, the direction and strength of the relationship varies with specific
measures of performance and, to an extent, with model specification. However, and
notwithstanding the conventional wisdom that cultural distance matters to IJV
Culture and Performance of IJVs 21
performance, our review shows that this relationship is statistically insignificant in the
majority of empirical tests. In light of this basic finding, the final section provides some
recommendations for future modeling of the cultural distance-IJV performance linkage.
CONCLUSIONS AND FUTURE DIRECTIONS FOR RESEARCH
In most studies, the dominant rationale for an expected negative impact of cultural
differences on IJV performance is related to interaction problems between parties to the
IJV. Differences in values and behavior between culturally distant partners are expected
to influence interpretations of and responses to strategic and managerial imperatives,
thereby creating potential disagreements and conflict between partners that adversely
influence IJV performance (e.g., Harrigan, 1988; Mohr and Spekman, 1994; Park and
Ungson, 1997). Yet, despite arguments for the theoretical relevance of managerial
processes and behaviors, the vast majority of empirical studies omit the role of
phenomena from empirical models.
To the extent that cultural distance is hypothesized to influence IJV performance
via inter-organizational processes, specifying a direct relationship between cultural
distance and IJV performance essentially ignores how inter-organizational dynamics
affect the relationship between the two variables. Consistent with an input processoutcome (IPO) framework (McGrath, 1964), cultural distance is likely to influence IJV
processes, which, in turn, condition measures of performance. Hence, future research
should open the “black box” of IJV managerial processes in order to evaluate the extent
to which national (and organizational) cultural distances affect IJV performance. That is,
future research should specify models where the influence of national cultural distance on
Culture and Performance of IJVs 22
IJV performance is mediated through various measures of (inter)organizational processes,
such as commitment, conflict, communication, and so forth. The partial structure of one
such model is outlined in Figure 1.
In addition, organizational level attributes, such as strategy and structure, are
likely to moderate the impact of national cultural distance on performance. Furthermore,
aspects of organizational context (such as strategy) may be endogenous to cultural
distance, and IJV partners can be expected to make investments and other commitments
to mitigate the influence of cultural differences at the organizational level when the
benefits of those investments and commitments exceed the relevant costs, at the margin.
For example, equity joint ventures might be favored given relatively large organizational
culture differences, notwithstanding the increased administrative costs associated with
introducing a separate and distinct management structure for the IJV. In other cases, IJV
partners may design and implement practices that are new to the parent organizations but
that are better suited to address what Rodriguez (2005) calls partners’ cognitive diversity.
Yet another possibility is that the objectives of the IJV will be partially conditioned by
organizational differences in culture. For example, given relatively large and irreducible
culture differences at the organizational level, IJV partners may concentrate on activities
where partner behavior is relatively easy to monitor and where outcomes are fairly
predictable given observable partner behavior.
By the same token, and depending on the nature of the research question,
attributes of national cultural distance, such as legal infrastructure, may moderate the
relationship between organizational level cultural distance and IJV performance
(Globerman and Nielsen, 2007). Similarly, firms embedded in certain national cultures
Culture and Performance of IJVs 23
may be more likely to form joint ventures, and national cultural traits, such as
individualism and uncertainty avoidance, may moderate the relationship between
entrepreneurial orientation and extensiveness of alliance portfolios (e.g., Marino,
Strandholm, Steensma, & Weaver, 2002; Steensma, Marino, Weaver, & Dickson, 2000).
Unfortunately, there is a paucity of empirical evidence identifying the relative importance
of different possible mediating and moderating variables in relation to IJV performance.
As discussed above, most empirical studies directly relate one or more IJV
performance outcomes to specific measures of national cultural distance. Yet, as Figure 1
suggests, the outcome of any IJV will reflect the behavior and activities of IJV partners,
including their financial and non-financial commitments to the IJV, the nature of interpartner communication, and so forth. National cultural differences will ordinarily
directly influence the organizational processes that go on within an IJV; however, so will
organizational attributes, including the cultures of the IJV partners, as well as the
strategies pursued by the partners and their organizational structures. National cultural
differences will therefore also indirectly influence inter-organizational processes by
conditioning organizational culture, as well as, perhaps, other aspects of organizational
context. The latter, in turn, will influence the IJV’s performance.
The main point underscored by Figure 1 is that in estimating a direct linkage
between national cultural distance and IJV performance, one fails to acknowledge that
IJV performance is ultimately determined by organizational actions. Hence,
understanding the true role of national culture in the IJV process requires identifying how
national culture influences organizational context and processes.
Culture and Performance of IJVs 24
Theory and Modeling
National cultural distance has both a moderating and a mediating influence on the
linkage between organizational processes and IJV performance outcomes. In this regard,
more thought needs to be given to the possible ways in which national cultural distance
moderates and mediates this linkage. In particular, it is possible for different specific
national cultural attributes to influence the linkage in different ways. For example,
studies of multinational teams suggest that despite initial process losses, cultural diversity
enhances team innovativeness and effectiveness (Milliken and Martins, 1996; Williams
and O’Reilly, 1998). While cross-cultural differences lead to initial difficulties with
communication, leading to conflict and misunderstandings, over time multinational team
members get to know each other, appreciate their differences and utilize them for
improved information-processing and problem-solving (Earley and Mosakowski, 2000;
Watson, Kumar & Michaelsen, 1993).
Specific national cultural attributes may have different impacts on performance
through their unique mediating or moderating influences on organizational cultures
and/or processes. The use of aggregate measures of national culture might obscure such
differences to the extent that the various influences are offsetting. Hence, the use of
broad measures of national culture may lead to a mistaken conclusion that national
culture does not influence IJV outcomes.
Measures of national culture may also need to recognize that sub-national cultural
differences may be important in countries such as China and Russia (Meyer, Estrin,
Bhaumik, & Peng, 2009; Meyer and Nguyen, 2005;). Furthermore, the influence of
national culture on organizational culture is unlikely to be the same across organizations
Culture and Performance of IJVs 25
within any national cultural domain. For example, Chinese companies with substantial
international experience and that employ Westerners in senior management positions are
likely to have much different organizational attributes and processes than those with little
international experience and that employ only Chinese managers. In this context, IJV
outcomes involving the two sets of Chinese firms are likely to differ even for IJVs
involving identical foreign companies.
Studies of IJV outcomes should also pay attention to how performance is
measured. In particular, it is important to match measures of cultural distance with
measures of performance in order to evaluate the nature and strength of this relationship.
By way of illustration, while cultural differences may lead to process losses and
suboptimal financial performance, diverse cultural perspectives may contribute to the
identification of innovative IJV strategies and practices that, in turn, promote
organizational learning and innovation (Nielsen, 2007; Nielsen and Nielsen, 2009). Thus,
depending on the context, individual measures of performance may yield different results
when linked to cultural distance.
Finally, if cultural distance is measured by managerial perceptions, measures of
performance using self-reported perceptions of satisfaction, operational efficiency and
IJV team performance are likely to yield more consistent results than if performance is
gauged by some objective measure of financial performance due to a closer match
between levels of theory and measurement. However, the use of perceptual measures of
national cultural distance is likely to be subject to negative biases, as managers tend to
focus on potential process problems that, in turn, are attributed to cultural differences. On
Culture and Performance of IJVs 26
the other hand, perceptual measures of IJV performance may potentially suffer from
positive survival biases.
In sum, future research must do a better job of specifying theoretically why
specific measures of cultural difference – be they at the national or organizational level –
will affect individual performance variables and under what conditions. In particular,
greater attention should be paid to intervening variables and processes between national
cultural distance and performance in IJVs which may potentially alter the nature and
direction of the latter relationship. Hence, when specifying and estimating models of IJV
performance, future studies should first consider the influence of IJV process variables on
specific performance outcomes and then specify how such processes may be influenced
by specific cultural differences.
Culture and Performance of IJVs 27
REFERENCES
Avny, G. & Anderson, A. 2008. Organizational culture, national culture and
performance in international joint ventures based in Israel. International Journal
of Business and Globalization, 2(2): 133-145.
Beamish, P. & Lupton, N. 2009. Managing joint ventures. Academy of Management
Perspectives, 23 (2): 75- 94.
Brown, L., Rugman, A. & Verbeke, A. 1989. Japanese joint ventures with western
multinationals: Synthesizing the economic and cultural explanations of failure.
Asia Pacific Journal of Management, 6 (2): 225-242.
Chiao, Y.C., Yu, C.M.J., & Peng, J.T.A. 2008. Partner nationality, market-focus and IJV
performance: A contingent approach. Journal of World Business, 44: 238-249.
Das, T.K. & Teng, B. 2003. Partner analysis and alliance performance. Scandinavian
Journal of Management, 19: 279-308.
Drogendijk, R. & Slangen, A. 2006. Hofstede, Schwartz, or managerial perceptions? The
effects of different cultural distance measures on establishment mode choices by
multinational enterprises. International Business Review, 15(4): 361-380.
Earley, P.C. & Mosakowski, E. 2000. Creating hybrid team cultures: An empirical test of
transnational team functioning. Academy of Management Journal, 43(1): 26-49.
Globerman, S. & Nielsen, B.B. 2007. Equity versus non-equity international strategic
alliances involving Danish firms: An empirical investigation of the relative
importance of partner and host country determinants. Journal of International
Management, 13(4): 449-471.
Culture and Performance of IJVs 28
Harrigan, K.R. 1988. Joint ventures and competitive strategy. Strategic Management
Journal, 9: 141-158.
Hofstede, G. 1980. Culture’s Consequences, Beverly Hills, CA: Sage
Kale, P. & Singh, H. 2009. Managing strategic alliances: What do we know now, and
where do we go from here? Academy of Management Perspectives, August: 4562.
Kim, Y. & Gray, S. 2009. An assessment of alternative empirical measures of cultural
distance: Evidence from the republic of Korea. Asia Pacific Journal of
Management, 26: 55-74.
Kogut, B. & Singh, H. 1988. The effect of national culture on the choice of entry mode.
Journal of International Business Studies, 19 (3): 411-432.
Luo, Y. 2001. Antecedents and consequences of personal attachment in cross-cultural
cooperative ventures. Administrative Science Quarterly, 46 (2): 177-200.
Luo, Y., Shenkar, O., & Nyaw, M. 2001. A dual parent perspective on control and
performance in international joint ventures: Lessons from a developing economy.
Journal of International Business Studies, 32 (1): 41-58.
Marino, L, Strandholm, K., Steensma, H.K. and Weaver, K.M. 2002. The moderating
effect of national culture on the relationship between entrepreneurial orientation
and strategic alliance portfolio extensiveness. Entrepreneurship Theory &
Practice, 26(4): 145-161.
McGrath, J.E. 1964. Social psychology: A brief introduction, Holt, Rinehart and Winston.
Meyer, K.E., Estrin, S., Bhaumik, S.K. & Peng, M.W. 2009. Institutions, resources, and
entry strategies in emerging economies. Strategic Management Journal, 30: 61–80.
Culture and Performance of IJVs 29
Meyer, K. & Nguyen, H.V. 2005. Foreign investment strategies and sub-national
institutions in emerging markets: Evidence from Vietnam. Journal of
Management Studies, 42(1): 63–93.
Mezias, S.J., Chena, Y-R., Murphy, P., Biaggio, A., Chuawanlee, W., Hui, H., Okumura,
T. & Starr, S. 2002. National cultural distance as liability of foreignness: The
issue of level of analysis. Journal of International Management, 8(4): 407-421.
Milliken, F. J., & Martins, L.L. 1996. Searching for common threads: Understanding the
multiple effects of diversity in organizational groups. Academy of Management
Review, 21: 402-433.
Mohr, J. & Spekman, R. 1994. Characteristics of partnership success: Partnership
attributes. Strategic Management Journal, 15(2): 135-153.
Nielsen, B.B. 2007. Determining international structure alliance performance: A multidimensional approach. International Business View, 16: 337-361.
Nielsen, B.B. 2010. Multilevel issues in strategic alliance research. In T.K. Das (Ed.),
Researching Strategic Alliances: Emerging Issues. Information Age Publishing.
Nielsen, B.B. & Nielsen, S. 2009. Learning and innovation in international strategic
alliances: An empirical test of the role of trust and tacitness. Journal of
Management Studies, 46(6): 1031-1056.
Nippa, M., Beechler, S., & Klossek, A. 2006. Success factors for managing international
joint ventures: A review and integrative framework, Freiburg University of
Technology and Mining, mimeo.
Culture and Performance of IJVs 30
Olk, P. 2002. Evaluating strategic alliance performance. In F.J. Contractor & P. Lorange
(Eds.), Cooperative strategies and alliances: 119-143. Elsevier Science, Ltd.
Killington, Oxford: UK
Park, H., Gowan, M., & Hwang, S.D. 2002. Impact of national origin and entry mode on
trust and organizational commitment. Multinational Business Review, 10 (2): 5261.
Park, S.H. & Ungson, G.R. 1997. The effect of national culture, organizational
complementarity and economic motivation on joint venture dissolution. Academy
of Management Journal, 40(2): 279-307.
Pothukuchi, V., Damanpour, F., Choi, J., Chen, C.C., & Park, S.H. 2002. National and
organizational culture differences and international joint venture performance.
Journal of International Business Studies, 33 (2): 243-265.
Ren, H., Gray, B., & Kim, K. 2009. Performance of international joint ventures: What
factors really make a difference and how? Journal of Management, 35: 805-832.
Reus, T. & Rottig, D. 2009. Meta-analyses of international joint venture performance
determinants: Evidence for theory, methodological artifacts and the unique
context of China. Management International Review, 49(5): 607-640.
Robson, M., Leonidou, L., & Katsikeas, C. 2002. Factors influencing joint venture
performance: Theoretical perspectives, assessment and future directions.
Management International Review, 42 (4): 385-418.
Rodriguez, C. 2005. Emergence of a third culture: Shared leadership in international
strategic alliances. International Marketing Review, 22 (1): 67-95.
Culture and Performance of IJVs 31
Salk, J., & Brannan, M.Y. 2000. National culture, networks and individual influence in
multinational management teams. Academy of Management Journal, 43 (2): 191202.
Scott, W. R. 1995. Institutions and organizations. London: Sage.
Shah, R., & Swaminathan, V. 2008. Factors influencing partner selection in strategic
alliances: The moderating role of alliance context. Strategic Management
Journal, 29: 471-494.
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.
Steenkamp, J-B.E.M. 2001. The role of national culture in international marketing
research. International Marketing Review, 18(1): 30-44.
Steensma, H. K., Marino, L., Weaver, K. M., & Dickson, P. H. 2000. The influence of
national cultural on the formation of technology alliances by entrepreneurial
firms. Academy of Management Journal, 43(5): 951-973.
Watson, W.E., Kurnar, K., & Michaelsen, L.K. 1993. Cultural diversity's impact on
interaction process and performance: Comparing homogeneous and diverse task
groups. Academy of Management Journal, 36: 590-602.
Williams, K.Y., & O'Reilly, C.A. 1998. Demography and diversity in organizations: A
review of 40 years of research. In B.M. Staw and L.L. Cummings (eds.), Research
in Organizational Behavior, 20: 77-140. Greenwich, CT: JAI Press.
Culture and Performance of IJVs 32
FOOTNOTES
1
Since most relevant studies focus on IJVs, we shall focus our discussion on this specific
form of ISA. Numerous studies cite the high failure rate of IJVs (Kale and Singh, 2009;
Park, Gowan and Hwang, 2002 and Pothukuchi, Damanpour, Choi, Chen and Park,
2002).
2
We provide an overview of several reviews of the empirical literature in the next section
of the paper.
3
Indeed, Shah and Swaminathan (2008) do not discuss empirical evidence on the
relationship between cultural distance and IJV performance at all.
4
Ren, Gray and Kim (2009) and Nippa, Beechler and Klossek (2006) also reject the
feasibility of a meta- analysis of the culture distance-performance relationship.
Conversely, Reus and Rottig (2009) contains a meta-analysis. The latter study will be
reviewed shortly.
5
The study of Reus and Rottig (2009) is an exception in this regard. Our study goes
beyond Reus and Rottig in terms of evaluating in more detail how altering the
specifications of key variables affects statistical outcomes. We also assess whether and
how the specification of the estimation model affects the statistical relationship between
cultural distance and IJV performance.
6
When no specific mention is made of the distinction between the national and regional
levels, the term “national” will from this point on be used to reflect the national as well as
the regional level.
Culture and Performance of IJVs 33
7
While the .05 level of statistical significance was chosen to distinguish significant from
insignificant results, there would be no substantial change in our reported results had we
used a .10 level of significance.
Culture and Performance of IJVs 34
Appendix 1: Reviewed Articles
#
1
Author(s)
Journal
Lyles, Salk (1996) Journal of International
Business Studies
N* Nature of relationship
201 Control
Cultural distance measure
Subjective organizational
cultural distance
Performance measure
Mixed, non-financial
(subjective)
2
Barkema, Shenkar, Academy of
Vermeulen, Bell
Management Journal
(1997)
244 Antecedent, Moderator,
Moderated
Kogut-Singh index,
country/region dummy
Non-financial
(objective)
3
Barkema,
Journal of International
Vermeulen (1997) Business Studies
228 Antecedent
Individual Hofstede dimensions, Non-financial
Kogut-Singh index
(objective)
4
Luo (1997)
Organization Science
116 Control
Contry/region dummy
Financial (objective)
5
Mjoen, Tallman
(1997)
Organization Science
102 Control
Subjective national and
organizational cultural distance
Mixed (subjective)
6
Park, Kim (1997)
Journal of Business
Venturing
174 Control
Contry/region dummy
Financial (objective)
7
Park, Ungson
(1997)
Academy of
Management Journal
186 Antecedent, control,
moderated
Country/region dummy, Kogut- Non-financial
Singh index
(objective)
8
Saxton (1997)
Academy of
Management Journal
98
Control, moderated,
moderates
Contry/region dummy
9
Zeira, Newburry,
Yeheskel (1997)
Management
International Review
34
Antecedent, Direct
Relationship
Individual Hofstede dimensions Mixed (subjective)
Non-financial
(subjective)
Culture and Performance of IJVs 35
10 Lin, Germain
(1998)
Journal of International
Business Studies
74
Antecedent, mediated
Subjective organizational
cultural distance
Mixed (subjective)
11 Sim, Ali (1998)
Journal of World
Business
26
Antecedent, Direct
Relationship
Subjective national and
organizational cultural distance
Non-financial
(subjective)
12 Glaister, Buckley
(1999)
Management
International Review
75
Antecedent, Direct
Relationship
Kogut-Singh index
Non-financial
(subjective)
13 Lasserre (1999)
Asia Pacific Journal of
Management
98
Antecedent, Direct
Relationship
Subjective national and
organizational cultural distance
Mixed (subjective)
14 Newburry, Zeira
(1999)
Journal of Management
Studies
83
Control
Individual Hofstede dimensions Mixed (subjective)
15 Fey, Beamish
(2000)
International Business
Review
40
Antecedent, control
Subjective organizational
cultural distance, Kogut-Singh
index
Non-financial
(subjective)
16 Merchant,
Schendel (2000)
Strategic Management
Journal
101 Antecedent
Kogut-Singh index
Financial (objective)
17 Sim, Ali (2000)
Asia Pacific Journal of
Management
59
Antecedent
Subjective national and
organizational cultural distance
Non-financial
(objective)
18 Fey, Beamish
(2001)
Organization Studies
24
Antecedent, control
Subjective organizational
cultural distance, Kogut-Singh
index
Mixed (subjective)
19 Lane, Salk, Lyles
Strategic Management
78
Antecedent
Subjective national and
Mixed (subjective)
Culture and Performance of IJVs 36
(2001)
Journal
organizational cultural distance
20 Li, Lam, Qian
(2001)
Journal of International
Business Studies
898 Antecedent
Contry/region dummy
Financial (objective)
21 Luo, Shenkar,
Nyaw (2001)
Journal of International
Business Studies
295 Control, moderater
Kogut-Singh index, subjective
national cultural distance
Mixed (subjective)
22 Yeheskel, Zeira,
Shenkar,
Newburry (2001)
Journal of International
Management
140 Antecedent
Individual Hofstede dimensions Financial, mixed
(subjective)
23 Fryxell, Dooley,
Vryza (2002)
Journal of Management
Studies
129 Control
Kogut-Singh index
Mixed (subjective)
24 Hennart, Zeng
(2002)
Journal of International
Business Studies
97
Contry/region dummy
Non-financial
(objective)
25 Kim, Park (2002)
Management
International Review
146 Antecedent
Kogut-Singh index
Financial (objective)
26 Li, Karakowsky,
Lam (2002)
Journal of Management
Studies
216 Antecedent
4
Contry/region dummy
Financial (objective)
27 Luo (2002)
Asia Pacific Journal of
Management
114 Control
Kogut-Singh index
Non-financial
(subjective)
28 Luo (2002)
Journal of International
Business Studies
255 Control
Subjective national and
organizational cultural distance
Financial (objective)
29 Luo (2002)
Journal of Management
255 Control, moderater
Subjective national and
Financial (objective)
Antecedent
Culture and Performance of IJVs 37
organizational cultural distance
30 Luo (2002)
Strategic Management
Journal
293 Control
Kogut-Singh index
Financial (objective)
31 Luo (2002)
Strategic Management
Journal
134 Control
Kogut-Singh index
Mixed (subjective)
32 Luo, Shenkar
(2002)
Journal of International
Management
155 Control
Kogut-Singh index
Mixed (subjective)
33 Merchant (2002)
Management
International Review
350 Control
Individual Hofstede dimensions Financial (objective)
34 Pothukuchi,
Journal of International
Damanpour,Choi, Business Studies
Chen, Park (2002)
127 Antecedent, moderator,
moderated
Individual Hofstede dimensions, Financial, non-financial
Kogut-Singh index org. & nat.
(subjective)
Culture
35 García-Canal,
Valdés-Llaneza,
Ariño (2003)
80
Kogut-Singh index
Mixed (subjective)
Organization Studies
Control
36 Hanvanich, Miller, International Business
Richards, Cavusgil Review
(2003)
101 Antecedent, moderator,
5 moderated
Contry/region dummy
Financial (objective)
37 Pangarkar (2003)
83
Kogut-Singh index
Non-financial
(objective)
Contry/region dummy
Financial (objective)
Long Range Planning
38 Sleuwaegen,
Long Range Planning
Schep, den Hartog,
Control
105 Antecedent
Culture and Performance of IJVs 38
Commandeur
(2003)
39 Beamish, Kachra
(2004)
Journal of World
Business
133 Antecedent
5
Kogut-Singh index
Financial (subjective)
40 Choi, Beamish
(2004)
Journal of International
Business Studies
71
Contry/region dummy
Mixed (subjective)
41 Luo, Park (2004)
Journal of International
Business Studies
250 Control
Kogut-Singh index
Mixed (subjective)
42 Gong, Shenkar,
Luo
and Nyaw (2005)
Journal of International
Business Studies
265 Control
Kogut-Singh index
Mixed (subjective)
43 Hanvanich,
Richards, Miller,
Cavusgil (2005)
International Business
Review
868 Control, moderator
Contry/region dummy, KogutSingh index
Financial (objective)
44 Luo (2005)
Academy of
Management Journal
124 Control, moderator
Kogut-Singh index
Financial (objective)
45 Merchant (2005)
Journal of World
Business
300 Antecedent
Kogut-Singh index
Financial (objective)
46 Steensma, Tihanyi, Academy of
Lyles, Dhanaraj
Management Journal
(2005)
225 Control
Contry/region dummy
Mixed, non-financial
(subjective)
47 Anh, Baughn,
Hang, Neupert
173 Control
Subjective national and
organizational cultural distance
Financial (subjective)
International Business
Review
Control
Culture and Performance of IJVs 39
(2006)
48 Krishnan, Martin,
Noorderhaven
(2006)
Academy of
Management Journal
126 Control
Kogut-Singh index
Mixed (subjective)
49 Lu, Beamish
(2006)
Journal of Business
Venturing
111 Control
7
Kogut-Singh index
Financial (subjective),
non-financial (objective)
50 Valdés-Llaneza,
Garicía-Canal
(2006)
Management
International Review
82
Control
Kogut-Singh index
Non-financial
(objective)
51 Garcia-Canal,
Sanchez-Lorda
(2007)
International Business
Review
336 Control
Kogut-Singh index
Financial (objective)
52 Gong, Shenkar,
Strategic Management
Luo, Nyaw (2007) Journal
224 Control
Kogut-Singh index
Mixed (subjective)
53 Luo (2007)
Academy of
Management Journal
127 Control
Kogut-Singh index
Financial (objective)
54 Luo (2007)
Strategic Management
Journal
188 Control
Kogut-Singh index
Financial (objective),
non-financial
(subjective)
55 Makino, Chan,
Isobe,, Beamish
(2007)
Strategic Management
Journal
999 Antecedent
Kogut-Singh index
Non-financial
(objective)
Culture and Performance of IJVs 40
56 Ng, Lau, Nyaw
(2007)
Journal of International
Management
298 Control, moderated
Kogut-Singh index, subjective
national and organizational
cultural distance
Financial, non-financial
(subjective)
57 Nielsen (2007)
International Business
Review
120 Antecedent
Subjective national and
organizational cultural distance
Financial, non-financial
(subjective)
58 JanowiczPanjaitana,
Noorderhaven
(2008)
Research Policy
149 Control
Subjective national and
organizational cultural distance
Mixed (subjective)
59 Lunnan, Haugland Strategic Management
(2008)
Journal
100 Control
Contry/region dummy
Mixed (subjective), nonfinancial (objective)
60 Luo (2008)
Strategic Management
Journal
198 Control
Kogut-Singh index
Financial (objective)
61 Luo (2008)
Strategic Management
Journal
168 Control, moderator
Contry/region dummy, KogutSingh index
Financial, non-financial
(subjective)
62 Meschi, Riccio
(2008)
International Business
Review
234 Antecedent, control,
moderated
Kogut-Singh index (Globe),
Kogut-Singh index (Hofstede)
Non-financial
(objective)
102 Control
Kogut-Singh index (Globe),
subjective organizational
cultural distance
Financial, non-financial
(subjective)
63 Zhan, Luo (2008) Management
International Review
* The highest N used in any test in the study
is reported
Culture and Performance of IJVs 41
TABLE 1
Sources of Studies Reviewed
Journal
Number of
Publication
abbreviation
studies
years
AMJ
7
1995 (1)
1997 (3)
2005 (1)
2006 (1)
2007 (1)
APMJ
3
1999 (1)
2000 (1)
2002 (1)
IBR
7
2000 (1)
2003 (1)
2005 (1)
2006 (1)
2007 (2)
2008 (1)
JBV
2
1996 (1)
1997 (1)
JIBS
11
1997 (1)
1998 (2)
Culture and Performance of IJVs 42
2001 (2)
2002 (3)
2004 (2)
2005 (1)
JIM
3
2001 (1)
2002 (1)
2007 (1)
JM
1
2002 (1)
JMS
3
1999 (1)
2002 (2)
JWB
3
1998 (1)
2004 (1)
2005 (1)
LRP
2
2003 (2)
MIR
6
1997 (1)
1999 (1)
2002 (2)
2006 (1)
2008 (1)
OS
2
1993 (1)
1997 (2)
OST
2
2001 (1)
2003 (1)
Culture and Performance of IJVs 43
RP
1
2008 (1)
SMJ
10
2000 (1)
2001 (1)
2002 (2)
2007 (3)
2008 (3)
Journal Abbreviations
Academy of Management Journal (AMJ)
Asia Pacific Journal of Management (APMJ)
International Business Review (IBR)
International Management Review (IMR)
Journal of Business Ventures (JBV)
Journal of International Business Studies (JIBS)
Journal of International Management (JIM)
Journal of Management (JM)
Journal of Management Studies (JMS)
Journal of World Business (JWB)
Long Range Planning (LRP)
Management International Review (MIR)
Organization Science (OS)
Organization Studies (OST)
Research Policy (RP)
Strategic Management Journal (SMJ)
Culture and Performance of IJVs 44
TABLE 2
Cultural Distance
Measures of cultural distance
Studies
National cultural distance
51
Kogut-Singh index based on Hofstede's dimensions for
32
national cultural distance
Country/region dummy
15
Individual Hofstede dimensions for national cultural distance
6
Kogut-Singh index based on Globe's dimensions for national
2
cultural distance
Subjective measure
3
Organizational cultural distance
6
Subjective measure (other than measures based on Hofstede's
5
dimensions for organizational CD)
Individual Hofstede dimensions for organizational cultural
1
distance
Kogut-Singh index based on Hofstede's dimensions for
1
organizational cultural distance
National and organizational cultural distance
11
Subjective measure
11
Culture and Performance of IJVs 45
TABLE 3
Performance
Measures of IJV performance
Studies
Financial
28
Subjective measure
9
Objective measure (based on financial accounts and stock
19
market reactions)
Non-financial
24
Subjective measure
13
Objective measure (based on stability)
11
Mutli-dimensional
22
Subjective measure
22
TABLE 4
Specifications
Specifications of culture distance variables
Studies
Control, direct relationship
41
Antecedent, direct relationship
26
Moderated by other variable
7
Moderates other variable
9
Mediated
1
Total
63
Culture and Performance of IJVs 46
TABLE 5
Results
Tests
5% significance
Relations
Studies
+
n.s.
-
+
+/n.s./-
-
39
311
58
31
186
33
63
Culture and Performance of IJVs 47
TABLE 6
Results by Cultural Distance
Tests
Relations
Studies
Measure of cultural distance
+
n.s.
-
+
+/n.s./-
-
National cultural distance
38
243
42
30
139
21
51
Kogut-Singh index based on Hofstede's
9
123
19
7
50
7
31
Country/region dummy
19
59
9
16
45
4
14
Individual Hofstede dimensions for
10
43
8
7
37
5
6
-
-
2
-
-
2
1
Subjective measure
-
18
4
-
7
3
3
Organizational cultural distance
1
34
8
1
24
8
6
Subjective measure (other than measures
1
18
3
1
8
3
5
-
14
4
-
14
4
1
-
2
1
-
2
1
1
-
34
8
-
23
4
11
-
34
8
-
23
4
11
dimensions for national cultural distance
national cultural distance
Kogut-Singh index based on Globe's
dimensions for national cultural distance
based on Hofstede's dimensions for
organizational CD)
Individual Hofstede dimensions for
organizational cultural distance
Kogut-Singh index based on Hofstede's
dimensions for organizational cultural
distance
National and organizational cultural
Distance
Subjective measure
Culture and Performance of IJVs 48
TABLE 7
Results for Country/Region Dummy By Partner Regions
Country/Region pairing
Tests
Relations
Studies
+
n.s.
-
+
+/n.s./-
-
Developing-developed
2
6
-
2
4
-
2
Developing-developing
-
-
-
-
-
-
-
Developing-mixed
13
12
-
11
7
-
3
Developed-developed
1
26
5
-
19
1
4
Developed-developing
-
-
-
-
-
-
-
Developed-mixed
3
15
4
3
15
3
5
Mixed-developed
-
-
-
-
-
-
-
Mixed-developing
-
-
-
-
-
-
-
Mixed-mixed
-
-
-
-
-
-
-
Total
19
59
9
16
45
4
14
Culture and Performance of IJVs 49
TABLE 8
Results for Kogut-Singh Index Based on Hofstede’s Dimensions
for National CD By Partner Regions
Country/Region pairing
Tests
Relations
Studies
+
n.s.
-
+
+/n.s./-
-
Developing-developed
3
9
2
1
5
2
5
Developing-developing
-
-
-
-
-
-
-
Developing-mixed
2
63
8
2
22
2
11
Developed-developed
-
25
2
-
10
-
5
Developed-developing
-
2
-
-
2
-
1
Developed-mixed
4
23
7
4
10
3
10
Mixed-developed
-
-
-
-
-
-
-
Mixed-developing
-
-
-
-
-
-
-
Mixed-mixed
-
1
-
-
1
-
1
Total
9
123
19
7
50
7
31
Culture and Performance of IJVs 50
TABLE 9
Results for Individual Hofstede Dimensions for National CD By Partner Regions
Country/Region pairing
Tests
Relations
Studies
+
n.s.
-
+
+/n.s./-
-
Developing-developed
5
15
4
2
9
1
1
Developing-developing
-
-
-
-
-
-
-
Developing-mixed
-
-
-
-
-
-
-
Developed-developed
-
8
-
-
8
-
1
Developed-developing
-
-
-
-
-
-
-
Developed-mixed
1
12
4
1
12
4
3
Mixed-developed
-
-
-
-
-
-
-
Mixed-developing
-
-
-
-
-
-
-
Mixed-mixed
4
8
-
4
8
-
1
Total
10
43
8
7
37
5
6
Culture and Performance of IJVs 51
TABLE 10
Results by Performance Dimension and Mode of Assessment
Performance measure
Tests
Relations
Studies
+
n.s.
-
+
+/n.s./-
-
Financial
25
130
8
20
72
5
28
Subjective measure
8
46
1
5
26
1
9
17
84
7
15
46
4
19
accounts and stock market reactions)
Non-financial
12
96
31
9
63
19
24
Subjective measure
7
71
10
4
45
6
13
Objective measure (based on stability)
5
25
21
5
18
13
11
Mutli-dimensional
2
85
19
2
51
9
22
Subjective measure
2
85
19
2
51
9
22
Objective measure (based on financial
TABLE 11
Results by Specification
Tests
Specified cultural distanceperformance link
Relations
Studies
+
n.s.
-
+
+/n.s./-
-
Control, direct relationship
6
209
23
5
100
11
41
Antecedent, direct relationship
33
102
35
26
86
22
26
Moderated by other variable
5
22
6
5
20
5
7
Moderates other variable
2
23
7
2
21
7
9
Mediated
-
1
1
-
1
1
1
Total
46
357
72
38
228
46
63
Culture and Performance of IJVs 52
FIGURE 1
Framework for National Cultural Distance-Performance Research
Process
Input
s
National
Cultural
Distance





Conflict
Communication
Trust
Commitment
Creativity
Organizational
Context
 Strategy
 Structure
 Culture
Outcome
Multiple
Performance
Criteria