An institutional approach to cross-national distance

• Published in: Journal of international business studies Vol. 41; no. 9; pp. 1460 - 1480
• Main Authors: Berry, Heather, Guillén, Mauro F, Zhou, Nan
• Format: Journal Article
• Language: English
• Published: London Palgrave Macmillan 01.12.2010; Palgrave Macmillan UK
• Series: Journal of International Business Studies
• Subjects: Business and Management; Business management; Business strategies; Business Strategy/Leadership; Business structures; Countries; Cross-national analysis; Cultural differences; Cultural diversity; Cultural dynamics; Cultural values; Culture; Demography; Entrepreneurs; Foreign subsidiaries; Gross domestic product; Host country; Human resource management; Individualism; International Business; International trade; Literature; Management; Management research; Management techniques; Market entry; Multinational corporations; Organization; Organization theory; Strategic management; Studies; United States > US; incorporating country variables; institutional theory; cross-cultural management
• ISSN: 0047-2506; 1478-6990
• DOI: 10.1057/jibs.2010.28

Cross-national distance is a key concept in the field of management. Previous research has conceptualized and measured cross-national differences mostly in terms of dyadic cultural distance, and has used the Euclidean approach to measuring it. In contrast, our goal is to disaggregate the construct of distance by proposing a set of multidimensional measures, including economic, financial, political, administrative, cultural, demographic, knowledge, and global connectedness as well as geographic distance. We ground our analysis and choice of empirical dimensions on institutional theories of national business, governance, and innovation systems. In order to overcome the methodological limitations of the Euclidean approach, we calculate dyadic distances using the Mahalanobis method, which is scaleinvariant and takes into consideration the variance-covariance matrix. We empirically analyze four different foreign expansion choices of US companies to illustrate the importance of disaggregating the distance construct and the usefulness of our distance calculations, which we make freely available to managers and scholars.