Managerial perceptions of the cultural distance basis for internationalization decisions by firms : implications for 'low-tech' industries

Abstract: The role of managerial perceptions of cultural distance in the internationalization decisions of 'LOW-TECH' firms is explored in this thesis. A first empirical study examined managers' perceptions of dissimilarity in food culture in foreign markets (food culture distance), as an antecedent to adaptation of an export marketing strategy for food companies. A second empirical study examined the explanatory power of food culture distance in relation to choice of foreign markets by food exporters. The relationship between managers' perceptions of cultural and other business differences (psychic distance), organizational innovation, and the performance of 'LOW-TECH' firms was examined in a third study, while a fourth examined the congruence between mangers' perceptions of cultural distance and objective reality. Finally, the strategic role of inpatriates as sources of knowledge of cultural preferences in foreign markets was analyzed. The quantitative data used were obtained in two separate surveys that employed questionnaires as the data collection technique. The hypotheses were examined using three multivariate analysis techniques: structural equation modeling (SEM), regression analysis with a clustered robust standard errors approach, and bivariate correlation analysis. It was found that food culture distance influences an internationalizing firm's marketing strategies and choice of foreign market. Psychic distance was found to affect a firm's innovation strategies during the internationalization process. Perception of substantial differences in foreign markets may lead firms to adapt their marketing programs while conducting innovative strategies. The results indicated that perceived cultural distance not only entails challenges and difficulties for firms, but also provides business opportunities that make distant markets an attractive target for internationalizing firms. Managers' perceptions of cultural distance were found to be highly congruent with objective reality. Moreover, inpatriates proved to be important as sources of knowledge about, inter alia, cultural preferences in situations with a great cultural distance between the home country and the host country.