Because Location Matters: What Multinationals Must Know About Cultural Distance

Abstract

The purpose of this paper is to analyse the influence of cultural distance on the ownership level assumed when international markets are targeted, and how managers are more likely to change their mind when they take into account the moderating effect of country risk. To this end, we have reviewed the pertinent literature as well as several Spanish case studies. The statistical verification has been performed by a Tobit model over the Spanish manufacturing sector (2000-2005). The results support our assumptions about the effect that cultural distance and country risk have on the commitment level and allow us to reconcile the two opposite streams that scholars have defended before. (English) [ABSTRACT FROM AUTHOR]