Cultural distance, innovation and export performance

Goudarz Azar · Rian HJ Drogendijk

69 citations0/0 files storedEuropean Business Review

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International Business and FDI Innovation and Knowledge Management International Student and Expatriate Challenges

Abstract

Purpose This paper aims to examine the relationship between cultural distance (both perceived and objective), innovation and firm export performance. Design/methodology/approach Hypotheses were tested here by structural equation modeling using data from 186 export ventures into 23 international markets by Swedish companies. Findings The results indicate that managers’ perceptions of substantial cultural differences as well as objective cultural differences (gauged using Hofstede’s (1980, 2001) scores for dimensions of national culture) and subsequent environmental uncertainty when expanding into culturally distant markets triggers strategies for interacting and integrating with the market environment. These include producing and adopting innovations to processes and products and to organizational strategy, structure and administrative procedures to cope with the new environment and overcome uncertainties. These innovations and the associated competitive advantages improve firm export performance. Originality/value Despite much research into the relationship between firm internationalization and innovation, little attention has been paid to the effect of the characteristics of the foreign markets (specifically cultural differences) on firm innovation strategies. Moreover, much research has been devoted to the effect of innovation on firm export performance, but such research has mainly focused on one type of innovation, i.e. technological innovation, while the influence of organizational innovation on firm export performance has been basically ignored. The present study validates the explanatory of cultural distance (both perceived and objective) in relation to innovation strategies (technological and organizational) and export performance.

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2019Innovation and export performance: a meta-analytic review and theoretical integration 2020Disentangling the effects of business groups in the innovation-export relationship 2020Cultural environments and the appointment of female directors on boards: An analysis from a global perspective 2023Firm innovation as a business strategy of CEO power: Does national culture matter?2022The importance of institutional and financial resources for export performance associated with technological innovation

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