How a Firm's Domestic Footprint and Domestic Environmental Uncertainties Jointly Shape Added Cultural Distances: The Roles of Resource Dependence and Headquarters Attention

27 Pages Posted: 26 Sep 2018

See all articles by Guus Hendriks

Guus Hendriks

Erasmus University Rotterdam (EUR) - RSM Erasmus University

Arjen HL Slangen

University of Amsterdam Business School

Pursey P.M.A.R. Heugens

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Date Written: September 2018

Abstract

Even though many firms conduct most of their business domestically, international management research has remained remarkably silent on the role of a firm's domestic footprint in its internationalization strategy. We shed light on that role by exploring how the size of a firm's domestic footprint influences the cultural distance that the firm adds to its country portfolio when expanding internationally. Integrating resource dependence theory and the attention‐based view, we hypothesize that a firm's domestic footprint has a negative relationship with added cultural distance (ACD), and that domestic policy uncertainty strengthens this relationship whereas domestic demand uncertainty weakens it. We find robust support for our hypotheses in a sample of the world's largest retailers covering the period 2000–07, indicating that a firm's domestic footprint and domestic environmental uncertainties jointly shape cross‐cultural expansion strategies. Our findings suggest that ACDs reflect headquarters executives' desire to avoid ineffective foreign expansions, hinting at possible biases in studies of the performance effects of distance.

Keywords: added cultural distance, attentionā€based view, domestic footprint, domestic uncertainty, foreign expansion, resource dependence theory

Suggested Citation

Hendriks, Guus and Slangen, Arjen and Heugens, Pursey P.M.A.R., How a Firm's Domestic Footprint and Domestic Environmental Uncertainties Jointly Shape Added Cultural Distances: The Roles of Resource Dependence and Headquarters Attention (September 2018). Journal of Management Studies, Vol. 55, Issue 6, pp. 883-909, 2018. Available at SSRN: https://ssrn.com/abstract=3240854 or http://dx.doi.org/10.1111/joms.12314

Guus Hendriks (Contact Author)

Erasmus University Rotterdam (EUR) - RSM Erasmus University ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Arjen Slangen

University of Amsterdam Business School ( email )

Amsterdam
Netherlands

Pursey P.M.A.R. Heugens

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands
0031 10 408 2365 (Phone)
0031 10 408 9012 (Fax)

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