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Beyond Cultural Distance - Switching To A Friction Lens in The Study of Cultural Differences

1) The document reflects on the author's 2001 article that critically reviewed the popular "cultural distance" construct for measuring cultural differences and its underlying assumptions. 2) The author discusses how subsequent work tested some of the observations made in the original article and how the field has redirected research away from the static "cultural distance" paradigm toward a more dynamic model. 3) The author expresses disappointment that the impact of the 2001 article varied, as other corroborating work did not immediately change practices, but hopes it has encouraged a more rigorous interdisciplinary approach to studying cultural differences.
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0% found this document useful (0 votes)
120 views6 pages

Beyond Cultural Distance - Switching To A Friction Lens in The Study of Cultural Differences

1) The document reflects on the author's 2001 article that critically reviewed the popular "cultural distance" construct for measuring cultural differences and its underlying assumptions. 2) The author discusses how subsequent work tested some of the observations made in the original article and how the field has redirected research away from the static "cultural distance" paradigm toward a more dynamic model. 3) The author expresses disappointment that the impact of the 2001 article varied, as other corroborating work did not immediately change practices, but hopes it has encouraged a more rigorous interdisciplinary approach to studying cultural differences.
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Journal of International Business Studies (2012) 43, 12–17

& 2012 Academy of International Business All rights reserved 0047-2506


www.jibs.net

RETROSPECTIVE

Beyond cultural distance: Switching to a


friction lens in the study of cultural differences

Oded Shenkar Abstract


My 2001 article provided a critical review of one of the most popular constructs
Fisher College of Business, The Ohio State in international business, and in the management and business literature as
University, Ohio, Columbus, USA a whole, namely cultural distance. It listed various illusions, implicit yet
unsubstantiated and refutable assumptions that underpinned a construct set to
Correspondence: capture the essence of cultural differences. The paper questioned the validity of
O Shenkar, 730A Fisher Hall, Fisher College
the measure; the resultant findings obtained in such international business
of Business, 2100 Neil Avenue, Columbus,
OH 43210, USA.
applications as foreign direct investment patterns, sequence, entry mode, and
Tel: þ 1 614 292 0083; performance; and, ultimately, the wisdom of continuing the use of the measure
Fax: þ 1 614 292 7062 and its underlying construct. In this retrospective, I review subsequent work
that tested some of the original observations, the impact the article has had,
and, in particular, how we can redirect research away from the static cultural
distance paradigm toward the dynamic interaction of the actual entities that
come into contact in international business.
Journal of International Business Studies (2012) 43, 12–17. doi:10.1057/jibs.2011.42

Keywords: cultural distance; cultural dimensions; cultural friction

BACKGROUND
The idea for the original paper (Shenkar, 2001) developed over
a long period of time. It involved research and review of the
literature in international business and in related areas, and a
number of “critical incidents” that were as much the result of trial
and error as they were of systematic investigation. Taken together,
these diverse processes produced an increasing sense of unease over
how the scholarly community, myself included, has measured
cultural differences and, in particular, how we have used the
cultural distance index to study the impact of those differences on
major international business phenomena. I have gradually come to
realize that what we have been doing was not only superficial,
lacking in substance and rigor, but was perhaps invalid or, at the
very least, seriously flawed. This was not an easy conclusion to
reach. After all, in over a decade since its introduction, the cultural
distance measure developed by Kogut and Singh (1988) has become
the field’s standard-bearer, supplanting virtually all other modes of
gauging cultural variations, including the prior concept of psychic
distance.
It is difficult for me to recall when exactly I first came to identify
Received: 30 June 2011
the deficiencies of the cultural distance measure. I can vividly
Revised: 18 August 2011 remember, however, an instance roughly two decades ago when,
Accepted: 30 August 2011 in one of my co-authored studies (Shenkar & Zeira, 1992), initial
A friction lens in the study of cultural differences Oded Shenkar
13

analysis showed that cultural distance had no an erosion of the interdisciplinary platform that is
discernible impact on role ambiguity, one of the supposed to be a stalwart of international business
key dependent variables in our study. When this research, and which underpins its strengths. Being
finding was challenged by post-study interviews, “interdisciplinary” has become a popular mantra
we became suspicious, and after some brainstorming in business schools, joining “globalization” and
came to identify the aggregation of cultural dimen- “relevance” as catchy terms that are fashionably
sions as the culprit. Indeed, a reanalysis showed promoted while rarely practiced beyond the super-
that differences on all four of Hofstede’s (1980) ficial. International business has a vital role in
constituent dimensions, when included separately in exercising interdisciplinary research, but at present
the regression, came out as significant, although the field has not lived up to its full potential as
with different signs, cancelling out their impact in a hub and model for such research. Unlike multi-
the aggregate measure. This not only questioned the disciplinary research, which connotes borrowing
rigor of the aggregation, but has also raised another from many disciplinary areas, interdisciplinary
issue, namely that not all cultural differences were research requires the intersection and cross-fertili-
disruptive and dysfunctional, and that – contrary to zation of disciplines with the aim of extracting
the assumption embedded in the cultural distance theoretical and methodological insights and syner-
concept – some could be, in fact, complementary gies. Interdisciplinary research implies borrowing
and conducive to performance. that is not cursory or haphazard, leveraging rather
As more and more challenges to the cultural than merely acknowledging the diversity within
distance index emerged, I began to suspect the each area, and is aimed at the eventual creation of
measure and, in time, the very concept of distance, a feedback loop from the borrower back to the
as a valid representation of cultural differences, and originator. This necessitates much more than the
as a predictor of impact on business phenomena. mechanistic import of disciplinary content exem-
Inconsistent empirical findings in the application plified by the cultural distance construct, which,
of the construct in a variety of settings should have as I have tried to illustrate, can do more harm
alerted me and others even earlier to the problem, than good.
but did not. Why? There are a number of reasons.
One is that there were other plausible explanations AFTERMATH
for the inconsistent findings, ranging from differ- Although the 2001 paper was extensively cited,
ences in sampling and research designs to theore- its impact varied widely, not always producing
tical deficiencies. A second explanation for failing the outcomes I had hoped for. I did not expect an
to detect the faults of the measure at an earlier stage immediate impact, but was disappointed, especially
was more worrisome, namely the temptation to as other work published around the same time
use a simple formula to gauge variations in the corroborated some of the points made in the
complex, intangible phenomenon called “culture.” article, for example, the distinct influence of the
This temptation was simply too big to pass up, individual dimensions of culture (e.g., Pothukuchi,
especially as it yielded a single quantitative measure Damanpour, Choi, Chen, & Park, 2002) or the
that could be incorporated in a regression equation role of non-cultural mediators (e.g., Brouthers &
together with supposedly hard data variables, such Brouthers, 2001). At the same time, several authors
as R&D intensity, producing what seemed to be appear to have taken the criticism to heart, as in the
seamless research. Equally worrisome was a third case of adopting cognitive measures of cultural
explanation, that the more it had been used, the differences (Chen, Kirkman, Kim, Farh, & Tangirala,
more legitimacy was conferred upon the measure, 2010). Still, these efforts fell short of my hopes for
so that subsequent authors justified its utilization redirecting research in the field. Worse, in quite a
by referring to prior usage. This pointed to a few instances, authors referenced the article to
fundamental failure in the knowledge-building acknowledge that dealing with cultural differences
process that was bigger than any one measure, was challenging, promptly proceeding to use the
and constituted one motivation behind the 2001 same measure I had argued against. There were
paper. other, more determined voices, however. For exam-
Although my primary motivation was to enhance ple, Kirkman, Lowe and Gibson (2006: 303) have
the rigor and depth of business research involving lent empirical support to several of the illusions
culture, I was also seeking to draw attention to listed in the 2001 article, and came up with a
other major concerns, among them what I saw as strongly worded take-away, recommending that

Journal of International Business Studies


A friction lens in the study of cultural differences Oded Shenkar
14

researchers “avoid further use of the overall cultural which challenges the equivalence/aggregation
distance index.” assumption, as well as the autopilot focus on
In the meantime, efforts were under way to distance as opposed to nominal readings. In that
convince scholars of the merits of the original paper, we found that MNEs hailing from high
recommendations. Two subsequent studies tested power distance/assertiveness cultures exercised
the first illusion identified in the 2001 paper, namely tight control over subsidiaries in the form of
that of asymmetry. The illusion was that the term expatriate assignment, regardless of whether the
“distance” connoted, by definition, symmetry – that host country was high or low on those dimensions,
is, that the distance from A to B was identical to the showing that “distance” failed to capture the
distance from B to A; yet there was no empirical impact. Those findings served as a reminder that
evidence or logical or theoretical justification to home-country culture was an important determi-
support an assumption of symmetry. There was nant of strategic and IHR decisions, an assumption
indirect evidence to the contrary, but not in the once taken for granted in the literature, but one
form of direct testing, so this was attempted in a that seems to have been all but forgotten. Indeed,
study on expatriate adjustment led by my colleagues another broader concern revealed by the 2001
(Selmer, Chiu, & Shenkar, 2007). We confirmed article was that the field has failed to build on
asymmetry for German expatriates assigned to the prior work, which became even more apparent in a
US compared with US expatriates assigned to subsequent review, which concluded that earlier
Germany: controlling for length of assignment, research in the “psychic distance” tradition was in
German expatriates were better adjusted, socio- some ways (e.g., the consideration of non-cultural
culturally and psychologically, than the US expatri- variables) richer and more rigorous than the latter
ates. We await further studies that will test expatriate stream of “cultural distance” research (Shenkar,
asymmetry for other national pairs, and which will Luo, & Yeheskel, 2008).
expand the scope of research into other facets of Finally, it was probably naive of me to expect an
selection, training, and performance. even deeper soul-search to result from my article,
In another firm-level study (Lee, Shenkar, & Li, one that would touch on fundamental issues relating
2008), we were able to confirm asymmetry by to the conceptualization and measurement of cul-
simultaneously studying the inward and outward ture, such as the ability to capture the phenomenon
international partnering preferences of South Kor- through a set of discrete dimensions (Bond et al.,
ean firms. We found that while cultural differences 2004; Gelfand, Erez, & Aycan, 2006; Usunier, 1998),
did not significantly impact on the control prefer- the complexity of dealing with multiple levels of
ences of the Korean firms, the relationship was analysis (e.g., Klein, Dansereau, & Hall, 1994), or the
moderated by the direction of investment. This appropriateness of using questionnaires as a singular
study was also aimed at highlighting another data collection device (Smith, Peterson, & Thomas,
problem associated with the application of the 2008). This brings me back to the meaning, and
cultural distance measure, that of confounding value, of interdisciplinary research, and the risk of
firm and environment. In other words, scholars generic imports. If we do not learn the language of
often looked at the investment entity and the another discipline, not only will we not be able to
investment environment as if they were equivalent, eventually export knowledge to that discipline, but
in effect measuring distance between “apples” and will also fail in a more fundamental sense by
“oranges.” They did not consider, for example, that importing an ill-adapted good. International busi-
a Korean firm bringing a foreign partner to work ness scholars are more aware than any of the
within Korea faced a different cultural challenge consequences of failing to adapt a product to a local
than that faced by counterparts partnering with environment, and we should not treat knowledge
foreign firms on foreign turf. The same confusion of inputs differently.
levels of analysis can be found in other cultural
distance applications, attesting to the danger of THE WAY FORWARD
veering away from actual transacting entities. When I searched for yet more explanations as to
Finally, in another international human resource why cultural distance retained its position as a
(IHR) article (Brock, Shenkar, Shoham, & Siskocick, popular concept despite increasingly glaring short-
2008), we have gone beyond asymmetry, illustrat- comings, I came to the conclusion that at least
ing that only certain cultural dimensions were part of the problem was the use of “distance” as the
impactful when it came to expatriate assignment, base metaphor for capturing the essence of cultural

Journal of International Business Studies


A friction lens in the study of cultural differences Oded Shenkar
15

differences, and their impact on international entailing a positive as well as a negative potential:
business phenomena. This became the basis for a too much friction will generate heat and resistance,
paper (Shenkar et al., 2008) that constituted a meta- but too little friction will bring about adverse
phorical analysis of the construct. In that paper, we consequences,for example, slippage, as is the case
argued that the appeal of cultural distance was at of a tire interfacing with the road. The paper also
least partially rooted in the characteristics of the introduces “drag parameters,” to include, in addi-
geographic “background metaphor,” which con- tion to entry mode, workflow interdependence,
noted a rational, objective and quantifiable gauge, the breadth of local stakeholders, the speed and
and which avoided dealing with the “messier,” but stage of international expansion, and the depth
crucial aspects of meeting and interaction. Conse- of localization. Also discussed are “lubricants,”
quently, we suggested doing away with the distance namely elements with the potential to reduce
metaphor in favor of another metaphor, that of friction at the point of contact (e.g., cultural
friction. We noted that the friction metaphor sensitivity training). A friction formula is provided,
provided a superior representation of what was although empirical work is yet to be conducted.
arguably the heart of the matter in international
business, namely the interaction between viable FINAL THOUGHTS
entities. We also discussed a number of repercus- Looking at recent developments in international
sions flowing from this switching of metaphors, for business, a switch to a friction lens seems more
instance that entry mode, traditionally the depen- necessary than ever. As the actors in the foreign
dent variable in international business research, be investment arena are transformed, the need to
also considered an independent variable, as differ- specify and ground them, and to capture the
ent entry modes generated variable levels of resultant interaction, becomes paramount. Take,
friction. Much remains to be done, however, if we for example, the sovereign wealth funds, which
are to achieve this shifting of metaphors from have been rapidly gaining in volume and clout,
“distance” to “friction.” but which have the potential to generate a very
One of the remaining challenges remains the different reaction in a host country than an
measurement of friction, a necessary step if we are investment by a business firm, especially one
to achieve an eventual switching of measures as lacking a strong national identity. Holding other
well as of metaphors. A study published by Orr and variables (e.g., a friendly vs a hostile takeover)
Scott (2008) showed how friction may actually constant, the cultural interaction generated in the
occur. Although their focus was more on institu- case of the former will be much more intense than
tional distance than on cultural distance, the in the latter case. Or think of the likely wave of
paper’s zeroing-in on the actual interaction Chinese foreign investment in the US against the
between specific actors rather than dwelling on background of increasingly tense relations between
their degree of separation is equally valid on the the two countries, at least one of which sees the
cultural front. Using 23 global projects, the authors culture of the other as a material threat. Only a
illustrated the process by which entities meet and perspective that embeds actual actors within their
go through phases of ignorance, sense-making, and respective systems, as well as within their bilateral
response. While falling short of providing direct and contextual relationship, political as well as
quantitative measurement of friction, the paper cultural (Shenkar & Arikan, 2009), is likely to
showed the complexity of outcome associated with capture the essence of the transaction; in contrast,
direct interaction of actual actors, and managed to clinging to a “distance” view will not only provide a
capture tangible instances of friction, “critical limited tunnel vision but may well produce wrong
incidents” that provided a visible substitute for readings as far as the nature, scale and scope of
the current sterile views encapsulated in the impact are concerned.
concept and measure of “distance.” It will be a mistake to focus only on conceptual
Another paper dealing with friction (Luo & and methodological flaws of cultural distance,
Shenkar, 2011) seeks inspiration in the disciplines important as they are, or even on the vital work
originally associated with the concept, namely that remains to be done in developing and
physics and mechanical engineering. The knowl- measuring cultural friction, without reassessing
edge base in those disciplines is used to develop the very role of culture in our theoretical frame-
“laws of friction,” as well as to remind readers works. The next front must also evolve around a
that, in and of itself, friction is a neutral term theory development effort. To start with, we should

Journal of International Business Studies


A friction lens in the study of cultural differences Oded Shenkar
16

attend to something that has been taken for granted of the “normative pillar” of institutions. The same
for too long, namely the tenuous connection is true for indigenous international business
between the construct of culture and the theoretical theories. For instance, the Uppsala internationa-
frameworks into which it has been deposited all too lization model incorporated psychic distance as
often in an implicit, haphazard and questionable a key construct (Johanson & Vahlne, 1977), and
fashion, and whose latent assumptions are as proble- later (Johanson & Vahlne, 2009) it was positioned
matic as those underlying the cultural distance as a root of uncertainty, raising similar questions
construct. Take, for instance, transaction cost eco- to those pertinent in the transaction cost applica-
nomics, which has become the most popular theore- tion. Similarly, Dunning (2009) called for the
tical platform from which to study market entry injection of context into his eclectic theory, and
mode. Williamson’s theory does not include culture cast culture in the potential role of triggering
as a theoretical construct, and in its various applica- country-specific and firm-specific advantages, but
tions culture has been conceived, when spelled out at we have yet to specify how this would happen
all, by and large as a proxy for uncertainty. Although within a multinational enterprise, or under what
seldom if ever questioned, this is a very problematic conditions advantages might be eroded rather
assumption: there are numerous forms of uncertainty than leveraged as an outcome.
that have nothing to do with culture and cultural The main point here is that until and unless
differences, and culture can be, at times, a harbinger culture is appropriately incorporated into the
of stability. As noted in the 2001 paper, the problem theoretical landscape, rather than reduced to ques-
can be easily illustrated in the case of entry mode. tionable and frankly indefensible proxies, worth-
Gatignon and Anderson (1988; see also Anderson & while efforts directed at increasing research rigor
Gatignon, 1986) acknowledge that transaction cost will have limited value. To get there, we will also
theory can accommodate contrasting predictions: need to revisit broader, fundamental assumptions,
under high cultural distance, a firm may choose such as whether the narrow economic view of
low control to compensate for its lack of local institutions is the right prism for international
knowledge, relying on a local partner; or it may opt business research (a resounding “no” in my humble
for tight control to reduce dependence upon agents opinion), and whether it should be substituted or
whose actions are poorly understood. These contra- supplemented by the more comprehensive view
dictory predictions may represent a fundamental flaw available from sociology and other areas (e.g.,
in the transaction cost argument, but they may be political science) that have all but disappeared
the result of how cultural differences are positioned from the theoretical radar screen of business
within the theoretical framework. scholarship. Then again, only a truly interdisciplin-
Similar questions regarding the theoretical role ary approach, one that seeks to learn from and work
of culture may be raised regarding agency theory, with other areas of study rather than naı̈vely import
where an intriguing question is whether and how out-of-context inputs, will set us on the way of
cultural interaction alters the nature of the achieving the theory development we covet. This
principal–agent relationship; regarding resource same approach can also turn us into knowledge
dependence, where culture may be viewed to exporters; after all, many of the problems endemic
potentially cement a relationship as a substitute to the cultural distance construct similarly afflict
for actual dependence, or, in the presence of such concepts as institutional distance, industry
certain moderators, such as historical interaction distance, technological distance, and organiza-
(Park & Ungson, 1997), strain or sever it; or tional distance, which are widely used in the
regarding institutional theory, where culture is organizational literature. Let international business
surprisingly missing except in limited discussion lead the way.

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ABOUT THE AUTHOR
Lee, S. -H., Shenkar, O., & Li, J. 2008. Cultural distance, Oded Shenkar, Ford Motor Company Chair in
investment flow, and control in cross-border cooperation. Global Business Management and Professor of
Strategic Management Journal, 29(10): 1117–1125.
Luo, Y., & Shenkar, O. 2011. Toward a perspective of cultural Management and Human Resources at the Fisher
friction in international business. Journal of International College of Business, The Ohio State University,
Management, 17(1): 1–14. where he heads the international business area, and
Orr, R. J., & Scott, W. R. 2008. Institutional exceptions on global
projects: A process model. Journal of International Business is also a member of the Centers for Chinese Studies
Studies, 39(4): 562–588. and for Near East Studies.

Accepted by John Cantwell, Editor-in-Chief, 30 August 2011. This paper has been with the author for one revision.

Journal of International Business Studies

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