1
Asymmetric Effects of Power Distance
on Foreign Subsidiary Performance
Master Thesis
2
Abstract
This paper researches the impact of asymmetric effects of power distance between home and host countries of MNEs on the performance of their foreign subsidiaries. The hypotheses are that differences in power distance have an effect on performance, and that these effects vary depending on the direction of difference. Organizations from low power distance environments could have a competitive advantage in high power distance environments because of better networking abilities and higher efficiency. Furthermore, it is hypothesized that the effect of power distance differences between countries does not occur in a linear way.
3
1 Introduction
Much research has been done on the influence of culture on management practices and their success. While in the 1950s the general belief was that management principles are generally applicable (Harbison & Myers, 1959), later research came to the conclusion that the applicability of management practices differs between countries (e.g. Oberg, 1963).
Doing research in a large, multinational American company, Hofstede (1980) identified four dimensions of cultural differences which would classify countries with regard to their cultural characteristics and which were prevalent in the attitudes of the company’s employees, i.e. which are relevant for the organization of the firm, and measured them on a scale. Out of these values for the four dimensions of cultural differences, Kogut and Singh (1988) constructed a measure of cultural distance which normalizes and adds up the values of the four dimensions. Ever since, this measure of cultural distance has been widely used to explore and quantify the impact of cultural differences on market entry strategies of MNEs, foreign subsidiary performance and the sequence of foreign investment (Shenkar, 2001). These studies indicate some impact of cultural distance, but are sometimes ambiguous or dependent on the firms and countries studied (cf. Kogut and Singh, 1988; Madlock, 2012; Khatri, 2009). Shenkar (2001) analyzes findings of many of these studies using cultural distance as a factor for explaining a firm’s behaviour and concludes that there are conceptual and methodological problems with the measure of cultural distance leading to these ambiguous results. Among other things he criticizes that cultural distance is not symmetric, i.e. that going from country A to country B may be different from going from country B to country A when it comes to the amount of cultural distance which needs to be taken into account. This is a concept which may apply to many different kinds of asymmetry. It could, for example, describe the fact that due to globalization and convergence some countries are not only more open than others. Some countries are known better in the world economy through a greater presence of its culture, which makes it easier for citizens of other countries coming to this country and to do business than a citizen leaving this open country to live in a country which is not as open. Furthermore, it could relate to other factors which close cultural distance on one side, but not on the other, such as foreign experience, or great attractiveness of one culture. These concepts are also described by Shenkar (2001).
4 only focuses on one dimension, namely power distance. Power distance refers to the amount of inequality between individuals in terms of power which is preferred by a society or individual.
This article focuses on power distance as it is important for the performance of a foreign subsidiary through its effect on employee participation, communication and decision making efficiency. Miller and Monge (1986) find that in U.S. based studies employee participation has a positive effect on both, employee satisfaction and productivity. According to their analysis it is particularly the participative climate within a company which leads to a substantially positive effect on workers. In a participative environment employees have to take responsibility by making own decisions and giving feedback, i.e. power distance in such an environment is low. Salter et al. (2008) investigated the relationship between power distance and the degree of information sharing within a country and found that these levels of sharing depends on the amount of power distance of a culture. In contrast to this, in high power distance cultures, individuals prefer to not decide themselves but to pass the decision on to a higher level, which leads to lower organizational efficiency and lower quality of decisions (Khatri, 2009). The findings by Miller and Monge (1986) would suggest that a high power distance environment leads to less satisfied employees and lower productivity in general. However, Newman and Nollen (1996) find that the impact of employee participation on performance depends on the cultural context of the host country of a subsidiary or work-group. The performance of a foreign subsidiary is better if the amount of employee participation fits the prevailing societal preference in power distance. Thus, high participation leads to better results in low power distance cultures and vice versa, while misfit management practices lead to lower performance.
In contrast to this, Roth, Kostova and Dakhli (2011), in line with Khatri (2009), hypothesize that due to better networking abilities – provided there is a minimum level of acceptance – low power distance attitudes generally have a competitive advantage in high power distance environments. This would suggest that a foreign subsidiary with a low power distance corporate culture could have a competitive advantage over competitors in a high power distance environment if there is a minimum level of acceptance of the misfit, i.e. the differences in power distance are not too large.
The possibility is investigated that there are asymmetric effects connected to power distance making it easier for one culture being a misfit in another culture, while this advantage is not available the other way around. If the general impact of power distance on foreign subsidiary performance in the dataset is verified, the question is what the effect of this difference in different directions of power distance is, whether these effects are asymmetric and under which circumstances they occur, i.e. the marginal effect of increasing the power distance differences between countries on subsidiary performance.
5 differences on a day to day basis in business, indicating under which circumstances how much assimilation is needed and how much difference in terms of power distance can be beneficial.
2 Power Distance in the Literature
Out of the four original dimensions of cultural distance by Hofstede (1980) power distance seems to be the second most often used dimension for research, ranking just behind the dimension of collectivism/individualism. This is not surprising as power distance plays an important role for management practices, especially in the fields of leadership and employee participation. Despite the fact that today it is widely acknowledged that different cultures need different management practices in order for a firm to become successful, the Anglo-American literature on management practices still has a significant influence worldwide. This may be why there are many studies on the effects of employee participation and constant improvement systems in different cultural contexts. The United States, like other Anglo-American, but also Scandinavian and German-Speaking countries have a low power-distance culture (compare to Hofstede, 1983). It has been found in studies in the U.S. that in a national culture of low power distance employee empowerment may lead to greater productivity and profits because of high employee satisfaction (Miller and Monge, 1986) and higher efficiency of decision making. Newman and Nollen (1996) find that the performance of work units of an MNE operating in high power distance cultures was better when there was lower employee participation because this fits the cultural preferences of higher inequality between individuals and delegating decisions to a higher level better.
Hofstedes cultural dimensions, including that of power distance, were originally thought to describe cultural attitudes of societies. However, as for example Roth et al. (2011) point out, individuals of the same national culture have different cultural attitudes. These can deviate from the general cultural attitude of that country in one or more dimensions (Early and Gibson, 1998; Farh, Hackett, Liang, 2007). The Hofstede dimension of power distance is used to characterize different individual and corporate cultural values as well as societal values to research are used to test whether there are asymmetric effects of power distance on subsidiary performance in situations where these subsidiaries are misfits in the societal host culture.
6 systems of continuous improvement and employee satisfaction is more closely related to the shared organizational culture than the national culture. Thus, on the one hand it might be organizational culture which limits the success of employee empowerment, but on the other hand it may very well be that even in high power distance cultures there are organizations which share a common value of low power distance among its individuals, leading to a successful performance due to employee satisfaction through empowerment. This result, however, is not unambiguous. Wu and Chaturvedi (2009) find that low power distance in the organizational culture is not significant explaining the success of high performance work systems in terms of job satisfaction and affective commitment to the company. Farh, Hackett and Liang (2007) find that if individuals hold low power distance values, high perceived organizational support (i.e. perception that the company cares about the individual worker) has a stronger relationship on that individuals’ work outcomes.
What can be drawn from this is that organizational culture generally tends to resemble national culture, but differences from the national culture are possible. For example a foreign subsidiary of an MNE setup by expatriates may have a lower power distance culture than the national culture this subsidiary operates in because the home country of this subsidiary has a low power distance culture and it may be successful doing so if it occupies individuals resembling this low power distance culture, being a misfit in their own national culture.
As Khatri (2009) finds, high power distance organizations generally have less effective communication and decision-making is faster, however of lesser quality than in low power distance organizations because decisions are not put into question. Furthermore, in high power distance organizations individuals in lower positions delegate even small decisions to higher levels which leads to a situation where higher management levels are occupied with routine decisions. All of this appears to have a negative impact on organizational performance. This would imply that low power distance cultures within a corporation have a competitive advantage over high power distance cultures, provided that this is supported by the employees’ individual power distance values. Out of the above discussion, the following hypotheses on the effects of power distance on foreign subsidiary performance are derived
Differences in Power Distance matter
7 conclusion that increasing power distance has the same negative effect on expected cost of a market entry as other dimensions of cultural distance. Specifically looking at power distance, as mentioned above, Newman and Nollen (1996) find a better performance in work units which adapt their management practices to the national environment of power distance they operate in. The greater the difference in power distance between two countries is, the greater the difficulties to work in the new environment with employees and customers having different attitudes than one has experience with (Salter, 2008; Morrison, 2004). It is thus hypothesized that:
H1: The difference in levels of power distance between the home and the host country has an
impact on the performance of foreign subsidiaries
Marginal Effect of Power Distance Differences
Roth et al. (2011) further hypothesize that the competitive advantage of individual low power distance in a generally high power distance environment may only come into existence if the low power distance individual has a minimum level of acceptance in the society it is in, as otherwise it would not be possible to make use of its competitive advantage because it could not establish a network at all. There are very ambiguous findings about the impact of cultural distance in general and specifically power distance on the performance of foreign subsidiaries in their host countries. This may have something to do with the fact that misfits, if they have a minimum level of acceptance, may be able to outweigh some of their disadvantages due to the liability of foreignness through a competitive advantage of being a misfit or even have a better performance than locals due to being a misfit. For example, Chang (1995) finds that cultural distance leads to lower rents of multinationals entering a new market, whereas Park and Ungson (1997) find that larger cultural distance may be associated with lower rates of international joint venture dissolution. Perhaps in the latter case many of the joint ventures in the study reached a minimum level of acceptance, leading to the found result. Furthermore, as Robert et al. (2000) find, organizational culture may very well deviate from national culture and it may be successful in doing so if it employs individuals which have a minimum level of acceptance of the organizational culture. This article hypothesizes that:
8
Asymmetric Effects of Power Distance Differences
Roth et al. (2011) argue that every individual has a network around it which is shaped by this individual’s culture. Due to being a cultural misfit in a society individuals or organizations may have competitive advantages over other individuals as for example in cultures with high power distance individuals tend to only be connected to other individuals of their hierarchical level, but misfit individuals with low power distance can make use of tighter connections spanning all hierarchical levels which makes them more effective. The same may apply for an organization which is a misfit in a national culture, both in communication with its customers and in communication within itself. A tighter network within the company due to low power distance may be associated with a flatter hierarchical structure which improves efficiency and speed of decision making, ultimately leading to better subsidiary performance. On the other hand, Ghosh (2011) states that organizational leaders of MNE’s originating from high power distance countries can nurture competences that makes its foreign subsidiary perform better in a low power distance economy. Zhang & Begley (2011) mentions that the relationship between power distance and empowerment is much more complex than generally believed.
Although Zaheer (1995) does not refer to the term asymmetry, in his study of trading room performance in Japan and the U.S., he observes asymmetric effects of U.S. trading rooms performing well in Japan if they stick to their U.S. practices whereas Japanese trading rooms in the U.S. do not perform as well, especially not if they try to adopt U.S. practices. Zaheer (1995) concludes from this that firms may have a competitive advantage in their managerial practices which they should not give up in other cultural circumstances. Also Newman and Nollen (1996) find that the positive effect of congruence of management practices with the national culture is more pronounced in some constellations than in other. In their study the performance of work units with high employee participation in low power distance environments is better than low employee participation in a high power distance environment. This could indicate that certain management practices have a competitive advantage over other management practices. Khatri (2009) confirms with his findings that high power distance cultures in organizations leads to less effective communication, lower quality decision making and lower corporate efficiency. It is hypothesized that:
H3:The effect of power distance on foreign subsidiary performance is asymmetric, i.e. moving operations from a low power distance country to a high power distance country has higher subsidiary performance.
9
3 Methodology
The easiest way to verify or falsify the above hypotheses for a larger number of situations is a quantitative study for a broad set of countries with a broad set of MNEs and subsidiaries. An OLS regression model is used to test the hypotheses as it allows bringing the hypotheses into a functional form which may then be tested empirically.
In order to test the hypotheses the following model is constructed:
ln(Yij) = β0 + β1*PDD + β2*PDD^2 + β3*D1 + β4*D1*PDD + Xi + εi
with Yij being a measure of performance of a subsidiary located in country i of an MNE located in country j (in this model showing an percentage increase on changes in the independent variables due to the logarithm). PDD denotes the difference in power distance when going from country i (MNE headquarters) to country j (subsidiary). Brock et al. (2008) also used this measure in a broader set of cultural distance variables to test for expatriate deployment. Therefore, there is some empirical justification for this specific variable to the test the hypothesis in this model. Standard OLS regression techniques are used to test the variables outlined in the previous section of the paper. The variable PDD is used to test whether power distance differences between countries play a role in the
performance of subsidiaries, which is reflected by the β1 coefficient. When β1 is significant, the first hypothesis is confirmed and an effect of power distance differences on foreign subsidiary performance exists. Also, the square of this variable, PDD, has been taken for modeling purposes and to include marginal effects of this variable in the estimation process, which in turn will be used to test the second hypothesis of a non-linear effect of power distance difference on foreign subsidiary performance is being present. When β2 is smaller than 0, this would indicate a diminishing marginal effect on the benefits of increasing the power distance gap between countries. It then could be inferred that a certain minimal threshold level of power distance difference exists that will make this phenomenon profitable for MNE subsidiaries and that the effect might diminish over time. To test the third hypothesis, the asymmetric effect of power distance on subsidiary performance, a dummy variable is included into the analysis. The dummy variable, D1, represent the movement from high numerical values to low
10 country and vice versa is different from each other. In line with the third hypothesis, foreign subsidiary performance is higher when moving operations from low power distance countries to high power distance countries than moving from high to low power distance countries. Therefore, when β4 is significant, it can be inferred that there are asymmetric effects when relocating production from country i to country j and vice versa on the performance of subsidiaries in terms of power distance differs. Furthermore, a vector of control variables, such as GDP differences between countries, level of property rights protection and the degree of innovation, will be included to prevent omitted variable bias to occur in the model, thus reinforcing the reliability of the parameter estimates.
11 with respect to the cultural dimensions by Hofstede (1983). From these countries, turnover data from the largest foreign subsidiaries of a large multinational enterprise (MNE) in each country has been collected. The reason why only data from the largest foreign subsidiaries have been collected is that these large firms might have the most pronounced effects on performance in asymmetricy of power distance. The mean of the turnover variable is around 4.8 billion US dollars, and has a standard deviation of. From the power distance scores of each situation, i.e. from country A to country B, the differences in power distance levels are calculated. As mentioned earlier, positive scores reflect the situation where the foreign subsidiary is located in the low power distance country compared to the MNE home country. Negative scores reflect the opposite situation where the foreign subsidiary is located in the high power distance country. In a last step we will add a dummy variable being one if the home country’s power distance is lower than the host country’s distance. All cases for which a certain score of a variable is not present, will be eliminated to decrease the potential of biasing the results of the research.. The logarithm of the performance measure as the dependent variable in the regression is used because it reflects the percentage change in the dependent variable when the independent variables take on different values. A reason to include a logarithm in the dependent variable is to control for specific characteristics of subsidiary performance, such as the size of the subsidiary.
Of course, the difference in power distance may only have a minor influence on foreign subsidiary influence in comparison to other influence factors, such as firm size, industry and others. This is why control variables are included to control for important influence factors on foreign subsidiary performance. First, the welfare of each country in the dataset for 2010 is included as a control variable in the model, in this case GDP per capita. Furthermore, institutional development in the host country determines the efficiency and performance of subsidiaries operating in this country, evidence for this may e.g. be found in Chan, Isobe and Makino (2008). For institutional development, data on this matter is included by using the institutional development index developed by Chan et al. (2008) as a control variable. The property rights index (IPRI) for 2010 is used as the level of institutional development is only one component of the index, giving the IPRI more reason to be included in the analysis. (Strokova, 2009) Finally, the Global Innovation Index 2010, (Confederation of Indian Industry & INSEAD, 2009) has been used to provide a numerical representation of the level of innovation of each country involved in the dataset, and contains a wide number of ‘pillars’ that constitute this index (human capacity, ICT and infrastructure, market sophistication etc.) Therefore, using these three control variables give an approximation of a wide range of country-specific factors influencing the relationship between power distance differences and foreign subsidiary performance.
12 quite easily available and does not require much time consuming, costly own data mining in the form of surveys or research within companies. However, the disadvantages are the power distance variable needs to be abstracted/added from the situation of a specific company which may have a corporate culture that is very different from its national culture, and also from the fact that individuals of one culture do not share the exact same behavioral attributes (McSweeney, 2002), but that culture also varies between individuals of the same national culture (Shenkar, 2001; Roth et al. 2011). The behavior in and performance of foreign subsidiaries may also depend on unobservable variables such as personal sympathy, experience and the like. This paper cannot account for the specific situation of one subsidiary or parent company which may be very different from the situation of other subsidiaries or parent companies, in terms of these intangible phenomena.
Furthermore, due to the choice of data sources, some difficulties with the current approach arise as the Hofstede measures are already forty years old. Using this, power distance together with recent firm level data, this may cause inconsistencies as cultural distance may vary over time. Despite the power distance scores in the article originate from 2010, it is assumed that this concept does not change enough in its scores per year to affect the research results. Even if this is not the case there should be crossvergence between cultures (Ralston, Gustafson, Cheung and Terpstra, 1993)leading to a situation where cultures may change but their absolute distance should not change.
4. Discussion
13 models 1 to 3 are steps prior to the complete model, i.e. model 4, and are included in the appendix for reference. The first model only includes two variables to test the first hypothesis of the effect of power distance differences on the turnover of foreign subsidiaries in its basic form. The logarithm of the turnover of foreign subsidiaries is regressed against the power distance difference measure. The coefficient of the PDD variable is negative, -0.0183, implying that differences in power distance have an effect of -1,83% on foreign subsidiary performance but is insignificant at the 5 percent level. However, this analysis is too simple to establish any conclusions regarding the hypotheses in this paper when looking at the R-square of 0.0351 and an adjusted R-square of 0.0247. More variables need to be included to add more ‘strength’ to the analysis which will be done in the second model of this paper. These variables and instruments are added in the upcoming models.
To test the second hypothesis, that power distance have a marginal effect on the performance of foreign subsidiaries, a square term of the PDD variable is included in the following step (PDD2). Adding the square of the power distance difference variable, increased the significance and magnitude of the PDD coefficient, β1, to -0.0234 indicating a -2,34% effect on foreign subsidiary turnover. The coefficient of the square term, representing the second hypothesis and β2, is -0.00042. This indicates that the negative effect of increase the amount of power distance between countries diminishes as it gets larger, by -0.042%. Unfortunately, the coefficient is not significant at the five percent level, although the R-squared term, 0.0577, and the adjusted R-squared term, 0.0371, have increased in value thus reinforcing the explanatory “strength” of the model compared to the basic first model.
14 distance between countries. Rephrasing this in line with hypothesis 3 in the text, moving from a high power distance country to a low power distance country increases foreign subsidiary performance by 20.1% when the value of PDD changes by one unit. However, too little factors are included to actually make real-life inferences about this phenomenon of asymmetric power distance on subsidiary performance as the power of this third model is small with an adjusted R-square of 0.0724. Only 7.24% of the changes in the logarithmic term of foreign subsidiary turnover is explained by changes in the independent variables.
In a final step, model 4, control variables are included in the OLS regression analysis. The three control variables used are the amount of GDP per capita per country, property rights protection index and an innovation index. It does not seem to be much control variables, however, these indices are constructed over a wide range of specific factors that encompass a country’s characteristics. Performing significance tests of the model and the control variables show that the F-value of respectively 15.75 and 10.22 are significant at the five percent level. (see Appendix). Therefore, the control variables are relevant for this particular model.
Table 1
Including the control variables have altered the values of the coefficients to some extent. Although GDP and PROPERTY have no direct causal relationship with subsidiary turnover, the ‘power’ of the model, denoted by R-square in the table, has increased to 0.1347 implying that 13.47% of the changes in the dependent variables are explained by the independent variables in the model. However, when looking at the adjusted R-square in the model, which is 0.0650, the “power” of the independent variables is limited in explaining differences in the dependent variable LOGTURNOVER. A reason for this is that the sample size of the data is limited. The control variable has a minor but significant positive effect on the turnover of a subsidiary. The outcomes of PDD, PDD2 and ASYMMETRY remain significant at the five percent level, with just a slightly different value. The effect of power distance differences on foreign subsidiary performance is 0.0895, implying that the difference in
16
5. Conclusion
The managerial implications of this research on the role of differences in power distance and the performance of foreign subsidiaries is that taking into account cultural differences is crucial for being successful in foreign countries and markets. Foreign companies may face a situation of liability of foreignness and have to focus on their competitive advantages in order to be able to compete with local companies (Zaheer, 1995). Corporate culture, which is influenced by the home country culture, can be a misfit in the national culture of the host country. This may at first sight be a disadvantage, however, as Roth at al. (2011), but also Zaheer (1995) argue, it can also be an advantage depending on the situation. However, this is only true as long as the foreign culture has a minimum level of acceptance in the sense that the power distance difference is not too big. Thus, taking into account the findings about power distance, managers may be able to use differences in power distance between home and host economies, based on the direction of market entry, to effectively enhance the performance of their foreign subsidiary.
What can be inferred from the hypotheses is whether differences in power distance between countries have an effect on subsidiary performance. The first hypothesis tests if the concept of power distance actually makes sense when conducting international business, and the results should increase the awareness among business practitioners on the role of particular cross-cultural elements. Furthermore, it is inferred that the benefits accruing from power distance differences between countries to firm subsidiaries is not a linear phenomenon. There might be increasing or diminishing marginal effects to the concept of power distance, and that adapting to cultures with large power distance differences compared to the MNE home country yields less performance to the subsidiary. Finally, the central question to the thesis is to test the application of the “illusion of symmetry” , as put forward in
Shenkar (2001), on firm performance. This implies that going from country A to country B is different than going from country B to country A in terms of power distance, despite the absolute value of the power distance difference being the same. The last hypothesis tested whether this asymmetry of power distance has an effect on the performance of subsidiaries. Since there has been evidence that this asymmetry plays a role, business practitioners should be aware of the concept of power distance. The concept of asymmetry can be stretched over multiple cultural dimension, increasing its importance in everyday business. When this is not taken into account, efficiency and revenue levels might be at a sub-optimal level.
17 distance economies. Ghosh (2011) point out the fact that organizational leaders in high power distance countries can nurture competences that are valuable when operating in a low power distance society. In addition, t could be that there is no universal rule that can explain this asymmetric behaviour, but needs to be considered on case-based scenario that differs every time. This article served to investigate the notion of “illusion of symmetry” by Shenkar (2001), and further research is required for a
complete picture of this phenomenon.
This research only focuses on one dimension of cultural distance, namely power distance. However, other dimensions such as masculinity – feminity or individualism – collectivism may also have a significant impact on foreign subsidiary performance as they influence the motivation of the employees (Newman and Nollen, 1996). It would be interesting to see what influence the other dimensions as well as the complete set of cultural distance measures together would have in the same kind model as it can be expected that asymmetric effects of the cultural dimensions will differ from each other. However, different cultural distance measures themselves may also have interaction effects which need to be taken into account. Further research may incorporate these problems into this model, by looking beyond the cultural values of Hofstede (1983) and to use other measures as well in the analysis.
Bibliography
Chan, C. M., Isobe, T., & Makino, S. (2008). Which Country Matters? Institutional Development and Foreign Affiliate Performance. Strategic Management Journal , 29, 1179-1205.
Chang, S. (1995). International Expansion Strategy of Japanese Firms: Capability Building through Sequential Entry. Academy of Management Journal , 38, 383-407
Confederation of Indian Industry & INSEAD: Global Innovation Index 2009-2010. Available: http://www.globalinnovationindex.org/gii/main/previous/2009-10/FullReport_09-10.pdf
Earley, P., & Gibson, C. (1998). Taking Stock in Out Progress on Individualism-collectivism: 100 Years of Solidarity and Community. Journal of Management , 24 (3), 265-304.
Farh, J.-L., Hackett, R. D., & Liang, J. (2007). Individual Cultural Values as Moderators of Perceived Organizational Support-Employee Outcome Relationships in China: Comparing The Effects of Power Distance and Traditionality. Academy of Management Journal , 50 (3), 715-729. Ghosh, A (2011) Power Distance in Organizational Contexts - A Review of Collectivist Cultures. Indian Journal of Industrial Relations, 47(1), 89-101
Harbison, F., & Myers, C. A. (1959). Management in the Industrial World. New York: McGraw-Hill Book Company Inc.
Hofstede, G. (2010) Data on Cultural Dimensions. Available: http://geert-hofstede.com/countries.html Hofstede, G. (2001). Culture’s Consequences (Second Edition): Comparing Values, Behaviors,
18 Hofstede, G. (1980). Culture's Consequences. New York: Sage.
Hofstede, G. (1983). The Cultural Relativity Of Organizational Practices and Theories. Journal of International Business Studies , 14 (2), 75-89.
House, R., Hanges, P., Javidan, M., Dorfman, P., & Gupta, V. (2004). Culture, leadership, and organizations: The GLOBE study of 62 societies. Thousand Oaks: Sage.
Kathri, N. (2009). Consequences of Power Distance Orientation in Organisations. VISION - The Journal of Business Perspective , 13 (1), 1-9.
Kogut, B., & Singh, H. (1988). The Effect Of National Culture On The Choice of Entry Mode. Journal of International Business Studies , 19 (3), 411-432.
Madlock, P (2012). The Influence of Power Distance and Communication on Mexican Workers, Journal of Business Communication, 49(2), 169-184
McSweeney, B. (2002). Hofstede's model of national cultural differences and their consequences: A triumph of faith - a failure of analysis. Human Relations , 55 (1), 89-118.
Miller, K., & Monge, P. (1986). Participation, Satisfaction, and Productivity: A Mety-Analytic Review. Academy of Management Journal , 29 (4), 727-753.
Morrison, Elizabeth Wolfe; Ya-Ru Chen; Salgado, Susan Reilly. (2004). Cultural Differences in Newcomer Feedback Seeking: A Comparison of the United States and Hong Kong. Applied Psychology: An International Review, 53(1), 1-22
Newman, K. L., & Nollen, S. D. (1996). Culture And Congruence: The Fit Between Management Practices And National Culture. Journal of International Business Studies , 27 (4), 753-779. Oberg, W. (1963). Cross-Cultural Perspectives on Managemement Principles. The Academy of
Management Journal , 6 (2), 129-143.
Park, S., & Ungson, G. (1997). The Effect of National Culture, Organisational Complementarity, and Economic Motivation on Joint Venture Dissolution. Academy of Management Journal , 40 (2), 279-307.
Ralston, D., Gustafson, D., Cheung, F., & Terpstra, R. (1993). Differences in Managerial Values: A Study of US, Hong Kong and PRC Managers. Journal of International Business Studies , 24, 249-275.
Robert, C., Probst, T. M., Martocchio, J. J., Drasgow, F., & Lawler, J. J. (2000). Empowerment and continuous improvement in the United States, Mexico, Poland, and India: Predicting fit on the basis of the dimensions of power distance and individualism. journal of Applied Psychology , 85 (5), 643-658.
Roth, K., Kostova, T., & Dakhli, M. (2011). Exploring Cultural Misfit: Causes and Consequences. International Business Review , 20, 15-26.
Salter, Stephen B.; Schulz, Axel K.-D.; Lewis, Philip A.; López V., Juan Claudio (2008). Otra Empanada en la Parilla: Examining the Role of Culture and Information Sharing in Chile and Australia. Journal of International Financial Management & Accounting, 19(1), 57-72
19 Shenkar, O. (2001). Cultural Distance Revisited: Towrds a More Rigorous Conceptualization and
Measurement of Cultural Differences. Journal of International Business Studies , 32 (3), 519-535. Strokova, V. (2009). International Property Rights Index 2010 Report, Property Rights Alliance. Available:
http://www.efnasia.org/index.php?option=com_content&view=article&id=195:international-property-rights-index-2010-report&catid=3:publication&Itemid=6
Wu, P.-C., & Chaturvedi, S. (2009). The Role of Procedural Justice and Power Distance in the Relationship Between High Performance Work Systems and Employee Attitudes: A Multilevel Perspective. Journal of Management , 35 (5), 1228-1247.
Zaheer, S. (1995). Overcoming The Liability Of Foreignness. Academy of Management Journal , 38 (2), 341-363.
Zhang, Yi; Begley, Thomas M. (2011). Power distance and its moderating impact on
empowerment and team participation, International Journal of Human Resource Management, 22(17), 3601-3617
Appendix
A1. Descriptive statistics.
A2. Histogram PDD variable
20
A3. Scatterplot logturnover vs. PDD
A4. Scatterplot logturnover vs. asymmetry
0 .0 0 5 .0 1 .0 1 5 D e n si ty -100 -50 0 50
Power Distance Difference
5 10 15 20 lo g tu rn o ve r -100 -50 0 50
21
A5. Correlation matrix of the control variables
A6. Significance of the model.
A7. Significance/relevance of the dummy variables
A8. Model 1 5 10 15 20 lo g tu rn o ve r 0 20 40 60 asymmetry innovation 0.0989 -0.0260 -0.1933 -0.2011 1.0000 property -0.0402 0.4793 0.7521 1.0000 gdp 0.0806 0.2621 1.0000 pdd -0.1873 1.0000 logturnover 1.0000 logtur~r pdd gdp property innova~n
22 A9. Model 2 A10. Model 3 _cons 13.6742 .2759129 49.56 0.000 13.1263 14.22211 pdd -.0183943 .0094693 -1.94 0.055 -.0371984 .0004098 logturnover Coef. Std. Err. t P>|t| [95% Conf. Interval] Robust Root MSE = 2.4624 R-squared = 0.0351 Prob > F = 0.0551 F( 1, 93) = 3.77 Linear regression Number of obs = 95
_cons 13.9282 .3102272 44.90 0.000 13.31206 14.54434 pdd2 -.0004214 .0002235 -1.89 0.063 -.0008653 .0000225 pdd -.0234448 .0103311 -2.27 0.026 -.0439633 -.0029264 logturnover Coef. Std. Err. t P>|t| [95% Conf. Interval] Robust Root MSE = 2.4466 R-squared = 0.0577 Prob > F = 0.0567 F( 2, 92) = 2.96 Linear regression Number of obs = 95
