National Cultural Distance and Institutional Distance: Two Determinants of MNCs Country Choice

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National Cultural Distance and Institutional Distance:

Two Determinants of MNCs Country Choice

Master Thesis for MSc International Business & Management

Jia Liu

S1635557

liujia73@hotmail.com

First Supervisor: Drs. Huib Stek

Second Supervisor: Drs. Binnur Kibriscikli

University of Groningen

Faculty of Economics and Business

Landleven 5

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Abstract

This study challenges the major role of national cultural distance in explaining MNCs behavior in term of country choice from two aspects. First, the more and better knowledge about host countries’ culture gained by MNCs may induce the effect of national cultural distance on MNCs country choice decrease. Second, the new developed concept -- institutional distance may have better explanation power than national cultural distance does which also challenge its role. The main findings of this paper are as below: National cultural distance still negatively influences MNCs behavior in terms of country choice and this negative effect decrease as more and better knowledge about host countries gained. Other distance concept become pronounced, that is institutional distance which also has negative impact on MNCs country choice and has better explanation power than national cultural distance. But this concept is not omnipotent and national cultural distance still need to be taken into account.

Keywords: Multinational Companies (MNCs), National Cultural Distance, Institutional Distance and Country Choice

Acknowledgement

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1. Introduction

1.1 Problem Statement and Research Objective

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is stable as little progress has been made in updating the value of four dimensions of national culture. However, the stable value of cultural distance between home and host country does not mean the effect of national cultural distance on MNCs behavior is unchangeable, because the sensitivity of MNCs behavior for national cultural distance may change through years of foreign expansion. During years of foreign expansion, MNCs have gained more and better knowledge about host countries’ culture and national cultural distance that they perceived may smaller than that time they just invested in those host countries. This perceived national cultural distance can be represented by the effect of national cultural distance on MNCs behavior which means the effect may decrease. Researchers have found that the effect of cultural distance on entry mode choice has changed. For instance, Kogut and Singh (1988) argued that larger national cultural distance increased the likelihood of green-field international joint ventures over both green-field wholly owned subsidiary and the acquisition of a controlling stake in an existing operation. But Hennart (1991) found that experience in the US has led Japanese firms to look more favorably at a wholly owned subsidiary than at an international joint venture. Surprisingly, no paper study whether the effect of national cultural distance on MNCs behavior in terms of country choice has decreased or not. This paper will try to fill this gap.

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distance into two categories: formal institutional distance and informal one.

Based on above classification and the definition of national cultural distance and institutional distance, this paper contends that there is an overlap between these two concepts. That is national cultural distance and informal institutional distance. Some previous studies employed national cultural distance as the proxy of informal institutional distance. This paper argues that it is too simplistic. National cultural distance does capture the difference of the shared values and beliefs between home and host country, however, which is part of informal institutional distance. It neglects the norms of doing business and corresponding institutional framework (the ways in which actors pursue their goals). Moreover, as institutional distance involves the difference in terms of formal rules and regulations as sanctioned by a state between home and host country, hence, this paper proposes that institutional distance may have better explanation power than national cultural distance does on MNCs country choice.

The effect of national cultural distance on MNCs country choice may decrease as more and better knowledge about host countries’ culture gained and the newly developed concept -- institutional distance may better explain MNCs behavior; these lead us to wonder whether national cultural distance still play a major role in explaining MNCs behavior or not. Based on above arguments, the main research question of this paper is as below:

Does national cultural distance still play a major role in explaining MNCs country choice as more and better knowledge about host countries’ culture gained by MNCs

and the emergence of institutional distance as an alternative concept?

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1.2 Research Design and Structure of Thesis

In order to answer above main research question fully, below sub-questions will be studied:

Sub-question 1: Does the effect of national cultural distance on US MNCs country choice decrease as more and better knowledge about host countries’ culture gained?

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national cultural distance on MNCs country choice in different time. Two coefficients will be compared and the conclusion that whether the effect of national cultural distance on MNCs country choice decrease or not will be made.

After answering sub-question 1, part of main research has been answered. There is another factor that may cause national cultural distance lose its major role. It is the emergence of institutional distance. If institutional distance can better explain MNCs behavior in terms of country choice than national cultural distance does, at the same time, if this concept encompasses all elements of national cultural distance, this paper will conclude that national cultural distance totally lose its role in explaining MNCs country choice. Otherwise, national cultural distance can still play a role in this filed, although it is not a major force. Therefore, below sub-questions will deal with these issues.

Sub-question 2: Does institutional distance influence US MNCs country choice?

Before examining whether institutional distance can better explain MNCs behavior in terms of country choice than national cultural distance does, it is logical to study the effect of institutional distance on MNCs country choice first. To answer this sub-question, first of all, related literature will be reviewed to provide arguments for putting forward the hypothesis concerning the relationship between institutional distance and MNCs country choice. Then single regression will be used to test hypothesis. Here the independent variable is institutional distance between US and each host country and the dependent variables are the number of affiliates of US MNCs in each host country in 2001. This paper will choose institutional indicators from The Global Competitiveness Report 2001-2002 based on the definition of institutional distance to calculate institutional distance.

Sub-question 3: Does institutional distance better explain US MNCs behavior in terms of country choice than national cultural distance does?

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choice in the year of 1982 and 2001 respectively. In order to compare which concept has better explanation power, it would be nice to compare their effects in both 1982 and 2001 as the effect of institutional distance on US MNCs country choice may change over time. However, as the values for calculating institutional distance of the year of 1982 are unavailable, this paper can only compare their effect in year of 2001. To answer this question, the standardized coefficient of national cultural distance between US MNCs country choice and the standardized coefficient of institutional distance between US MNCs country choice will be compared. The conclusion that whether the institutional distance can better explain US MNCs behavior in terms of country choice than national cultural distance does or not will be made based on the result.

Sub-question 4: To what extent national cultural distance and institutional distance have elements in common?

As discussed in the introduction part, national cultural distance captures part of informal institutional distance. However, it does not mean informal institutional distance encompasses all elements of national cultural distance. Only does informal institutional distance include all elements of national cultural distance, this paper can conclude national cultural distance lose its role in explaining MNCs country choice completely. Hence, this sub-question is an important step to get an answer for main research. To answer this sub-question, this paper will first study the definition of these two concepts. After that, this paper will examine the variables used to operationalize these concepts to find out to what extent these two concepts have elements in common. Finally, the correlation coefficient of these two distances will be used as a confirmation of the found overlap. As the measurement of these two concepts will be presented in the methodology part, thus, this sub-question will be answered in the discussion part.

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After the brief introduction, introducing the main research question, sub-questions and research design, this thesis will be organized along the following lines. The second part is literature reviews. After that, the hypotheses will be formulated. The third part is methodology, in this part, how data was collected will be explained, the variables measurement method and the statistical method will be described. In the fourth part, the result of statistical test will be presented and all sub-questions will be discussed with related theories thoroughly. And the final part of this thesis is the conclusion, limitation and suggestion for future research.

1.3 Significance of Research

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2. Literature Reviews and Hypotheses Development

In this part, related literatures will be reviewed and the development of hypothesis will be presented. Firstly, how national cultural distance influences MNCs country choice in different time will be discussed. Then will be continued with discussing the relation between institutional distance and MNCs country choice from the perspective of institution theory.

2.1 National Cultural Distance and MNCs Country Choice

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to be less risk-averse in its investment behavior. In sum, larger national cultural distance causes difficulties in understanding local partner and employees, hence it result in the complexity of management task and finally increase the operation cost of MNCs. Consequently, MNCs would choose those countries with less cultural distance to invest in especially when they just invested in foreign market because at that time, they had little knowledge about host country’s culture. Based on above arguments, the first hypothesis is formulated as follow:

H1. There is a negative relationship between the cultural distance and US MNCS country choice in the year of 1982.

As mentioned in the introduction part, between 1984 and 1998, worldwide FDI increased by 1000 percent (Hill, 2002) which means during this period, MNCs unprecedented expanded their business to foreign markets. The expansion enables MNCs to gain more and better knowledge about host country culture through intensive communications and interactions with local employee, firms and organizations. Moreover, local employee became knowledgeable of MNCs management method. Hence, the managerial uncertainty and operation cost decrease accordingly and the national cultural distance perceived by MNCs is smaller, which means the negative effect of cultural distance decrease. And the second hypothesis is

H2. There is a negative relationship between the cultural distance and US MNCs country choice in the year of 2001 and this negative effect decrease compared to

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2.2 Institutional Distance and MNCs Country Choice

As mentioned in the introduction part, except for the difference in language, culture, religion, education, level of development, political system and time zone that can play roles in influencing MNCs behavior, difference in institutional environment is likely an important factor influencing MNCs activities. The newly developed concept, institutional distance (Kostova, 1999; Kostova & Zaheer, 1999) has been used to measure the differences in institutional environments between two countries (Kostova, 1999).

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(Hymer, 1976; Kindleberger, 1969). From this perspective, MNCs’ unfamiliarity with new institutional environment causes competitive disadvantage and additional costs of doing business abroad (Eden & Miller, 2004; Mezias, 2002).

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environment (Kostova, 1999; Xu & Shenkar, 2002). The higher informal institutional distance will induce the inefficiency of routine transfer and conflict between MNCs headquarter and their affiliates. In the context of external environment, MNCs need to contact with local government, local official and local partner, etc. If the informal institutional distance is large, it is quite changeling for MNCs to obtain social legitimacy. In other words, it is difficult for MNCs manager to find out the way in which local organizations doing things. For example, giving gift to gain a favor or bribed the official may be a norm in some countries. But for those managers who come from less corruption country, they regard this behavior as kind of taboo and hence find it is difficult to gain social legitimacy in host country. Past empirical study (Wu, 2004) found that multinationals from corrupt countries tend to invest more in countries with a similar level of corruption which implying that the corruption distance between countries affects multinationals' foreign investment.

To sum, the larger the institutional distance between home and host country, the more difficult for MNCs to gain legitimacy in targeted country, to transfer organizational practices and routines to subsidiaries, finally result in less investments in such institutional distant country. However, there is few study examine this relationship empirically. Based on above argument, the second hypothesis is formulated as below:

H3. There is a negative relationship between the institutional distance and US MNCs country choice.

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there has been a shift in FDI activities toward more capital, knowledge and skill-intensive industries (Pfeffermann and Madarassy, 1992; Dunning, 1998). Some formal institutional indicators, for instance, the intellectual property protection, play roles in stimulating knowledge-based productivity and in promoting innovation and technology policy in knowledge-intensive industries. Based on these agreements, this paper proposes that institutional distance has better explanation power than national cultural distance in explaining MNCs country choice in the year of 2001.

3. Methodology

3.1 Sample Country Selection Process

The list of host countries that US MNCs invests in can be derived from the website of Bureau of Economic Analysis (BEA, www.bea.gov/index.htm). This website provides information about US economy which including National Economic Accounts Data, Regional Economic Accounts Data, Industry Economic Accounts Data and International Economic Accounts Data. According to BEA, White House and Congress use the National Economic Accounts Data to prepare budget estimates and projections and Federal Government agencies employ International Economic Account Data to calculate international price indexes and understand behavior of multinational companies. Hence the data derived from this website can be considered as an authoritative one. The sample country selection process is as follow. As one of independent variables of this paper is the cultural distance which will be calculated based on Hofstede (1980)’s four cultural dimensions and www.geert-hofstede.com

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countries in Africa (Egypt, Nigeria, South Africa and Uganda) and 14 countries in Asia and Pacific area. Only Israel is from Middle East. Those countries represent a full picture of main economic areas in the world, for example, the EU, Asia Pacific economic area and America.

Table 1 List of Country

Argentina Germany Philippines

Australia Greece Poland

Austria Guatemala Portugal

Bangladesh Hong Kong Romania

Belgium Hungary Russia

Brazil India Singapore

Bulgaria Indonesia Slovakia

Canada Ireland South Africa

Chile Israel South Korea

China Italy Spain

Colombia Jamaica Sweden

Costa Rica Japan Switzerland

Czech Rep. Malaysia Taiwan

Denmark Mexico Thailand

Ecuador Netherlands Trinidad and Tobago

Egypt New Zealand Turkey

El Salvador Nigeria United Kingdom

Estonia Norway Uruguay

Finland Panama Venezuela

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3.2 Variables Measurement Method 3.2.1 Dependent Variable

Reinhilde (2001) argued that the number of foreign affiliates can serve as a useful proxy of MNCs country choice as it measures the spread of MNCs across host countries; hence the dependent variable is the numbers of US foreign affiliates in each host country. The total number of foreign affiliates for the year of 1982 and 2001 in each host countries will be obtained from the website of BEA. As per BEA, the definition of US MNCs is a person, or entity, resident in the United States, that owns or controls 10 percent or more of the voting securities of an incorporated foreign business enterprise or an equivalent interest in an unincorporated foreign business enterprise. Foreign affiliate refer to a foreign business enterprise in which there is U.S. direct investment–that is, in which a U.S. person, or entity, owns or controls 10 percent or more of the voting securities of an incorporated foreign business enterprise or an equivalent interest in an unincorporated foreign business enterprise. From the definition, it can be concluded that the total number of foreign affiliate in each host country is the sum of foreign affiliates of every US MNCs, no matter it is large company or small enterprise.

3.2.2 Independent Variable

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institutions accept and expect that power is distributed unequally. Individualism (IDV) (its opposite collectivism) refers to the degree to which a society emphasizes the role of the individual as opposed to that of the group. Uncertainty avoidance (UA) refers to the extent to which people are threatened by uncertain, unknown, or unstructured situations. Masculinity (MAS) (its opposite femininity) refers to the distribution of roles between the genders which is another fundamental issue for any society to which a range of solutions are found (Hofstede, 1980). The indices for Egypt are replaced with that for Arab World and the indices for Nigeria are replaced with that for West Africa.

This paper follows the way that Kougt and Singh (1998) used to calculate a composite score for each country’s overall cultural distance from the United States through taking an arithmetic average of the four cultural deviation scores obtained as follows:

Where Iij stands for the index for the ith cultural dimension and jth country, Vi is the variance of the index of ith dimension, u indicates the United States, and CDj is cultural distance of the jth country from the United States.

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because these two aspects of institutions are quite similar to one another (Scott, 1995). Therefore, the calculation of institutional distance will be divided into two categories: formal regulative institutional distance and informal institutional distance. Based on the definition of institutional distance, this paper selects 10 indicators related to formal and informal aspect of host country’s institutional environment to compute institutional distance. Financial regulation and supervision, effectiveness of anti-trust policy, property right and intellectual property protection are related to the formal rule and regulations in a country and these four indicators can be used as the proxy of formal institutional environment. Judicial independence, administrative burden for startups, public trust of politicians, irregular payments in government procurement, business cost of corruption and favoritism in decisions of government officials are related to the way in which people pursue their goals and the value and belief system of a society, the informal aspect of institutional environment. To sum, these ten indicators capture the formal and informal aspect of institutional environment. Those indicators are drawn from The Global Competitiveness Report 2001-2002. The Global Competitiveness Report is a yearly report published by the World Economic Forum and it has been widely cited and used by many scholarly and peer-reviewed articles. One part of the report is the Executive Opinion Survey which is a survey of a representative sample of business leaders in their respective countries. Respondent numbers have increased every year and are currently just over 11,000 in 125 countries. Executives are always MNCs’ decision maker and they have better knowledge about host countries’ institutional environment. So the difference in their opinion represents the difference in institutional environment between home and host country.

In this paragraph, 10 indicators will be described in detail. The score for each country is the result of Executive Opinion Survey and the full mark is 7. 1. Financial

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specified country is lax and not effective at promoting competition or effectively promotes competition. Finland receives 6.6 while Ecuador is only 2.5.3. Property

right refers to the financial assets and wealth are poorly delineated and not protected by law or clearly delineated and protected by law. In this aspect, Netherlands get 6.5 and Russian only have 2.4. 4. Intellectual property protection refers to the intellectual

property protection in specified country is weak or nonexistent or equal to the world’s most stringent. France with highly score 6.6 while Vietnam only get 1.5. 5. Judicial

independence refers to the judiciary in specified country is independent and not subject to interference by the government / parties to disputes. Germany still ranks highly with score 6.7 and Venezuela get 1.7. 6. Administrative burden for startups

refers to starting a new business is extremely difficult and time consuming or easy. It is quite easy to start a new business in Hong Kong but rather tough in Bulgaria. 7.

Public trust of politicians is quite high in Singapore while people in Peru do not trust politicians. 8. Irregular payments in government procurement refer to how commonly

do firms give irregular extra payments or bribes when getting connected to public utilities. In this field, Finland get 6.9 and Bangladesh only get 1.8. 9. A business cost

of corruption refers to the unfair or corrupt activities of other firms imposed costs on your firm in the specified country. The result is same as indicator 8. 10. Favoritism in

decisions of government officials refers to when deciding upon policies and contracts, government officials usually favor well-connected firms and individuals or is neutral among firms and individuals. Finland still ranks first with 5.7 and Guatemala got 1.7. It needs to point out that all the indicators extracted from this edition are the survey result in 2000, so the institutional distance is for the year of 2000.

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Where I_ikrefers to the i_thinstitutional indicator for country k, V_iis the variance of indicator i and u refers to United States. ID_kis the institutional distance of country k from United States.

Table 2 Variables Description and Source

Description Source

Dependent Variable

The Numbers of US Foreign Affiliates in Each Host Country

Bureau of Economic Analysis

www.bea.gov/index.htm

Independent

Variables National Cultural Distance www.geert-hofstede.com Power Distance

Individualism

Uncertainty Avoidance

Masculinity

Institutional Distance

The Global Competitiveness Report 2001-2002

Financial Regulation and Supervision Effectiveness of Anti-Trust Policy Property Rights

Intellectual Property Protection Judicial Independence

Administrative Burden for Startups Public Trust of Politicians

Irregular Payments in Government Procurement

Business Cost of Corruption

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3.3 Statistic Method

The first step is to check whether all variables are normally distributed, which is a necessary condition for conducting linear regression analysis. Table 3 shows an overview of sample characteristics.

Table 3 Descriptive Statistics Minimu

m

Maximum Mean Standard Deviation

Skewness Kurtosis Statistics Statistics Statistics Statistics Statisti

cs Std. Error Statisti cs Std. Error Cultural Distance 0.02 6.17 2.3963 1.36591 0.104 0.309 -0.313 0.608 Institutional Distance 0.09 7.8 2.4567 2.15989 0.898 0.309 -0.072 0.608 Number of Affiliates 1982 4 1996 290.078 407.792 2.739 0.333 8.443 0.656 Number of Affiliates 2001 5 2732 367.98 505.621 2.678 0.309 8.592 0.608

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Table 4 Descriptive Statistics after Transformation Minimu

m

Maximum Mean Standard Deviation

Skewness Kurtosis Statistics Statistics Statistics Statistics Statisti

cs Std. Error Statisti cs Std. Error Cultural Distance 0.02 6.17 2.3963 1.36591 0.104 0.309 -0.313 0.608 Institutional Distance 0.09 7.8 2.4567 2.15989 0.898 0.309 -0.072 0.608 Log Number of Affiliates 1982 1.39 7.6 4.938 1.25978 -0.108 0.333 0.320 0.656 Log Number of Affiliates 2001 1.61 7.91 5.1165 1.38291 -0.339 0.309 -0.062 0.608

As mentioned in the research design, Single Regression will be used to test the effect national cultural distance and institutional distance on the US MNCs country choice respectively. So for hypothesis 1, the regression formula is

Lognumaf1982= a + b*CD (Lognumaf1982: dependent variable, CD: cultural distance -- independent variable, a: constant, b: coefficient).

For hypothesis 2, the regression formula is

Lognumaf2001= c+ d*CD (Lognumaf2001: dependent variable, CD: cultural distance ID: institutional distance -- independent variable, c: constant, d: coefficient)

For hypothesis 3, the regression formula is

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4. Result and Discussion

The third part has elaborated how sample was collected and the variables measurement. Moreover the statistic method was also discussed in details. In this part, the statistic result will be presented first, and then the result will be discussed with related theories in order to answer sub-questions thoroughly.

4.1 Result

Before presenting the statistic result, it is important to note that p value in all tests is set on 0.01. The results of three single regression analyses are summarized in Table 5.

Table 5 Result of Three Single Regressions Analysis Model Unstandardized Coefficients Standardized Coefficients t Significant R Square B Std. Error Beta Lognumaf1982 Cultural Distance -0.448 0.113 -0.492 -3.951 0.000 0.242 Lognumaf2001 Cultural Distance -0.435 0.120 -0.429 -3.621 0.001 0.184 Lognumaf2001 Institutional Distance -0.355 0.070 -0.554 -5.069 0.000 0.307

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Lognumaf1982= 6.000 -0.448*CD

In appendix C are the results of the second regression model. Those results reveal that there is a relationship between national cultural distance and MNCs country choice in the year of 2001. ANOVA show that this model is accepted as it is significant at p-value smaller than 0.01. The table of coefficient show that cultural distance has a negative regression coefficient of -0.435. This negative sign means that cultural distance negatively impact US MNCs country choice in the year of 2001 and the relationship is significant at a p-value of 0.001. Hence the second regression equation will be derived as follow:

Lognumaf2001= 6.158 -0.435*CD

Appendix C is the model summary, the ANOVA table result and the coefficient for the third regression model. It can be seen from ANOVA table that there is a relationship between the institutional distance and MNCS country choice and this model is also accepted with p-value smaller than 0.01. The table of coefficient show that institutional distance negatively impact US MNCS country choice and the relationship is significant at a p-value of 0. Hence hypothesis 3 is supported and the third regression equation is

Lognumaf2001= 5.988 -0.355*ID

4.2 Discussion

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also proposed that this negative effect decrease compared to the year of 1982. In order to figure out this answer, the standardized coefficient of the first and second regression equations will be compared. Customarily, the degree to which independent variable is related to the dependent variable is expressed in the standardized coefficient, which is the square root of R-square. In other words, standardized coefficient indicates the variable’s contribution to the overall model and lie between -1 and 1. The standardized coefficient of first regression is -0.492 and the standardized coefficient of second regression is -0.429 which means national cultural distance better explained the US MNCs behavior in term of country choice in the year of 1982 than in the year of 2001. It also means the negatively effect of national cultural distance on MNCs country choice decrease. After years of international expansion, enculturation processes taking place among multinational managers and more and better knowledge about host countries’ culture are gained, hence national cultural distance they perceived decrease. National cultural distance lose its major role in explain MNCs behavior in term of country choice. Those factors such as quality of institutional environment and government policies become pronounced in multinational managers’ decision making procedure (Porter, 1990).

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environment incur difficulty for MNCs in obtaining legitimacy in target country and finally result in additional costs of doing business abroad. Hence, MNCs will choose those countries with less institutional distance to invest in.

The third sub-question is to compare the explanation power between national cultural distance and institutional distance on MNCs country choice in the year of 2001. The standardized coefficient of national cultural distance between US MNCs country choice is 0.429. And the standardized coefficient of institutional distance between US MNCs country choice is 0.554. This result means institutional distance better explain the US MNCs country choice than national cultural distance does. It is consistent with the theoretical assumption that institutional distance captures more aspects of country difference and those differences between home and host country influence MNCs behaviors.

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masculinity/femininity are not included in the calculation of institutional distance. In sum, institutional distance does not encompass all elements of national cultural distance. Institutional distance can complement, rather than replaces, the cultural distance construct (Xu and Shenkar, 2002).

5. Conclusion and Limitation

To conclude, this paper aims to specifically address whether national cultural distance still play a major role in explaining MNCs country choice or not. The main findings are as below: National cultural distance still negatively influences MNCs behavior in terms of country choice and this negative effect decrease as more and better knowledge about host countries gained. Other distance concept become pronounced, that is institutional distance which also has negative impact on MNCs country choice and has better explanation power than national cultural distance. But this concept is not omnipotent and national cultural distance still need to be taken into account.

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Netherlands 653 1290 0.30 1.60 New Zealand 110 154 0.44 0.23 Nigeria 68 58 6.30 2.95 Norway 118 188 0.35 2.18 Panama 165 97 3.48 5.03 Peru 76 84 4.73 3.58 Philippines 150 177 3.68 2.88 Poland 0 161 1.70 1.73 Portugal 69 154 1.05 4.01 Romania 0 20 5.06 3.86 Russia 0 120 6.41 3.98 Singapore 204 494 0.75 3.89 Slovakia 0 27 3.24 4.20 South Africa 279 200 1.20 0.32 South Korea 71 252 2.65 3.38 Spain 331 574 0.63 1.75 Sweden 195 341 0.29 2.48 Switzerland 494 496 0.37 0.34 Taiwan 98 249 0.83 2.83 Thailand 74 245 2.07 3.01

Trinidad and Tobago 36 39 2.05 2.38

Turkey 25 106 3.69 2.37

United Kingdom 1804 2732 0.13 0.08

Uruguay 30 44 2.19 3.08

Venezuela 331 223 7.11 3.86

Vietnam 0 15 5.01 2.95

(DV: Dependent Variable, IV: Independent Variable) Appendix B

Model Summary

Model R R SquareAdjusted R Square Std. Error of the

(39)

a Predictors: (Constant), CD

b Dependent Variable: LOGNUMAF1982 Coefficients Unstandardiz ed Coefficients Standardized Coefficients t Sig.

Model B Std. Error Beta

1 (Constant) 6.000 .310 19.337 .000

CD -.448 .113 -.492 -3.951 .000

a Dependent Variable: LOGNUMAF1982

Appendix C

Model Summary

Model R R Square Adjusted R Square Std. Error of the

Estimate 1 .429 .184 .170 1.25965 a Predictors: (Constant), CD ANOVA Model Sum of Squares

df Mean Square F Sig.

1 Regression 20.804 1 20.804 13.111 .001

Residual 92.030 58 1.587

Total 112.834 59

a Predictors: (Constant), CD

1 (Constant) 6.158 .330 18.634 .000

CD -.435 .120 -.429 -3.621 .001

a Dependent Variable: LOGNUMAF2001

Appendix D

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Model R R Square Adjusted R Square Std. Error of the Estimate 1 .554 .307 .295 1.16113 a Predictors: (Constant), ID ANOVA Model Sum of Squares

df Mean Square F Sig.

1 Regression 34.637 1 34.637 25.691 .000

Residual 78.197 58 1.348

Total 112.834 59

a Predictors: (Constant), ID

1 (Constant) 5.988 .228 26.251 .000

ID -.355 .070 -.554 -5.069 .000

National Cultural Distance and Institutional Distance: Two Determinants of MNCs Country Choice