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Reconceptualizing cultural distance: The role of cultural experience reserve in cross-border acquisitions

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  • Popli, Manish
  • Akbar, Mohammad
  • Kumar, Vikas
  • Gaur, Ajai

Abstract

Cultural distance is one of the most widely used distance construct in international business. However, scholars have long questioned the notion that cultural distance has a homogenous impact on organizational actions and performance. We redress this by examining how the relationship between cultural differences and deal abandonment in cross-border acquisitions is contingent on firm-level cultural experience reserve and industry affiliation. Drawing on the organizational learning theory and cultural friction perspective, we first propose that the cultural experience reserve of a focal firm mitigates the positive impact of cultural differences on cross-border deal abandonment. We then hypothesize that the firm's industry context affects the uncertainties associated with cultural differences. Our findings based on a sample of 197 Indian services sector firms support our theoretical predictions.

Suggested Citation

  • Popli, Manish & Akbar, Mohammad & Kumar, Vikas & Gaur, Ajai, 2016. "Reconceptualizing cultural distance: The role of cultural experience reserve in cross-border acquisitions," Journal of World Business, Elsevier, vol. 51(3), pages 404-412.
    • Handle: RePEc:eee:worbus:v:51:y:2016:i:3:p:404-412
    DOI: 10.1016/j.jwb.2015.11.003
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