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Cultural Distance and Entry Modes in Emerging Markets: Empirical Evidence in Vietnam

Author

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  • Nguyen Minh Ha

    (The Business and Economics Research Group, Ho Chi Minh City Open University, 97 Vo Van Tan Street, District 3, Ho Chi Minh City 700000, Vietnam)

  • Quan Minh Quoc Binh

    (Faculty of Economics and Public Management, Ho Chi Minh City Open University, 97 Vo Van Tan Street, District 3, Ho Chi Minh City 700000, Vietnam)

  • Pham Phi Dang

    (Department of Planning and Investment Binh Thuan Province, 290 Tran Hung Dao Street, Phan Thiet City 800000, Vietnam)

Abstract

Cultural distance is acknowledged as a crucial factor that significantly affects the entry mode selection of multinational enterprises. The purpose of this article is to analyze the relationship between cultural distance and entry mode choice by exploring a novel dataset of 5236 firms in Vietnam with foreign investment during the period 2005–2016. Although many studies were conducted about the cultural distance and entry mode nexus, most of the research mainly focuses on developed and developing countries, where a market economy is already established. It is important to expand the research to a transition economy such as Vietnam, where the government is committed to attracting foreign investment. The results indicate that, when the cultural difference between Vietnam and their home country is high, foreign-invested firms prefer wholly-owned subsidiaries (WOS) over equity joint ventures (EJV). The study contributes to the general understanding about cultural distance and entry mode decision of foreign-invested firms in emerging markets.

Suggested Citation

  • Nguyen Minh Ha & Quan Minh Quoc Binh & Pham Phi Dang, 2020. "Cultural Distance and Entry Modes in Emerging Markets: Empirical Evidence in Vietnam," JRFM, MDPI, vol. 13(1), pages 1-11, January.
    • Handle: RePEc:gam:jjrfmx:v:13:y:2020:i:1:p:14-:d:307252
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    References listed on IDEAS

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    Cited by:

    1. Nguyet Nguyen & Ha Thi Hoang Tran & Tuan Duong Vu, 2022. "Country Distance and Entry Mode Choice of MNEs in Vietnam’s Agricultural Sector in Context of Free Trade," Sustainability, MDPI, vol. 14(6), pages 1-16, March.
    2. Li, Kun-Sha & Xiong, Yong-Qing, 2022. "Host country’s environmental uncertainty, technological capability, and foreign market entry mode: Evidence from high-end equipment manufacturing MNEs in emerging markets," International Business Review, Elsevier, vol. 31(1).
    3. Chia-Lin Chang & Duc Hong Vo, 2020. "Contemporary Issues in Business and Economics in Vietnam and Other Asian Emerging Markets," JRFM, MDPI, vol. 13(6), pages 1-4, May.

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