Journal of International Business Studies (2022) 53, 516–533
ª 2020 Academy of International Business All rights reserved 0047-2506/22
POINT
National culture and international business:
A path forward
Oded Shenkar1,
Stephen B Tallman2,
Hao Wang3 and Jie Wu4
1
Fisher College of Business, The Ohio State
University, 2100 Neil Avenue, Columbus,
OH 43210, USA; 2 Robins School of Business,
University of Richmond, 102 UR Drive, Richmond,
VA 23173, USA; 3 Amsterdam Business School,
University of Amsterdam, Plantage Muidergracht
12, 1001 NL Amsterdam, The Netherlands;
4
Faculty of Business Administration, University of
Macau, Avenida da Universidade, Taipa, Macau,
China
Correspondence:
J Wu, Faculty of Business Administration,
University of Macau, Avenida da
Universidade, Taipa, Macau, China
e-mail: jiewu@um.edu.mo
Received: 13 May 2019
Revised: 11 June 2020
Accepted: 28 June 2020
Online publication date: 26 October 2020
www.jibs.net
Abstract
The anniversary of Kogut and Singh’s construct of ‘‘cultural distance’’ is a good
time to reflect on this immensely popular but flawed construct, assess the
efficacy of the remedies offered for its reform and refinement, and chart an
alternative approach that represents a departure from distance as the dominant
paradigm with which to view and analyze the impact of national culture on
cross-border business. The proposed alternative, a contact-based framework
shifts attention from what sets cultures apart towards the actual cultural
interface that firms and their executives experience when participating in an
international transaction. With this lens, the cultural exchange is regarded as an
evolving interactional process of engagement, which commences prior to a
transaction and proceeds through the life of the inter-party arrangement and
beyond, and whose potential to yield negative – or positive – outcome is
subject to specific contingencies. Implications for theory, methodology, and
practice are delineated.
Journal of International Business Studies (2022) 53, 516–533.
https://doi.org/10.1057/s41267-020-00365-3
Keywords: cultural distance; cultural friction; paradigm shift; contact-based framework;
national culture
INTRODUCTION
Cuypers, Ertug, Heugens, Kogut, and Zou (2018) and Maseland,
Dow, and Steel (2018) commemorated 30 years to the publication
of Kogut and Singh’s (1988) paper that coined the term ‘‘cultural
distance’’ (CD) and generated a stream of research that was to form
the dominant perspective on national culture in international
business (IB). Together with an Editorial by Beugelsdijk, Ambos,
and Nell (2018a), the papers assessed the contribution of the Kogut
and Singh’s (1988) article and offered ideas for improvement and
refinement of a construct whose popularity has not dimmed in the
face of ongoing criticism. Not only does the construct remain
‘‘much loved’’ (Zaheer, Schomaker, & Nachum, 2012: 18), but it has
engendered the view that ‘‘almost…no international business (IB)
can be complete unless there is an explicit variable controlling for
cultural distance’’ (Cho & Padmanabhan, 2005: 309) and, even
more broadly, that ‘‘international management is management of
distance’’ (Zaheer et al., 2012: 19).
 National culture and international business
At the same time, fundamental flaws have been
uncovered in the CD approach (Shenkar, 2001),
and results should be sobering. Maseland et al.
(2018: 1155) report that of seven meta-analyses
reviewed, six ‘‘have found small and largely non-
significant effect sizes for the relationships between
cultural distance and various dependent variables’’.
Beugelsdijk, Kostova, Kunst, Spadafora, and van
Essen (2018b) find CD a significant predictor of a
single aspect of foreign direct investment (FDI),
greenfield investment, but not ownership stake or
other variables; even that modest finding is attrib-
uted by Maseland et al. (2018: 1155) to ‘‘greater
statistical power’’. That the construct survived
evidence of basic flaws and, at best, inconsistent
support, is a testimony to its staying power. How-
ever, as Tung and Verbeke (2010) ask, does this
construct set us on the road to progress? We suggest
that it does not, and that it can even stymie
advancements. We thus take Devinney and Hoh-
berger’s (2017: 54) advice that ‘‘it is perhaps time to
look at different avenues of work and ones that do
not follow the same path as in the past.’’
With this Point article, we seek to go beyond a
critical assessment of Kogut and Singh’s (1988)
article and the research it has spawned, since
the criticism of CD has been raised (Shenkar,
2001), expanded (Tung & Verbeke, 2010), con-
firmed (e.g., Huang, Zhu & Brass, 2017; Lee,
Shenkar, & Li, 2008; Selmer, Chiu, & Shenkar,
2007; Yildiz & Fey, 2016) and extended to fields
beyond IB (e.g., Lim, Makhija, & Shenkar, 2016).
Our first goal is to evaluate the remedies offered for
the illusions and distortions associated with the CD
construct, and judge whether those remedies have
the potential to overcome the flagged problems.
Our second goal is to offer an alternative paradigm
that is conceptually sound, theoretically anchored,
and metaphorically adequate; that is, realistic and
pragmatic in its depiction of national culture and
its cross-border business process and impact. We
believe that this approach offers a viable alterna-
tive, or at least a complement that can serve as a
foundation for future research and theory
development.
THE CULTURAL DISTANCE APPROACH TO
NATIONAL CULTURE
Kogut and Singh’s (1988) article caused quite a stir
in the IB literature. Up to that point, national
culture had been the exclusive domain of a small
group of cross-cultural psychologists, with few if
Oded Shenkar et al.
517
any links to their macro brethren. Venturing into a
deceivingly barren land, IB researchers created the
concept of ‘‘psychic distance’’ (PD) (Beckerman,
1956), which was later placed at the heart of the
Uppsala model (Johanson & Vahlne, 1977). PD
shed its non-culture variables when morphed into
CD in the Kogut and Singh’s (1988) version. The
latter iteration not only coined the CD term, but
also developed an algorithm to measure it and
provided a link to a specific set of data, seeking to
establish what they saw as ‘‘tight unity between the
concept of culture as a distance, the calculation of
distance, and the data’’ (Cuypers et al., 2018: 1138).
Just how popular is the CD approach? Stahl and
Tung (2015) find that 50 of the 136 empirical
papers from the Journal of International Business
Studies (JIBS) they reviewed have used the Kogut
and Singh Index (KSI). Kogut and Singh’s (1988)
article is the second most cited JIBS article, lagging
only behind Johanson and Vahlne (1977) who
popularized the predecessor PD concept. It is also
the second most cited in IB culture research overall,
just behind Hofstede’s (1980) landmark book, and
forms the nucleus of one of two primary citation
clusters in the IB literature on national culture
(Pinto, Serra, & Ferreira, 2014). Various counts put
the paper’s citations at more than 6,000 (Beugels-
dijk et al., 2018b; Harzing & Pudelko, 2016), with
numbers rising briskly year on year, apparently
undeterred by the publication of damaging criti-
cism (Konara & Mohr, 2019). In fact, citations have
actually increased since the publication of Shenkar’s
(2001) critique (Zaheer et al., 2012).
Citations, we know, are not necessarily an indi-
cation of fitness and rigor (MacRoberts & MacRo-
berts, 1989, 1996). Maseland et al. (2018: 1155)
voice the risk of ‘‘justification by citation’’: that is
conferring legitimacy solely by virtue of prior
usage. At times, citations merely acknowledge a
concern while sidestepping its repercussions. In a
review of the CD literature, Harzing and Pudelko
(2016: 4) report that ‘‘the vast majority of empirical
papers that were either citing Shenkar, Luo, and
Yeheskel’s (2008) cultural friction metaphor or
Tung and Verbeke’s (2010) suggestions only did so
in order to highlight the conceptual problems of
the Kogut and Singh (1988) formula, and subse-
quently went on to apply the formula all the same,
with reference to its established use in the past’’
(italicized in the original). Maseland et al. (2018:
1155) note that authors ‘‘have used exactly the
same arguments and techniques as the original KS
article, thus entrenching its weaknesses and
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 National culture and international business
518
limitations’’ and that ‘‘as a result, these weaknesses
and limitations have actually become established
practice, which is notoriously difficult to correct.’’
In a recent example, Chua, Roth and Lemoine
(2015: 204) justify using the KSI on the grounds
that ‘‘this method of computing cultural distance
has gained acceptance and is widely used in
international business research’’.
Difficult it may be, but when concerns about
rigor and relevance are raised and sustained, using
constructs just because ‘‘their usefulness is so great’’
(Zaheer et al., 2012: 19) may be counterproductive.
The scientific process guides us to correct remedi-
able flaws, and, when key problems appear to be
serious and possibly incorrigible and hence there
‘‘is no guarantee that we are making progress’’
(Dow, 2014: 119), to consider alternatives. To reit-
erate, in this article, we do not seek to repeat the
criticism of the CD approach on conceptual, the-
oretical, methodological, and empirical grounds
(Shenkar, 2001, 2012; Tung & Verbeke, 2010),
except in conjunction with the remedies offered
for flagged deficiencies and in the context of
assessing the efficacy of such responses and the
associated need for an alternate approach.
REMEDIES AND REFINEMENTS
To conduct a systematic review of the published
remedies for the problems identified with CD, we
followed Cuypers et al.’s (2018) method and
selected 16 journals with more than 20 citations
in the Web of Science, covering the period from
September 1988 to September 2019. We collected a
total of 1,047 papers, accounting for 39% of all
citations as of March 2020 (2,663) in the Web of
Science database. We first checked whether a paper
has used a CD-related variable in its empirical
analysis, which excluded 434 papers or roughly
41% of the total, including editorial reviews, meta-
analyses, points, commentaries, perspectives, for-
mal modelling and studies citing Kogut and Singh
(1988) but not for culture-related purposes (e.g.,
multi-nationality or international market experi-
ence). Of the remaining 613 papers with at least
one CD-related variable, 291 use CD as the inde-
pendent variable (47% of 613), 272 use CD as a
control variable (including in the robustness check,
44% of 613), and 58 papers employ CD as a
moderator (9% of 613).1
We adapted Tung and Verbeke’s (2010) list of
CD-related illusions, which builds and expands on
Shenkar (2001) against which we counted and
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Oded Shenkar et al.
classified remedies proposed in the reviewed stud-
ies, if any. Additional flaws not on the original lists
for which remedies have been offered over the years
are also listed and counted accordingly.
We first checked whether authors provided jus-
tification for the use of CD in the empirical section,
and then reviewed the robustness check and the
discussion section for additional information.
Statements justifying the use of CD based on its
prior usage, e.g., because it is ‘‘widely used’’ or
‘‘most commonly used’’, are classified as providing
no remedy. The same is true for justifications
building on prior CD-based results. For example,
Chua et al. (2015:204) explain that ‘‘to further
verify that this (KSI) approach is valid, we exam-
ined sample scores for key countries derived from
our dataset and found them to have face validity.
For instance, the cultural distances between the
United States and China (4.61), Singapore (4.03),
India (1.87), and the United Kingdom (0.43) are in
an order that one would expect. Hence, we are
confident that the measure we used adequately
captures cultural differences between countries.’’
Similar statements are counted as ‘‘illusion noticed’’
but ‘‘no remedy provided’’.
As 44% of the sampled studies used CD as a
control variable, we only count a remedy if the
authors explicitly stated that other culture-related
variables such as language, religion, geography,
experience, etc., are added to improve the validity
of the CD construct (e.g., Flores & Aguilera, 2007;
Slangen & Hennart, 2008). Similarly, we only count
the remedy for the illusion of corporate/regional
homogeneity when a paper includes culture-related
variables at the firm or subnational level (e.g.,
Vaara, Sarala, Stahl, & Björkman, 2012). The same
principle applies to the symmetry assumption: we
only count a uni-directional CD impact as a remedy
when the authors state that a sample was deliber-
ately designed to solve the symmetry illusion (e.g.,
Lee et al., 2008).
Following the above procedure, we find that 331
of the 613 papers provide no justification for using
KSI, 93 papers acknowledge at least one flaw but
take no empirical steps to correct it, and only 189
papers provide one or more remedies. The Academy
of Management Journal (AMJ) has the highest per-
centage (62% of 189, tied with the International
Management Review - IMR) of articles noticing illu-
sions and the highest percentage (43% of 189) of
papers providing remedies, but this is based
on their small sample sizes (21 papers from AMJ
and IMR). Among the 16 journals reviewed, only
 National culture and international business Oded Shenkar et al.
519

Table 1 Flaws and remedies in the Kogut and Singh’s (1988) construct (journals with more than 20 citations).

Journal No. of empirical with KSI No illusion noticeda Illusion noticed but no remedy Empirical remedy providedc
offeredb

No. of paper % in journal No. of paper % in journal No. of paper % in Journal

JIBS 164 88 54 15 9 61 37
IBR 88 48 55 11 13 29 33
JWB 50 33 66 10 20 7 14
MIR 48 28 58 6 13 14 29
SMJ 48 32 67 4 8 12 25
JIMgt 35 15 43 6 17 14 40
JBR 29 15 52 8 28 6 21
IJHRM 23 9 39 5 22 9 39
JMS 22 13 59 3 14 6 27
AMJ 21 8 38 4 19 9 43
IMR 21 8 38 7 33 6 29
JIMkt 20 12 60 4 20 4 20
GSJ 13 6 46 4 31 3 23
JOM 13 6 46 4 31 3 23
OS 12 6 50 2 17 4 33
MBR 6 4 67 0 0 2 33
Total 613 331 54 93 15 189 31
JIBS Journal of International Business Studies, IBR International Business Review, JWB Journal of World Business, MIR Management International Review,
SMJ Strategic Management Journal, IBR International Business Review, JIMgt Journal of International Management, IMR International Management
Review, IJHRM International Journal of Human Resource Management, AMJ Academy of Management Journal, JIMkt Journal of International Marketing,
JMS Journal of Management Studies, GSJ Global Strategy Journal, JOM Journal of Management, OS Organization Science, MBR Multinational Business
Review.
a
One reason for the high rate of ‘‘no illusion noticed’’ is that 44% of papers (271/613) citing KSI use it as the control variable.
b
Papers only making verbal justification (e.g., not assuming asymmetry effect or it is a popular/widely used construct) are treated as no remedy.
c
All remedies are counted as long as authors are explicit (e.g., including the long-term orientation as an extra dimension to KSI).

JIBS scores better than average for all three indica-
tors in Table 1: out of 164 papers, 76 spot flaws and
61 offer at least one remedy.
We then analyzed 189 papers that employed at
least one of remedy and list the most popular
approaches (more than 10%) in Table 2. We find
that the most popular remedy addresses a weakness
that is not on the Tung and Verbeke’s (2010) list
and has to do with general criticism of the Hofst-
ede’s (1980) framework on which the KSI is based.
This is not the place to discuss this criticism be-
cause it suffices to reiterate Shenkar’s (2001) rec-
ommendation to use multiple indices, e.g., GLOBE
and Schwartz, to enhance reliability given the tacit
and complex nature of the culture variable. Of the
189 above mentioned papers, 70 papers use multi-
ple measures [those using a single measure, even if
not Hofstede’s (e.g., Liu & Maula, 2016 only used
GLOBE), are not counted].
The second most popular presumed remedy,
employed by 48 papers, is also not a direct response
to Tung and Verbeke’s (2010) list, but rather a
potential refinement of the KSI formula, substitut-
ing Euclidean or Mahalanobis distance, with the
goal of relaxing the assumption of zero covariance
across dimensions (Kandogan, 2012). However, we
do not view this as an actual remedy, not only
because results appear to vary little, but also
because it does not address any of the illusions
flagged earlier.
The next remedy, using a single dimension
(rather than an index), is initially proposed as a
response to the illusion of equivalence (Shenkar,
2001; Tung & Verbeke, 2010), and as a way to
assure the theoretical underpinnings for CD-related
arguments (Beugelsdijk et al., 2018a). A total of 44
papers have taken this approach (including check-
ing individual dimensions for robustness). Still, it
should be noted that the use of a single dimension
sidesteps rather than resolves the equivalence illu-
sion and typically does so at the cost of missing on
inter-dimensional linkages in a national cultural
profile.
The fourth most popular remedy, represented in
36 papers, is devised to deal with the illusion of CD
stability. Among these 36 articles, 27 explicitly
include distance-closing mechanism variables, such
as experience (e.g., Slangen & Hennart, 2008).

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 National culture and international business
520
Table 2 Common KSI CD illusions and remedies (adapted from Tung & Verbeke, 2010).
Illusion
General weakness of Hofstede’s index, e.g., single firm
survey, comprehensiveness of dimensions
No correlation between individual dimension in KSI
Aggregating different cultural dimensions into a single
distance measure with the assumption that each
dimension is equally important or produces the same
impact
Measured at a single point in time, CD is implicitly
assumed to be constant
CD implicitly assumes lack of corporate culture and
firm characteristics variance
Linear relationship between scores for distance
measures and selected dependent variables
Symmetry in scores for distance measures between
countries (the distance from point A to point B is
identical to the distance from point B to point A)
a
One paper might use multiple remedies, so the sum of the papers is more than 189.
b
Number in the quote means the papers provided the remedy to KSI CD.
c
Due to the complexity of selecting control variables, counted only when the authors explicitly offer extra variables as a remedy (e.g., Flores & Aguilera,
2007; Slangen & Hennart, 2008).
While many potential mechanisms, such as an
evolution of corporate culture from that of an
entrepreneurial startup to that of an established
company are yet to be included, this is a step in the
right direction. The same is true for the 9 papers
using a weighted formula (e.g., Hutzschenreuter &
Voll, 2008 for ‘‘added CD’’), though this approach,
while dealing with stability, violates the equiva-
lence illusion by aggregating the different cultural
dimensions.
A more complex challenge relates to the con-
founding of units and levels of analysis (Kirkman,
Lowe, & Gibson, 2017; Tung & Stahl, 2018). A total
of 33 papers design their own questionnaire survey
to capture firm-level cultural variables (e.g., Sarala
& Vaara, 2010). This is an improvement in that it
captures the cognitive element missing from the
generic data set associated with the CD framework,
but it sidesteps rather than resolves the problem of
using the same ‘‘algorithm’’ at different levels and
in different contexts, e.g., inter-firm (say, a cross-
border joint venture where parent firms engage
with each other) and firm-country (say, the firm
decision to enter a national market, where the
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Oded Shenkar et al.
Remedy provideda Percentage of Percentage of
with remedy total empirical
(N/189) (N/613)
Use multiple cultural classifications: e.g., 37 11
GLOBE, Schwartz, Ronen & Shenkar’s
clustering (70)b
Use Improved formula, e.g., Euclidean or 25 8
Mahalanobis distance (48)
Study single dimension effect (44) 23 7
Add extra variables as closing mechanismc 19 6
or consider other factors (e.g., time) and
weighted CD (36)
Use designed survey to capture firm-level 17 5
(managers) perception or cultural
attributes (33)
Use cultural cluster or hypothesized non- 15 5
liner relationship (e.g., U-shape or
S-shape) (29)
Study one direction impact or introduce 10 3
direction dummy (19)
interface is between a company and national host
institutions and constituencies), which confounds
learning to work with another firm with obtaining
legitimacy in a host environment.
The last two remedies are set to address the
linearity and the symmetry assumptions, amount-
ing to 29 and 19 papers, respectively. To remedy
the presumption of linearity, papers either use
cultural clusters (Ronen & Shenkar, 1985, 2013) or
hypothesize non-linear (e.g., U-shape or
S-shape) relationships. Both solutions are quite
reasonable, if not full-fledged, as threshold effects
are often neither hypothesized nor tested. Among
the 19 papers responding to the symmetry assump-
tion, 14 explicitly claim to design their study with a
specific direction in mind, while 5 introduce a
directional dummy. For instance, Lee et al. (2008)
found significant differences in the impact of
cultural differences between inward investment
(seeking foreign partners for FDI in the home
country of South Korea) and outward investment
(seeking foreign partners for FDI outside South
Korea). While primarily designed to gauge asym-
metry, the design enables a disentanglement of the
 National culture and international business
aforementioned confounding effect, consistent
with the recommendation in Kirkman et al. (2017).
Having reviewed all of the remedies above, we
arrive at the most serious and unfortunately incor-
rigible problem, the index itself. None of the
reviewed papers offers a remedy to the problem of
equivalence (as noted, using a single dimension
merely sidesteps the problem). There is simply no
justification for adding up and aggregating the
various cultural dimensions into a single index, and
plenty of evidence to show that it is plain wrong
due to the widely varied impact of the different
dimensions (Berry, Guillén, & Zhou, 2010; Dow &
Ferencikova, 2010; Dow & Karunaratna, 2006; Dow
& Larimo, 2009, 2011). This should not have come
as a surprise: Hofstede made it clear that aggrega-
tion violated a basic assumption of his framework.
The problem with the aggregated index goes well
beyond the issue of unequal weighing, which,
while being serious enough, could perhaps produce
distortion in magnitude alone. Rather, findings
show that gaps on some dimensions of culture
produce a negative effect, whereas divergences on
other dimensions yield a positive outcome (Koch,
Koch, Menon, & Shenkar, 2016; Shenkar & Zeira,
1992). In addition, while a theoretical argument
can be made for the impact of individual dimen-
sions (Beugelsdijk et al., 2018a), no such justifica-
tion is on offer for the KSI, the centerpiece of the
CD approach and by far the most popular measure
of the CD paradigm. The one possible exception,
and indeed the theoretical platform on which the
CD paradigm presumably rests, is transaction cost
economics (TCE), but in and of itself this does not
resolve the fundamental challenge of inverse
impacts. Worse, as we will show, not only is the
TCE argument concerning CD questionable, it
amplifies the problem by implicitly negating the
possibility of obtaining contrasting effects, to begin
with.
THEORY PLATFORMS
Maseland et al. (2018) noted that most of the
scholarly work in the CD tradition ‘‘invokes’’ rather
than applies theory in a meaningful fashion. Hof-
stede (1980), the inspiration and data source for the
CD approach, used an instrument based on earlier
work, in particular, Haire, Ghiselli, and Porter
(1963), which was anchored in motivation theory.
This legacy was ‘‘lost in translation’’ when travel-
ling to the macro IB realm, arriving stripped of its
theoretical foundations, one of the competency
Oded Shenkar et al.
521
traps associated with using distance as an underly-
ing metaphor (Shenkar et al., 2008). In the rare case
in which motivational theory has at all surfaced in
the IB and strategy version of cultural diversity
(e.g., Taras, Kirkman, & Steel, 2010), it has not been
adjusted for subsequent findings, in this case, the
rejection of Maslow’s (1943) hierarchy hypothesis
(Alderfer, 1969). This, and the failure to identify
other theories to engage with culture, has left TCE
as ‘‘the only game in town.’’
An economic theory with behavioral elements,
TCE is by far the most popular theoretical platform
for CD studies. Culture plays, however, a minor and
ambiguous role in TCE. As Williamson (1993:476)
writes, ‘‘The main import of culture, for purposes of
organization, is that it serves as a check on oppor-
tunism’’; this is because it weakens social sanctions
(e.g., against breach), undermines contract enforce-
ment (e.g., via bribery), and engenders ‘‘slight
remorse’’ when behaving ‘‘opportunistically’’. As a
result, IB and strategy scholars applying TCE in
conjunction with CD use a core construct of the
theory, uncertainty, as a proxy for cultural differ-
ences. This is a stretch, to say the least. Uncertainty
is a multifaceted construct (Ellis, Almor, & Shenkar,
2002), so even if it is implied by cultural differ-
ences, it is vague what type of uncertainty they
engender and what would be the impact.
The fundamental TCE logic for the most com-
mon IB application of cultural differences, entry
mode, is similarly suspect. Anderson and Gatignon
(1986) and Gatignon and Anderson (1988) point
out that TCE’s entry mode prediction could go
either way: a preference for whole ownership to
control opportunistic, culturally distant actors, or
rather partial ownership, to mitigate locational risk.
In addition, gaps in different dimensions of culture
may produce less uncertainty, or even reduce it (see
the illusion of equivalence). In addition, different
parties to a transaction face different types and
levels of uncertainty (see the illusion of symmetry).
Many of the other critiques of TCE, such as the
avoidance of history and the universal presumption
of opportunism (e.g., Argyres & Liebeskind, 1999;
Ghoshal, 2005; Ghoshal & Moran, 1996; Pfeffer,
2005), also apply here and may have their roots in
TCE’s own cultural relativity (Hofstede,
1993, 1996), which makes it partial to individual-
ism (Steensma, Marino, Weaver, & Dickson, 2000).
In any event, culture is about much more than
uncertainty. It concerns values, beliefs and atti-
tudes; it is a guide to behavioral norms, a marker of
trust, and a compass for what transactions are
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 National culture and international business
522
considered legitimate and how they should be
conducted. As such, culture can yield a variety of
outcomes, both positive and negative. It is in this
respect that the distance paradigm becomes con-
fined to a point of obstruction. As Shenkar et al.
(2008) write, the dictionary definition of ‘‘distance’’
lists ‘‘discord’’, ‘‘disagreement’’, ‘‘dissension’’ and
‘‘dispute’’ as synonyms, alluding to the negative
view embedded in the metaphor. The TCE view is
that cultural differences are always detrimental to
firm operation and performance since they are by
and large an information cost (Caves, 1996). In
Stahl and Tung’s (2015) analysis, 41 of the 50 (82%)
empirical JIBS studies that used the KSI made
negative assumptions concerning the impact of
cultural differences; 7 were neutral or mixed, and
only 2 looked at such differences as potentially
positive. Yet, as Zaheer et al. (2012) noted, similar-
ity does not necessarily breed harmony, and differ-
ences do not necessarily cause harm.
Indeed, research shows that while negative out-
comes are possible with cultural differences (e.g.,
Palich & Gomez-Mejia, 1999), so are positive ones.
The evidence for the latter comes from IB (e.g., Reus
& Lamont, 2009; Shenkar & Zeira, 1987; Stahl,
Mäkelä, Zander, & Maznevski, 2010), but also from
other fields and disciplines. In economic geogra-
phy, Ottaviano and Peri (2005) found that cultural
diversity increased productivity. In economics,
Hong and Page (2001) discovered that diverse
groups were more productive, because their prob-
lem-solving ability benefitted from different heuris-
tics. In financial economics, Ahern, Daminelli and
Fracassi (2015) explained that cultural diversity
contributed to M&A success because it raised
alternatives to the status quo. Other examples
abound.
SHIFTING PARADIGMS
Responding to the call to improve the quality of
cross-cultural research, Tung and Verbeke (2010:
1261) raise the question of ‘‘how do we progress
beyond the point of adding only marginal value to
extant knowledge?’’ The answer, we believe, lies in
the willingness to consider alternative paradigms to
challenge, complement, or substitute a current
paradigm. Following Kuhn (1962), we use the term
‘‘paradigm’’ because it is not merely a formulaic
construct, but as a roadmap to how one approaches
the world. According to Kuhn (1962, 1977), para-
digms are ‘‘models for thinking’’ which determine
the fundamental way in which the world is viewed
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Oded Shenkar et al.
and understood. This includes ‘‘law, theory, appli-
cation, and instrumentation together’’, a ‘‘body of
intertwined theoretical and methodological belief’’
(Kuhn, 1962: 10, 16–17; see also Shapere, 1964).
The view is quite consistent with statements from
CD proponents that it is not only an algorithm but
rather an interconnected set of elements, with a
‘‘tight unity between the concept of culture as a
distance, the calculation of distance, and the data’’
(Cuypers et al., 2018: 1138).
A paradigm typically starts with an abstract
proposition that is ‘‘an object for further articula-
tion and specification under new or more stringent
conditions’’ (Kuhn, 1962: 23–24), but in the case of
CD, the order has been reversed, starting out as a
formula and ending with the aforementioned
expansionary view that ‘‘international manage-
ment is management of distance’’ (Zaheer et al.,
2012:19). This reverse order may partially explain
why the lack of ‘‘predictive accuracy (empirical
adequacy)’’ (McMullin, 1993: 67) did not under-
mine the CD approach, since ‘‘a problem or other
anomalies’’ typically develop ‘‘in the course of
paradigm articulation’’ (Kuhn, 1962: 6). This leaves
little room for an alternative because while defend-
ers ‘‘inevitably fail to make contact’’ with a rival
paradigm, ‘‘troublesome anomalies’’ (McMullin,
1993: 59) are less likely to be noted under an
inverse progression from articulation to concept.
A paradigm can be beneficial. It helps ‘‘connect
the dots’’ and enables further development by
forcing articulation of hitherto unknown linkages
across diverse elements and between theory and
application. This helps to make a theory testable
and may sow the seeds of its eventual replacement
should it prove not to hold (Kuhn, 1962, 1977). A
paradigm is also limiting, however. As Clarke and
Clegg (2000: 47) note, ‘‘Paradigms are what allow us
to see certain things as something in particular, but
they also make it difficult to see certain other
things that do not ‘belong’ within the paradigm.’’
They added that ‘‘Being locked into a paradigm at
its worst can become a form of conceptual impris-
onment’’. In contrast, having multiple paradigms
‘‘may help us see better where to go, what questions
to ask, what evidence to seek, what to deny’’ (Clarke
& Clegg, 2000: 47). In the sciences, competing
paradigms can exist side-by-side for a time but
eventually one replaces the other (Kuhn, 1977).
This may not hold in the social sciences, to which
business management belongs. Clarke and Clegg
(2000: 46) observe that unlike the sciences, where
paradigms exist in parallel for a transition period
 National culture and international business
until a shift is consummated, ‘‘in management, at
any time, there are a number of competing
paradigms available.’’ The parallel existence is an
opportunity to formulate, compare and test the
different approaches, enriching the field, until the
eventual shift, that Kuhn views as essential to
scientific progress but is a time of uncertainty
embedded in political processes (Kuhn, 1977, 1979;
Loving & Cobern, 2000), may come.
The Roots of the Distance Paradigm
Before we discuss the alternative paradigm we offer,
it is important to briefly recall why ‘‘distance’’ has
become so entrenched in the IB literature (apart
from the aforementioned inverse evolution) and
why its geographic manifestation is the ‘‘metaphor
of origin’’ (Lakoff & Johnson, 1981) for cultural
differences in the first place (Shenkar et al., 2008).
First, by the time the CD construct emerged,
geography was an established field and a bona fide
IB variable (Buckley & Casson, 1976; Davidson &
McFetridge, 1985; Vachani, 1991). Second, as a
spatial property, geographic distance belongs in the
sensorimotor domain and provides pictorial ima-
gery of the physical world, historically, the domi-
nant source for metaphors (Cornelissen, 2005;
Lakoff & Johnson, 1981, 1999; Narayanan, 1997;
Tsoukas, 1991). Third, geographic distance was
considered ‘‘hard data,’’ which fits well with the
‘‘imagery of order’’ and perceived rationality perva-
sive in organizational research (Meadows, 1967;
Morgan, 1997; Smircich, 1983). This provided a
counterbalance to culture, a concept that embeds
subjective meanings and abstract elements (Jelinek,
Smircich, & Hirsch, 1983), and, in particular,
human meanings (Morgan, 1997). Fourth, the US
is a ‘‘low contact’’ culture (Triandis, 1982; Watson,
1970), which is consistent with a disengaged view
of cultural differences. With the vast majority of
management researchers, including those conduct-
ing cross-cultural research hailing from the US or
other Anglo Saxon countries (Pugh & Hickson,
1997; Tsui, Nifadkar & Ou, 2007), and with almost
all management and economic theories developed
in those nations, it is not a surprise that distance
emerged as the lens of choice.2
Even with this geographic anchoring, scholars
neglected deviations and anomalies which were
pointed out by geographers and trade scholars who
included such variables as language and colonial
heritage that are closer to PD than to the CD view
(Karolyi, 2016). Similarly, trade costs have been
shown to be asymmetric over time (Chen, Novy, &
Oded Shenkar et al.
523
Pascali, 2015), while export costs have been found
to be asymmetric between developed and develop-
ing markets (Waugh, 2010). Shipping costs also are
asymmetric to merchandise trade imbalances and
historical (e.g., postal) treaties, and the effects of
geographic distance are nonlinear, as encapsulated
in the geographic concept of ‘‘distance decay’’
(Haynes, 1974). Thus, the concept of fixed distance
as deployed in KSI is not actually equivalent to
geographic distance, but rather is an artificial
geometric construct. As such, it assigns properties
that bear little resemblance to the complex phe-
nomenon it is supposed to capture.
From Separation to Engagement
Our point of departure for a paradigm reset is that
IB is not only, or even mainly, about distance. This
is not to say that distance does not play a role, but
rather that it merely represents a narrow and
limited aspect of the cross-border engagement.
Above all, trade involves contact and interaction
among traders, consumers, intermediaries, rulers,
and other constituencies. This is further amplified
when one shifts from arm’s length transactions to
FDI, which, by definition, involves contact between
the parties and their constituent parts, and sets the
stage for exchange between firm executives and
other actors. As affiliates are negotiated, formed,
and operated, human actors are posted and inter-
faced, and contacts initiated, pursued, and medi-
ated. This exchange is not merely a transfer of
resources, but an interface that is taking place
within a historical and geopolitical context, repre-
senting not only each of the parties but also their
bilateral (or multilateral) dyads (or triads, etc.) as
well as the ties between the broader entities in
which they are embedded, i.e., nations (Arikan &
Shenkar, 2013; Li, Arikan, Shenkar, & Arikan,
2020).
Even prior to a transaction, with contact limited
to a few negotiators, individual actors embedded in
their respective firms and institutions prepare for a
future exchange. They enact their environments
using stereotypes of others (Weick, 1995), inclusive
of their cultural elements, leading to an anticipa-
tory adjustment of the cultural encounter (Black,
Mendenhall, & Oddou, 1991), a cognitive and
process-based course of action (Scott, 1995). Dor-
rough and Glöckner (2016: 10836) simulated coop-
eration based on national stereotypes and found
that ‘‘social preferences are influenced by differ-
ences in wealth and ingroup favoritism, as well as
effects of specific country combinations but not by
Journal of International Business Studies
 National culture and international business
524
spatial distance between nations’’ (our italics). Doney,
Cannon, and Mullen (1998) studied how national
culture impacts trust, while Guiso, Sapienza, and
Zingales (2009) ranked mutual trust perceptions
across five European nations. From a psychological
perspective, such stereotypes may change the fol-
lowing contact and then are generalized to other
group members (Amichai-Hamburger & McKenna,
2006).
Alternating Theory Lenses
That TCE was able to enter unto the center stage of
culture research despite its many vulnerabilities
and its little interest in the phenomenon says
volume about the broader theory vacuum. Tell-
ingly, among the theories listed by Maseland et al.
(2018), not one has culture as an original core
construct. The potential to draw on other theoretical
streams from the macro organizational realm, or
economics, a traditional IB source for theory, is
limited. In institutional economics, North (1990)
acknowledges the importance of ‘‘informal institu-
tions’’, which some economists now formally label
‘‘culture’’ (Alesina & Giuliano, 2015), but formal
institutions are, clearly, more important. In insti-
tutional theory, Scott’s (1995) normative pillar
appears close to representing culture, but its dis-
tinction from other pillars, in particular the cogni-
tive, is not definitive. The Uppsala model may be
the only extant framework where culture is a core
element, but it only hints at a theoretical base with
a definition that touches on social information
processing, but without a direct link to the theory
by that name (Salancik & Pfeffer, 1978). With that,
it is not a surprise, as Beugelsdijk et al., (2018a:
1115) observe, that ‘‘no grand theory of distance’’
has emerged. Nor is evident that one is possible or
even needed, should distance not be, as we argue,
the right lens with which to look at culture,
including cultural differences, and their impact.
If IB and economic theories offer limited pro-
spects for theory development, there is room to
engage other theoretical lenses. For example, social
identity theory (Tajfel, 2010) specified when and
how cultural affiliations become more salient and
impact organizations. Salk and Shenkar (2001)
applied the social identity theory in a European
joint venture, showing how identification with
national groupings overwhelmed corporate identi-
fication, though this has also changed over time,
partly based on the prevailing business environ-
ment, with crises raising national at the expense of
corporate identities. Salk and Shenkar’s
Journal of International Business Studies
Oded Shenkar et al.
(2001) study also showed the importance of taking
a process approach, as suggested by Johanson and
Wiedersheim-Paul (1975: 307), who saw FDI as an
‘‘establishment chain’’, an approach endorsed by
Tung and Verbeke (2010: 1261) who called on
scholars to explore ‘‘processes of cultural integra-
tion’’. Further, this reiterates the importance of
placing the culture in a business context, as advised
by Morosini (1998), and the commensurate need to
identify relevant contingencies, as we explore
below.
TOWARDS A CONTACT-BASED FRAMEWORK
In Search of Contingencies
Acknowledging varied outcomes for culture and
cultural differences is a crucial start (Rugman &
Verbeke, 2001; Stahl & Tung, 2015; Sarala & Vaara,
2010; Tung & Verbeke, 2010; Verbeke & Yuan,
2016), but, indeed, merely a start. Just as affirming
that culture matters (Kirkman, Lowe, & Gibson,
2006) is only a first step (Devinney & Hohberger,
2017), confirming the potential for contrasting
effects of cultural diversity is the beginning of a
long journey. The focus should now turn towards
specifics, that is, the conditions under which the
impact will be positive or negative, the mechanisms
involved, and the process through which the
benefits and drawbacks are activated.
Parkhe (1991) speculated that cultural differences
are a draw when joint venture partners consider an
alliance because they imply different skills and
capabilities, but become a liability during the
operational phase when partners work together.
Reus and Lamont (2009) found that CD impeded
M&A performance by undermining the under-
standing of key capabilities that needed to be
transferred and disrupting communication
between the parties, but enhanced performance
for those who overcame those challenges. Doherty
and Chelladurai (1999) suggested realizing the
benefits of cultural diversity, creativity, challenge,
and constructive conflict, necessitate a particular
organizational culture and benefit from heightened
task interdependence and complexity. Shachaf
(2008) found that cultural differences have a pos-
itive influence on decision-making but a negative
influence on communications. Frijns, Dodd, and
Cimerova (2016) reported that the negative effects
of board diversity are concentrated among inde-
pendent directors, and differences in individualism
and masculinity are mainly responsible for the
 National culture and international business
impact. Finally, Li, Brodbeck, Shenkar, Ponzi, and
Fisch (2017) showed that the impact of cultural
differences flips from negative to positive when a
foreign culture is considered attractive, and that
cultural attractiveness is ‘‘a predictor of FDI inflows
and CBA (cross-border acquisitions) outcomes,
whose explanatory power is superior to cultural
difference measures’’ (Li et al., 2017: 950). In other
words, positive feelings concerning a counterpart
have the potential to not only reduce the negative
impact of cultural differences, but to transform
them into a positive force.
Inputs from Contact Theory
While the aforementioned literature identifies con-
tingencies mediating the impact of culture, we are
still lacking a comprehensive theoretical frame-
work. Given the limitations of the current theory
pool, the input may need to come from far afield.
We have already noted potential contributions
from social identity theory, but the current theory
vacuum calls for casting a wider net. Given our
proposed paradigmatic shift towards the actual
engagement linking participating entities, we have
searched for a theoretical framework that appears
to be consistent with this approach as well as
applicable to a business context.
Contact has been served as a theoretical center
point in areas ranging from archaeology and
anthropology (Bateson, 1935; Lightfoot, 1995) to
physics, mechanics, and beyond (e.g., Carbone &
Bottiglione, 2008). While all contact theories
espouse a focus on the outcome of bringing differ-
ent entities together, the most relevant for our
purposes appears to be the one outlined in social
psychology (Allport, 1954). That theory is focused
on the role of intergroup contact in reducing
stereotypes and prejudices, and its writings identify
mechanisms that are key to a positive outcome, for
instance, learning about the outgroup (Pettigrew,
1998; Pettigrew & Tropp, 2008). A meta-analysis by
Pettigrew, Tropp, Wagner and Christ (2011) con-
firmed three main mediators amplifying prejudice
reduction following contact, including enhancing
knowledge about the group, reducing the anxiety
about the contact, and increasing empathy and
perspective-taking (the mediational value of
enhanced knowledge was not as strong as that of
the other two). Though these variables are yet to be
tested for groups differentiated by national culture,
this is a potentially promising path.
Bochner (1982) summarized relevant properties
for contact theory as (a) on whose territory the
Oded Shenkar et al.
525
contact occurs; (b) the time span of the interaction;
(c) its purpose; (d) the type of involvement; (e) the
frequency of contact; and (f) the degree of inti-
macy, relative status and power, numerical balance,
and distinguishable characteristics of the partici-
pants. Many of the same properties are relevant at
the firm level. Consider, for example, a joint
venture between a foreign and a local firm as
opposed to a joint venture between two foreign
firms in a third country. What should be specified
in an inter-firm context is however not only the
type of involvement (say, a merger vis-à-vis a joint
venture where contact interface is lower), but also
the strategic purpose, whose relationship to the
cultural process is rarely discussed (Morosini, 1998).
Similarly, the relative position of the players (e.g.,
an acquirer vs. a target, a dominant joint venture
parent vs. a minority parent), which conveys status
and power, could make a difference – contact
theory research found that the impact of contact
is greater for a majority than a minority status
group (Pettigrew et al., 2011). It is also important to
recognize that cultures vary in the extent to which
norms are enforced (Gelfand et al., 2011). In
addition, within each culture, specific values and
norms vary in importance. Those perceived to be
central and foundational are less likely to be
compromised, while those considered secondary
are more likely to be negotiated and traded away.
Koch et al. (2016) applied the concept of value
centrality to the study of foreign–Chinese joint
ventures, and confirmed that differences on less
central work values generated less conflict and the
negative impact they produced on operation and
performance was less pronounced.
From a Unitary to a Relational, Process-Based
Approach
A relational, bilateral approach, where entities are
considered in terms of their mutual relationship
rather than their independent characteristics, is key
to a contact paradigm. Huntington (1996), who
clustered ‘‘civilizations’’ based on cultural, religious
and other historical factors, speculated on future
clashes among them based on their differences but
also their historical, adversarial contact. Arikan and
Shenkar (2013) studied the impact of historical
animosity between countries based on past contact
on the formation of cross-border alliances among
their firms. Their findings suggest that collective
stereotypes are triggered not only by how we view
other cultures but also by the record of contact
Journal of International Business Studies
 National culture and international business
526
between the countries in which firms are embed-
ded, which can also vary by industry and sector.
The relational approach can be augmented by a
dialectical method of the sort employed by Orr and
Scott (2008) for institutional differences. As a
byproduct, this could also challenge the static view
of institutional distance (Kostova, 1996), a con-
struct subject to many of the drawbacks of CD.
Institutions, and the values they disseminate, can
change with a regime, as McClelland (1963) has
shown for China. A contact-based approach would
require studying both cultural and institutional
differences (Golesorkhi, Mersland, Randøy, & Shen-
kar, 2019; Tung and Verbeke, 2010), because
cultural contents are transmitted via institutions
that, in turn, are counterparts to firm exchange.
This duality has become a central theme in eco-
nomics (Alesina & Giuliano, 2015; for instance, it
was the subject of the Presidential Address in the
European Economic Association, see Tabellini,
2008; also Amin & Thrift, 2004, 2007; Thrift &
Olds, 1996), but remains relatively rare in IB and
strategy/management.
While the need to look at the cultural process,
e.g., various decision-making stages, has been
acknowledged in IB (e.g., Beugelsdijk et al.,
2018a), the mechanisms (see Zaheer et al., 2012)
are better accommodated in a framework in which
parties actually meet. A contact approach would
look at how communication channels, for instance,
impact and are impacted by cultural interaction.
This would also allow for the perceptions of
cultural differences to change over time. This is
not because national cultural systems change (ev-
idence on that is inconsistent, the World Value
Survey shows change while Ronen and Shenkar
(2013, 2017) find remarkable stability (see also
Beugelsdijk, Maseland, & van Hoorn, 2015), but
because individual and corporate interpretations of
national cultures and their meanings are impacted
by the inter-cultural interaction (Boyacigiller,
Kleinberg, Phillips, & Sackmann, 2004).
Staging Contact: Connecting Levels of Analysis
A contact approach requires paying closer attention
to how actual actors embed different levels of
analysis. Shenkar and Zeira (1987) use the cultural
makeup in cross-border joint ventures as a case in
point, delineating which group members bring
either national or corporate culture, or both, into
the hybrid entity. Nascent efforts can also be found
in Weber, Shenkar, and Raveh (1996), who study
the interaction between corporate and national
Journal of International Business Studies
Oded Shenkar et al.
culture, and in Salk and Shenkar (2001), who add
the individual to the mix. Brannen and Doz (2010)
laid out the case for bridging the macro strategic
with the micro cross-cultural perspective to
advance scholarship that ‘‘continues to be dated
and unsophisticated with regard to the complexity
of the culture construct’’ (2010: 239). Indeed,
‘‘culture is dynamically created and enacted by
individual members’’ (Brannen & Doz, 2010: 239;
Van Maanen & Barley, 1985), but how those
individuals’ function in their role as strategic
decision-makers remains to be explored. As Fischer
and Schwartz (2011) note, variation across individ-
uals is considerably higher than among national
samples (see also Huang & Bond, 2012). Suffice it to
say at this point that a contact-based perspective
could and should be tuned to individual actors,
embedded as they are in their respective organiza-
tions and nations, and hence to the relationship
between individual and national levels attributes,
such as that between tolerance for ambiguity and
uncertainty avoidance. Furthermore, a contact-
based approach can monitor the back and forth
interactions between actors over time, following a
processual, dialectic method. This would mean, for
instance, monitoring how host country con-
stituents react when a foreign investor dramatically
increases its stake in a joint venture, and how that
may inform the intercultural process between the
partners.
Relatedly, Boyacigiller et al. (2004) surface the
need to capture the cognitive angle of culture,
which would be consistent with Cyert and March’s
(1963) admonition that decisions are made by
people, not firms. Similarly, Dow (2017) recom-
mends operationalization at the individual, action-
able level, which is in line with Bond’s (2002: 73)
call for ‘‘reclaiming the individual’’ in culture
research, based on evidence that individual varia-
tion typically exceeds that of national aggregates.
With the exception of a few anecdotal references
(for instance, an exception to the Uppsala model is
explained in the original study in that a CEO was
educated in a host country), individual-level
research remains rare, though modest steps have
been taken, e.g., by Puthusserry, Child and Rodri-
gues (2014), and Williams and Grégoire (2015) who
examined FDI protocols to gauge cultural percep-
tions. Even studies that invoke social cognition as a
theoretical base (Baack, Dow, Parente, & Bacon,
2015) struggle to explain how individual percep-
tions diverge from national averages, and still use
the aggregate KSI with its myriad of illusions.
 National culture and international business
Overall, it seems that Boyacigiller et al.’s (2004:
123) review of the literature, that ‘‘national cultural
identity remains separate and distinct throughout
the process of interaction’’ is as true today as it was
at the time it was written.
We also need to incorporate variations within
national cultures, as recommended by Shenkar
(2001) and recently pursued (e.g., Dheer, Lenar-
towicz, & Peterson, 2015). Variations in regional
culture have long been noted in the IB literature
(Au, 2000; Huo & Randall, 1991; Lenartowics &
Roth, 2001; Schwartz, 1992) but are rarely applied
to global strategic issues. The same is true for
variations in corporate culture, and, in particular
the interplay between national and corporate cul-
ture (Dong & Glaister, 2007; Ulijn, Duijsters, &
Fèvre, 2010), inclusive of their interaction effect
(Weber et al., 1996). These, too, should be incor-
porated if we are to approximate a realistic encoun-
ter between firms in an FDI context. Also to be
resolved is the inability of the CD formula to
accommodate a setting with more than two play-
ers, for instance, a joint venture with three or more
parent firms, or a multiple-member consortium.
This limitation has led researchers in multiparty
settings to limit their analyses to the two parents
with the largest stake, missing critically important
multi-parent dynamics (Gong, Shenkar, Luo, &
Nyaw, 2007). A contact approach would necessitate
consideration of all major firm actors, and be
cognizant of the very different dynamics between
dyads and triads, for instance (Simmel, 1902).
Strategy and Culture
Another challenge has to do with the interface
between strategy and culture, which past literature,
before and after Morosini (1998), has barely
noticed. Sirmon and Lane (2004: 306) proposed
that ‘‘the closer the domain of a social group is to
the value-creating activities of an alliance, the more
disruptive cultural differences between the part-
ners’ members of that social group will be.’’ Part of
the problem is that value creation tends to vary
across governance modes, for instance, in an
alliance setting, what constitutes value creation to
one party may not be considered as such by the
other(s), as is the case for M&As (Morosini, Shane,
& Singh, 1998). Kogut and Singh (1988) found an
impact for experience, but later evidence suggests it
is not straightforward. Zeng, Shenkar, Lee, and
Song (2013: 59) found that ‘‘when an MNE is new
to a dissimilar culture its prior FDI experience in
the host culture has a detrimental effect on
Oded Shenkar et al.
527
subsequent subsidiaries in that culture’’, and iden-
tified a different learning effect for ‘‘host-proxi-
mate’’ experience as compared to ‘‘home
proximate’’ experience. The authors calculated the
number of prior foreign entries before learning was
absorbed, showing a threshold, nonlinear impact.
By definition, a processual contact approach is
more suited to reveal such effects that are masked
under the cultural distance paradigm.
A processual contact paradigm also implies look-
ing at how cultural interaction may be altered
under changing business circumstances, and not
only at the level of strategic intent (Morosini,
1998). Salk and Shenkar (2001) found that during
an industry crisis, the national identification of
members of parent firms rose markedly, undermin-
ing cooperation within the cross-border joint ven-
ture they were part too. More recently, Dinner,
Kushwaha, and Steenkamp (2019) found that a
marketing crisis had a more negative impact when
PD was either very high or very low, again negating
the linear assumption of the distance approach.
Overall, we believe that a processual contact
approach is much more suitable to address the
current disconnect between culture and strategy.
Finally, we agree with Beugelsdijk et al. (2018a)
that comparing extreme country cases may not be a
good idea when pursuing empirical research, and
that we should rather select ‘‘partially’’ similar cases
(Przeworski & Teune, 1970), which enables better
controls and are yet another way to avoid the
treatment of culture as a residual variable. Longi-
tudinal designs are especially recommended, espe-
cially given the neglect of timing (Mitchell &
James, 2001). We should also consider alternatives
to survey-based data such as McClelland’s (1963)
content analysis of children’s literature to gauge
motivational values across societies and over time,
or, more recently, Santacreu-Vasut, Shenkar, and
Shoham’s (2017) use of the grammatical structure
of languages that was shown to offer a better
prediction than its equivalent survey-based
measure.
Nascent Application: Friction Models
Without a doubt, a significant driver of the popu-
larity of the CD framework has been the ability to
operationalize cultural differences with a simple
formula that offers ease of use combined with
ready-made data. To offer an attractive alternative,
a contact-based paradigm would need to offer some
level of measurability, though not at the cost of
oversimplification. Shenkar et al. (2008) proposed
Journal of International Business Studies
 National culture and international business
528
the general contours of a general ‘‘friction’’ model
of cross-border cultural encounter. It is important
to reiterate that friction itself is a neutral concept,
which can lead to positive as well as negative
consequences. From an engineering perspective,
friction can be too high, producing drag and energy
loss, but it can also be too low, reducing perfor-
mance. Relying on the discipline of Tribology,
Bowden and Tabor (1973) provide many examples
where friction is a positive, e.g., a tire that should
grip an icy road, a shoe that must not slip on the
floor, knots and nails that would not otherwise
hold, etc.
Luo and Shenkar (2011: 2) operationalized the
friction framework, stating that ‘‘with the friction
lens, culture comes to be viewed as being created
and recreated by actors who are (1) embedded in
organizational and national identities, possessing
divergent resources and interests and holding
asymmetric power and (2) engaged in an ongoing
exchange that consists of a chain of responses and
counter-responses.’’ The authors adapted concepts
from physics and mechanical engineering that view
friction as an increasing function of drag pressure,
or forces in contact. Drag parameters are mirrored
in load, surface coefficient of friction, speed, and
stage. Friction is also a function of ambient condi-
tions experienced by parties to the contact, and can
be curbed by ‘‘lubricants’’ that reduces wear and
tear. Thus, the size and type of the transaction, the
‘‘cultural coefficient of friction’’, the pressure for
completion, and the stage of the relationship can
be seen as relevant to the success of the transaction.
National and international institutions provide a
set of ‘‘ambient conditions’’, while interpersonal
relationships, training, and cross-cultural teaming
can be seen as lubricants. This model implies that
the components of culture must be considered for
relevance to the transaction-specific construct of
a ‘‘cultural coefficient’’. As in engineering, every
surface has its own coefficient, and no general
measure can be applied to all conditions. Note that
from this perspective, cultural friction can also be
the dependent variable, which is impossible to
consider with a cultural distance lens. For instance,
a joint venture can be imagined to create a smaller
surface ratio than an acquisition, since the former
places only portions of each firm in contact with
the other partner(s) (Shenkar et al., 2008), such that
even for the same ‘‘coefficient of cultural friction’’,
frictional losses will be greater in the case of the
acquisition.
Journal of International Business Studies
Oded Shenkar et al.
The literature on cultural friction is expanding,
ranging from looking at the changing impact of
culture over time (Černe, Jaklič, & Škerlavaj, 2013)
to the saliency of cultural differences (Cheok, Hede,
& Watne, 2015) and the impact of the logic of
institutions as opposed to the difference between
them (Newenham-Kahindi & Stevens, 2018). Some
studies are qualitative, using narrative inquiry (e.g.,
Cheok et al., 2015), interviews (e.g., Rui, Zhang, &
Shipman, 2017), and archival data (e.g., Newen-
ham-Kahindi & Stevens, 2018); others are quanti-
tative (e.g., Li, Liu, & Qian, 2019). For instance,
Zeng et al. (2013) found that rapid expansion has
amplified the negative effect of past experience. Li
et al. (2019) studied cultural friction for small to
medium-sized Chinese enterprises engaged in the
Belt and Road Initiative, looking at scope as the
number of destination countries with which a firm
comes into contact. Li et al. (2019) study uses a
customized friction formula that can be adapted to
other contexts. Results for both approaches have
been promising.
CONCLUSION
The review we have conducted shows that while
partial and modest remedies are on offer for some
of the ailments of the CD platform, others persist.
In particular, KSI, the linchpin of the paradigm,
suffers from fundamental theoretical, conceptual
and rational flaws that have not been corrected and
appear to be irredeemable. Under these circum-
stances, it is imperative that we consider alternative
paradigms to capture the impact of culture on
cross-border business. The proposed friction frame-
work, a contact-based paradigm, is one such alter-
native. Future research will tell whether it will
become a viable option given its inherent com-
plexity. Regardless, it is high time for IB scholars to
seriously consider alternatives and not allow a well-
cited and seductively simple framework go unchal-
lenged. If we want the IB field to remain at the
forefront of cross-border business research, we
should demand nothing less.
NOTES
1
The sum of the papers exceeds 613 due to
the multiple functions of CD in some papers (e.g.,
hypothesizing CD as both an independent variable
 National culture and international business
and a moderator, or using one cultural dimension
as an independent variable while calculating CD
with other dimensions as a control variable)
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ABOUT THE AUTHORS
Oded Shenkar (Ph.D. Columbia University) holds
the Ford Motor Company Chair in Global Business
Management at The Ohio State University, where
he is Professor of Management and Human
Resources and the Academic Director of the
National Center for the Middle Market. He is also a
member of the East Asian Studies Center and Fellow
and Past Vice President of the Academy of Inter-
national Business.
Stephen B Tallman (Ph.D. University of California,
Los Angeles) is the E. Claiborne Robins
Publisher’s Note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional
affiliations.
Accepted by Alain Editor-in-Chief, 28 June 2020. This article has been with the authors for two revisions.
Oded Shenkar et al.
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Distinguished Professor of Business at the Univer-
sity of Richmond. He holds a Ph.D. in international
business and strategic management from UCLA. He
is a founding editor of Global Strategy Journal and a
Fellow of the AIB and of the SMS. His research
interests include global strategic management,
geographical clusters, organizational learning, and
alliance strategies.
Hao Wang (Ph.D. Ohio State University) is an
Assistant Professor at the University of Amsterdam.
His research interests include metacognition and
cultural crossvergence, psychological foundations
of strategic behaviors and decisions, as well as
international negotiation.
Jie Wu (Ph.D., National University of Singapore) is
an Associate Professor at the University of Macau.
His research interests include internationalization
of emerging multinational enterprises, top man-
agement team, and BTOF. His scholarly work
appears in the Strategic Management Journal, Journal
of International Business Studies, Strategic
Entrepreneurship Journal, Research Policy, and other
top journals. He is associate editor of Asian Business
and Management and leading Special Issue on Asian
Entrepreneurship.
Journal of International Business Studies