Chapter 8: Is Distance the Same Across Cultures? A Measurement-Equivalence Perspective on the Cultural Distance Paradox

The purpose of this chapter is to make sense of the cultural distance paradox through a basic assessment of the cross-cultural comparability of cultural distance measures. Cultural distance between a base country and partner countries is a key construct in international business (IB). However, we propose that what exactly is measured by cultural distance is unique for each country that is chosen as the base country to/from which cultural distance to a set of partner countries is calculated.

We use a mathematical argument to establish that cultural distance may correlate rather differently with the culture of partner countries depending on which base country one considers, for example, the United States or China. We then use empirical analysis to show the relevance of this argument, using Hofstede’s data on national culture for 69 countries.

Results show that cultural distance indeed has very different correlations with partner country culture, depending on which country one selects as the base country in one’s distance calculations.

Implication of our findings is that measured cultural distance is not equivalent across different base countries. The effect of cultural distance on such issues as foreign market entry mode or market selection, therefore, lacks international generalizability.

This chapter presents the first assessment of the cross-cultural comparability of cultural distance. Paradoxical findings that plague extant cultural distance research may be understood from the found lack of measurement equivalence.