The Influence Of Cultural Distance On The Performance Of China Mne’s Overseas Subsidiaries

With the development of economic globalization and expansion of China openness,China OFDI has been increasing greatly.MNEs need to consider not only the market environment,location,infrastructure,population but also the cultural difference in the host countries.Cultural difference can be both the challenge and opportunity.On the one hand,cultural difference bring organization innovation,energy,competitiveness and better performance.On the other hand,it may also means conflicts and higher cost in getting information,contracting,management,compliance and arbitration,even business failure.Although the influence of cultural distance on the performance of overseas subsidiaries has been widely discussed by scholars,scholars have still reach an agreement on the relationship between cultural distance and performance of multinational operation due to the complexity of host country environment and global cultural diversity.Related research shows that,a lot of Chinese MNEs have not attached importance to cultural distance.Therefore,under the background of opening-up being increasingly deepen,to discuss the influence of cultural distance on performance of MNEs from Chinese culture environment is still necessary.Research on this question will help us understand the situation of Chinese OFDI,make good use of the synergy effect and avoid cultural conflict as far as possible.This text is going to study the influence of cultural distance on performance of MNEs from Chinese culture environment and find out the influence of specific culture dimension in this process.This article first made a summary of scholars’ different opinion on this question by literature review and provided influencing mechanism by analyzing the reason behind the difference.The empirical analysis is based on 406 Chinese overseas subsidiaries which spread over 46 countries.We use both financial index and nonfinancial index to measure the performance and add entry mode as a moderated mediator to test the influence of entry mode on this process.In addition,to examine the influence of specific cultural dimension with Chinese cultural characteristics on subsidiaries’ performance,the distance of each cultural dimension was examined as independent variable.Regression results show that,firstly,there is significant positive correlation between cultural distance and the performance of overseas subsidiaries.Secondly,when the entry mode is took into consideration,there is significant negative correlation between them,which means when MNEs choose to enter host country as a wholly owned subsidiary,positive effect brought by cultural distance will reduced.Thirdly,the distance of power distance,individualism and masculism can exert significant effect on overseas subsidiaries performance and entry mode still act as a moderated mediator in this process.At last,this article provided relevant suggestion to Chinese MNEs based on the conclusions.