# Analysis of Cultural Distance

Can you explain the example given in the lecture in your own words? The mean is a weighted average of the possible values a certain variable can take. The mean provides the long-run average of a variable. The variance of a variable measures the spread or variability of the distribution. The example given in the lecture can be explained like this: if the mean increases, the graph moves to the right, because a higher mean is a higher average. Increase in variance however, does not makes the graph move, but it changes the shape of the graph.

This is due to the fact that the values of the graph become more spread, as a result of the variance increase. 3. Calculate the distance on each dimension between Germany (our home country) and a specific host country using the Excel program. The host country we chose is Mexico. The distances between Germany and this host country on each dimension are: PDP 46 JAVA 17 MIND -37 MASS 3 4. The Gout-Sings index of cultural distance also contains the variance of each dimension. Answer the following questions: a. In the bottom row of the columns you will find the variance for each culture dimension.

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What dimension has the highest variance? The Individualism/Collectivism (MIND) dimension is the dimension with the highest variance. B. What does a high variance mean? That there is high variation in the values included in the calculation. 5. Calculate the cultural distance using Gout and Sings formula while using Germany as the home country. The cultural difference between our chosen host country Mexico and the home country Germany is 1,73. 6. Which four countries have the lowest cultural distance to Germany? 1. Switzerland 0,03 2. Italy 0,20 3.

South Africa 0,22 4. Luxembourg 0,24 7. Which country has the highest cultural distance? Guatemala has the highest cultural distance with Germany: 4,49 8. What is the average cultural distance between Germany and these 57 other Mounties? The average cultural distance between Germany and these countries is 1,63. 9. Pick a host country and relate the cultural distance score between Germany and that host country to the 7 points of critique raised by Sheehan as discussed in the lecture. We pick South Africa as our host country, the cultural distance is therefore 0,22. . The illusion of symmetry: the culture distance is pretty low, but it does not mean that it is therefore easy to do business. For Germany it may be easy to do business in South Africa, but the other way around, it is very difficult for South Africa to do business in Germany. This is the illusion of symmetry. 2. The illusion of stability: the CD is measured at a single point in time, but a lot has changed and is still changing. This makes the CD not always realistic, because it can be easily outdated. 3.

The illusion of linearity: Cultural Distance is not linear, that is just an illusion. It is different for all the different approaches a German firm can choose to enter the South African market, but also the other way round, when South Africa enters Germany. 4. The illusion of causality: distance is multidimensional and therefore isolating cultural distance from geographic stance and institutional distance is not correct. In this case, the low cultural distance between South Africa and Germany suggests that these countries are not very distant.

We all know that that is not true, because geographically speaking they are distant. 5. The illusion of discordance: Some dimensions of culture matter way more than others. The different languages in Germany and South Africa for example, but also the difference between employee acceptance to power and control. 6. The assumption of corporate homogeneity: there are big differences between the national cultural level and the corporate cultural bevel, especially in South Africa, and this is not included in the current Cultural Distance score.. . The assumption of spatial homogeneity: difference in location and spread around the country is not included in the cultural distance score. Especially in South Africa, but also in Germany (Our area) firms are centralized in certain areas where the CD differs to the other locations. This means that the general CD is not representative for all the areas in the country. 10. Assess the strengths and weaknesses of the Gout and Sings measure of cultural distance. It is really difficult to measure the cultural distance between countries, but

Gout and Sings did a good job by using Hypotheses dimensional framework and transforming these scores into a formula and eventually a cultural distance score. At first sight it indeed looks like a good measure to compare the cultural distance between countries, but when we take a better look we find out that there are some problematic aspects of the Gout and Sings CD measure. Sheehan made a critique list with seven weaknesses, described in the previous question. We can therefore conclude that it is great that there is a system to compare the cultural distance between countries, but that this system has some real problems.

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