Cultural Dimensions , business and finance homework help

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Write a 500 word page paper defining each of the four cultural dimensions explained by Qui. How does each cultural dimension affect product diversity in an international business setting? Please cite at least 2 sources and use APA style. One source can be the article already assigned in this section.

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Product Diversification and Market Value of Large International Firms: A Macroenvironmental Perspective Tianjiao Qiu ABSTRACT Drawing on a strategic fit perspective in international marketing, this study explores how macroenvironmental factors—cultural dimensions and globalization forces—affect the relationship between product diversification and market value of large international firms. The author hypothesizes that (1) the four dimensions of culture (individualism– collectivism, uncertainty avoidance, power distance, and masculinity–femininity) significantly affect product diversification and (2) economic and social globalization positively moderate the relationship between product diversification and market value of large international firms. The author empirically examines the hypothesized relationships using a sample of 485 firm-year observations from 17 countries for the period between 2006 and 2009. Using the hierarchical linear modeling technique, the author demonstrates that firms in countries with cultures characterized by high uncertainty avoidance and low power distance have a higher degree of product diversification, and product diversification in turn has a significant positive impact on firm market value. Furthermore, the author demonstrates that economic and social globalization, as indicated by actual flows, personal contacts, and information flows, positively moderates the relationship between product diversification and market value of large international firms. Keywords: product diversification, cultural dimensions, globalization, market value, large international firms roduct diversification—the extent to which a firm manages market segments on the basis of its multiple and disparate products—has been one of the most widely adopted foreign marketing strategies for opening new markets and gaining market shares in a turbulent and competitive global marketplace (e.g., Bowen and Wiersema 2005; Gabrielsson, Gabrielsson, and Seppälä 2012; Griffith and Rubera 2014). Among the three product strategy dimensions—product platforms, product lines, and individual products—strategic marketing decisions of the length and breadth of product lines determine the extent of the firm’s product portfolio diversification and delineate the scope of market P Tianjiao Qiu is Associate Professor, Marketing Department, College of Business Administration, California State University, Long Beach (e-mail: The author gratefully acknowledges the JIM review team for their comments and suggestions, which were instrumental in improving the article. Bulent Menguc served as associate editor of this article. 86 Journal of International Marketing segments in which marketers compete (Gabrielsson et al. 2006; Griffith and Rubera 2014). The advance of globalization makes product diversification an even more prominent international marketing strategic initiative for firms worldwide to expand into global markets (Dos Santos, Errunza, and Miller 2008; Gabrielsson, Gabrielsson, and Seppälä 2012). Because of its strategic importance for the survival and success of international firms, product diversification has received increasing attention in international marketing (Gabrielsson, Gabrielsson, and Seppälä 2012; Varadarajan 1986; Yli-Renko and Janakiraman 2008). Recent research (e.g., Bowen and Wiersema 2005; Gabrielsson et al. 2006; Gabrielsson, Gabrielsson, and Seppälä 2012) has shown that external globalization Journal of International Marketing ©2014, American Marketing Association Vol. 22, No. 4, 2014, pp. 86–107 ISSN 1069-0031X (print) 1547-7215 (electronic) pressure significantly affects the breadth of product offerings. However, despite these findings, it is still unknown how product diversification affects firm market value in a global marketplace with diverse cultural values. This is an intriguing question for both marketing practitioners and academics (Wiersema and Bowen 2008). Recent international marketing literature adopting a strategic fit perspective has argued that an appropriate fit between marketing strategy and contextual factors positively affects firm performance (e.g., Gabrielsson, Gabrielsson, and Seppälä 2012; Hultman, Robson, and Katsikeas 2009; Katsikeas, Samiee, and Theodosiou 2006). Contextual factors include both internal (i.e., controllable) factors related to firm capabilities and external (i.e., uncontrollable) factors related to the macroenvironment (e.g., Hultman, Robson, and Katsikeas 2009; Katsikeas, Samiee, and Theodosiou 2006). Drawing on the strategic fit perspective in international marketing, the current study brings two external contextual factors (cultural dimensions and globalization forces) to the foreground and takes the initiative to explore how these macroenvironmental factors affect market success or failure of product diversification in large international firms. The study focuses on large international firms rather than small globalizing firms for both theoretical and methodological reasons. Theoretically, focusing on large international firms provides a control on firm capacities—the internal contextual factor, as highlighted in a strategic fit perspective—while enabling the researcher to examine the external contextual factors that shape the performance implications of product diversification. Large international firms are equipped with the tremendous tangible and intangible capabilities/resources necessary for product diversification and can freely decide on their strategic levels of product diversification. In addition, product diversification has been a more prudent strategic choice for large international firms (Elsas, Hackethal, and Holzhäuser 2010) because they have strategic needs for product diversification either as a general policy of growth or as a defensive response to the competitive pressures on their primary product categories caused by the advance of globalization (Varadarajan 1986). In contrast, under external globalization pressure, resource-constrained small globalizing firms need to focus on their core products (Gabrielsson, Gabrielsson, and Seppälä 2012). Methodologically, examining large international firms that are equipped with necessary resources and have few restrictions regarding diversification levels allows for heterogeneity in product diversification and makes the statistical test more robust (Elsas, Hackethal, and Holzhäuser 2010). Drawing on a strategic fit perspective, the study addresses three research questions: (1) How does each cultural dimension—individualism–collectivism, uncertainty avoidance, power distance, and masculinity– femininity—affect the product diversification of large international firms? (2) How does product diversification affect the market value of large international firms? (3) How does economic and social globalization moderate the effect of product diversification on firm market value? By addressing these questions, the study contributes to international marketing literature from three perspectives. First, it sheds new light on how each cultural dimension affects the product diversification of large international firms. Although an extensive body of research has demonstrated that cultural dimensions have significant implications for various international marketing strategies (e.g., foreign market entry [Bradley and Gannon 2000], product diffusion [Dwyer, Mesak, and Hsu 2005], services offshoring [Hahn and Bunyaratavej 2010]), little empirical research has examined how cultural dimensions influence the scope of product offerings in large international firms. The adoption of a narrow or a broad scope in product offerings is a fundamental product strategic decision that marketers must make (Gabrielsson et al. 2006), and it has significant implications for firm competitiveness in the global marketplace (Wiersema and Bowen 2008). In this study, I highlight the impact of cultural dimensions on this fundamental product strategy. Second, this study contributes to international marketing literature by investigating how product diversification affects the market value of large international firms. Previous studies of the link between product diversification and firm market value have centered on U.S. firms, but only a few studies have explored firms with more diverse international backgrounds (Gabrielsson, Gabrielsson, and Seppälä 2012; Wan 2005). In addition, research on the effect of product diversification on firm market value across disciplines such as marketing, strategic management, and finance has produced mixed results (e.g., Gabrielsson, Gabrielsson, and Seppälä 2012; Graham, Lemmon, and Wolf 2002; Griffith and Rubera 2014). One stream of research that focuses on comparing the financial performance of diversified U.S. firms with that of specialized U.S. firms has demon- Product Diversification and Market Value of Large International Firms 87 strated that product diversification leads to value discount and that diversified firms have significantly lower market value than single-segment firms (e.g., Berger and Ofek 1995; Lang and Stulz 1994). In contrast, another stream of research has suggested that diversification contributes to firm survival and long-term performance (e.g., Chiang 2010; Gassenheimer and Keep 1998). In this study, instead of focusing on U.S. firms, I examine large international firms with different national backgrounds and demonstrate that diversification into multiple product segments promotes the market success of those firms. and Seppälä 2012; Wan 2005) have shown that country environmental contexts play a critical role in understanding the performance implications of product diversification. Drawing on the strategic fit perspective, this study examines how the alignment of two macroenvironmental factors—cultural dimensions and globalization forces—and product diversification affects the market value of large international firms. Figure 1 illustrates the conceptual model. Cultural Dimensions and Product Diversification Third, globalization forces, including both economic and social forces, are external contextual factors that large international firms must face. However, although recent studies (Bowen and Wiersema 2005; Gabrielsson, Gabrielsson, and Seppälä 2012) have shown the significant impact of globalization on product diversification, empirical evidence regarding the effect of the interaction between the degree of globalization and product diversification on firm market value is scarce. Drawing on a strategic fit perspective in international marketing literature, this study fills this gap by demonstrating that researchers examining the performance implications of product diversification must take into consideration the economic and social globalization in which all firms are embedded. In the subsequent sections, I outline the constructs, develop theoretical arguments, and present my hypotheses on the product diversification and market value of large international firms. Then, I report the sampling procedure, the empirical test, and the findings. Finally, I discuss the implications of the results and potential avenues for further research. CONCEPTUAL FRAMEWORK The strategic fit perspective, derived from the contingency theory in management studies, has assumed an increasingly prominent position in international marketing literature (e.g., Gabrielsson, Gabrielsson, and Seppälä 2012; Hultman, Katsikeas, and Robson 2011). It emphasizes the degree of congruency between strategic choices and firm contexts and proposes that international marketing strategies—properly aligned with external environmental opportunities and threats—will promote firm performance. Consistent with this perspective, recent international marketing studies (Gabrielsson et al. 2006; Gabrielsson, Gabrielsson, 88 Journal of International Marketing “The business of international business is culture” (Hofstede 1994, p. 1). Culture refers to collective values, beliefs, and ways of life that are socially created and shared by a group of people (e.g., Dwyer, Mesak, and Hsu 2005; Hofstede 1980). Although culture reflects intangible and symbolic aspects of society, researchers in the fields of business, social studies, psychology, and education (Hofstede 1980, 1983; Schwartz 1994) have long studied the behavioral implications of culture and have used it to distinguish one group of people from another. Prominent studies on culture include Hofstede’s study of cultural dimensions (e.g., Hofstede 1983), Schwartz’s cultural value types (e.g., Schwartz 1994), the World Wide Survey (e.g., Inglehart 1997), and the Global Leadership and Organizational Behavior Effectiveness project (House et al. 2004). Schwartz’s seven value types focus on universal cultural values at an individual level. The World Wide Survey provides a comprehensive source of respondents’ beliefs, values, and attitudes as well as their sociodemographic information and has wide-ranging implications in social studies. The more recent Global Leadership and Organizational Behavior Effectiveness project develops nine cultural dimensions to explain different preferences in leadership styles (Tung and Verbeke 2010). Among the aforementioned studies, Hofstede’s (1983) study has been “the best known cross-cultural study” (House et al. 2004, p. 239) and provides the best match for the research purposes of the current study. Specifically, Hofstede’s study, based on IBM’s international employee attitude survey, has the most influence in the field of international business and is most relevant in studying international marketing practices (Tung and Verbeke 2010). Research on Hofstede’s cultural dimensions has demonstrated that macro-level cultural dimen- Figure 1. The Model of Product Diversification on Firm Market Value Economic Globalization • Actual flows • Restrictions • Social Jlobalization • Personal contacts • Information flows • Cultural proximity Cultural Dimensions • Individualism–collectivism • Uncertainty avoidance • Power distance Product Diversification Market Value of Large International Firms • Masculinity–femininity Notes: Control variables = company size, industry, and purchasing power parity (PPP) per capita. sions significantly affect a wide variety of international marketing strategies, such as cross-national product diffusion (Dwyer, Mesak, and Hsu 2005), international brand management (Eisingerich and Rubera 2010), the location of service offshoring projects (Hahn and Bunyaratavej 2010), and foreign market entry (Bradley and Gannon 2000). In addition, I favor Hofstede’s macrolevel cultural framework because it provides clarity and parsimony in conceptualizing macro-level cultural dimensions. According to Hofstede’s (1983) cultural framework, culture mainly consists of four dimensions: (1) individualism– collectivism, which reflects how members of a society perceive relationships with their immediate groups; (2) power distance, which examines whether unequal distribution of power is a social norm in the society; (3) uncertainty avoidance, which pertains to the general attitude toward uncertainty and ambiguity; and (4) masculinity–femininity, which addresses how dominant values in a society reflect the traditional distribution of roles between genders. In this study, I argue that the four cultural dimensions—representing shared value, perception, and behavior—have important implications for the product diversification strategy of large international firms. Among the four dimensions, individualism–collectivism has been prominent in explaining self-expression and patterns of social behavior (e.g., Chelminski and Coulter 2007; Eisingerich and Rubera 2010; Hofstede 1983). Individualism and collectivism are opposite ends of a one-dimensional construct; that is, they can be viewed as existing on a continuum (Hofstede 1983). Individualist cultures consist of loosely linked people who place a strong emphasis on personal needs and self-interest. The characteristic values of individualist cultures are independence, autonomy, and competition. In contrast, collectivist cultures are characterized by closely linked people who are inclined to make their personal goals subordinate to collective goals. Collectivists value conformity, cooperation, and harmony. They are more likely to engage in behaviors that conform to social norms and contribute to group-interest maximization. Research has demonstrated that individualism– collectivism strongly affects brand commitment (Eisingerich and Rubera 2010), chief marketing officers’ influence in the top management team (Engelen, Lackhoff, and Schmidt 2013), and investment in operations (Power, Schoenherr, and Samson 2010). People in indi- Product Diversification and Market Value of Large International Firms 89 vidualist cultures prefer to interpret information and perceive themselves to be independent of the social environment (Chelminski and Coulter 2007). Business relationships in individualist cultures are calculative and more instrumentally oriented (Lund, Scheer, and Kozlenkova 2013). In contrast, people in collectivist cultures prefer systematic knowledge and emphasize interdependence within the group. Business relationships in collectivist cultures are more socially oriented and emphasize relationship reciprocity. Firms in collectivist cultures tend to invest more in structural resources than those in individualist cultures (Power, Schoenherr, and Samson 2010). The cultural dimension of individualism–collectivism has important implications for product diversification because product diversification requires that firms demonstrate strong independence and autonomy in multiple product segments (Amit and Livnat 1988; Berger and Ofek 1995). I argue that this strategic initiative is more feasible in individualistic cultures, where firms are more assertive and value competition more. In addition, I propose that individualism drives product diversification because firms in individualist cultures are more willing to take the risk of diversifying their product portfolio for future gains. In contrast, firms in collectivist cultures value collective goals and systematic knowledge. They tend to promote the unity of the organization while avoiding the competition and managerial conflict that product diversification may cause. Therefore, I hypothesize the following: H1: Individualism positively affects the degree of product diversification in large international firms. Uncertainty avoidance focuses on how well people tolerate unpredictable environments and reflects how they perceive opportunities and threats in future events (e.g., Möller and Eisend 2010). People in cultures with high uncertainty avoidance are more sensitive to controllability in ambiguous and unknown situations (e.g., Hofstede 1980). Therefore, they strive to use reasonable measures to develop structured situations. They also tend to exert more control on strategic issues to reduce uncertainty in the environment (Barr and Glynn 2004; Möller and Eisend 2010). When encountering unstructured situations, they prefer to establish formalized rules and regulations to reduce risk and seek stability. In contrast, people in cultures with low uncertainty avoidance are less concerned about risks and are more inclined to accept ambiguous and unpredictable situations. 90 Journal of International Marketing Uncertainty avoidance has important implications for business strategies. Research has demonstrated that uncertainty avoidance significantly affects banner advertising effectiveness (Möller and Eisend 2010) and service offshoring decisions (Hahn and Bunyaratavej 2010). Three factors make it especially important to examine the impact of uncertainty avoidance on product diversification. First, facing the complexity of the gl ...
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Hello, attached is the answer. in case of any issue please let me know.Jerry.


Cultural Dimensions Paper
Paige Piatnichko
MBAC611 MBA Cornerstone
Regis University
April 9, 2017


The collective beliefs, values, and the ways of living which are socially shared and
created by groups of people is known as culture. Even though culture has been used in reflecting
the symbolic and the intangible society aspects, scholars in the fields of psychology, business,
education and social studies have studied the behavioural effects of culture for a long period and
have this to differentiate one group of people from the other.

The Four Cultural Dimensions
1. Individualism-Collectivism
This is a cultural dimension which reflects how the society members perceive their
relationships with the immediate teams and groups. According to Qiu (2014), individualism–
collectivism cultural dimension has no relationship with the product diversification. There is an
assumption that this cultural dimension has conflicting impacts on the product diversification.
Firms found in ...

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