Closing the distance: a grounded theory of adaptation
| DOI | https://doi.org/10.1108/JABS-11-2012-0050 |
| Pages | 65-80 |
| Date | 20 December 2013 |
| Published date | 20 December 2013 |
| Author | Beat Hans Wafler,Fredric Swierczek |
| Subject Matter | Strategy,International business |
Closing the distance: a grounded theory of
adaptation
Beat Hans Wafler and Fredric Swierczek
Abstract
Purpose – This paper seeks to consider the impact of psychic, cultural and institutional distance, the
adaptation of international joint ventures and the performance of international companies entering an
emerging economy. It is also a critique of the dominant quantitative approach to analyzing distance in
international business.
Design/methodology/approach – This study applies a comparative case study using a grounded
theory approach of six companies who entered Vietnam from 1986 until the present. A total of 20
international executives were interviewed representingdifferent phases from start-up, implementation to
the current situation.
Findings – In comparison to other empirical studies on entry strategy and distance, this research finds
that executives involved in entry do not consider established theories such as transaction costs. The
resource-based approachis considered but from a practical view. Despite the considerable cultural and
institutional distance between the European cultures and the Vietnamese values, these international
ventures have managed to close the distance. This contradicts the findings of many quantitative studies
on this issue.
Research limitations/implications – This study is qualitative. It depends on the perceptions of
international executives over a 25 year period. Only a few of the Vietnamese counterparts are included in
this study.
Practical implications – This study demonstrates the importance of adaptation overtime for the
success of international ventures.
Originality/value – A long term qualitative study including executives from six major international
companies and executives over such a longtime is rare. Using the grounded theory process in this
research context is also unique.
Keywords Vietnam, Adaptation entry strategies, Expatriate executives,
National and institutional distance, Adaptation
Paper type Research paper
1. Introduction
The last thing companies were thinking of on entering Vietnam was the theoretical aspects behind
their actions (Nestle Executive).
Theories about distance have been a major topic in international business for decades. This
includes psychic, cultural, national and institutional measures of distance which have been
used to determine the impact of distance on entry strategies, mergers and acquisitions, and
the performance of joint ventures among many other topics. The results of distance studies
are quite mixed varying from positively to negatively related or with no significant impact.
Given this ambiguity, researchers have developed three major approaches. The first is to
elaborate the measurement of distance, typically from psychic or cultural distance based on
Hofstede (1991) to a more detailed measurement based on Schwartz (1992), Trompenaars
(1993) or Project Globe (House et al., 2002). A related emphasis is to include cultural
DOI 10.1108/JABS-11-2012-0050 VOL. 8 NO. 1 2014, pp. 65-80, QEmerald Group Publishing Limited, ISSN 1558-7894
j
JOURNAL OF ASIA BUSINESS STUDIES
j
PAGE 65
Beat Hans Wafler is based
at the School of
Management, Asian
Institute of Technology,
Bangkok, Thailand. Fredric
Swierczek is based at
Thammasat Business
School, Thammasat
University, Bangkok,
Thailand.
distance in a larger framework of institutional distance with dimensions of economic, political
and administrative (Ghemawat, 2001).
An emphasis on longitudinal studies is the second major emphasis in distance research.
This approach assesses distance measures as they change overtime (Meschi and Riccio,
2008)
The third research approach is based on meta-analysis which compares the results of a
number of empirical studies to identify overall average mean effects of distance on entry or
other decisions(Magnusson et al., 2008).
Unfortunately these studies have not reduced the ambiguity of the results. This paper will
argue that quantitative approaches to distance are the wrong direction and that the results
obtained have become too abstract and removed from reality. A better approach is
qualitative, emphasizing the response of executives who were actually involved in
implementing entry strategies and operating joint ventures in a host country which had
significantly large cultural and institutional differences from the home country. The setting is
Vietnam, and the home region of the majority of executives is Europe, mainly, Switzerland.
1.1 Focus
This study focuses on the market entry success of six European companies into Vietnam,
Vietnam ’s institutional context has had an important influence on market entry mode
selection and the related implementation process since its renovation policy doi moi was
introduced in 1986. In order to develop a representative sample for this research,
companies were selected for which original data were made available. These companies
were paired with its closest globally active competitor:
BCement producers: Holcim Ltd of Switzerland and Lafarge of France.
BPersonal consumer goods and food producers: Nestle SA of Switzerland and Unilever NV
with dual nationality The Netherlands/United Kingdom.
BPharmaceutical distributors: Diethelm Ltd and Zuellig Ltd both of Swiss origin.
1.2 Measures of distance and Vietnam
Based on distance indicators investments in Vietnam from Europe should face significant
cultural differences. In a cultural analysis based on Hofstede’s (1991) dimensions, Vietnam
would be classified as high power distance, more collective, more affiliation oriented, low
uncertainty avoiding and more long term oriented.
TableI, considers the partners in the six cases including the French, Anglo-Dutch and Swiss,
most are lower in power distance (the exception is France). All are more individualistic.
Concerning achievement oriented versus affiliation, the Dutch are the most affiliation
oriented. The French are similar to the Vietnamese in affiliation. The UK partner’s cultural
values related to managing uncertainty are similar to Vietnam. The other partners are more
uncertainty avoiding. Compared to the Vietnamese, the other partners are also short-term
oriented. Cultural distance is typically used in this research, however psychic and
institutional distance have also been researched as shown in Table II.
Table I Cultural differences
PDI IDV MAS UAI LTO
Vietnam 70 20 40 30 80
France 68 71 43 86 –
The Netherlands 38 80 14 53 44
Switzerland 34 68 70 58 –
UK 35 89 66 35 25
Source: Hofstede (1980)
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