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The Impact of Cultural Differences on Overseas Investment of Enterprises

When a multinational enterprise enters the international market by way of overseas investment, how to choose the entry mode is an important issue in the internationalization strategy of the multinational enterprise. The entry mode of overseas investment represents the resource supply, control and technology transfer of parent enterprises of multinational enterprises to overseas sub-enterprises, which will have a long-term and significant impact on the performance of overseas operations of enterprises. However, the entry mode of multinational enterprises is determined by the core decision makers.

This paper focuses on the direct overseas investment of multinational enterprises and studies the influence of cultural gap on the core choicer of multinational enterprises. Through reviewing the relevant literature, it is found that the influence factor of the cultural gap will affect the information input and decision-making risk in enterprise decision-making, thus affecting the decision-making results. Clark and Pugh (2001) studied the impact of “psychological distance” on the overseas business of enterprise decision-makers when making decisions, and found that the cultural gap is an important factor. At the same time, the geographical distance and institutional distance between the home country and the host coun The Impact of Cultural Differences on Overseas Investment of Enterprises Li 2 gap to some extent: Wang Weigong (2014) pointed out that although the international expansion of enterprises has shortened the spatial distance between the mother company and the market of the host country, there are still information barriers between the host country and the mother country, which are caused by cultural and institutional factors. The greater the cultural gap, the higher the cost of the decision maker’s perception of the host country’s market, and the greater the environmental uncertainty and operational risk. (Johanson 1997) In this study, the main theories involved were sorted out.

Through the literature review, the research ideas were gradually clarified and the research questions were finally answered. The Impact of Cultural Differences on Overseas Investment of Enterprises

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