Since the publication of Hofstede’s seminal work, Culture’s Conse- quences: International Differences in Work-related Values (1980), for better or for worse, his cultural dimensions have become an integral component of international business (IB) research. Both supporters and opponents of Hofstede’s work are agreed on the immense impact of his work in a globalized economy. Hofstede’s dimensions and other alternative measures to describe and gauge differences across cultures (e.g., House, Hanges, Javidan, Dorfman, & Gupta, 2004; Schwartz, 1994; Trompenaars & Hampden-Turner, 1997) have been used in the literature to explain a broad range of phenomena including but not limited to: modes of foreign market entry and their relationships to performance, knowledge transfer across This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms 1 Towards a more balanced treatment of culture in IB studies Günter K Stahl and Rosalie L Tung 392 international boundaries, success and failure of international cooperative agreements, such as mer- gers and acquisitions (M&A) and alliances, human resource management practices across countries, dynamics of multicultural teams, outcomes of IB negotiations, and patterns of adjustment to a foreign culture. As originally conceived, cultural dimensions or attributes ascribed to members of a given society were intended to be neutral constructs, that is, by them- selves, they are neither good nor bad. Rather, they provide us with a means for characterizing and differentiating the way that people in different socie- ties think and behave. For example, Hofstede’s dimensions were derived from a study of IBM employees around the world. By most measures, IBM is a highly successful multinational in spite of the size and diversity of its workforce. Viewed in this context, there is nothing dysfunctional or negative about cultural differences of IBM employees in disparate corners of the world. Over time, however, the notion that cultural differences are a source of misunder- standings, irritation, and conflict appears to have taken hold in our literature. The undue attention to adverse processes and outcomes associated with cul- tural differences is by no means limited to work drawing on Hofstede’s model but seems pervasive in research that uses dimensional frameworks of national culture to study IB phenomena. For exam- ple, Trompenaars and Hampden-Turner (1997: 5) asked: “Why is it that many management processes lose effectiveness when cultural borders are crossed?” and then go on to describe how “the silent forces of culture operate a destructive process”. Similarly, the introduction chapter of the GLOBE project’s third book stated that “cultural differences have been the proverbial ‘elephants in the room’ …. Cultural mis- understandings have led to numerous failures in cross-cultural mergers, acquisitions, and market pene- tration” (House, Dorfman, Javidan, Hanges, & Sully de Luque, 2014: 4). Hofstede’s, Trompenaars and Hampden-Turner’s, and the GLOBE researchers’ observations are so pervasive in IB research and practice that the notion that cultural differences are a liability has almost become a truism. It lies at the heart of the “cultural distance” (Kogut & Singh, 1988; Shenkar, 2001), “psychic distance” Qohanson & Vahlne, 1977, 2009), and “liability of foreignness” (Miller & Parkhe, 2002; Zaheer, 1995) concepts that have guided hypotheses formulation and empirical test- ing in much of the IB literature. Collectively, these concepts suggest that the barriers, and hence difficulties, costs, and risks associated with cross- cultural contact, increase with growing cultural differences between individuals, groups, and orga- nizations. This “problem-focused view” of cultural diversity (Stevens, Plaut, & Sanchez-Burks, 2008) is in line with concepts such as “foreignness,” “unfa- miliarity costs,” “institutional gaps,” “culture novelty,” “cross-cultural miscommunication,” and related concepts. Consistent with the widely held view that distance and novelty are largely respon- sible for incompatibility, thus resulting in discor- dance, friction, and conflict, cultural difference variables have been proposed – and often shown – to be significantly and negatively related to organi- zational learning across national borders (e.g., Barkema, Bell, & Pennings, 1996), the choice of foreign entry mode and the perceived ability to manage foreign operations (e.g., Kogut & Singh, 1988), the longevity of global strategic alliances (e.g., Parkhe, 1991), post-acquisition integration pro- cess dynamics and performance (e.g., Björkman, Stahl, & Vaara, 2007), team process and outcomes (e.g., Earley & Mosakowski, 2000), and cross-cultural adjustment of expatriates (e.g., Black, Mendenhall, & Oddou, 1991), among others. In short, it seems that the prevailing theories and research in IB tend to over-emphasize the “dark side” of culture by focusing primarily on the adverse outcomes associated with cultural differences and cross-cultural contact while de-emphasizing the potentially positive role of cultural diversity in organizations. In this article, we adopt a Positive Organizational Scholarship (POS) lens (Cameron, Dutton, & Quinn, 2003), couched within the broader context of March’s (1991) exploration vs exploitation framework, to highlight a complemen- tary perspective, namely the idea that cultural dif- ferences can be an asset, not just a liability in a wide range of IB contexts. POS does not represent a single theory, but rather offers a fresh lens and encourages scholars to look at commonly considered phenom- ena in new ways. In the field of IB research, calls to pay greater attention to the potentially positive outcomes of IB activity and to view “foreignness as an asset” (Brannen, 2004: 596), to explore the “upside of cultural distance” (Stahl & Tung, 2013), to challenge “the illusion of discordance” (Shenkar, 2001: 524), and to dispel “the myth of difference as a handicap … but rather consider it as an opportu- nity for arbitrage, complementarity or creative diversity” (Zaheer, Schomaker, & Nachum, 2012: 26) are examples of looking at phenomena in new and more positive ways. journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms VtV 393 Of course, we are not suggesting that the tradi- tional, problem-focused perspective on cultural dif- ferences does not add value; nor are we claiming to be the first to propose that viewing diversity as an opportunity rather than a threat creates possibilities for a better understanding of cultural dynamics within organizations. Positive aspects of cultural dif- ferences have been studied for decades, and scholars have highlighted a number of potentially beneficial outcomes of diversity, such as increased creativity, adaptability, and problem-solving quality (e.g., Adler, 2003; Ng & Tung, 1998). Also, research within the perspective of the resource-based view of the firm (e.g., Barney, 1991; Fiol, 1991) and organizational learning theories (e.g., Barkema & Vermeulen, 1998; Lane, Salk, & Lyles, 2001) suggest that cultural differ- ences can be a source of synergistic benefits for global organizations. However, while there are suggestions in the literature that cultural diversity can offer mean- ingful positive opportunities to individuals, groups, and organizations, we argue – and demonstrate empirically – that the problem-focused view of cul- tural diversity is by far predominant in research on culture in IB. In other words, we know much less about the positive dynamics and outcomes associated with cultural differences than we know about the problems, obstacles, and conflicts caused by them. The emphasis on the liabilities associated with cul- tural differences and the limited scholarly attention that has been given to the positive role of culture in various IB contexts have likely hindered our under- standing of the full range of dynamics, processes, and conditions that help organizations leverage the bene- fits of cultural diversity (Brannen, 2004; Tung & Verbeke, 2010; Zaheer et al., 2012). In what follows, we first present the results of a content analysis of 24 years of publications in the Journal of International Business Studies (JIBS ) to demonstrate that current theory and research in IB tend to over-emphasize the liabilities associated with cultural differences while de-emphasizing the poten- tially positive role of cultural diversity in various IB contexts. We discuss whether the findings indicate bias or simply reflect the reality of cross-cultural contact and consider alternative explanations. Next, we explore the reasons for the predominance of the negative over the positive in theory and research on culture in IB. Using the example of research on cross- border M&A, we demonstrate how the adoption of a POS lens has furthered the development of this field from a predominantly negative to a more balanced treatment of cultural differences. We conclude this article by offering an integrative framework for understanding both positive and negative effects of cultural differences and provide a road map for IB researchers going forward. RESEARCH ON CULTURE IN IB: RESULTS OF A CONTENT ANALYSIS OF 1IBS ARTICLES PUBLISHED OVER A 24- YEAR TIME PERIOD We conducted a content analysis of articles on culture in IB that appeared in JIBS between 1989 and 2012. We selected a 24-year time frame because an important objective of this study was to deter- mine whether the alleged over-emphasis on the negative in research on culture in IB has diminished over time by analyzing trends regarding theoretical assumptions and empirical findings over three 8- year periods (1989-1996; 1997-2004; 2005-2012). Content-analytical Approach In this study, we adopted a deductive, a priori content-analytic approach, which involves estab- lishing categories prior to the analysis based on some theory or rationale (Neuendorf, 2002; Weber, 1990). In a first step, we developed a category system that enabled us to answer our research questions regard- ing the dominant assumptions underlying research on culture in IB; in a second step, we applied the category system to relevant articles to organize the content of articles and obtain information on the key variables of interest. For each article, the following information was recorded: Theoretical assumptions; empirical find- ings; cultural difference variable examined (e.g., “cultural distance,” “cultural diversity,” “culture novelty”); methods and measures (e.g., Kogut & Singh (KS) index, self-developed scales); use of cultural difference variables as moderators/controls vs main (independent) variable of interest; IB sub- domain/topic area (e.g., diverse teams, cross-border M&A); and information about the published article (publication year, title, name of authors). Given the mix of theoretical and empirical papers on culture that appeared over the time period 1989-2012, under the theoretical papers’ category, we classified articles into those that made positive, negative, and neutral/mixed assumptions regarding culture and the effects of cultural differences. For empirical papers, we distinguished between the theoretical assumptions made (theoretical underpinnings, hypotheses) and actual research findings, and clas- sified them into those that made positive, negative, and neutral/mixed assumptions, and those that reported positive, negative, and inconclusive or mixed findings. Journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms ^ Towards a more balanced treatment of culture In IB studies Günter K Stahl and Rosalie L Tung 394 Using articles in one area of research (cross-border alliances, M&A), Table 1 shows sample codings for the main categories of interest, as well as short excerpts from articles to illustrate the content-analy- tic approach taken in this study. Sample and Selection Criteria Included in the content analysis were empirical and theoretical papers that conceptualized cultural dif- ference variables, such as cultural distance, cultural diversity, etc., as a potential cause or independent variable (e.g., cultural diversity as a factor influen- cing team performance); as a moderating condition for a causal relationship (e.g., cultural distance as a moderator of the relationship between entry mode choice and foreign subsidiary performance); or as a control. Studies that were purely comparative in nature (e.g., how do leadership styles differ across countries) or papers that used cultural difference variables as the dependent variable (e.g., how does bicultural identity integration affect perceptions of cultural distance) were excluded. Only articles that conceptualized cultural difference variables at the national level (e.g., as measured by the KS index) were included. The outcome variable could be con- ceptualized and measured at the individual level (e.g., expatriate adjustment), group level (e.g., team performance), or organizational level (e.g., post- acquisition performance). Dissertation abstracts, review articles, and book reviews were excluded. Coding and Inter-rater Agreement Coding was undertaken by two independent coders (a post-graduate student and a post-doctoral fellow). The inter-rater reliability coefficient used was Cohen’s kappa, a widely used measure for categorical variables. As a rule of thumb, kappas above 0.70 can be con- sidered satisfactory and above 0.80 excellent (Neuendorf, 2002). Variables that could not be coded reliably were collapsed into broader categories until acceptable reliability was obtained. For example, the “mixed findings” and “neutral findings” categories were collapsed into a broader “neutral/mixed find- ings” category. Disagreements between raters were discussed until consensus was reached. Kappas for the three main categorical variables of interest were 0.80 (assumptions made in theoretical papers), 0.71 (theo- retical assumptions made in empirical papers), and 0.75 (research findings reported in empirical papers), which suggests that the coding process produced reliable data. Content-analytical Results Of the 1141 articles that appeared in this 24-year time frame, 244 articles met the selection criteria.1 That 21% of total publications in JIBS is related to the impact of cultural differences in various organi- zational settings attests to the popularity of the topic in the premier journal in the field of IB. Consistent with the general nature of papers published in JIBS, empirical papers outnumbered theoretical ones – there were 136 empirical papers compared with 108 theoretical/conceptual pieces. The 244 publications revolved around a broad range of topics: market entry, FDI and expansion (80 articles); cross-border alliances/M&A (19 articles); international HRM/OB (37 articles); MNC theory (37 articles); culture stu- dies (20 articles); cross-border knowledge transfer and learning (16 articles); international marketing (13 articles); and others (22 articles). Articles were coded according to the conceptual status of the cultural difference variable (i.e., whether it was used as independent variable, mod- erator, or control). We found that 85 of the 136 empirical studies (63%) conceptualized cultural dif- ferences as independent variable; 7 studies (5%) as moderator; 18 (14%) as control (usually adopting the KS measure); in 24 studies (18%) the conceptual status was unclear or varied; and 2 studies (1%) were qualitative. As mentioned above, we distinguished between theoretical and empirical papers. Figure 1 provides an overview of results for the two categories. We found that in the theoretical papers’ category, papers with negative assumptions (69%) exceeded those with neutral/mixed (27%) and positive (4%) assumptions by a wide margin. Particularly startling is the 17:1 ratio of papers with negative assumptions vs papers with positive ones. In the empirical papers’ category, a strong emphasis on the negative could be observed regarding the theoretical underpinnings of studies: Papers with negative assumptions (75%) exceeded those with neutral/mixed assumptions (20%) by a ratio of almost 4:1 and those with positive assumptions (5%) by a ratio of 15:1. In terms of empirical results, studies with negative findings (53%) outnumbered those in which cultural differences had a non-significant/mixed (40%) or positive effect (7%); however, the ratio of negative findings vs non-significant/mixed and positive find- ings was much more even compared with the theo- retical assumptions advanced in these papers. This implies that in empirical studies on culture in IB, negative assumptions about the impact of cultural differences are often not supported by the research Journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms 395 ISi C O “50 ‘d O” u “O C (TJ £ u c <2 2 u o ra S «o O) .c •i-) c to _a> u t (Z S OQOQ L_ £ <-o OÌ ç ‘~o o u _QJ Q. E 03 00 _a¿ .û ff g üi I s| |s 2 «fv ° |.8 J« « a s I ïïie^iîsr wuUratídjC.ijX g ř I DO+->Qj a ^ -pi _Q s wuUratídjC.ijX ř DO+->Qj -pi _Q Ï- tu^ ufu>roc–= ř ucwu-Ä(oa>^a>K> r C (U • ļ- a» , • -pi ^.E u siísilšij* tu^ 1- 0^ ufu>roc–= r~ cu u O i- íl6i;i|5i>páiii’šís|ts?si ucwu-Ä(oa>^a>K> *-> *-> “O ■<- * E -C ^ ^ ra • a» , • ^.E ^ – *-> “O ■<- * E -C tj ^ ^ ra ^ : c u ^ S i- S o *-> <0 – *-> ^(oOusUr-tííacSs^Bcaoif- > ■<- tj ^ ra 4; > *a3PS¿a> c ^ .2 +J ^ «/) > & £ ;p n’>7. 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I £ ! s § £ -§ -ë ” I gl 2 I ? f :l S 8 I & § s i i H S 8 * ë^&ilS-ëliSsriJîTils^^^i ” ff 2 ?îf i |<ë fï* _ 3l”5=^j3SS^3^1^a;c1 lE^g^ïi « ïlfll?sisî řílsSs ;ï|ïî Itíílillír ^ I “s!o2S®™ocw«i^iï § f ! 1 1 i I c ‘S ¿ I l’a i. i ‘j « Ž 8» i-?–o™s.ip^~£§ i s 1« -S -S 1 ?! s S » §; “s!o2S®™ocw«i^iï 1 c s” a- ‘s i-?–o™s.ip^~£§ » X ra ÎjC-iSQjin^^.brF-^^irC^yîâOISuOOaj^î-^QJvajra ” ¥ O £ £”u”S g 2^-° £ s” c a- ‘s ^ oj t; ü ra í aj X ra ” ÎjC-iSQjin^^.brF-^^irC^yîâOISuOOaj^î-^QJvajra O £ c ü ra I CD .5^ O v’w Û- .5¿, +¿ o O CU«- -C 3 aita Ol Q- 0’ ž è-S.£,S§>BÍ?-5£i5.f?ii.i-§:5 O v’w +¿ 8>5i£í:è-£S5S.££b1S–8^ o O CU«- -C aita I- Is I I S S S -2″? -2 -5- – ‘S 8 •■= o. 8 – 8 Si ;c: Si E :s £ I I s 3 sia! !- §• 3 ¡s s £ 8 sia! !- §• ~~ Journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms ^ Toward» a more balanced treatment of culture In IB studies Günter K Stahl and Rosalie L Tung 396 Figure 1 Content-analytic results for theoretical and empirical papers’ categories in JIBS. Figure 2 Content-analytic results for different topic areas in / IBS : Theoretical papers. findings – in fact, a substantial proportion of studies (47%) found cultural differences to be either posi- tively related to outcome variables or found mixed or inconclusive results. The content analysis of JIBS articles further revealed that this tendency varied depending on the sub-domain of IB studies under consideration. For example, Figure 2 shows that in the theoretical papers’ category, 14 out of 18 articles (78%) on MNC theory, 18 out of 21 articles (86%) on market entry/ FDI and expansion, and 15 out of 19 articles (79%) on International Human Resource Management/ International Organizational Behavior made negative assumptions concerning the impact of cultural dif- ferences. Of articles that focused on culture studies, only 6 out of 14 articles (43%) emphasized the negative aspects associated with cultural differences and the remaining 57% were either positive or mixed/neutral. This category includes papers that focus on cross-cultural issues but do not link cultural difference variables to specific IB outcomes (such as MNC performance, entry mode choice, etc.). A prominent example of a conceptual/theoretical paper included in the “culture studies” category is Shenkaťs, 2001 article, “Cultural Distance Revisited: Towards a More Rigorous Conceptualization and Measurement of Cultural Differences,” which won the 201 1 JIBS Decade Award. A similar picture emerged in the content analysis of empirical papers.2 The findings suggest that there is more “negativity” in some IB fields than in others. In general, articles that focus on cultural diversity, biculturalism, cultural intelligence, etc. (abbreviated as “culture studies”), seem to espouse a more positive Journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms 397 Figure 3 Content-analytic results for three analysis periods in JIBS: Theoretical papers. perspective of culture than articles classified in other categories. Further, we again found a large discon- nect between the theoretical assumptions of empiri- cal papers and the actual research findings, which suggests that there is a tendency among authors to focus in their theory building mainly on the nega- tive aspects associated with cultural differences, while empirical studies that actually examined the impact of cultural differences displayed a more com- plex and mixed picture. Finally, the content analysis revealed that the year of publication seems to matter. In general, more recent articles are more likely to make neutral/mixed assumptions and less likely to make negative assumptions than are older articles. As illustrated by Figure 3, in the theoretical papers’ category, 86% of articles published between 1989 and 1996 – the first third of the analysis period – made negative theore- tical assumptions about the impact of cultural differences, 10% made neutral/mixed and 5% made positive assumptions. The ratio of papers with negative assumptions vs papers with positive ones is 17:1. For the period 2005-2012 – the last third of the analysis period – the ratio of articles with negative to neutral/mixed or positive theoretical assumptions is more balanced: 57% of articles emphasized the negative aspects of culture and cultural differences, 38% made neutral/mixed assumptions and 5% made positive assumptions. Thus it seems that the empha- sis on the negative observed in the content analysis of theoretical papers has become less pronounced over time. In the empirical papers’ category, this trend towards diminishing negativity over time is less clear or even absent. For the theoretical assumptions made in those articles, there appears to be a slight trend towards diminishing negativity over time; this trend largely disappears when looking at the actual research findings reported in the articles. DOES THE PREPONDERANCE OF THE NEGATIVE OVER THE POSITIVE IN THEORY AND RESEARCH ON CULTURE IN IB REFLECT BIAS OR THE REALITY OF CROSS-CULTURAL CONTACT? Overall, the results of our content analysis suggest that there is a pervasive tendency among JIBS authors to focus in their theory building primarily on the negative aspects of cultural differences rather than on the positive dynamics and outcomes asso- ciated with cultural diversity. Thus Cameron and Caza’s (2004: 7) assertion that “[t]o date … the conscious examination of positive phenomena is vastly underrepresented in organizational science” extends to the field of IB as well. This raises a key question: Do these results indicate bias or do they simply reflect the reality of cross- cultural encounters in IB, which may inherently be more precarious, problematic, and conflict-laden than those that occur within a homogeneous cul- tural group? If cultural differences, in reality, have mostly negative effects on processes and outcomes in IB, then the results do not indicate bias, but show that IB researchers are getting it right in terms of their research questions and theory building. If, however, cultural differences in reality have both negative and positive effects, then the results may indicate bias.3 Ultimately, this is an empirical ques- tion; and there are two sources of evidence – both internal and external to our dataset – on which we can draw inferences. One source of evidence is the difference between assumptions and results in the empirical papers. The findings of our content analysis of JIBS articles reveal that assumptions about the effect of cultural Journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms ‘ Towards a more balanced treatment of culture In IB studies Günter K Stahl and Rosalie L Tung 398 differences in IB research (as reflected in the research questions, theoretical models, and hypotheses) are predominantly negative while empirical studies that actually examined the impact of cultural differences reveal a more complex and mixed picture. In the empirical papers’ category, the ratio of papers with negative assumptions to those with positive ones was 15:1; the theoretical underpinnings of research on culture in IB are thus overwhelmingly negative. By contrast, a look at the actual research findings reported in these papers reveals that almost half of the studies (47%) found cultural differences to be either positively related to outcome variables or found mixed or inconclusive results. Collectively, these findings suggest that there is a tendency among JIBS authors to over-emphasize in their the- ory building the adverse dynamics and outcomes associated with cultural differences. Another source of evidence comes from several meta-analyses of studies examining the effects of cultural differences on various outcome variables. These meta-analyses allow us to gauge the ratio of positive to negative findings in various sub-domains of IB studies, including research on cultural distance and foreign entry mode choice, international diver- sification, and MNC performance (Tihanyi, Griffith, & Russell, 2005), research on the role of cultural distance in cross-border M&A (Stahl & Voigt, 2008), and research on culturally diverse teams (Stahl, Maznevski, Voigt, & Jonsen, 2010a). Collectively, these meta-analyses suggest that across various domains of IB studies effect sizes for the relationship between cultural differences and outcomes are small; results about the direction of effects are inconclusive; and whether cultural differences have a positive or negative effect is contingent on contextual influences and management-related factors (e.g., interventions to manage cultural diversity). For example, Stahl et al. (2010a: 705), in their meta-analysis of team diversity research conclude that “cultural diversity in teams can be both an asset and a liability. Whether the process losses associated with cultural diversity can be minimized and the process gains be realized will ultimately depend on the team’s ability to manage the process in an effective manner, as well as on the context within which the team operates.” These meta-analytic findings are consistent with qualitative reviews of research on culture in IB (e.g., Gibson, Maznesvski, & Kirkman, 2009; Leung, Bhagat, Buchan, Erez, & Gibson, 2005; Tung & Verbeke, 2010). For example, Leung et al. (2005: 368) conclude that “in many studies culture demon- strates a statistically significant relationship with individual outcomes, but the strength of the rela- tionship (i.e., the size of the coefficient) is relatively weak in practical terms, indicating that culture does not explain a large amount of variance in those outcomes, and that, in fact, other variables must be considered as important predictors alongside cul- ture.” Collectively the evidence summarized above indicates that across different sub-domains of IB studies, the effects of cultural differences on out- comes are mixed (that is, both positive and negative) and dependent on contextual and management- related variables (i.e., how cultural differences are managed). Returning to the question we posed at the begin- ning of this section: Do the results of our content analysis of JIBS articles indicate bias or do they simply reflect the reality of cross-cultural encoun- ters? Given our current understanding of what “rea- lity” is, we cannot answer this question with complete certitude. However, based on the findings of our study and available qualitative and quantita- tive reviews of the field, we can assert with great confidence that there is little evidence to suggest that cultural differences systematically engender negative outcomes in IB. At the same time there is growing evidence that cultural distance and cultural diversity represent a double-edged sword in various domains of IB research and practice (foreign entry mode choice, international diversification, MNC performance, multicultural teams, and cross-border M&A), thus necessitating a more nuanced under- standing of the multifaceted relationship between culture and IB processes and outcomes. REASONS FOR THE PREPONDERANCE OF THE NEGATIVE OVER THE POSITIVE IN THEORY AND RESEARCH ON CULTURE IN IB There are several possible explanations for the over- emphasis on the negative in theory and research on culture in IB observed in the content analysis of JIBS articles. For convenience, they can be divided into three categories: general explanations for the ten- dency of social scientists to emphasize the negative relative to the positive; explanations that are specific to the field of IB research; and potential publication biases. General Explanations for the Tendency of Social Scientists to Overemphasize the Negative In general, the predominance of the negative over the positive in the social sciences can be explained by basic cognitive processes and theories of intensity, novelty, adaptation, and singularity. For journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms 399 instance, Kramer (1999) has observed that negative events are generally more visible than positive ones; that negative, trust-destroying events carry more weight in judgment than positive, trust-building incidents of comparable magnitude; and that sources of bad news tend to be perceived as more credible than that of good news. In a similar vein, Cameron (2008) has noted that negative news sells more than positive ones, people pay more attention to negative feedback over the positive, and traumatic events have greater impact on individuals than positive situations. It is therefore not surprising that IB researchers tend to focus more on the liabilities associated with cultural differences and cross-cul- tural contact than on their upside. A related expla- nation is that in the social sciences, in general, a larger effect (as denoted by R2) is observable when comparing negative to positive phenomena (Baumeister, Bratslavsky, Finkenauer, & Vohs, 2001). In other words, negative phenomena tend to exhibit stronger effects than those that are positive. As such, it is understandable that researchers focus on the strongest factors accounting for the most variance in their studies (Cameron, 2008). Another possible explanation is the influence of the media. In their analysis, Margolis and Walsh (2003) found that negative phenomena received four times more attention than those that are positive. In the context of IB research, the continual flow of anecdo- tal evidence from the popular business press about botched IB deals, cultural clashes in global alliances, failed cross-border mergers, etc., may influence researchers in their selection of research topics, the theoretical approaches they adopt in their investiga- tions, and the hypotheses they formulate and test. This would explain the pervasive tendency among JIBS authors to focus in their theory building primar- ily on the negative aspects associated with cultural differences, as evidenced in the content analysis. Finally, another possible reason for this negative bias is the fact that leading thinkers in the field are predominantly Americans and West Europeans (Pugh & Hickson, 1997) who are more attuned to the Greek Aristotelian linear logic that avoids contra- dictions and paradoxes. Linear logic is one-dimen- sional as it rejects duality in properties, namely a phenomenon can either be an affirmation or a negation, only one of which is true. Applying this perspective to cultural distance implies that differ- ences can either be positives or negatives, not both. While there are alternative epistemological tradi- tions, such as Hegelian dialectics that asserts that a thesis and its opposite, antithesis, can only be resolved at a higher level, synthesis, in general, their influence has been less pervasive among American and West European scholars. Previous studies have demon- strated that in contrast to the Aristotelian, linear logic favored by their Western counterparts, East Asians tend to embrace the dialectical concepts of contra- diction, change, and holism (Nisbett, 2003; Peng & Nisbett, 1999). Individuals with dialectical lay beliefs are more accepting of apparent contradictions and emphasize both the good and bad (Boucher, Peng, Shi, & Wang, 2009; Spencer-Rodgers, Boucher, Mori, Wang, & Peng, 2009). Not surprisingly, the Yin Yang perspective to understanding culture (Fang, 2012), which conceptualizes culture as possessing inherently paradoxical value orientations, thereby enabling it to embrace opposite traits of any given cultural dimen- sion, has been advanced by a Western-based scholar who is knowledgeable of Chinese culture. Explanations Specific to the Field of IB Research To shed light on whether there might be something about the kind of research published in JIBS that would make it more likely to publish papers with a negative outlook, we collected a validation sample of articles published in Cross Cultural Management: An International Journal ( CCM ). By all measures (impact factor, journal rankings, etc.), JIBS is the premier journal in the field of IB and articles published in JIBS have a high degree of credibility. However, it may be that certain properties of the research pub- lished in JIBS (e.g., the predominant concepts and constructs that are widely used in the IB literature) or the journal itself (e.g., the fact that most articles focus on macro-phenomena) make it more likely to publish papers with an emphasis on negative aspects associated with culture and cultural differences. Analyzing articles published in CCM allowed us to contrast and compare the results of the content analysis of JIBS articles with those of articles pub- lished in a journal that is dedicated to publishing cross-cultural management research. We selected CCM because it focuses on cross- cultural issues in management and, thus, a sub- domain of IB studies, rather than on cultural anthro- pology, cross-cultural psychology, or intercultural relations in general (ruling out journals such as Cross-cultural Psychology or International Journal of Intercultural Relations). We chose CCM over other journals with a focus on cross-cultural management because at the time of this study (2013) there were 19 volumes (1994-2012) and about 400 articles available for analysis (by contrast, for the Interna- tional Journal of Cross Cultural Management, ‘ Towards a more balanced treatment of culture in IB studies Günter K Stahl and Rosalie L Tung 400 Figure 4 Content-analytic results for theoretical and empirical papers’ categories in CCM. has a comparable focus, there were only 12 volumes and about 300 articles available). For the content analysis of articles published in CCM we used the same content-analytic procedure as in the content analysis of JIBS articles. As illustrated in Figure 4, the content-analytic findings reveal that publications in CCM tend to present a much more balanced perspective on culture and cultural differences than articles published in JIBS, both in terms of theoretical assumptions and empirical findings. Particularly striking is the large proportion of articles that made mixed assumptions regarding culture and the effects of cultural differ- ences, both in the theoretical and empirical papers’ categories, and of papers that reported mixed or inconclusive findings. Based on these results, cultural differences indeed appear to be a double-edged sword or mixed blessing in cross-cultural management. A more fine-grained comparison of articles pub- lished in these two journals reveals a number of significant differences, as indicated in Table 2. In general, articles published in CCM are more likely to be theoretical/conceptual than empirical; to focus on individual- and group-level phenomena than on orga- nizational-level processes and outcomes; and to use self-developed scales rather than adopt existing mea- sures such as the Hofstede and GLOBE dimension scores to measure cultural differences. Three characteristics, in particular, can help explain the greater “negativity” found in JIBS articles compared with publications in CCM: Use of the “cultural distance” construct and the KS index The predominant concepts that are widely used in the IB literature to predict or explain the effect of cultural differences tend to view differences as pejoratives. This is particularly true of the “cultural distance” construct. As Shenkar (2001) and others (Tung & Verbeke, 2010; Zaheer et al., 2012) have noted, the concept of cultural distance is based on the assumption of discordance. Thus by its very definition, the cultural distance construct focuses on the negative consequences associated with cul- tural differences. While there are various ways to measure cultural distance (see Berry, Guillén, & Zhou, 2010; Drogendijk & Slangen, 2006), by far the most commonly used measure is the Kogut and Singh (1988) index (KS index), a composite measure of Hofstede’s dimensions of national cultures. Our content analysis found that 50 of the 136 empirical studies (37%) published in JIBS adopted the KS index to measure cultural distance. Of these studies, 41 (82%) made negative assumptions about the effect of cultural differences, 7 (14%) were neutral/mixed, and 2 (4%) made positive assumptions. By contrast, empirical studies published in CCM often relied on self-developed scales to measure cultural differences, and only 2 studies (10%) adopted the KS index. Culture as a control vs main study variable Another explanation for the greater “negativity” found in JIBS articles is that in empirical research on culture in IB, cultural distance is often used as a control rather than as the main study variable. We found that 25 of 136 studies (19%) published in JIBS used cultural distance as a moderator or control; and that these studies tended to adopt a more negative perspective than studies that used cultural difference variables as the main (independent) variable of interest. Since the intent of this former group of journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms 401 Table 2 Comparison of results of content analyses of articles published in JIBS and in CCM Journal of International Business Studies Cross-Cultural Management: An International Journal 24 volumes analyzed (1 989-201 2) 1 9 volumes analyzed (1 994-201 2) 244 articles met selection criteria (see Methods) 66 articles met selection criteria (see Methods) Ratio of empirical to theoretical papers Ratio of empirical to theoretical papers • 1 36 empirical papers (56%) • 20 empirical papers (30%) • 1 08 theoretical/conceptual papers (44%) • 46 theoretical/conceptual papers (70%) Major topic areas covered (but not limited to): Major topic areas covered (but not limited to): • Market entry, FDI and expansion • Managing people in organizations • Cross-border alliances/M&A • Work values and cultural orientations • International HRM/OB • Diversity and culturally diverse teams • MNC theory • Cross-cultural communication/languages • Knowledge transfer and learning • Intercultural effectiveness/competencies • International marketing • Cross-cultural training/learning • Culture studies • Expatriation and cultural adjustment Main focus: organizational/macro level of analysis Main focus: individual/micro level and group/meso level of analysis Conceptual status of cultural difference variable3 Conceptual status of cultural difference variable3 • Independent variable: 85 studies (63%) • Independent variable; 1 0 studies (50%) • Moderator: 7 studies (5%) • Moderator: 1 study (5%) • Control: 1 8 studies (1 4%) • Control: 1 study (5%) • Qualitative: 2 studies (1 %) • Qualitative: 3 studies (1 5%) • Multiple/mixed: 24 studies (1 8%) • Multiple/mixed: 5 studies (25%) Cultural difference measure3 Cultural difference measure3 • Composite measure (e.g., Kogut & Singh index): 55 studies (40%) • Composite measure (e.g., Kogut & Singh index): 3 studies (1 5%) • Cultural dimension score (e.g., one or more GLOBE dimensions): • Cultural dimension score (e.g., one or more GLOBE dimensions): 21 studies (1 5%) 2 studies (1 0%) • Direct measure (e.g., self-developed scale): 50 studies (37%) • Direct measure (e.g., self-developed scale): 14 studies (70%) • Others: 1 0 studies (7%) • Others: 1 study (5%) Note:’ Only applies to empirical studies. studies is not to shed new insights on culture per se, their authors are likely to use readily available mea- sures such as the KS index rather than developing their own understanding of how cultural differences might impact the IB phenomena of interest. Culture studies vs “culture and …” In the content analysis of JIBS articles we identified a group of studies -labeled “culture studies” – that is more balanced and tends to have a more positive outlook than papers that use culture to study IB phenomena. Included in this category are theoreti- cal and empirical articles that address a range of cross-cultural issues such as biculturalism, intercul- tural learning, culture and communication, etc., but do not link cultural difference variables to specific IB outcomes such as MNC performance, entry mode choice, and so on. In the content analysis of JIBS articles, half of the theoretical papers in this category were classified as “mixed,” that is, cultural differences are seen both as a liability and an asset (see Figure 2). The overall pattern of results for this group of articles is thus very similar to the results found in the content analysis of articles published in CCM. The vast majority of publications in that journal could be classified as “culture studies,” an area of research that tends to espouse a more positive outlook of culture per se. In summary, several characteristics of research published in JIBS can explain the greater “negativ- ity” found in JIBS articles as compared with publica- tions in CCM. These include greater reliance on the cultural distance construct, particularly the KS index; the fact that culture is more often used as a control, rather than as main variable of interest; and the fact that the majority of studies link cultural differences to specific IB outcomes (such as MNC performance, entry mode choice, etc.), rather than investigate culture and cross-cultural issues as the main variable. Journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms ‘ Towards a more balanced treatment of culture In IB studies Günter K Stahl and Rosalie L Tung 402 Potential Publication Biases Another possible reason for the over-emphasis on the negative observed in the content analysis of JIBS articles is publication bias. Publication bias is present when the publication of research results depends on their nature and direction. Not all bias is inherently problematic; for instance, a bias against publishing methodologically flawed research is a desirable bias. However, the tendency of journal editors and reviewers to handle papers making positive assump- tions about culture or reporting positive effects of cultural differences differently from papers empha- sizing adverse dynamics and outcomes associated with cultural differences would be problematic because it would result in a misleading bias in the overall published literature. This kind of bias would be a variation of the “file drawer problem” (Rosenthal, 1979), that is, the fact that many studies in a given area of research may be conducted but never reported, and those studies lost “in the file drawer” may on average find different results from those that are reported. Do the results of our content analysis demon- strate evidence for such a bias in work published by JIBS ? Although we cannot rule out the possibility of publication bias (after all, it is people who make acceptance and rejection recommendations and decisions), there is little evidence to suggest that JIBS editors and reviewers display a systematic bias. First, there is no reason to assume that studies yielding positive results (or testing hypotheses that predict positive outcomes) per se are more prone to the file drawer problem than studies yielding negative results (or testing hypotheses that predict negative outcomes). On the one hand, since most theories and the bulk of empirical research in the IB field emphasize the adverse dynamics and outcomes associated with cultural differences, this may make it more difficult for authors to publish findings that contradict the dominant theoretical paradigms in the field. Proponents of an alternative view may thus be channeled into conformity with the dominant paradigm – or, at least, there may be strong incen- tives to conform. To provide a personal example, a co-author of this paper recently had to address a reviewer’s contention that the finding of a positive relationship between cultural diversity and certain team outcomes was both “puzzling and com- pletely unexpected,” and suggested that “other (methodological) explanations might be more meaningful.” In other words, it appears that the reviewer had dismissed the observed positive effects of cultural diversity as a methodological artifact, and encouraged the authors to explain the findings away. While the study was eventually published in JIBS, this example illustrates how senior scholars may unwittingly hinder diverse perspectives by perpetuating conventional wis- dom, thus making it more difficult to publish seemingly counterintuitive findings. On the other hand, given the dominant para- digms in the field, the very fact that predictions and findings of positive effects of cultural differ- ences are unexpected, if not counterintuitive, may make them more interesting and actually increase, not decrease, the likelihood that such studies be accepted for publication. In the above personal example, another reviewer noted that “some of the findings are intriguing” because they shed new light on dynamics of culturally diverse teams. Clearly, this second reviewer found the paper inter- esting and worthwhile for publication because the findings contradicted the dominant paradigms in the field. Hence publication bias could go in either direction. REDRESSING THE IMBALANCE IN RESEARCH ON CULTURE IN IB: THE VALUE OF POSITIVE CROSS- CULTURAL SCHOLARSHIP AND A FRAMEWORK FOR UNDERSTANDING THE DOUBLE-EDGED SWORD NATURE OF CULTURAL DIFFERENCES In the preceding sections we explored the reasons for the preponderance of the negative over the positive in theory and research on culture in IB based on a content analysis of 24 years of publications in JIBS. Recently, scholars (Brannen, 2004; Stahl et al., 2010a; Tung & Verbeke, 2010; Zaheer et al., 2012) have suggested that the emphasis on the liabilities associated with cultural differences and the limited scholarly attention that has been given to the upside of cultural diversity may have hindered our under- standing of the full range of dynamics, processes, and conditions that help organizations leverage the benefits of cultural differences. A growing body of research (e.g., Edman, 2009; Insch & Miller, 2005; Kostova & Zaheer, 1999; Mezias, 2002) suggests that there may be circumstances in which foreignness and cultural distance might be beneficial to global corporations. Studies have found cultural differences to be associated with positive outcomes in a range of IB contexts, including foreign market entry (Brannen, 2004), multicultural teams (e.g., Stahl et al., 2010a), IB negotiations (e.g., Liu, Chua, & Stahl, 2010), global alliances and joint ventures (e.g., Meirovich, 2010), and cross-border M&A (e.g., Sarala journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms 403 & Vaara, 2010), highlighting the conditions under which cultural differences can be either beneficial or dysfunctional. These examples illustrate that IB research can benefit from adopting a more balanced approach to the study of culture in IB by elucidating the circumstances in which the bene- fits of cultural differences outweigh the costs asso- ciated with them. We argue that POS can help to redress this imbalance so that positive phenomena receive their fair share of rigorous and systematic investigation. Applying a POS Lens to the Study of Culture in IB As noted in the introduction, POS does not represent a single theory, but rather offers a fresh lens and encourages scholars to look at commonly considered phenomena in new ways, as well as to explicitly consider new phenomena. Drawing from an array of organizational theories, the POS lens seeks to unravel processes through which organizational dynamics can produce positive or unexpected outcomes at the indi- vidual, group, and organizational levels by focusing on the enablers (e.g., structures, systems, capabilities), explanatory mechanisms, (e.g., positive relationships between people) and outcomes or effects (e.g., creativity, meaningfulness, engagement) associated with positive phenomena (Cameron & Caza, 2004; Dutton & Sonenshein, 2007). As applied to the field of IB and cross-cultural management research, a POS lens can provide insights into how cultural differences can be under- stood in the broader context of organizational effec- tiveness and performance at multiple levels of analysis. It can shed light on those processes and mechanisms through which cultural differences pro- mote positive outcomes, as well as the conditions that help organizations leverage the benefits of diversity in a wide range of contexts, such as the development of strategic capabilities, foreign direct investment and entry mode decisions, the process of synergy creation in cross-border M&A, the dynamics of knowledge-sharing and learning across cultures, and the processes that help unleash the creative potential of diverse teams. In particular, it can help explain “positive deviance” (Cameron et al., 2003; Spreitzer, 2006) and seemingly counterintuitive results, such as the “double-edged sword” nature of cultural distance in cross-border alliances and M&A (Reus & Lamont, 2009), the observation that for- eignness can be an asset rather than a liability for MNCs (Brannen, 2004), or the puzzling finding that culturally diverse teams tend to perform either better or worse than homogenous teams (Adler, 2003; DiStefano & Maznevski, 2000). Although few studies in IB and cross-cultural management have explicitly adopted a POS perspec- tive to uncover the processes and dynamics that can lead to positive outcomes in culturally diverse envir- onments, research on culture in IB can benefit from using a POS perspective as a generative lens to theorize about positive outcomes. Other existing theoretical perspectives within and outside the IB field could be linked to theorize why differences, distance, and diversity matter in these contexts; under what circumstances they are likely to be beneficial rather than challenging or harmful; how their effects play out and what motivational and enabling mechanisms are or could be at work in the process. Next, we will draw on a theoretical perspec- tive from a field outside of IB research (organiza- tional learning) to theorize about the boundary conditions under which diversity and cultural differ- ences can yield positive or negative effects in various IB contexts. Understanding the Effects of Cultural Differences within the Exploration-Exploitation Framework of Organizational Learning March (1991: 102), in his seminal article, proposed that exploitation and exploration are two funda- mentally different learning processes. Exploitation is associated with activities such as “refinement, effi- ciency, selection, and implementation,” whereas exploration pertains to notions such as “search, varia- tion, experimentation, and discovery.” Exploitative strategies broaden existing knowledge and skills and are associated with the extension, reconfiguration, and optimal usage of existing competencies, leading to the semi-automatic reproduction of concepts and routines, rather than to the development of new ones (Barkema & Drogendijk, 2007; Zollo & Winter, 2002). Exploration, on the other hand, involves learning through processes of planned variation or experimentation, possibly leading to “long jumps” from the company’s existing knowledge base and breakthrough innovations (Gavetti & Levinthal, 2000). Since exploitation and exploration involve fundamentally different learning processes and require different organizational structures, strategies, and capabilities (Raisch & Birkinshaw, 2008), some scholars have asserted that there is an inherent trade-off between aligning the organization to exploit existing competencies and exploring new ones (e.g., Ancona, Goodman, Lawrence, & Tushman, 2001; Levinthal & March, 1993). More journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms ^ Towards a more balanced treatment of culture in IB studies Günter K Stahl and Rosalie L Tung 404 recently, however, there is a growing body of research that suggests that firms can both exploit existing competencies and explore new opportu- nities (Cao, Gedajlovic, & Zhang, 2009; Gibson & Birkinshaw, 2004; Zhang & Cantwell, 2011). In the context of this article, we propose that cultural diversity – and diversity in general – has an inverse effect on the two learning processes: positive on exploration and negative on exploitation. Stated differently, cultural diversity enables exploration and hinders exploitation. For example, Sivakumar and Nakata (2003), in a study of global product teams, found that cultural diversity is a two-edged sword, generating both benefits and liabilities for such teams. Since greater diversity means that a wider range of perspectives, motivations, and approaches exist, these teams tend to experience more conflict, communications breakdowns, and inefficiencies, making exploitation more difficult. On the other hand, divergent views can lead to better ideas and multiple solutions for a single problem, helping teams to avoid the pitfalls of group-think and explore new opportunities. They conclude that “diversity serves teams well when they are charged with creativity demanding tasks [i.e., requiring exploration], but may be impeding for more routine activities [i.e., requiring exploitation]” (Sivakumar & Nakata, 2003: 401). This is in line with research on innovation in MNCs that shows that cultural diversity tends to have an adverse effect on capability exploiting overseas R&D units but does not seem to hinder, or may even be beneficial for, capability augmenting R&D units whose primary aim is to create new knowledge in order to enhance the firm’s long-term competitiveness (Ambos & Schlegelmilch, 2008). Finally, work by Barkema and Drogendijk (2007) suggests that MNCs have to balance exploitation and exploration as they enter foreign markets. They point out that companies will learn from their local experience only if the new knowledge overlaps with or is related to their exist- ing knowledge. Entering a new and unfamiliar cul- tural environment in an exploratory move provides opportunities for breakthrough innovations and learning, but is fraught with uncertainties, difficul- ties, and risks. Some overlap between the company’s knowledge base and the knowledge required for operating in the new cultural environment is needed for the company to be able to interpret the local knowledge, to assimilate it, and put it to commercial ends. From an organizational learning perspective this implies that “learning is optimal if new knowl- edge is neither too similar to, nor too different from, existing knowledge” (Barkema & Drogendijk, 2007: 1136). Collectively, this research suggests that explora- tion is encouraged by cultural diversity, whereas exploitation is more challenging with diversity (see Cantwell & Mudambi, 2005). In the context of subdisciplines within the IB field (foreign market entry, cross-border alliances, multinational teams, etc.) cultural diversity seems to exhibit an inverse U-shaped relationship with the capacity for learning and other positive outcomes. That is, as diversity increases – across individuals in an organization, across cultures, or across different sub-units in an MNC – the capacity for learning and the potential for synergy increases, but beyond a certain threshold level, the relationship turns downwards as it is possible to have “too much of a good thing.”4 The foregoing arguments and research findings help to put the results of our content analysis of / IBS articles in perspective. Applied to research on culture in IB, the exploration-exploitation framework sug- gests that studies which focus on the exploitation of some existing capabilities will tend to emphasize the adverse dynamics associated with cultural differ- ences, using concepts such as “cultural distance” and the “liability of foreignness” to explain or pre- dict negative outcomes, while studies that focus on exploration and new capability building will tend to view diversity and cultural differences more favorably, emphasizing the potential for “cultural synergy” and the “benefits of multinationality.” Viewed in this context, while neither kind of study is inherently biased, this perspective enables us to understand that each category can tell only one side or describe one aspect of a more complex story. Next, we will use the example of studies that explore the effect of cultural distance in cross-border M&A to demonstrate how adoption of the above framework can account for the “double-edged sword” nature of cultural differences observed in this and other sub-fields within IB research, as well as shed light on those processes and mechanisms through which cultural differences may promote positive outcomes, highlighting the conditions under which cultural differences are likely to be beneficial rather than harmful. TOWARDS A MORE BALANCED TREATMENT OF CULTURE IN IB RESEARCH: APPLYING THE EXPLORATION-EXPLOITATION FRAMEWORK TO WORK ON CROSS-BORDER M&A As several narrative reviews of the cross-border M&A’s literature (Björkman et al., 2007; Cartwright Journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms 405 & Schoenberg, 2006; Schweiger & Goulet, 2000; Teerikangas & Very, 2006) and one meta-analysis (Stahl & Voigt, 2008) show, until the late 1990s research in this area has delved into the negative implications of cultural distance in M&A. For exam- ple, David and Singh (1994), in summarizing the body of literature then available, concluded that cultural differences represent a source of “acquisi- tion cultural risk” and a potential obstacle to exploit- ing synergistic benefits in M&A. Cultural differences were seen as a source of friction and conflict, leading to disruptive “culture clashes” (Marks & Mirvis, 1998) and requiring “double-layered acculturation” (Barkema et al., 1996) of organizational and cross- national cultures to enable the successful transfer and integration of new knowledge. M&A failure was explained in terms of the impact that “cultural distance,” “cultural incompatibility,” “cultural mis- fit,” and related variables have on the post-merger integration process. In the late 1990s Morosini, Shane, and Singh (1998) hypothesized, and demonstrated empirically, that differences in national culture are positively associated with cross-border acquisition performance because they may support exploration by enhancing the firms’ routines and repertoires related to innova- tion effectiveness, organizational design, and new product development. Drawing on the resource-based view of the firm, they argued that a cross-border acquisition can be interpreted as “a mechanism for the acquiring (or the target) firm to access different routines and repertoires that are missing in its own national culture, and which have the potential to enhance the combined firm’s competitive advantage and performance over time” (Morosini, Shane, & Singh, 1998: 141). Under this perspective, acquisi- tions in culturally distant countries are potentially more valuable, because greater cultured distance makes it more likely that the target firm will have capabilities that are significantly different from that of the acquirer, and hence not easily replicable. Consistent with and extending from the above logic, researchers proposed and demonstrated empiri- cally that acquisitions in unfamiliar cultures can enhance the development of technological skills, trigger new solutions, and foster innovation, as firms operating in different cultures and markets are exposed to a wider variety of ideas, practices, and routines (Barkema & Vermeiden, 1998; Hayward, 2002; Larsson & Finkelstein, 1999). Other existing theoretical perspectives in IB and related fields were used to theorize why cultural differences matter to the success of M&A; under what circumstances they are likely to be beneficial rather than disruptive or harm- ful; and what mechanisms are at work in the process. For example, adopting an organizational learning perspective on cross-border acquisitions, research con- ducted by Barkema and Vermeulen (1998) and Vermeulen and Barkema (2001) revealed that differ- ences in cultures and systems help acquiring firms to overcome inertia, develop richer knowledge struc- tures, and foster innovation and learning. Other studies found that cultural differences, which are more salient in cross-border M&A than in domestic deals, may lead the managers involved to pay greater attention to the less tangible, but critical, cultural and people factors that are often overlooked in M&A involving companies from the same country (Björkman et al., 2007; Larsson & Risberg, 1998). This effect is also corroborated by the so-called psychic distance paradox, according to which the perceived similarity between psychically close countries may hide unexpected and unforeseen barriers to successful M&A (O’Grady & Lane, 1996). Over time, a more balanced and nuanced under- standing of the role of cultural distance in M&A seems to have taken hold in the literature. For example, Dikova and Sahib (2013) suggest that cultural distance can be both “a bane and a boon” as far as performance of cross-border acquisitions are concerned. This is in line with research that shows that the benefits arising from cultural differences in terms of increased potential for capability transfer, resource sharing, and innovation may offset the impediments in the integration process caused by cultural differences (e.g., Björkman et al., 2007; Larsson & Finkelstein, 1999). Reviews of this litera- ture (Stahl & Voigt, 2008; Teerikangas & Very, 2006) and recent empirical research that investigated both potentially positive and adverse effects of cultural distance on the post-merger integration process (Reus & Lamont, 2009; Vaara, Sarala, Stahl, & Björkman, 2012) have generally concluded that cultural differences present a “double-edged sword” or “mixed blessing” in M&A, in that they may be positively or negatively associated with integration outcomes, depending on factors such as the magni- tude of cultural change resulting from the merger, the integration approach chosen, and the use of social integration mechanisms. Further, consistent with the exploration-exploitation framework, researchers have concluded that “cultural differ- ences are most likely to lead to complementary capabilities and synergistic benefits … when they are moderately large” (Björkman et al., 2007: 663), suggesting a curvilinear relationship between journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms ‘ Towards a more balanced treatment of culture in IB studies Günter K Stahl and Rosalie L Tung 406 cultural distance and cross-border acquisition performance. The above cursory review of evolution in cross- border M&A research illustrates how the adoption of a more balanced perspective on culture/cultural differences has furthered the development of this field by alluding to the more nuanced insights on how cultural differences might affect processes and outcomes. As illustrated by Figure 3, other areas of IB research might have followed a similar path over time, that is, moving away from a predominantly negative view to a more balanced treatment of culture and cultural differences as the field matured and researchers began to pay more attention to situational contingencies, consider non-linear effects, and test more complex models. TOWARDS A MORE NUANCED UNDERSTANDING OF THE ROLE OF CULTURE IN IB RESEARCH: RECOMMENDATIONS AND A ROAD MAP FOR FUTURE RESEARCH In the preceding section we made a case for Positive Cross-cultural Scholarship through the exploitation vs exploration lens to help redress the imbalance observed in our content analysis of JIBS articles. We conclude this article by discussing how a more nuanced understanding of the role of culture and cultural differences in IB research could be achieved and provide a road map for IB researchers going forward. We recommend that future research on culture in IB take five directions: (1) rethink the concepts of cultural diversity, differences, and dis- tance and the way they are measured; (2) build new theory and more complex models; (3) pay more attention to context and process; (4) conduct rich qualitative research taking an emic perspective on culture; and (5) learn from practice. Rethink the Concepts of Diversity, Differences, and Distance and Ways to Measure Them As noted previously, the predominant concepts and constructs that are widely used in the IB literature to explain for the effects of cultural differences and the outcomes of cross-cultural encounters tend to view differences as pejoratives. The KS index (1988) has become a mainstay of research on foreign market entry, cross-border transfer of knowledge, and inter- national alliances and M&A in the past two decades. While parsimonious constructs can be useful in gauging the differences across countries, the cultural distance construct, in particular, has come under increased scrutiny (Berry et al., 2010; Hâkanson & Ambos, 2010; Shenkar, 2001; Tung & Verbeke, 2010). As we have shown earlier, the over-reliance on the KS index can partly explain the preponder- ance of the negative over the positive in research on culture in IB found in our content analysis of 24 years of publications in JIBS. Another key concept that is widely used in some areas of IB research, such as work on multicultural team interactions, is “homophily.” Essentially, homophily asserts that people like those who are similar to themselves (Ibarra, 1993; Lazarsfeld & Merton, 1954). Homophily is related to social identity theory (Ashforth & Mael, 1989; Tajfel & Turner, 1986) and collectively can explain the problems that often arise in diverse contexts. Homophily and social identity theory augment the cultural distance con- struct by alluding to the challenges created by differ- ences in backgrounds and upbringing of parties to intercultural encounters, such as entering a foreign market or managing strategic alliances. While there is evidence to support homophily and its related con- structs (Hamlin, Mahajan, Liberman, & Wynn, 2013), this perspective ignores the reality that people do learn to work with differences that can contribute to rather than detract from organizational outcomes. Further, homophily and theories of social identity that traditionally focused on affiliation with one social group are increasingly replaced by the reality that a growing percentage of our population now identify with two or more groups, be they on the basis of race, ethnicity, sexual preference, and cultural background/upbringing (Brannen & Thomas, 2010; Fitzsimmons, Miska, & Stahl, 2011; Tung, Worm, & Fang, 2008). This reality challenges the widely held concepts dominant in the field of IB research that are largely based on the assumptions of homogeneity within a given country (see the mask of “spatial homogeneity within a single nation” in Tung & Verbeke, 2010) and the relative stability of culture over time (Hofstede, 1980). Future research should “unpack” the role of diver- sity in organizations and understand its component pieces more thoroughly. In this regard, Harrison and Klein’s (2007) typology of diversity offers useful insights on how this can be attained. In an attempt to reconcile the conflicting findings in the literature on the impact of diversity on organizational perfor- mance, Harrison and Klein (2007) hypothesized that the lack of clarity associated with the diversity con- struct may help unravel the puzzle. They proposed that diversity or differences can be operationalized and gauged along three separate dimensions: separa- tion, variety, and disparity. Even though their typol- ogy was intended for understanding demographic Journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms 407 diversity, the “unpacking” of cultural diversity on the bases of “separation” (as in geographic distance, difference in values and attitudes), “variety” (as in nature and type of cross-cultural interaction), and “disparity” (as in interaction between members from a developed vis-à-vis emerging market, minority vis-à-vis majority partners), holds promise in pro- viding a “clearer, more cumulative understanding” (Harrison & Klein, 2007: 1223) of differences and distance used in the field of IB. This “unpacking” of cultural diversity can assist us in developing a more multifaceted conceptualization of the distance/dif- ference construct in terms of what categories or types of differences are under investigation. This is in line with recent attempts by Berry et al. (2010) to disaggregate the construct of cross-national distance through a set of multidimensional measures, including economic, political, administrative, cul- tural, demographic, knowledge, and global connect- edness as well as geographic distance. They argue, and show empirically, that measuring cross-national dis- tance along multiple dimensions is important because different types of distance can affect firm, team, or individual decisions in different ways, depending on the dimension of distance under examination. They conclude that a multidimensional definition and empirical operationalization of dis- tance can help researchers to “better understand when and why different types of distance have either a positive or negative impact on managerial deci- sions, country trade patterns, or even political rela- tionships across countries” (Berry et al., 2010: 1461). Build New Theory and More Complex Models There is a need to develop new theoretical models and frameworks to examine the positive aspects of cross-cultural dynamics in organizations and account for the mixed effects of cultural differences observed in various sub-fields within the IB field, thereby redressing the imbalance in theory and research on culture in IB. For example, researchers have expended less effort on developing new theo- retical perspectives highlighting the positive charac- teristics of multicultural teams and how they can be utilized for the welfare of the teams, their members, and organizations. In their review of the team diversity literature, Stahl, Mäkelä, Zander & Maznevski (2010b) uncovered that all but one of the dominant theoretical perspectives on cultural diversity in teams are consistent with the problem-focused view of diversity, in that they emphasize the adverse dynamics of cultural diversity in teams. The “pessi- mistic” view of cultural diversity focuses on process losses resulting from reduced perceptions of similarity- attraction among team members; negative biases and attributions associated with social categorization pro- cesses; feelings of mistrust, dislike, and resentment due to incongruent values; and communication barriers resulting from differences in language and communi- cation styles. The “optimistic” view focuses on infor- mation processing advantages due to team members’ different perspectives, knowledge bases, and decision- making styles, which, if properly harnessed, can enhance creativity and lead to superior decision-mak- ing quality. Thus except for information-processing theory, the dominant theoretical perspectives, and explanatory frameworks in diversity research all focus on the negative dynamics and consequences of diver- sity, rather than capturing its upside. From a POS perspective, a future research agenda on diversity should focus on developing further in- depth understanding of the processes, mechanisms, and conditions through which diversity promotes positive outcomes at various levels (Dutton & Sonenshein, 2007). Other existing theoretical per- spectives could be linked to theorize why and how cultural diversity matters in teams and organiza- tions. For example, there is some evidence to suggest that cultural diversity may have a positive effect on teams’ ability to learn and innovate (Fiol, 1991; Gibson, Waller, Carpenter, & Conte, 2007), thus organizational learning theory (specifically, March’s exploration-exploitation framework) could be fruit- fully applied to future research on the subject. Another potentially positive effect of diversity in teams is reduced tendency towards group-think, group ethical decision-making, and other such processes. More specifically, social capital theory suggests that too much cohesiveness in the group may become a source of rigidity that hinders the accomplishment of complex organizational tasks and adaptation to change (Gargiulo & Benassi, 2000). These are just some examples to illustrate that by adopting a more balanced perspective on diver- sity and cultural differences new insights can be gained in areas of IB research such as multicul- tural teams and the management of diversity in organizations. Pay More Attention to Context and Process Earlier in this article we presented evidence from several meta-analyses (e.g., Stahl & Voigt, 2008; Stahl et al., 2010a; Tihanyi et al., 2005), as well as from narrative reviews of research on culture in IB (e.g., Gibson et al., 2009; Leung et al., 2005; Tung & Verbeke, 2010), that across various domains of IB Journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms ‘ Towards a more balanced treatment of culture in IB studies Günter K Stahl and Rosalie L Tung 408 studies, the size and direction of effect sizes for the relationship between cultural differences and IB out- comes are contingent on situational factors. This led Leung et al. (2005: 368) to conclude that “instead of addressing whether or not national culture makes a difference, it is more useful to address the issue of how and when it makes a difference.” Similarly, Tung and Verbeke (2010: 1264) concluded from their discussion of common myths about cultural dis- tance and IB research that “no direct, generalizable linkage (divorced from a specific situational context) should be expected between cultural distance scores and managerial choice or economic performance.” Thus reviewers of the literature seem to be unan- imous in their recommendation to pay greater atten- tion to the role of context in research on culture in IB. Scholars in adjacent fields, such as team diversity research, have also highlighted the need to pay more attention to situational contingencies. For example, Homan et al. (2008: 1205) have argued that the main effects approach to studying team diversity is incap- able of fully explaining the effects of diversity because, first, “it ignores moderating variables that determine whether diversity has positive or negative effects,” and, second, “it fails to elucidate the under- lying processes that are responsible for the effects of diversity on team performance.” Unfortunately, there is little theoretical clarity concerning how moderators influence the effects of diversity and cultural differences in various IB con- texts; and very few studies have systematically exam- ined moderators of the relationship between culture and IB outcomes. A notable exception is Gibson et al. (2009) who identified a set of moderating conditions operating across three different categories (individual, group, and situational characteristics) that serve to moderate the impact of national culture on indivi- dual perceptions, beliefs, and behavior. Understand- ing the extent to which the moderating factors are present in any given situation thus helps to under- stand whether or not culture will likely matter (and how it will matter) in those circumstances. Since processes and outcomes in IB are likely influenced by more than one aspect of culture at any given time, and moderators possibly work in concert rather than in isolation (Leung et al., 2005), future research should examine the most critical combinations of moderators, including process- oriented and management-related variables. As noted by Zellmer-Bruhn, Maloney, Bhappu, and Salvador (2008: 42) in the context of diverse teams, we should not expect the impact of diversity to be static; in order to fine-tune our understanding of processes and boundary conditions, it will be impor- tant to study dynamic, emergent states in teams, inter-temporal variation, and intervening mechan- isms more systematically. A process perspective seems particularly suited for this, as many of the positive outcomes identified in research on diverse teams (e.g., creativity, enhanced problem-solving, and team learning) may arise from team-internal processes. The aforementioned assertion with regard to the need to study processes more systematically applies to other areas of IB research as well. For example, Shenkar, Luo, and Yeheskel (2008) argue that the impact of cultural differences in international alli- ances depends not only on static aspects such as the type of alliance in question (e.g., a 50/50 equity joint venture will likely trigger a milder cultural response on the part of host country constituencies than a deal awarding majority ownership and control to the foreign partner), but also on process-oriented and management-related aspects such as the negotia- tions surrounding the transaction, the assessment of consequences for the local constituencies, and “cultural signals,” such as the appointment of local board members or positive gestures showing respect for local interests and ways of doing business. Gibson et al. (2009) caution, however, that such complex mediated and moderated models necessi- tate changes in research design, particularly with regard to sampling and data analysis. Investigating the influence of multiple moderator variables con- currently may require more complex field research, including the need to engage in longitudinal studies, especially when these moderators include process- oriented and management-related factors. To sum up, we believe there is a need to pay more attention to the processes and mechanisms through which cultural differences affect IB outcomes, as well as to the role of context. This relates to another myth identified by Tung and Verbeke (2010: 1264) in their overview of research on cultural distance in IB, namely the erroneous assumption that there is a direct and unambiguous causal linkage between cultural difference measures, on the one hand, and economic performance, on the other. In other words, no direct, generalizable linkage should be expected between cultural variables and managerial choice or other outcomes. To further advance our understanding of the implications of cultural differ- ences in various IB contexts, we need a more accu- rate mapping of the mechanisms that link these differences to management-related variables and performance outcomes. Greater attention to the context – or “contextual intelligence” (Bennis, journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms 409 2009; Khanna, 2014) – and processes can help us gain a better appreciation of the circumstances and conditions under which specific outcomes can be attained. Need for Qualitative Research Taking an Emic Perspective on Culture There are two long-standing approaches to under- standing the role of culture: “the inside perspective of ethnographers, who strive to describe a particular culture in its own terms, and the outside perspective of comparativist researchers, who attempt to describe differences across cultures in terms of general, exter- nal standards” (Morris, Leung, Ames, & Lickel, 1999: 781). The latter stream of research, termed “etic,” is generally grounded in the functionalist paradigm (Burrell & Morgan, 1979) and is associated with dimensioned frameworks of national culture such as the ones developed by Hofstede, Schwartz, Trompe- naars, and the GLOBE researchers. This approach to understanding culture and its impact on IB phenom- ena has been enormously influential in cross-cultural management and IB research, and most of the work reviewed in this paper has relied on these “universal” cultural dimensions as an important tool for cultural analysis. However, the etic approach has also been criticized (e.g., Birkinshaw, Brannen, & Tung, 2011; Zhu & Bargiela-Chiappini, 2013) for failing to recog- nize the uniqueness and complexity of cultures and relying on polarized views (e.g., individualistic vs collectivistic). As Osland and Bird (2000: 65) noted, “[while] this sophisticated stereotyping is helpful to a certain degree, it does not convey the complexity found within cultures.” By contrast, the emic approach is defined as the insiders’ perspective on culture, which provides insight into cultural nuances and complexities. Emic approaches capture the uniqueness of each cultural environment and look for specificities not found in other cultures; they are based on the meanings and interpretations of members of a given culture. Since studies adopting an emic approach try to make sense of a culture’s internal logic, they tend to promote a more positive perspective on culture and cross- cultural contact. For example, Primecz, Romani, and Sackmann (2012) present ten in-depth case studies on a variety of IB topics, including headquarters-subsidi- ary relationships, intercultural negotiation, and global alliances, to highlight the predominantly posi- tive dynamics and outcomes associated with cultural differences (while giving due consideration to the challenges and risks inherent in cross-cultural contact). Adopting an “interpretative” epistemology, they show that in cross-cultural encounters indivi- duals engage in continuous negotiation and renego- tiation of meanings, resulting in what Brannen and Salk (2000) have termed as “negotiated cultures.” For instance, one case study (Mahadevan, 2012) describes the collaboration between German and Indian engi- neers, illustrating the interplay between different layers of culture (national, organizational, profes- sional). In this case downplaying and minimalizing national cultural differences, and stressing their shared professional identity, helped these engineers to successfully collaborate on a project. The case also reveals how different cultural boundaries gain differ- ent importance depending on the context, and how different situations modify the significance of cultural differences, which can be either minimized or emphasized depending on the circumstances (e.g., whether the context is competitive or collaborative). In-depth qualitative case studies such as the one described above go beyond stereotypical representa- tions of cultural differences by trying to make sense of a culture’s internal logic and showing how collec- tive sense-making processes can explain an indivi- dual’s actions in cross-cultural situations. Our content analysis revealed that of the 136 empirical papers on culture in IB published in JIBS only 2 were qualitative in nature; of the 20 empirical studies published in CCM that met the selection criteria, only 3 were classified at qualitative. We recommend that future research on the role of culture in IB incorporate emic perspectives into existing etic fra- meworks for a fuller understanding of culture and cross-cultural dynamics. This applies to research at both micro and macro levels of analysis. In fairness, JIBS has recognized the potential con- tributions of qualitative research and has devoted an entire Special Issue on that subject (Birkinshaw et al., 2011). Suffice it to say that rigorous qualitative research should be encouraged to allow further development of our understanding of complex cross-cultural dynamics and processes. Learn from Practice Interestingly, it seems that practitioners, more so than academics, are acutely aware of the double- edged sword nature of culture and the f 1 Towards a more balanced treatment of culture in IB studies Günter K Stahl and Rosalie L Tung 410 Carlos Ghosn’s management style, particularly his effective handling of the cultural issues, played in the success of the Renault-Nissan alliance (e.g., Emerson, 2001; Kets de Vries & Florent-Treacy, 2012). In a recent interview published in Academy of Management Learning and Education (Stahl & Brannen, 2013), Ghosn implicitly drew on the POS perspective by discussing the conditions under which cultural differences can lead to positive out- comes, the mindset and skill-sets on the part of managers that are required to create cultural syner- gies, and how global corporations can utilize their cultural diversity to build cross-cultural competence in individuals and teams. Conversely, the failure of DaimlerChrysler, one of the most talked-about “merger disasters,” is often attributed to cultural differences in management philosophies, the unanticipated problems arising from different communication styles, and lack of cultural sensitivity on the part of the Daimler top management (Epstein, 2004; Vlasic & Stertz, 2000). While the aforementioned case studies highlight the need to understand cultural differences, to date few studies have looked at the more management-related factors that determine whether cultural differences can have a positive or negative effect in IB. More sophisticated studies on process variables will likely reveal that it is not cultural distance per se that creates problems but rather it is the way cultural differences are recognized, understood, and managed. CONCLUSIONS The framework proposed in this article is in line with March’s (1991: 71) exhortation with regard to the need to understand the relationship “between the exploration of new possibilities and the exploitation of old certainties” to generate further knowledge of a field of inquiry, in this case IB. He cautioned that while “refining exploitation more rapidly than exploration” tends to be more “effective in the short run,” in the long term, it could be “self-destructive” (March, 1991: 71). Thus far, it appears that the development of our understanding of the impact of culture and cultural differences on various types of IB activities has mainly revolved around the exploi- tation spectrum, thus conveying a predominantly problem-focused view of cultural diversity. In this article, we presented a content analysis of 1141 JIBS articles published over a 24-year time period that revealed a 17:1 imbalance in theoretical assumptions between research on negative over the positive role of culture. With the introduction of the KS index (1988), researchers have a readily available tool to enable them to gauge the downside asso- ciated with cultural distance. While the research on the liability of cultural differences has produced useful knowledge of cross-national business transac- tions, it appears that we have reached the point of diminishing returns whereby additional insights on the negative aspects of culture can only make mar- ginal contributions to our understanding of the total picture associated with IB transactions. In this article, we have presented arguments for the need to complement our existing knowledge of the field by looking at the upside of cultural differ- ences (i.e., turning to the “exploration” aspect of organizational learning). Throughout this article, we have asserted that a one-sided perspective has likely hindered our understanding of the full range of dynamics, processes, and conditions that help orga- nizations leverage the benefits of cultural differences in a wide range of contexts, such as the development of strategic capabilities, foreign direct investment and entry mode decisions, synergy creation in cross- border M&A, and the processes that help unleash the creative potential of diverse teams. In short, we believe that an inflection point has been reached. Similar to the fable of the six blind men from Hindustan who tried to describe an elephant from their vantage point only, a single-sided perspective and mere reliance on exploitation may no longer serve the further development of the field. To gain a holistic and more accurate description of reality, we need to adopt multiple lenses to understand the phenomenon under investigation. In other words, to more fully understand the relationships between cultural differences and IB, we should delve more into “wider knowledge-exploration” of the subject. This article represents a first step towards redres- sing this imbalance by showing the value to theory and practice of a complementary view – the need for positive cross-cultural scholarship – and by offering a general framework within which both positive and negative effects of cultural differences in various IB contexts can be understood. We recognize that what is proposed in the article represents a first step. Future research should more specifically identify the conditions, processes and mechanisms under which cultural differences can lead to positive or negative outcomes and the factors that can moderate such relationships. Scholars (e.g., Bennis, 2009; Khanna, 2014) have increasingly emphasized the need to develop “contextual intelligence,” defined as “the ability to understand the limits of our knowledge and to adapt that knowledge to an environment different from the one in which it was developed” (Khanna, journal of International Business Studies This content downloaded from 139.182.75.138 on Thu, 25 Apr 2019 06:54:40 UTC All use subject to https://about.jstor.org/terms 411 2014: 60). In the field of IB, in particular, diversities of all kinds will likely widen in light of the rising economic power of emerging markets and the crisis of confidence in US or Western-centric institutions and organizational forms. To advance our understand- ing of the field, we can no longer afford to focus on the negative dynamics; rather, it is essential that we gain better “contextual intelligence” to fully understand the conditions under which we can minimize the negative and maximize the positives. ACKNOWLEDGEMENTS We are grateful to Editor-in-Chief John Cantwell, Associ- ate Editor Mary Zellmer-Bruhn and three anonymous reviewers for their guidance and their insightful com- ments on earlier versions of this article. We also thank a number of colleagues whose advice and ideas have helped us improve the article: Nancy Adler, Rangga Almahendra, Björn Ambos, Allan Bird, Mary Yoko Brannen, Julian Birkinshaw, Paula Caligiuri, Cristina Gibson, Harry Lane, Hyun-Jung Lee and Laurence Romani; as well as participants (in particular, Kim Cameron) of the symposium “The upside of cultural distance: A positive organizational scholarship perspec- tive” at the Academy of Management Conference, Orlando, 9-1 3 August 201 3. Thanks are further due to Christof Miska who provided invaluable assistance in the literature search and content analysis.