(Tiểu luận) impacts of cultural distance onperformance of employees in mncs’subsidiaries

Trang 1 FOREIGN TRADE UNIVERSITYINTERNATIONAL ECONOMICS FACULTY……….o0o………REPORTRESEARCH METHODOLOGY IN ECONOMICS ANDBUSINESS2nd International ConferenceICGE“Economic stability and busine

FOREIGN TRADE UNIVERSITY

INTERNATIONAL ECONOMICS FACULTY

……….o0o………

REPORT RESEARCH METHODOLOGY IN ECONOMICS AND

BUSINESS 2nd International Conference(ICGE)

“Economic stability and business transformation in a BANI world”

IMPACTS OF CULTURAL DISTANCE ON PERFORMANCE OF EMPLOYEES IN MNCS’

SUBSIDIARIES

Student’s name : Tran Minh Tam

Student’s ID : 2213450068

Module class : KTEE206.4

Lecturer : Dr Vu Thi Phuong Mai

Ha Noi, April 20 , 2023 th

TABLE OF CONTENTS

TABLE OF CONTENTS 2

INTRODUCTION 2

CONTENTS 4

I Conference: “Economic stability and business transformation in a BANI world” 4

1 The conference (ICGE – 2023) 4

2 Purpose of the conference 4

3 Conference’s information 4

4 Before the sessions 5

II Session 5: Impacts of cultural distance on performance of employees in MNC’s subsidiaries 6

1 Reasons for choosing 6

2 Introduction of the presentation 6

3 Literature review 6

4 Measurement and Data 9

5 Implications 10

6 Facilitators’s comments 11

CONCLUSION 12

After the world was hit by COVID-19, there have been a lot of changes happening in the area of economics From there, the term "BANI" was born As the world undergoes rapid transformation, the business landscape is also changing at an unprecedented pace The adoption of new technologies has led to the emergence of a new economic paradigm, known as the BANI world This world is characterized by uncertainty, complexity, and ambiguity

Given this context, it is essential to understand how these changes impact the field of economics Attending a conference on economics in a BANI world can provide valuable insights into how the economic landscape is evolving and what strategies can be adopted to navigate this environment To understand how to navigate this changing economic environment and understand how graduates research a topic, I attended a conference on economics in a BANI world

This essay will first provide information about the conference, the sessions and how it proceeded before giving my opinion on the conference and session overall

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I Conference: “Economic stability and business transformation in a BANI world”

1 The conference (ICGE – 2023)

BANI (B for Brittle, A for Anxious, N for Non-linear, and I for Incomprehensible) is a name that has recently been used to characterize the world due to the new context created by the advent and spread of Covid, conflicts, and economic and political developments

The second ICGE International Conference is a place to connect and share science among scientists and experts participating in a network of postgraduate research and training in many training institutions around the world and Vietnam in the field of economics, business and other interdisciplinary academic issues Together with scientists, experts, graduate students and graduate students, have the opportunity to present and share ideas as well as new research directions related to the topic of the conference; receive criticisms

to complete the research; improve presentation and critical skills; at the same time, have the opportunity to publish the full text in the proceedings of international conferences when meeting the requirements of the reviewer

2 Purpose of the conference

The Foreign Trade University (Vietnam) and its partners host the international conference on "Economic stability and business transformation in

a BANI world" to discuss these topics from both economic and business perspectives in the context of the BANI world The conference aim to give academics, professionals, decision-makers, and graduate students a forum to discuss the most recent research findings, exchange stories from abroad, and promote policies for both developed and developing nations like Vietnam

3 Conference’s information

- Name: economic stability and business transformation in the BANI

world

- Date: April 20th

- Time: 1:30 PM to 6:00PM

- Location:

Offline: 3rd Floor, VJCC building, Foreign Trade

University

Online: Zoom

- Scale: 800 people

- Participants: professors from both Australian institute and Foreign Trade

University

- Target audiences: 3nd-year and 4th year student, professor of Foreign

Trade University in Hanoi

- Content: Economy-related problems

- Topic chosen: Impacts of cultural distance on performance of employees

in MNCs’ subsidiaries

4 Before the sessions

The conference have the agenda before the sessions as follows:

Time Content Person in charge Comments

13h30 –

14h00

Registration

for the

Conference

(both on-site

and online

registration)

The staff and event planner of the conference

Because of the participents involve both students and professers, the offline registration were slower than expected but the time for open ceremony were not affected

14h00 –

14h15

Introduction

Opening

speech

Photo

session

MC Opening speech: Dr

Pham Thu Huong

The introduction were clear about the presenters The speech again imply the significant purpose of the conference and the photo session were croweded but kept the guests entertain

14h15 –

15h15

Keynote

presentation

s

Dr Uwe Kaufmann – Uncertainty,asymmetric information, risk and investment decisions in

a BANI world

Assoc Prof., Dr Kim Huong Trang – Leading

by example, corporate cultureand firm performance

Dr Uwe Kaufmann gave a clear explanation about uncertainty and ways to deal with those uncertainty

in a BANI world He also gave a hot take about not believing in “the invisible hand” Assoc Prof., Dr Kim Huong Trang gave the conference many facts,statistics and expamle of her topic and make clear the points of her presentations were

15h15 –

15h20 Break

The staff and event planner of the conference

There were desserts, coffee and tea for everyone to enjoy, it helps the participents relax and have the time to charge their energy, for some this is also the time for them

to discuss the presentation of Dr Uwe Kaufmann and Assoc Prof

Dr Kim Huong Trang

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II Session 5: Impacts of cultural distance on performance of employees in MNC’s subsidiaries.

1 Reasons for choosing

The Conference 2023 took place at Foreign Trade University on April 20th, 2023, and featured speakers who covered a wide range of topics relevant

to economics and business in the BANI World After the main conference and a break, there were 6 parallel session for each topic Those include topics like:

“Challenges of SPS/TBT measures in the coffee export under EVFTA”;

“Determinants of Foreign Direct Investment into the Southeast Asia real estate sector”,…and many more Those were all interesting topic but the one catch my attention the most were “Impacts of cultural distance on performance of employees in MNC’s subsidiaries” by Dat Tran, Nga Vuong, Dai Le Not only is the topic relevent to the concern of covid, but also it touched upon the topic off employees after distancing Knowing the conference include both social and economics asspect of a country and how i can learn their ways of conducting a research, i decided to enter the session at 15:40

2 Introduction of the presentation

- Culture has long been proven as a barrier to the internationalization process of multinational corporations (MNCs) in the world

- Companies have to deal with several critical decisions such as entry modes (Tihanyi et al., 2005), international diversification (Grosse and Trevino, 2006)subsidiary management (Roth and O'Donnell, 2016), and human resources management (Morosini et al., 1998)

- Failure to understand the elements of the subsidiary national culture would have an adaption crisis (De mooij & hofstede 2010)

- This research aims to discover the direct relationship between cultural distance and the performance of employees in subsidiaries of multinational corporations

- MNCs can take into account the suggested implications when expanding

to other territories

3 Literature review

- Cultural distance:

Culture is defined as a mutual program of mind and a tool to differentiate the individual from one human group to another (Hofstede, 1980)

Under the cross-border conditionmany international researchers have introduced the concept of distance

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The concept of “cultural distance” has been applied to a lot of areas of business from both international and domestic contexts (Oded Shankar, 2001)

According to Ralf Muller (2009)cultural distance and commonalities are the differences in the way people behave, believe and act (Hofstede, 1980; Lloyd, B., & Trompenaars, F., 1993)

In this paper, cultural distance, that is, the difference in cultural values between two countries - remains the most widely used term

of distance in global business (Beugelsdijk & Mudambi, 2013) as owing to the centrality of cultural values in shaping individual and organizational behaviors (Hofstede, 2001)

1988

Kogut and

Singh

2008

Xu & Shenkar

2010 Holburn and Zelner

2018 Lowe& Gibson

Lay the

foundation of

cultural

distance when

they mention

the differences

in entry modes

because of the

influence of

cultural factors

Cultural norms significantly affect

innovation and inventionmaking

decisionsdevelopin

g strategiesor training high conflict after acquisition

A high level of cultural distance makes the possibility of investment in a location decrease,

or make preference for a joint venture instead of a wholly owned investment

Cultural distance has impacts on almostly all international expansion activibes global integration even administration process and outcomes of MNCs

The more cultural distance increases the more difficult and costly Information about performance and actions of subsidiaries are obtained

Therefore, the activities of subsidiaries seem to be uncontrollable

by the headquarters (Gong, 2003) As a result, the parent companies cannot replace the subsidiaries to make decisions correctly, due to the lack of concrete information about the context that the subsidiaries are in (Rugman and Verbeke, 2003)

Cultural distance is also described as a key factor in subsidiary's transaction costs management (Harzing 2003)

Hence, the increase of cultural distance forces MNCs to have more cultural control (Kogut and Zander, 2003)

- Employee performance:

Phương Pháp Học Tập và NCKH phương

21

There are two types of performance in organizations: Organizational performance and employee performance (job performance) (Otley, 1999)

Organizational performance is the direct result of an employee's performance in certain conditions such as environment, time and politics

Organizational performance can only be perceived as success when its objectives are accomplished by effectively operating and suitable strategy (Otley, 1999)

Job performance or employee performance is the process of an individual using his her own skills, experience, knowledge, personality and abilities (Vroom, 1964; Hunter, 1986) with a view

to reach their goal

- Research on employee performance:

Many research has been done to determine factors that affect employee performance as well as to build scale for performance evaluation:

Interests: Campbell et al, 1993 Mount, & Gupta, 2003 Hansen, 2004

Motivation: Deer & Ryan 1965 Grant, 2008 Asim, 2013 Satisfaction: HY J & Park 2011 Shanzadi et al, 2014 Reward management system: Yang, 2008; Meyerson, G., & Dewettinck, B, 2012

All these Recent Other factors: training effectiveness, incentives and empowerment (Tuffaha, M., 2020)

Documents were conducted through evaluation of employee performance then analyzed the correlation between performance with other factors

8

- Cultural distance and employee performance:

Almost no studies

directly on the

relationship of

cultural distance

and employee

performance with

empirical evidence

in MNCs (there are

also some studies

on the impact of

culture only)

Low level of empirical research (Lok &

Crawford, 2004), and the culture is determined at the organizational level, which means that the culture of one organization affect its own employee performance

Cultural dimensions in some studies are

in the role of a moderating variable, not an independent variable (Rafiel S

Pourreza A, (2013)

The absence of global experience factor (employee experience)

- Control variables and moderators:

Gender

Age

Job experience

Industry

Insitutional distance

4 Measurement and Data

- Employees performance: Construct includes 6 variables adapted from Feirong Yuan and Richard W Woodman (2010), L.Koopmans et al (2014)

- Cultural distance: Six dimensions of national culture measurement which

is based on extensive research done by Professor Geert Hofstede, Gert Jan Hofstede Michael Minkov and their research teams (2006)

- Institutional distance: World economic forum database, competitiveness report

Hypothesi

Cultural distance between home-bost countries has a significant negative impact on employee performance

of MNCs' subsidiaries

H2

The relationship between Cultural distance and MNCs Employee performance is significantly controlled by Industry

H3 The relationship between Cultural distance and MNCs

Employee performance is significantly controlled by Gender

The relationship between Cultural distance and MNC: Employee performance is significantly controlled by Age

H5

Job experience significantly negatively moderates the relationship between culture distance and employee performance

H6

Institutional distance significantly negatively moderates the relationship between culture distance and employee performance

- Hypothesis result:

- Hypothesis accepted:

H1: Cultural distance between home-host countries has a significant negative impact on employee performance of MNCs subsidiaries

H2: The relationship between Cultural distance and MNCs Employee performance is significantly controlled by Industry H6: Institutional distance significantly negatively moderates the relationship between culture distance and employee performance

5 Implications

- MNCs should pay attention to cultural distance, especially MNCs that operate in the tertiary and quaternary industry, to achieve the best outcome when expanding to a new international market

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