Abstract
Culturally-bound communication styles affect the specificity of verbal and written messages. Contracts are no exception. The purpose of this paper is to explore the relationship between cultural communication style and joint venture (JV) contract length. Using a database of 470 JV contracts, we empirically test the relationship between the parties’ cultural communication styles, cultural distance and JV contract length. We apply Edward T. Hall’s high- and low- context communication construct and find that JV contracts are longer when made between parties of low and high context cultures and shorter when both parties come from high context cultures. Additionally, we find the higher the cultural distance in terms of individualism vs. collectivism between partners, the shorter the contracts. These results highlight the influence of culture on contractual length and, as such, upon contract negotiation and design costs. This paper contributes to the culture and alliance literatures by moving beyond the assumption that low-context culture contracts are longer and high-context culture contracts shorter by actually testing it empirically. In addition, the paper focuses on the interaction of high- and low-context cultures, which to the best of our knowledge has not been done before, in producing shorter or longer contracts, as well as how cultural distance affects contract length.
Published Version
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