Does culture impact private label performance?

Abstract

PurposeTo better understand the disparity of private label performance across countries, the purpose of this paper is to investigate the role played by national culture. Two types of impact are considered: a direct influence of cultural dimensions on the performance of private labels in a country and an indirect one where national culture favours the development of modern retailers, which, in turn, benefits private label performance.Design/methodology/approachUsing the five dimensions of the Hofstede model to describe national culture, this paper performs a structural equation modelling incremental building model approach using secondary data collected from a sample of 65 countries.FindingsThe results show that individualism (positively) and long-term orientation (negatively) directly impact private label performance. Moreover, four dimensions (individualism, masculinity, power distance and uncertainty avoidance) are shown to have a significant indirect impact on private label performance via the mediation of retail market development, positively for individualism and negatively for the three other dimensions.Practical implicationsThe findings provide retailers with important insights into the critical decisions of the selection of new markets and adaptation of the private label strategy according to the culture of the country.Originality/valueThis research pioneers by being the first to determine the impact of all the dimensions of the Hofstede cultural model on private label performance, use a very large number of countries to test this impact and study the role of important retail market factors in this phenomenon.