When does culture matter? A multilevel study on the role of situational moderators

Abstract

Extending leading-edge frameworks on ‘when does culture matter?’, we propose a nuanced theoretical model to explain the context and mechanism of how the home country’s national culture influences managerial seeking of control, conditional on ‘situational moderators’ in the foreign market entry decision context. We examine the degree of ownership equity sought as a criterion variable, illuminating the mechanism as the acquirer signaling its intention to control based on managerial perception of transaction costs. Through a multilevel analysis of acquisitions from 27 countries into India (host country), we find that ‘magnitude of impact’ and ‘firm-level uncertainty’ act as situational moderators that activate/amplify/reverse/suppress the influence of culture on the managerial preference to seek higher levels of control based on equity ownership.