FOREIGN ENTRY, CULTURAL BARRIERS, AND LEARNING

This paper examines the longevity of foreign entries. Hypotheses are d eveloped on the mode (start-ups vs. acquisitions) and ownership struct ure (wholly owned vs. joint ventures) in relation to cultural distance . The hypotheses are tested within a framework of organizational learn ing, using data on 225 entries that 13 Dutch firms carried out from 19 66 onwards. Results show that the presence of cultural barriers punctu ates an organization's learning. Cultural distance is a prominent fact or in foreign entry whenever this involves another firm, requiring the firm to engage in 'double layered acculturation.' We also identify lo cational 'paths of learning.' The longevity of acquisitions is positiv ely influenced by prior entries of the fin in the same country. Simila rly, the longevity of foreign entries, in which the firm has a majorit y stake, improves whenever the expanding firm engaged in prior entries in the same country and in other countries in the same cultural block .