Cultural Distance Assignment IIB
1. What is the formula developed by Kogut and Singh in 1988 in the Journal of International Business Studies (JIBS)? Explain the formula in your own words.
CDj is the cultural distance between the host country (j) and the home country (in this case Germany). It is calculated with a summation of 4 different variables indicating different cultural dimensions. These are uncertainty avoidance, power distance, individualism/collectivism and masculinity/femininity. is the country j’s score on one of the four cultural dimension is the score of the home country (in this case Germany) on this dimension. is the variance of this particular dimension.
Firstly, the distance on each dimension between the host country j and the home country (in this case Germany). Secondly, this number is squared. After squaring minus each variable is divided by the variance of that variable. And finally, all these four variances are added together and divided by 4. 2. What is the difference between mean and variance? Can you explain the example given in the lecture in your own words? Mean and variance are both about distribution, but mean refers to one measure of the central value for a probability distribution. It is the average of a set of measurements. On the other hand, variance is a measure of how far a set of numbers is spread out. In a statistical probability graph the difference in variance is made visible in the height of the graph. A low variance indicates that the data points are close to the mean. This can be recognized in a normal distribution graph where the curve is either flatter or steeper. A flat curve indicates a high variance as data points are far away from the mean, whereas a steep curve indicates a small variance as the data points are close to the mean.
3. Calculate the distance on each dimension between Germany (our home country) and a specific host country using the Excel program.
Tip: you can use the formula editor in Excel to calculate the distance on e.g. power distance between Germany and Argentina, the first country in the sample. You can copy-paste the formula in the other rows/columns. Power distance: Argentina – Germany: 49-35 = 14
Uncertainty avoidance: Argentina – Germany: 86-64 = 21
Individualism / collectivism: Argentina – Germany: 46-67 = -21 21 Masculinity / femininity: Argentina – Germany: 56-66 = -10 10 4.The Kogut-Singh index of cultural distance also contains the variance of each dimension. Answer the following questions: a. In the bottom row of the columns you will find the variance for each culture
dimension. What dimension has the highest variance? Individual - collectivism
b. What does a high variance mean?
Tip: to calculate the variance yourself, you can use the formula editor of Excel and search for “variance”. A high variance means that the date points are very spread out from the mean and from each other 5. Calculate the cultural distance using Kogut and Singh formula while using Germany as the home country.
Tip: follow the different steps as explained in the main lecture, and first calculate the difference,
the squared difference, the variance, and the overall cultural distance. Cultural distance = 0,547
[(14*14)/507,68 + (21*21)/559,42 + (-21*-21)/621,34 + (-10*-10)/329,58)]/4 6. Which four countries have the lowest cultural distance to Germany? Switzerland, Italy, South Africa and Luxembourg
7. Which country has the highest cultural distance?
8. What is the average cultural distance between Germany and these 57 other countries? 1,6046894
9. Pick a host country and relate the cultural distance score between Germany and that
host country to the 7 points of critique raised by Shenkar as discussed in the lecture. We picked Egypt, which has a cultural distance score of 1,748. 1. The illusion of symmetry: you cannot assume that the cultural distance from Germany and Egypt is similar to the cultural distance...
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