MNE home country cultural norms and conflict strategy fit in transnational business contract disputes |
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| Authors: | George O. White John Hadjimarcou Stav Fainshmidt Richard A. Posthuma |
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| Affiliation: | 1. Department of Management, College of Business and Public Administration, Old Dominion University, 2166 Constant Hall, Norfolk, VA 23529, United States;2. Department of Marketing and Management, College of Business Administration, University of Texas at El Paso, El Paso, TX 79968-0539, United States;3. Department of Management, College of Business and Public Administration, Old Dominion University, 2160 Constant Hall, Norfolk, VA 23529, United States |
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| Abstract: | The increasing frequency and complexity of transnational business relationships has been commensurate with an increase in contractual disputes. In such situations, home country cultural norms will often influence how MNEs resolve contractual disputes in foreign markets. This begs the question: does fit between an MNE's choice of conflict strategy and its home country cultural norms affect monetary payouts (costs) in transnational business contract disputes? We apply organizational imprinting theory and the fit paradigm to a model employing data from U.S. court cases involving 316 MNEs from 47 countries. We find that choosing a conflict strategy that fits home country cultural norms will result in higher monetary payouts for MNEs. Additionally, cultural distance, but not legal distance, enhances the positive relationship between MNE conflict strategy fit and monetary payouts. Implications and future research directions are discussed. |
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