The impact of cultural distance and language diversity in the internationalization process of a company

This dissertation analyzes the influence of cultural distance and language diversity in the internationalization process of a company, in terms of entry mode choice in a foreign market, impediments in negotiations, impact on type of internationalization, the effect on dayto- day operations and factors influencing the relationship between cultural distance and entry mode choice. The study includes five interviews to a top manager working for company A for 21 years. Findings show that cultural distance and language diversity were considered in the company’s strategic option of internationalizing incrementally, with the goal of decreasing these two phenomena’s impact. Moreover, language diversity proved to be constraining during negotiation processes with clients that did not speak English, French, Portuguese or Spanish and would reject the option of not negotiating besides their native language, such as clients in Vietnam. On the other hand, cultural distance and language diversity posed complications and inefficiencies such as quality and security gaps, disruptions in the communication flows and pace of negotiations, leading delays on delivery, hindering day-today operations. The final findings were the preference of company A for Wholly Owned Subsidiaries as entry mode choice in every country, despite the research suggesting otherwise, and the company A showing easier integration in Anglo-Saxon countries due its organizational culture being better aligned with their cultural traits. The goal is to have these findings becoming appealing for future literature on the subjects as well as companies integrating them in their strategic planning and creating effective measures to lead with the expected impacts