Culture and foreign companies' choice of entry mode: the case of the Singapore building and construction industry

Abstract

Recent studies have shown that culture has an effect on the choice of foreign investment venture structure. Cultural distance has been identified as a primary determinant in the selection of shared control over wholly foreign owned investment. The data from these studies indicate, however, that individual cultural characteristics of investor countries may be more important than the difference in culture. In this study, a sample of Singaporean building and construction firms is utilized to explore whether joint venture (JV) formations correspond more to the uncertainty avoidance dimension of the investor's culture than to cultural distance. The results show that an investor's cultural aversion to risk may be more influential in explaining the propensity for firms from certain countries to engage in JVs, rather than other cultural factors.