Understanding the Paradox in the Results of National Cultural Distance Impact on International Joint Venture Performance: A Narrative Review of Prior Literature

Abstract

The literature on international joint ventures (IJVs) continues to grow owing to their crucial importance in global market competition. National cultural distance (NCD) between partner firms is conventionally considered one of the main contributors to unsatisfactory IJV performance, leading to its dissolution. Nevertheless, there is no consensus on the extent of the impact of NCD on IJV performance, nor on whether this impact is predominantly positive or negative. Therefore, we conducted a narrative review to shed light on prior research (including the earliest works) to explore and clarify the causes of these apparent inconsistencies in the research’s results. Theoretically, the current research offers guidance for future study on the topic. Researchers should introduce moderator and mediator variables in pursuit of a more nuanced understanding such as mutual trust between partners. Practically, this paper will help IJV managers mitigate the negative effects of NCD and improve overall venture performance by selecting culturally intelligent managers, providing cross-cultural training for IJV staff, and implementing cooperative conflict resolution. Like any study, this paper has some limitations that should be examined by future researchers.