Culture clusters were composed of countries with a similar response to fundamental questions and similar cultural patterns. Culture clusters indicate that the nations forming a cluster have a low cultural distance. High cultural distance significantly affects the costs of various transactions performed by organizations operating within a culture with a high cultural distance.

Considering that most individual identities are formed by participating in diverse businesses within the social paradigm, most topics of consulting agendas - regarding cultural distance - were aimed at analyzing the distance as a factor which forms new cross-cultural patterns in the line of business.

Management practices are culturally specific; investors, therefore, prefer to choose culturally, even linguistically familiar locations. Investors do not necessarily have to select a culturally similar country, but they consider the cultural distance and the price required to control it. There is an increasing tendency to include the extent of cultural differences into the analyses, to determine the focal points at which transactions can be performed (Carleton, 1996)[1].

Revision of probable costs in each society striving to be involved in global trends (political, economic, social, cultural) is based on "asymmetrical inclusion or hierarchical integration." The current globalization process tends to exclude the majority of inhabitants on the planet, and the majority of businesses. Ways of reducing costs of this exclusion should be an essential part of the cultural due diligence (CDD) in consulting practice (Ivanic, 2015)[1] The practice includes a strategy and dynamics of providing steady returns after integration and the ways how to increase the profits compared to the losses brought by integration. Since globalization is primarily a process of regional economic integration, the dynamics of returns after the integration in regional economic integrations increasingly becomes a necessary due diligence, both on the economic and cultural level.

Within the research of gains from integration, the dynamics of returns should be taken into account. Usually, it leads to increase in the volume of trade and GDP (Gross Domestic Product- GDP) in the short term.  Period of adjustment may lead to unemployment increase. In the medium and long-term, structural changes in the economies of countries occur along with changes in the qualification structure of the workforce, whose mobility increases until the moment of creating new jobs and reducing unemployment, while the economy of scale rises in significance. Gains from integration are often divided into static and dynamic ones; static benefits are the strongest immediately before and after integration, while the dynamic prevail after a period of adjustment and growth in the long term, thereby pushing technological boundaries and contributing to growth.

Finally, globalization is the process leading to rapid satisfaction of customer demands at existing markets.  So the cultural divergence is viewed as a phenomenon demanding increased consideration by those who participate in diverse internationalization forms (foreign direct investors, exporters and those involved in value chains (Anđelić, Ivanić, & Đaković, 2012)[2] We should also consider that the changes in the last 30 years brought multinational corporations (MNCs) to the phase of saturation of markets in which they operated and that a positive and statistically significant relationship between cultural distance and international diversification of MNCs activities is established.

MNCs choose culturally different markets only when customer demands are saturated in their domestic markets or the culturally similar ones.

Cultural distance has been used to explain foreign direct investment entry mode choice (Agarwal, 1994)[3]. Cultural distance has been used to explain subsidiary ownership patterns (Barkema, Bell, & Pennings, 1996)[4]. Cultural distance may hinder the transfer of knowledge between MNE and target (Uhlenbruck, 2004).[5]

When it comes to cultural distance, most consulting agendas focus on analyzing the distance as a factor which forms new cross-cultural patterns in the line of business. What is the content of the original "cross-cultural" trends in business?

The paradigm of cultural divergence about the problems of multiculturalism offers as a solution the closing policy or a form of apartheid. According to the model of cultural divergence, globalization is viewed as a phenomenon whose real dynamics occurs within regionalization process, whereas the future of globalization is analyzed within that particular context through rivalry between different forms of regional integration.

Multicultural convergence paradigm proposes the policy of cultural assimilation, but only by a dominant group - a center which other, not so influential cultures, should gravitate towards. According to the convergence model, globalization is viewed as westernization or Americanisation. On the other hand, the hybridization paradigm, as a solution to the multiculturalism enigma, offers the policy of integration, thus forming new “cross-cultural“ patterns. (Nederveen, 2004)[6]

Understanding of culture as an essentially territorial process, was present in the works of 20th-century researchers, and it views culture as endogenous, organic, unique, belonging to the communities under analysis, as introverted and static, a part of the global mosaic and, in that respect, a part of the collection able to collide with other cultures.

Translocal culture is by no means attached to a place (no culture can exist without a place (Nederveen, 2004, str. 79)[7]). But,  it is the culture emerging as a result of the learning process with a translocal rather than the local character. It is exogenous, integrating the outsider group cultures, i.e., a diffuse culture grid, “extroverted," fluid and not static, and in that respect the culture which is not a part of the static mosaic but a flow meeting other cultures and creating the new ones.

 

[1] Nederveen, J.P., (2009)Globalization and Culture: Global Mélange; Rowman and Littlefield Publishers, https://www.amazon.com/Globalization-Culture-Jan-Nederveen-Pieterse/dp/0742556069

[2] Nederveen, J., (2004) Globalization and Culture: Global Mélange,  Rowman&Littlefield Publishers, INC, SAD; pg. 79

[1] Ivanic, V. (2015) Managing Cultural Distance; Serbia-Germany; DOI  10.13140/RG.2.2.14340.32649 https://www.researchgate.net/publication/313634087_Managing_cultural_distance_-_Serbia_and_Germany

[2]     Andjelic, G., Ivaic, V., Djakovic, V. (2012) The Impact of the EU accession process to the organizational culture of the companies operation in the transition economies; Zb. Rad. Ekon. Fak.Rijeka Vol 30, No 2, pp 295'319, https://www.efri.uniri.hr/sites/efri.hr/files/cr-collections/2/04-andjelic-2012-2.pdf

[3] Agarwal, S. (1994). Socio-cultural distance and the choice of joint ventures: A contingency perspective. Journal of International Marketing, 2/2, 63-80, https://archive.ama.org/archive/ResourceLibrary/JournalofInternationalMarketing/documents/4453042.pdf

[4] Barkema, H.G.; Bell, J.J., Pennings, J. (1996) Foreign Entry, Cultures, l Barriers, and Learning; Strategic Management Journal; Vol. 17; NO 2; pp 151-166; https://www.researchgate.net/publication/246850672_Foreign_Entry_Cultural_Barriers_and_Learning

[5] Uhlnebruck, K., (2004) Developing Acquired Foreign Subsidiaries: The Experience of MNEs in Transition Economies; Journal of International

Business Studies; Vol. 35; No. 2; pp. 109-123; https://www.jstor.org/stable/3875246

[1] Carleton, R.J. (1996) Cultural Due Diligence; Vector Group, LLC, Denver, Colorado, http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.469.2516&rep=rep1&type=pdf