Empresas

Cultural Distance and Internationalization: The World’s
Largest Food and Drink Multinationals
Fragkiskos Filippaios
Kent Business School, University of Kent, Canterbury, Kent, CT2 7PE, United Kingdom.
E-mail: f.filippaios@kent.ac.uk
Ruth Rama
Department of Economics, CCHS-CSIC (Spanish National Research Council), Albasanz 26-28,
Madrid 28037, Spain. E-mail: ruth.rama@cchs.csic.es
ABSTRACT

Theauthors analyze the expansion of the world’s largest food and beverage multinational enterprises
(hereafter, F & B MNEs) over 1996–2002 using a database that provides detailed information on the
location and activities of more than 8,000 affiliates. The research provides abundant empirical support
to the view that F & B MNEs operate on a worldwide scale and although their share of foreign to totalaffiliates is lower than in the average MNE they have a wide country spread. The great physical
dispersion of the F & B MNEs’ assets, however, does not necessarily imply expansion to cultural distant
areas. World leaders in this industry are more likely to expand their operations to countries that display
cultural characteristics similar to those of the home country. The authors observe differencesconcerning
cultural distance among different companies. Western F & B MNEs seem more culturally rooted than
Japanese ones, probably owing to differences in the product mix and the activities developed by the
companies. A comparison of 1996, 2000, and 2002 data shows that F & B MNEs are gradually
expanding to increasingly unfamiliar environments. Complementary analysis of 3,507 M&A operations
involvingthe sampled MNEs between 1987 and 2003 confirms these findings. [Econ Lit classification:
F230, L660, M210]. r 2011 Wiley Periodicals, Inc.

1. INTRODUCTION

Multinational enterprises (hereafter, MNEs)1 are often attracted by specific host-countries
countries on the basis of common culture and language that could facilitate business
(Dunning, Fujita, & Yakova, 2007; Goerzen & Beamish, 2003). Bycontrast, a great
cultural distance between the home country and the host country may contribute to
hampering the internationalization of a firm as some firms’ specific advantages (FSAs) may
display a limited scope (Collinson & Rugman, 2008). Though cultural distance has been
extensively analyzed in the recent economic and management literature (for a review, see
Kirkman, Lower, & Gibson, 2006), it isstill a topic largely overlooked in the literature,
dealing more specifically with the food and beverage MNEs (hereafter, F & B MNEs). This
inquiry is, paradoxically, especially pertinent for this international industry as patterns of
food consumption vary widely around the globe (Selvanathan & Selvanathan, 2006).
According to anthropologists, diet and cooking are significant elements of the culturalmakeup (Cavusgil, Knight, & Riesenberg, 2007). Some authors argue that technology-based
durables would be the products least connected to local cultures whereas food products
would be the most connected (Verlegh, 2007). In summary, F & B MNEs manufacture and
sell products that are, to a large extent, culturally bound.
The primary focus of this study is to investigate whether cultural distanceaffects the F & B
MNEs’ pattern of international expansion. After analyzing internationalization patterns,
over the 1996–2002 period, of the world’s largest food and beverages MNEs using a database
providing detailed information on the location and activities of more than 8,000 F & B
1
‘‘A multinational enterprise is a firm that controls and manages production establishments located in at least twocountries’’ (Teece, 1985)

Agribusiness, Vol. 27 (4) 399–419 (2011)
Published online in Wiley Online Library (wileyonlinelibrary.com/journal/agr).

r 2011 Wiley Periodicals, Inc.
DOI: 10.1002/agr.20283

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400 FILIPPAIOS AND RAMA

affiliates, we test whether companies are more likely to expand their operations to countries
that display cultural characteristics similar to those of the home...