Cultural Distance Assignment

Topics: Arithmetic mean, Variance, Probability theory Pages: 3 (918 words) Published: November 17, 2013
1. What is the formula developed by Kogut and Singh in 1988 in the Journal of International Business Studies (JIBS)? Explain the formula in your own words.

〖CD〗_j=∑_(i=1)^4▒{ (I_ij-I_iDE )^2/V_i}/4

CDj is the cultural distance between the host country and the home country (in this case Germany). The I’s are the scores on the ith cultural dimensions from Hofstede, so in this case the four scores for PD, UAV, IND and MAS. Vi is the variance of the score of this dimensions. The variances for all dimensions can be calculated in excel.

2. What is the difference between mean and variance? Can you explain the example given in the lecture in your own words?
The mean is a weighted average of the possible values a certain variable can take. The mean provides the long-run average of a variable. The variance of a variable measures the spread or variability of the distribution. The example given in the lecture can be explained like this: if the mean increases, the graph moves to the right, because a higher mean is a higher average. Increase in variance however, does not makes the graph move, but it changes the shape of the graph. This is due to the fact that the values of the graph become more spread, as a result of the variance increase.

3. Calculate the distance on each dimension between Germany (our home country) and a specific host country using the Excel program.
The host country we chose is Mexico.
The distances between Germany and this host country on each dimension are: PD 46
UAV 17
IND -37

4. The Kogut-Singh index of cultural distance also contains the variance of each dimension. Answer the following questions:
a. In the bottom row of the columns you will find the variance for each culture dimension. What dimension has the highest variance?
The Individualism/Collectivism (IND) dimension is the dimension with the highest variance. b. What does a high variance mean?
That there is high variation in the values included in the...
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