Cultural Distance and Entry Mode Choice: Evidence from the North-Adriatic Area

The progressive strengthening of economic and political relations in the North-Adriatic area and their gradual formalization encouraged by the new institutional structures of Euro-regions are phenomena of central importance to the actual economic environment of the countries involved. These conditions significantly affect the strategic choices of local firms interested in penetrating the other markets of the area. In spite of the geographical proximity between Italy, Austria, Slovenia and Croatia, cultural differences still act as relevant determinants in leading foreign investment strategies. The aim of this study is to investigate the role played by cultural distance between Italy and Austria, Slovenia and Croatia, in influencing entry mode choices and strategies followed by companies of the North-eastern Italian region of Friuli-Venezia Giulia. The study was undertaken during the period January to December 2007 and involved the submission of a questionnaire to a sample of 129 companies. Multiple statistical analysis were used in this study. These procedures include exploratory factor analysis and Structural Equation Modelling (SEM).