Food Culture Distance as a Predictor of Foreign Market Selection: The Case of Swedish Food Exporters

Abstract

The purpose of this article is to examine the impact of dissimilarity in food culture, “food culture distance,” as a predictor of foreign market selection by food exporters. The sample for this study consisted of 96 export ventures by Swedish food companies in 27 international markets. A composite index of the construct food culture distance was calculated and used as a predictor of foreign market attractiveness for food exporters. The findings indicate that food culture distance does positively impact the attractiveness of a foreign market for food exporters, implying that the greater the perceived distance in terms of food culture, the more attractive is the market for food exporters to enter.

Keywords:

• food culture
• food industry
• internationalization
• market selection
• psychic distance

Notes

¹Examples of entry modes are exporting, selling via agent, sales subsidiary, and production subsidiary (Johanson & Vahlne, 1977).

²According to Barney (1991), a firm's strategically relevant resources are those attributes of a firm's resources that enable a firm to implement strategies that improve its performance. Assets, capabilities, organizational processes, information, and technology are examples of these resources (Barney, 1991).

³According to SME's definition recommended by European Commission (2003), an enterprise qualifies as an SME if the number of its staff is less than 250.

⁴A natural logarithm transformation was used to correct the highly skewed and kurtotic distribution of trade flow among the countries. This method was used in previous research (e.g., Dow, 2000; Dow & Karunaratha, 2006; Malhotra et al., 2009).

⁵Trade flow in this study corresponds to Sweden's total export value (in Swedish krona) of food products (including beverages) between 2007 and 2009 to nominated markets. Data were obtained from Statistics Sweden (2011).

⁶Data for GDP (constant 2000 US$) were obtained from World Bank (2011).

⁷Geographical distance was calculated in terms of actual distance in kilometers between the capitals of the acquiring country (Sweden) and the target country j. The distance in kilometers was obtained from Geobytes Databases (2010). This approach is consistent with previous research (Brock et al., 2011; Malhotra et al., 2009).

⁸Results from the multicollinearity test indicated that the tolerance value for the dimension fundamental food style (i ₁) was less than 0.10, which is an indication for multicollinearity (Hair Jr. et al., 2010). Accordingly, i ₁ was highly correlated with the dimension drinking preferences (i ₅). To address this issue and bring multicollinearity within acceptable levels, model 2 was regressed without i ₁ (Hair Jr. et al., 2010). The results were quite similar to the original model, i.e., i ₂ and i ₃ positively influenced foreign market attractiveness while i ₄ influenced negatively the attractiveness of a foreign market for food exporters. Moreover, R ² equaled approximately 73%.

⁹It should be noted that R ² value increases when the number of (independent) variables in the model increases (Hair Jr. et al., 2010). Therefore, after removing the nonsignificant dimensions (i ₅ and i ₆) in model 2, the model was tested again against the dependent variable, which resulted in quite similar R ² (≈75%).

¹⁰It is noteworthy that both Evans and Mavondo (2002) and Evans et al. (2008) studied non-food companies. Therefore, the current study supports their findings even in the context of the food sector.