Cultural Tightness–Looseness and International Expansion of Emerging Market Firms: A Cultural Escapism Perspective

Abstract Drawing on cultural tightness–looseness theory and institutional escapism view, this study develops a cultural escapism perspective to examine the impact of within-country cultural heterogeneity in emerging market context, specifically subnational cultural tightness–looseness, on firms’ outward foreign direct investment. Tight culture is characterized by strict social norms with low tolerance for deviant behaviors within a society. This study examines how emerging market firms navigate the constraints of cultural tightness through internationalization, such that firms located in culturally tight regions are more likely to engage in international expansion. In addition, the strength of the relationship between cultural tightness and a firm’s international expansion is contingent on government R&D subsidies and industry technological dynamism. The hypotheses are tested and supported through an analysis of Chinese listed firms during the period of 2007 to 2019. The cultural escapism perspective contributes to cultural tightness–looseness theory and international business research.