Transnational organisational fields and revealed comparative advantage: Conceptualising distance as a field

Abstract

Understanding distance and how it functions is critical for international business research. Anchored on the theoretical work arguing that business should be conceptualised as taking place in institutional fields, this study contributes to the distance debate which seeks to extend the conceptualisation of distance beyond the dyadic view. I argue that the dyadic conceptualisation of distance is inadequate to explain organisational outcomes in transnational organisational fields. The field theory suggests that actors exist within a field or social space, where they are oriented towards one another over a common issue or goal. Therefore, this study broadens the conceptualisation of distance from the prevalent dyadic view towards a field perspective. To test and explain the conceptualisation of distance in a field perspective, I developed a novel construct, called the ‘transnational distance field’. The proposed construct is anchored on the CAGE distance framework and the field theory. The usefulness of the transnational distance field construct was tested at the national level by looking at country performance in a global value chain, namely for the food and beverage sector. In each country’s food and beverage global value chain, all the CAGE distance dimensions were determined for all its customer and supplier countries. Their relationship with the revealed comparative advantage (RCA) of the country in that sector was then tested. The outcome of the study provided evidence that distance indeed functions as a field. Particularly relationships with customers are sensitive to distance indicators: The evidence showed that the cultural distance diversity of customer countries is positively correlated and their economic distance diversity in terms of income level groups negatively correlated to RCA. Both these relationships were also shown to be moderated by the administrative membership of customer countries to regional trade blocs. The only supported supplier related hypothesis was of the positive relationship between administrative membership of supplier countries to regional trade blocs and RCA. In summary, the field conceptualisation was shown to function counter-intuitively in that greater diversity is positive and not negative. The results of this study justified the argument for the need to broaden our conceptualisation of distance in international business from a dyadic view to a field perspective. This outcome agrees with a recent study that proposed the use of a diversity framework as an alternative approach to studying distance phenomena involving more than two entities. This study will assist firms and policy makers to formulate optimised strategic responses to various distance diversities in transnational fields.