MNE Home Country Cultural Norms and Conflict Strategy Fit in Transnational Business Contract

George O. White, Old Dominion University
Stav Fainshmidt, Old Dominion University
John S. Hadjimarcou, University of Texas at El Paso
Richard A. Posthuma, University of Texas at El Paso


The increasing frequency and complexity of transnational business relationships has been commensurate with an increase in contractual disputes. In such situations, home country cultural norms will often influence how MNEs resolve contractual disputes in foreign markets. This begs the question: does fit between an MNE’s choice of conflict strategy and its home country cultural norms affect monetary payouts (costs) in transnational business contract disputes? We apply organizational imprinting theory and the fit paradigm to a model employing data from U.S. court cases involving 316 MNEs from 47 countries. We find that choosing a conflict strategy that fits home country cultural norms will result in higher monetary payouts for MNEs. Additionally, cultural distance, but not legal distance, enhances the positive relationship between MNE conflict strategy fit and monetary payouts. Implications and future research directions are discussed.