Cultural Intelligence, Firm Capabilities, and Performance: The Case of German Subsidiaries in Malaysia
Abstract
:1. Introduction
2. Literature Review and Hypotheses Development
2.1. Knowledge Transfer and Firm Performance
2.2. Innovation and Firm Performance
2.3. Knowledge Transfer, Innovation, Competitive Advantage, and Firm Performance
2.4. The Mediating Effect of Competitive Advantage
2.5. The Moderating Effects of Cultural Intelligence
3. Methodology
3.1. Sample
3.2. Measures
4. Results
4.1. Descriptive Statistics
4.2. Measurement Model Results
4.3. Hypotheses Testing
5. Discussion
6. Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
Appendix A
Constructs | Standardized Factor Loading | t-Value |
---|---|---|
Knowledge Transfer (C.R. = 0.9328) | ||
Indicator #1: The company saves and renews important information onto the computer for easy browsing | 0.7880 | 17.394 |
#2: Knowledge is categorized in the database for use by all company employees | 0.8240 | 18.392 |
#3: The company saves important information through words, pictures in the computer systems | 0.7800 | 17.371 |
#4: Employees use e-mail or internal network to share their knowledge with others | 0.7940 | 17.696 |
#5: Employees are willing to share their experience and knowledge | 0.8170 | 18.772 |
#6: The company transfers employee experiences to other employees | 0.7840 | 18.106 |
#7: The company transfers effective knowledge to employees through training courses, presentations, and internal magazines | 0.7970 | 18.446 |
#8: The company always organizes employee sharing session for all employees to share their knowledge and skills | 0.7880 | 18.212 |
Innovation (C.R. = 0.9647) | ||
Indicator #1: Our company launches new products | 0.7800 | 17.471 |
#2: Our company extends numbers of product lines | 0.8520 | 19.468 |
#3: With NPD (new product development), our company enlarges new markets | 0.8370 | 19.124 |
#4: Our company launches customized products according to market demands | 0.8020 | 18.213 |
#5: Our company adopts advanced real-time process control technology | 0.7880 | 17.564 |
#6: Our company imports advanced automatic quality restriction equipment/software | 0.7700 | 17.119 |
#7: Our company imports advanced programmable equipment | 0.7870 | 17.547 |
#8: Our company engages in business process re-engineering | 0.8250 | 18.416 |
#9: Our company leads innovative distribution methods to markets | 0.8360 | 20.922 |
#10: Our company leads innovative promoting methods to markets | 0.7630 | 18.556 |
#11: Our company continually enlarges potential demand markets | 0.8300 | 20.804 |
#12: Our company continually spreads latest newsfeed to the market | 0.8380 | 21.054 |
#13: Our company adopts innovative reward systems | 0.6250 | 11.672 |
#14: Our company adopts innovative work designs | 0.7020 | 12.302 |
#15: Our company adopts innovative administration aiming at NPD | 0.8600 | 13.819 |
#16: Our company engages in organizational reconstruction for pursuing operational efficiency | 0.7870 | 13.286 |
Competitive Advantage (C.R. = 0.9484) | ||
Indicator #1: R&D of new products | 0.7540 | 15.572 |
#2: Innovative marketing techniques | 0.7710 | 16.253 |
#3: Marketing of new products/services | 0.8220 | 17.274 |
#4: Obtaining patents/copyrights | 0.8050 | 16.963 |
#5: Benchmarking best manufacturing/operating processes | 0.7950 | 17.342 |
#6: Strict products/services quality control | 0.8280 | 18.418 |
#7: Immediate resolution on customer query | 0.7610 | 16.899 |
#8: Time to time product improvements based on feedback | 0.7600 | 16.881 |
#9: Employed knowledgeable and skilled employees | 0.7520 | 15.762 |
#10: Encourages employees to take extra milestone for self-pace learning | 0.7730 | 15.592 |
#11: Provides funding for employees to enroll in professional course | 0.7230 | 14.659 |
#12: Constantly seeks new resources to enhance the products and processes | 0.7870 | 15.816 |
Cultural Intelligence (C.R. = 0.9541) | ||
Indicator #1: My company is conscious of the cultural knowledge employees will use when interacting with co-workers with different cultural backgrounds | 0.8300 | 11.525 |
#2: My company encourages employees to check the accuracy of their cultural knowledge as they interact with people from different cultures | 0.8710 | 12.250 |
#3: My company knows well the legal and economic systems of all employees from different cultures | 0.8960 | 13.792 |
#4: My company encourages employees to know the arts and values of other employees from different cultures | 0.8190 | 12.073 |
#5: My company will ensure all employees can deal with the stresses of adjusting to a culture that is new to them | 0.8510 | 12.151 |
#6: My company encourages all employees to socialize with people in a culture that is unfamiliar | 0.8350 | 11.585 |
#7: My company encourages employees to change their verbal behavior when a cross-cultural interaction requires it | 0.8140 | 9.564 |
#8: My company encourages employees to change their non-verbal behavior when a cross-cultural situation requires it | 0.8800 | 10.386 |
Firm Performance (C.R. = 0.9325) | ||
Indicator #1: Our company’s sales growth | 0.7540 | 13.512 |
#2: Our company’s profit growth | 0.7330 | 13.331 |
#3: Our company’s employee growth | 0.7410 | 13.401 |
#4: Our company has better intangible assets (resources) | 0.7170 | 11.121 |
#5: Our company has good customer satisfaction | 0.6280 | 10.687 |
#6: Our company outperforms average industry product innovation and quality | 0.7300 | 11.335 |
#7: Our company creates long term economic profits | 0.6790 | 11.523 |
#8: Our company outperforms average market returns | 0.7420 | 12.023 |
#9: Our company has better return to shareholders | 0.7380 | 12.003 |
#10: Our company has better residual income | 0.7020 | 13.915 |
#11: Our company creates more returns than actual accounting measure | 0.7830 | 14.190 |
#12: Our company has better cash flow return on investment | 0.8210 | 14.367 |
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LV | M | SD | KT | Inn | CA | CI | FP |
---|---|---|---|---|---|---|---|
KT | 4.3887 | 0.3816 | 1.000 | 0.537 *** | 0.427 *** | 0.382 *** | 0.358 *** |
Inn | 4.3317 | 0.3434 | 1.000 | 0.596 *** | 0.608 *** | 0.463 *** | |
CA | 4.3665 | 0.3282 | 1.000 | 0.474 *** | 0.422 *** | ||
CI | 4.3689 | 0.3431 | 1.000 | 0.452 *** | |||
FP | 4.2072 | 0.3819 | 1.000 |
Latent Construct | Average Variance Extracted (AVE) | Composite Reliability (CR) | Cronbach’s Alpha |
---|---|---|---|
KT | 0.7965 | 0.9328 | 0.837 |
Inn | 0.7926 | 0.9647 | 0.876 |
CA | 0.7776 | 0.9484 | 0.838 |
CI | 0.8495 | 0.9541 | 0.802 |
FP | 0.7307 | 0.9325 | 0.821 |
Hypothesized Relationships | Standardized Estimates | t-Values | Hypothesis Supported |
---|---|---|---|
H1: Knowledge Transfer → Competitive Advantage | 0.118 * | 2.291 | Supported |
H2: Innovation → Competitive Advantage | 0.657 *** | 8.055 | Supported |
H3: Competitive Advantage → Firm Performance | 0.543 *** | 7.719 | Supported |
Squared Multiple Correlations: | |||
Comparative Advantage | 0.530 | ||
Firm Performance | 0.295 | ||
Model Fit Statistics: | |||
CMIN = 1.379, CFI = 0.926, IFI = 0.927, RMSEA = 0.038 |
Relationships | Direct Effect | Indirect Effect | p-Value | Conclusion |
---|---|---|---|---|
H4: Knowledge Transfer → Competitive Advantage → Firm Performance | 0.137 (2.650) | 0.090 (2.063) | <0.008 | Partial Mediation |
H5: Innovation → Competitive Advantage → Firm Performance | 0.323 (3.445) | 0.692 (7.965) | <0.000 | Partial Mediation |
Hypothesis | Path | Standard Error | t-Value | p-Value | Result |
---|---|---|---|---|---|
H6 | Cultural Intelligence → Knowledge Transfer → Competitive Advantage → Firm Performance | 0.040 | 7.905 | *** | Supported |
H7 | Cultural Intelligence →Innovation → Competitive Advantage → Firm Performance | 0.043 | 2.606 | 0.009 ** | Supported |
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Cortes, B.S.; Ooi, Z. Cultural Intelligence, Firm Capabilities, and Performance: The Case of German Subsidiaries in Malaysia. Businesses 2023, 3, 460-474. https://doi.org/10.3390/businesses3030028
Cortes BS, Ooi Z. Cultural Intelligence, Firm Capabilities, and Performance: The Case of German Subsidiaries in Malaysia. Businesses. 2023; 3(3):460-474. https://doi.org/10.3390/businesses3030028
Chicago/Turabian StyleCortes, Bienvenido S., and Zhengyao Ooi. 2023. "Cultural Intelligence, Firm Capabilities, and Performance: The Case of German Subsidiaries in Malaysia" Businesses 3, no. 3: 460-474. https://doi.org/10.3390/businesses3030028