Based on research by Yan Anthea Zhang, Yu Li & Wei Shi

• Expanding into foreign markets is tempting, but strategic fit can determine success or disaster. 
• Three company characteristics strongly affect the fate of expansion into a distant or culturally different country: age, size, and state versus private ownership.
• Paradoxically, firms with the resources to handle geographical distance lack the resources to manage cultural distance — and vice versa.

You built your business from the ground up, patiently finding techniques and products that work, carefully crafting solid bonds with your clients. Then one day a new project, opportunity or simple request poses a question: Is it time to branch out overseas?

Of the welter of questions to consider, the first and most important involves location: not just the physical location of the prospective expansion site, but the cultural differences between a firm’s home country and its new destination. Secondly, key company traits need to be considered in choosing the investment locations. Is your firm large or small? Young or old? Finally, of pivotal importance to companies outside the United States: Is your company privately held or state-owned?  

In a recent paper, Rice Business professor Yan Anthea Zhang looked closely at these three variables with Yu Li of the University of International Business and Economics Business School in Beijing, China and Wei Shi of the Miami Business School at the University of Miami. What, the researchers wanted to know, was the relation of these three features and firms’ location choices for their overseas investments? 

To find out, Zhang and her colleagues analyzed 7,491 Chinese firms that had recently ventured into foreign markets with 9,558 overseas subsidiaries. Because China now has become the world’s leading source of foreign direct investments, the sample promised to be instructive. Thanks to the large sample size, researchers could test hypotheses relating to firm size, age, ownership and the impact of geographical and cultural distance on their location choices. 

After studying the elements of geographic distance and cultural distance, Zhang and her colleagues uncovered a paradox. Companies that had an advantage in tackling one dimension of distance were actually disadvantaged — because of the same characteristic — in another dimension.

How, exactly, did this paradox work? Larger firms, with access to more resources, can “experiment with new strategies, new products, and new markets,” the researchers wrote. This large size makes geographic distance less of a concern, but it comes with a ponderous burden of its own. Company culture is directly influenced by the country of origin, Zhang wrote. Transferring that culture into a completely different environment can cause the kind of shock that could lead to failure, even with financial and physical resources to ease the geographical distance. Conversely, smaller firms may be more nimble and able to adapt to needed cultural changes — but lack the resources to make true inroads in a foreign market. 

A similar paradox exists for older and younger firms, Zhang wrote. A younger firm is more likely to adapt to a culturally distant country than an older firm might, even if that youth means that geographical distance is a greater logistical challenge. 

State-owned firms face a similar paradox, one that comes down to the balance of resources against cultural flexibility. A company with state-generated resources may be better equipped to move a caravan people, machinery and materials to a distant new location. However, state-owned companies often typically lack the internal cultural flexibility to handle expansion to a different environment. 

What does this mean for the average manager? Simply that going global demands meticulous weighing of factors. Does your firm have the practical resources to expand overseas? Does your staff have the personal flexibility and willingness to meld company culture with that of a different milieu? It’s a truism that major overseas expansions require money and heavy lifting. Less obviously, managers of successful companies must thread a very fine needle: ensuring they have the material resources to get their business overseas physically, while confirming that company culture is light enough on its feet to thrive in day-to-day life in a new place.

Yan Anthea Zhang is a professor and the Fayez Sarofim Vanguard Chair of Strategy in the Jones Graduate School of Business, Rice University.

To learn more, please see: Li Y., Zhang Y.A., & Shi W. (2019). Navigating geographic and cultural distances in international expansion: The paradoxical roles of firm size, age, and ownership. Strategic Management Journal, 1-29. 

Rice University’s Jones Graduate School of Business believes executive education should be available to all levels, not just senior-level executives.

That philosophy guides the school’s upcoming executive education courses this spring, which include the Corporate Innovation Certificate, May 11-13, and B2B Marketing Strategy: A Customer-Centric Approach, June 9-10. Both courses are grounded in scientifically proven approaches in an interactive learning environment to equip participants with comprehensive and practical frameworks to achieve their goals, program leaders said.

Executive education early in careers, before bad habits are formed, empowers business professionals to not only do their job more effectively but to see how their role fits into the bigger picture, said Michael Koenig, Rice Business associate dean for innovation initiatives and executive director of the school’s executive education program.

“Markets will always go up and down, but one investment always pays long-term dividends — investment in talent development,” said Koenig, who added that the Management Incubator program completes Rice Business’ executive education leadership portfolio, which serves the needs of first-time supervisors through senior executives.

All Rice Business executive education faculty members teach full time in the MBA and Executive MBA programs and have extensive business or consulting experience. These award-winning professors’ real-world understanding and practice provide a depth of comprehension that elevates the experience for their selectively admitted students.

For more information about Rice Business degree programs and executive education, go to https://business.rice.edu.

For more information about and insights from Rice Business faculty research, visit the school’s Rice Business Wisdom website, https://business.rice.edu/wisdom.

Based on research by Marlon Mooijman, Joe Hoover, Ying Lin, Heng Ji and Morteza Dehghani

• It’s possible to predict some violent public protests by tracking social media posts on moral outrage over a triggering event.
• Violence is more likely when social network discussions include groups of like-minded participants. It’s less likely when there is a greater variety of participants.
• Overall social network traffic discussing an event does not predict potential violence, but traffic focusing on the moral wrongness of the event does, especially if it’s not challenged.

Every grade school teacher knows that student conduct can get out of hand, fast, when a group of kids eggs on one individual. Time-outs are a testimony to the power of isolating one 10-year-old from a choir of buddies.

Social media plays a role similar to a gang of hyped-up grade schoolers, providing a community that can express collective disapproval of people or events. When this disapproval has a moral cast ⁠— for example, after a police shooting or the removal of a statue ⁠— the social network’s particular characteristics are key predictors about whether that disapproval will turn violent.

There is a word for the way group support of a belief system makes it seem worth fighting for: moralization. Tracking social network activity now makes it possible to measure the chances for an individual belief to become moralized by a group ⁠— a phenomenon known as moral convergence.

In a recent study in Nature, Rice Business Professor Marlon Mooijman, then at the Kellogg School of Management, joined a team that analyzed when and how violence erupts in protests. In a series of observation and behavior experiments that mixed psychology, organizational theory and computer science, they accurately predicted how violence is influenced by group discussion of moral views on social media. 

The researchers started by studying the number and content of tweets linked to the Baltimore riots in 2015, after the death of Freddie Gray in police custody. The researchers then compared these tweets with the number of arrests in a given timeframe, using a methodology developed by Marlon Mooijman and Joe Hoover from the Brain and Creativity Institute at the University of Southern California.

To analyze the tweets responding to Gray’s death, they first separated them into two sets: Those with moral commentary and those without moral judgments.

Next, the researchers tracked whether tweets with moral content increased on days with violent protests. Violence was measured using the number of police arrests, which the researchers compared with the specific timeframes of moral tweets.

There was no major difference in the overall tweet traffic discussing Freddie Gray’s death on days with violent protests and on peaceful days. The number of moralizing tweets, however, clearly correlated with episodes of violent protests, rising to nearly double the moralizing tweets on days with no violence.

This raised a provocative question. Were morally-based tweets a response to the events of the day ⁠— or were they somehow driving the violence?

To find out, Mooijman and Hoover worked with computer scientists Ying Lin and Jeng Ji of Rensselaer Polytechnic Institute and Morteza Dehghani of the University of Southern California to develop algorithms that could establish mathematical probabilities for the results.

For every single-unit increase in moral tweets over a 4-hour period, the researchers found, there was a .25 corresponding increase in arrests.

The researchers then tried to measure the effect of similar moral views ⁠— such as a social media page with self-selected members of a similar political affiliation ⁠— had on violence during protests.

To do so, they set up a second study, which measured participant reactions to the protestors of a far-right rally in Charlottesville, Virginia in 2017. Participants ranked their level of agreement over the morality of protesting the rally.

There was a direct relationship between believing a protest action was moral, the researchers found, and finding violence at that protest acceptable. This relationship held true throughout the study, regardless of political orientation.

The researchers’ next goal was to identify the impact of exposure to people of like beliefs. To do this, participants rated their feelings when they were told that most people in the U.S. shared their views. While the intensity of participants’ moral views created the potential for violence, the researchers found, violence resulted when only actively validated by others with similar views.

Having one’s moral outrage supported by others on social media, the professors concluded, may explain the spike in violence in recent protests.

While respect for privacy remains critical, governments and law enforcement can use the social media trend to pinpoint the moments when moral outrage can turn deadly. Perhaps most importantly, however, the research also suggests practical tactics for calming violent tendencies before they get out of control. To reduce real-life protest violence, they wrote, it’s critical that social media sites include a variety of voices. It’s another reason, if any were needed, that a bit of judicious exposure to other views is healthy for everyone.

Marlon Mooijman is an Assistant Professor of Organizational Behavior. He teaches in the undergraduate business minor program and MBA full-time program.

To learn more, please see: Mooijman, M., Hoover, J., Lin, Y., Ji, H., & Dehghani, M. (2018). Moralization in social networks and the emergence of violence during protests. Nature Human Behavior, 2, 389-396.

As the climate debate heats up ahead of the 2020 elections, the country’s oil and gas companies want to get in front of the curve. But they may be hampered by a longstanding culture of playing defense, according to an energy industry expert at Rice University’s Jones Graduate School of Business.

Bill Arnold, professor in the practice of energy management at Rice Business and a former energy industry executive, is available to comment on the issues at play at the intersection of corporate interests and culture and public policy.

“The oil and gas companies want to get ahead of the curve but want to avoid claims of greenwashing, so their investments in renewables, both research and operations, are more bite-sized,” Arnold said. “Of course, that generates criticism by contrasting tens of millions of dollars of investments for renewables against hundreds of millions and billions for oil and gas. The majors have a record of falling into defensive mode when criticized, and it’s built into the DNA of many older executives. But this is being challenged by their own younger employees as well as activists.”

The European majors came under pressure from ethical investors and environmentalists earlier than their U.S. counterparts and should be positioned better to deal with environmental challenges, Arnold said.

“A number of majors, European and U.S., made big commitments in research — Exxon Mobil with algae in the hundreds of millions of dollars — or operations — Shell in wind energy in West Virginia — without being able to commercialize or generate adequate returns,” Arnold said. “Carbon capture and storage is a silver bullet that’s still far from commercial at scale.”

Arnold added that the skill sets of Big Oil are in geosciences and mechanical engineering, not so much electrical engineering. “The most adaptable skill is project management, where the majors routinely have made multibillion-dollar commitments,” he said. “This could lend itself to large offshore wind projects that can build on offshore exploration.”

Arnold stressed, “There’s a huge gap in what is believed to be feasible over a 20-year period. The majors lay out their view of energy transitions in their scenarios and forecasts. They see continuing rapid decline of coal and, in the U.S., nuclear power. They accept that oil is likely to plateau in a couple of decades, but that natural gas plays a critical role in the transition. The great pressure on that comes from methane emissions, which is a complex issue.”

Rice has a VideoLink ReadyCam TV interview studio. ReadyCam is capable of transmitting broadcast-quality standard-definition and high-definition video directly to all news media organizations around the world 24/7.

To schedule an interview with Arnold, contact Jeff Falk, director of national media relations at Rice, at jfalk@rice.edu or 713-348-6775.

Follow the Jones Graduate School of Business on Twitter @Rice_Biz.

Follow Rice News and Media Relations on Twitter @RiceUNews.

We know the MBA application can seem daunting and we're here to help you. Check out these application tips from Rice Business alum Ashley John. Follow her advice when applying for the MBA and increase your chance of success: 

1. Take the GMAT/GRE early so you can shift your focus to the rest of the application and ensure you've completed each part to the best of your ability.
2. Make sure your essay truly reflects your unique perspective and voice.
3. Trust the process and remember that your application will be reviewed comprehensively, meaning that no part is more important than the others.
4. Conduct thorough research on your potential professors to make an informed choice of school for your MBA. 

Look here for more information about the Rice MBA application process.