An improvement to Kogut and Singh measure of cultural distance considering the relationship among different dimensions of culture

National cultural distance construct has wide-spread use in the international business literature, with many applications. Despite its limitations as summarized by Shenkar (2001), the method in Kogut and Singh (1988) is commonly adopted by researchers to measure cultural distance. This article demonstrates that this method is a special case of the distance measure in Mahalanobis (1936) under the assumption of zero covariances between different dimensions of culture. Further, it demonstrates that this assumption is not valid for several cultural dimensions of countries measured by Hofstede (1980), and suggests a simple modification to the method that corrects for this invalid assumption, and hence produces more accurate measures of cultural distance. The article concludes with a comparison of cultural distances as measured by the original and the modified version of the method.

► The article provides a short overview of the use of the cultural distance construct in various applications from strategy to finance.
► It is demonstrated that the widely used cultural distance measure by Kogut and Singh is a special case of Mahalanobis, but the underlying assumptions of zero covariances are not valid.
► A modification to the Kogut and Singh measure that accounts for non-zero variances is proposed.
► The circumstances under which the original Kogut and Singh measure would under- or over-estimate the cultural distance, as well as the size of these deviations, are described.