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Abstract

Enterprises engaged in international business have been playing a crucial role in international business arena and their cross-cultural competence, as a type of dynamic capability, is indispensible. However, enterprises’ cross-cultural competence (ECC) is understudied and how to measure it has not been sufficiently investigated. In the current study, we aim to develop and validate an Enterprises’ Cross-cultural Competence Scale (ECCS). Python semantic analysis was applied to segment the Internet data and interview data with 142 Chinese practitioners to develop scale items. Exploratory and confirmatory factor analysis supported the construct validity of the scale involving three dimensions: cross-cultural communication competence, cross-cultural endogenous development competence, and cross-cultural relationship management competence. The hierarchical regression analysis results indicated that enterprises’ cross-cultural competence had a positive impact on enterprise performance, which documented the concurrent predictive validity of the scale. This empirical study extends and deepens existing theoretical research on organizational cross-cultural competence and dynamic capability. We propose a new measure to systematically observe and assess enterprises’ cross-cultural competence. The three-factor competence model can serve as a basis for evaluating and promoting the cross-cultural competence of Chinese enterprises and beyond.

Keywords

Enterprises’ Cross-cultural Competence Scale cross-cultural communication cross-cultural endogenous development cross-cultural relationship management Chinese enterprises

Impasses entail transforming, transforming engenders smoothness, and smoothness ensures sustainability.—The Book of Changes

Introduction

Enterprises engaged in international business have been playing a crucial role in international business in terms of creating, transmitting, sharing, and realizing value in the world market. Most Fortune 500 companies of 2024, such as Walmart, Apple, Volkswagen, Shell, and Microsoft, are international players expanding beyond their home countries. There are also important small and medium-sized enterprises dealing with international business (Zahoor et al., 2022). Specifically, with the implementation of One Belt and One Road Initiative, more Chinese enterprises are going global such as BYD, Xiaomi, Midea, and so on. The enterprises, big or small, are highly involved in international business and trade. To fulfill the business and trade, managers and employees are dedicated to remote work and international assignment (T. Liu et al., 2025). Given the increasing global mobility and multicultural nature of the workforce (Bueechl et al., 2023), enterprises increasingly need to help boundary-spanners succeed, interact with consumers, suppliers, and partners from culturally different backgrounds (Blesa & Ripollés, 2021). Managing cultural differences has become a necessity. Successful management is rewarding for individuals (Bustamante et al., 2009) and organizations (Gu & Meng, 2022; Linna & Jaakkola, 2010; B. W. Liu, 2019). However, “cultural frictions” are inevitable (Cavusgil & Deligonul, 2024) and cultural differences and communication obstacles make organizations’ cross-cultural business activities increasingly challenging (Gaspar et al., 2023; Kersiene & Savaneviciene, 2009, p. 63) in trust developing and maintaining (Pudelko & Liu, 2020), expatriate management (T. Liu et al., 2025), and international new ventures’ expansion (Blesa & Ripollés, 2021). How can Chinese employers motivate the Mexican employees? What can Midea do to localize in the Indian market? To bridge cultural and communication gaps, enterprises engaged in international business need cross-cultural competence to realize their short-term and long-term performance, ensure sustainable development and build up internationalized corporate culture. But the study on organization’s cross-cultural competence is still limited (Van Driel & Gabrenya, 2012, p. 874). The existing literature on cross-cultural competence mainly points to individuals’ competence but the construct of enterprises’ cross-cultural competence (hereafter abbreviated as ECC) is underexplored. There has been some study on the factors of organizations’ cross-cultural competence, but some research is purely conceptual (Gu & Meng, 2022) or theoretical framework (Wu, 2008; Zhang, 2009). The extant empirical study on the related constructs’ measurement sheds much light on our study but is limited by unideal construct validity for organization’s cross-cultural competence (Van Driel & Gabrenya, 2012), measurement scope (Bustamante et al., 2009; Kumra et al., 20202; B. W. Liu, 2019; Meng & Zhao, 2019), and measurement tool (Yitmen, 2013). More convincing empirical research on the ECC construct is called for. A reliable and valid enterprises’ cross-cultural competence measure poses a challenge for the scholarship.

The dynamic capability framework (DCF) emerges as a theoretical perspective of profound relevance, especially for firms competing in global markets (Cavusgil & Deligonul, 2024). Through the dynamic capability lens, enterprises’ cross-cultural competence is the dynamic capability that they require in the changeable multi-cultural environment. But this type of dynamic capability has yet to be fully investigated.

To address the research gap, we aim to explore the construct of enterprises’ cross-cultural competence, develop a cross-cultural competence scale and provide validity evidence for it. We implemented our empirical research by means of open-ended interview and survey. The open-ended interview was administered with 142 Chinese international business practitioners. Python semantic analysis was applied to analyze the interview and Internet data to develop scale items. Exploratory, confirmatory factor analysis and regression analysis on 308 respondents’ data supported the construct and concurrent predictive validity of the scale.

Theoretical Basis

The dynamic capability view (DCV; Pitelis, 2022) or dynamic capabilities framework (DCF; Cavusgil & Deligonul, 2024) or dynamic capabilities paradigm (Verbeke, 2022) has evolved and demonstrated its transformative insights in at least three ways (Cavusgil & Deligonul, 2024). Drawing on works on organization, evolutionary theory, and research on business history (Pitelis, 2022), DCV has been deemed as a leading theory in strategic management and recognized in the international business scholarship. According to Teece et al. (1997, p. 515), winners in the global marketplace have been firms that can demonstrate timely responsiveness and rapid and flexible product innovation, coupled with the management capability to effectively coordinate and redeploy internal and external competences. Dynamic capabilities are the firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environment so as to keep the competitive advantage which rest on their process, position, and path (Teece et al., 1997). Dynamic capability view (DCV) is a meta-theory and organizational dynamic capabilities (DCs) reside in humans and/or non-human structures, systems, processes, organizational routines, and cultures (Pitelis, 2022). The core activities of sensing, seizing, and transforming, are deemed to be very important to identify (Katkalo et al., 2010; Pitelis, 2022) and cultivate DCs (Cavusgil & Deligonul, 2024). The sensing, seizing, and transforming DCs are mobilized to create and capture value (Katkalo et al., 2010). Sensing means identifying, diagnosing, appraising, and selecting opportunities from the available and/or creating new opportunities. Seizing implies putting together an appropriability apparatus, such as barriers to entry, valuable, rare, inimitable, and non-substitutable (VRIN) resources and capabilities, and branding to capture value from opportunities. Transforming requires operating on the resource base and changing the organization so that sensing and seizing are aligned with and facilitate upgrading the productive opportunity (Pitelis, 2022, pp. 6–7). The relationship between dynamic capabilities and firm/organization performance in general, innovation, financial, job, operation, and accounting performance has been examined (Baía & Ferreira, 2024). In spite of the transformative views and status as a meta-theory, the DCV is subject to deficiencies such as the call for more conceptual, qualitative, and quantitative work including how to proxy and measure human DCs, non-human DCs, the organizational resource base, the modality, sustainable competitive advantage (SCA), and the context (Pitelis, 2022, p. 10).

Literature Review

Related Study on Enterprises’ Cross-Cultural Competence

There are different terminologies related to the construct of enterprises’ cross-cultural competence:cultural competence (Bennett, 2015; Cross et al., 1989); organizational cultural competence (Bustamante et al., 2009, p. 797; Kumra et al., 2020; Ljubica et al., 2016) ; intercultural competence (Morley & Cerdin, 2010); organizational cross-cultural competence (Kersiene & Savaneviciene, 2009; Van Driel & Gabrenya, 2012); cultural intelligence on the organizational level (Yitmen, 2013), corporates’ cross-cultural competence (Gu & Meng, 2022); and organizational CQ (Livermore et al., 2022). In the present study, we use the terminology cross-cultural competence.

Some scholars have attempted to define organization’s cross-cultural competence or related constructs. Morley and Cerdin (2010) argue that in international business arena, intercultural competence at the organizational level is associated with business success through more effective management of business operations in the diverse range of host locations. This argument points out the result and means of realizing the competence, but the components of the competence are not elaborated. Kersiene and Savaneviciene (2009) study organizational competence from the cross-cultural perspective and define it as “the whole complex of particular organization systems and employees’ characteristics ensuring successful activity of an organization in different cultures.” Both the organization and individuals’ characteristics are taken into consideration in this definition. The successful performance of the organization is also a key indicator of the competence. Based on a literature review, Kersiene and Savaneviciene argue that three abilities are critical to organizational cross-cultural competence: ability to adapt in different cultural environment; ability to absorb, spread, and create knowledge; ability to execute successful international assignments. Cross et al. (1989) and Bennett (2015) both hold that cultural competence refers to a congruent set of behaviors, attitudes, strategies or policies of a agency, institution or an individual to facilitate their efficient work in cross-cultural situation. Bustamante et al. (2009, p. 797) also think that organizational cultural competence refers to an organization’s ability to perform effectively in cross-cultural situations through a congruent set of behaviors, attitudes, and policies. Based on the definition, they propose a definition of schoolwide cultural competence: how well a school’s policies, programs, practices, artifacts, and rituals reflect the needs and experiences of diverse groups in the school and outer school community. A 33-item Schoolwide Cultural Competence Observation Checklist (SCCOC) was then developed. Cross et al. (1989), Bennett (2015), and Bustamante et al. (2009) all agree that efficiency or effectiveness is the benchmark of organizations’ cultural competence and complex factors are involved such as behaviors, attitudes, strategies or policies, programs, practices, artifacts, and even rituals. From Yitmen’s (2013) point of view, cultural intelligence (CQ) on the organizational level is an organization’s capacity to reconfigure its capability to function and manage effectively in culturally diverse environments and to gain and sustain its competitive advantages. Livermore et al. (2022) hold that organizational CQ is a firm’s capability to function effectively in a complex and unpredictable multicultural world.

Although some factors of organization’s cross-cultural competence are mentioned in the definitions above (Bennett, 2015; Bustamante et al., 2009; Cross et al., 1989; Kersiene & Savaneviciene, 2009), the research on factors of enterprises’ cross-cultural competence is limited. The following related conceptual and empirical study illuminates our research. Many contributions have been made on conceptual exploration. B. W. Liu (2019) proposes a model of enterprise intercultural absorptive capacity involving four dimensions: recognition, digestion, integration, and continuous innovation ability. Meng and Zhao (2019) hold a similar opinion on the four dimensions of intercultural absorptive capacity and examine its role in knowledge transfer during international M&A. Basing on the literature review on individuals’ cross-cultural competence, Gu and Meng (2022) conclude that four dimensions are involved in corporate cross-cultural competence: knowledge, skill, emotion, and implementation. Wu (2008) proposes a theoretical model of enterprise intercultural competence including employee management, marketing operation, public relations, and commerce cooperation. He further puts forth an evaluation system for the competence and argues that three factors influence the competence: cultural sensitivity, cultural tolerance, and cultural learning. Zhang (2009) examines the construct of enterprise cross-cultural competence from three layers: outer, middle, and inner layer. The competences involved in the outer layer are cross-cultural adaptability and response. Cross-cultural market forces, business collaboration, and staff management are included in the middle layer. The inner layer encapsulates cross-cultural learning, cohesion, and innovation competence. According to Livermore et al. (2022), organizational CQ is a dynamic system involving organizational CQ drive, strategy, knowledge and action which work interactively.

In the realm of empirical research, Van Driel and Gabrenya (2012) attempt to explore the possibility of assessing American military organization’s cross-cultural competence with individual-level data gathered by CQS (Cultural Intelligence Scale, including four components of meta-cognitive, cognitive, motivational, and behavioral CQ) and organization’s cross-cultural performance scale. But Organizational CQ is more than the aggregate intelligence of an organization’s members (Livermore et al., 2022). In addition, their study only provides partial support for the hypothesized four-factor structure of organization’s cross-cultural competence. Only a three-component structure (behavioral, cognitive, and motivational component) emerges in the first study and two-component structure is identified in the second study (organizational cultural knowledge and organizational actions to obtain, manage, and use cultural knowledge) . Kumra et al. (2020) hold that the primary care organizational cultural competence is composed of the strategic efforts made on a system’s level to meet the needs of employees and patients of diverse backgrounds. The items of their organizational cultural competence are adapted from the NQF-endorsed fields (National Quality Forum). Specifically, the items cover issues such as senior managers’ recruiting, retaining, and promoting diverse staff, diverse leadership, cooperating with the community in terms of cultural differences, recognizing and rewarding culturally sensitive care, planning for patients’ cultural concerns and providing cross-cultural training. So the items concentrate on cross-cultural human resource management (HRM) and marketing. Ljubica et al. (2016) argue that organization’s cultural competence (OC) is manifested by expatriates’ managerial role, intra-organizational conflict management, knowledge transfer, control, motivating, and communication system development. In addition, the organizational development is realized by OC through stated policies, procedures, adopting, adapting, creating, and implementing new and innovative ways of management. In conclusion, the factors of OC involve culturally competent managers and their roles in cross-cultural management: institutionalized cross-cultural policies and flexible and innovative cross-cultural HRM practice. Items in the School-Wide Cultural Competence Observation Checklist (SCCOC) cover the domains of school mission/vision, curriculum, student interaction and leadership, teachers, teaching and learning, parents and outer community, conflict management and assessment (Bustamante et al., 2009).

To sum up, there has been some study on the factors of organizations’ cross-cultural competence, but the existing work deserves reconsideration. Gu and Meng’s (2022) argument on the components of the construct is based on the study on individuals’ cross-cultural competence and “purely conceptual” (Gu & Meng, 2022) and the model’s robustness needs support of empirical evidence. Wu (2008) and Zhang’s (2009) study are theoretical frameworks, which might lack the support of empirical evidence. In B. W. Liu (2019) and Meng and Zhao (2019)’s study, the construct of enterprise intercultural absorptive capacity focuses more on the process of intercultural knowledge transfer and it might not explain the construct of enterprises’ cross-cultural competence. Van Driel and Gabrenya’s (2012) empirical research is limited by construct validity. The scope of School-Wide Cultural Competence Observation Checklist (SCCOC) doesn’t focus on enterprises’ cross-cultural competence.

In addition, how to gauge the construct has yet to be fully investigated. Yitmen (2013) attempts to measure organizational cultural intelligence with the scale developed on the basis of Teece’s dynamic capability framework. The construct is measured with three dimensions: process capability (involving cross-cultural coordination/integration, organizational learning, cross-cultural reconfiguration), position capability (including cross-cultural managerial, competitive, and structural), and path capability (encapsulating cross-cultural initiation, experience, and resource fungibility). In Yitmen’s opinion, organizational cultural intelligence or organizational cross cultural dynamic capability is not equal to the organization’s cross-cultural competence, which is assessed by the 6-item INCA (intercultural competence assessment) tool in his study. However, whether it is feasible to apply an individual-level tool to measure an organization’s cross-cultural competence deserves reconsideration. Kumra et al.’s (2020) Organizational Cultural Competence Scale is an encouraging attempt but the items are developed for the primary care scenario. Bustamante et al.’s (2009) study caters for school’s cultural competence. Although the items provide insights into organizational cultural competence, they might not fully and precisely reflect enterprises’ cross-cultural competence required by international business.

To conclude, it is necessary to revisit the factors of enterprises’ cross-cultural competence (ECC) with empirical evidence support. In addition, an observation checklist for assessing ECC might be a meaningful and feasible research, so the authors attempt to develop and validate an Enterprises’ Cross-cultural Competence Scale (hereafter abbreviated as ECCS) to expand the existing study.

Enterprises’ Performance

The existing research on enterprises’ performance is mainly about the assessment system and the construct’s relationship with other variables including DCs (Baía & Ferreira, 2024). Indicators of enterprises’ performance include accounting, market, and composite indicator. The accounting and market indicators are called objective indicators. For example, Lu and Beamish (2004) introduce ROS and Tobin’s Q value as performance measurement to explore the relationship between international diversification and firm performance. The composite indicator involves objective and subjective data such as client satisfaction, staff satisfaction, brand recognition and reputation, management efficiency, and innovation capability. For researchers, the objective data is hard to be obtained and the subjective data is often limited in terms of accuracy and authenticity. Nevertheless, the subjective data is applied in some research. Mu et al. (2018) collect subjective data with a survey (376 valid responses) and research how outside-in marketing capability and strategic flexibility eventually influence firm performance. X. J. Zhou (2018) implements her research with financial controllers in the state-owned enterprise and examines the influence of non-financial indicators upon enterprise performance. Fang and Wu (2020) explore and verify the association among relationship resource, E-commerce competence, and enterprise performance, which is assessed with subjective data collected by comparison with main competitors of the same industry to reflect the enterprise’s financial performance. Z. H. Wang (2013) introduces long-term and short-term indicators to assess the foreign trade enterprises’ performance. The indicators on long-term performance include corporate image, environmental protection performance, staff learning and growth, new products development, and enterprises’ adaptability. The short-term performance indicators involve financial performance and delivery speed. The performance data is collected through survey on the enterprises. Most researchers introduce the composite indicator, namely, the combination of objective/financial and subjective/non-financial indicators. After Geringer and Hebert (1991) investigate joint ventures’ performance measurement indicators, they conclude that either the financial indicator or subjective data is very limited in assessing performance. Since benefits can be transferred within joint ventures by means of investment and M&A, only financial indicator is not sufficient to represent the joint venture’s performance level. A combination of financial indicator and subjective data could be a better solution. Brouthers (2013) examines the relationship between choice of entry mode into foreign market and enterprise performance and argues that either financial indicators or non-financial ones are not good measures of performance, and the integration of the two indicators is an ideal solution. The non-financial data is obtained through interviews, follow-ups, and questionnaires. According to Van der Stede et al.’s (2006) study, the more measurement indicators introduced by a company, the better the company’s performance result. In addition, composite performance indicators should be chosen in line with the company’s economic background and its inner conditions. Gregory et al. (2017) examine the influence of exporting companies’ E-commerce competence upon their exporting performance, which is assessed with objective and subjective data. Subjective data is measured in terms of whether the company’s routine strategic goals are realized. The objective indicator is the percentage of export sales in total sales over the past 3 fiscal years. Basing on enterprise’s economic background, Bei and Wang (2004) examine the factors influencing performance and build up a composite performance assessment system including financial, asset management, human resource management, and corporate culture. X. J. Wang and Li (2014) integrate E-commerce service enterprises’ features with performance indicators of traditional service enterprises and establish an indicator system including five dimensions: internal operating capabilities, customer service, financial capabilities, enterprise learning and growth and collaborative innovation competence. The literature review indicates that the composite indicator is better solution to enterprise performance. But limited by our access to enterprises’ real financial data, we attempted to obtain the performance data with survey on the enterprise.

The Scale Development Process

Practitioners Interview and Internet Data Collection

To develop an Enterprises’ Cross-cultural Competence Scale, we firstly implemented an open-ended interview among 142 international business practitioners (76 females, 66 males). We designed an interview question: “To gain more international business and operate successfully in international market, what abilities do Chinese enterprises need?” The practitioners were requested to think about the question for a week and write down their opinions in a WROD document.

We also gathered data from the Internet to triangulate the data needed for the Python semantic analysis. Articles, news, and degree thesis relevant to enterprises’ cross-cultural competence were collected and included in the Internet data.

Python Semantic Analysis

The interview and the Internet data, involving about 80,000 Chinese characters, constituted the data for semantic analysis. Two attempts were made to extract key words. In the first attempt, we used the jieba tokenizer library in Python to perform full mode word segmentation to segment all possible words and phrases in the text material. Then word frequency statistical analysis was made basing on the segmented words and the frequency was sorted in descending order. Finally, we analyzed the weights of the top 30 words to obtain the result and saved the result as a CSV file. The results showed that the extracted key words were not ideal for semantic analysis. In the first place, the frequency of meaningless and unrepresentative key words was too high and ideal key words were not extracted. In the second place, there were divergent differences between the key words extracted from Internet data and interview data. Because the result of the first attempt was not satisfactory, we tried extracting the key words of the Internet and interview data separately.

In the second attempt, we created a stop word list and a personal word list respectively for the two data sources. Firstly, a stop word list was established on the basis of the weight ranking in the CSV file. Then a personal word list was created with the words that appeared frequently in the text materials. Next, the text materials were segmented with the stop word list and personal word list. When the segmentation program encountered stop words, it would ignore and exclude them from the results, while when it encountered personal words, it would include them in the key words accordingly. For example, in the first attempt, the segmentation program would split the phrase “cross-cultural collaboration ability” into individual words but when “cross-cultural collaboration ability” was added to the personal word list in the second attempt, the program kept it as a whole.

The second segmentation results were used for word frequency statistics and weight ranking, and the results were saved as CSV file. Next, appropriate modifications to the word lists were made according to the weight results of the second segmentation. The final segmentation was performed by using the modified lists. The following flow diagram illustrates the procedure of the segmentation process (Figure 1).

Figure 1.

Flow diagram on segmentation process.

Two tables are used to list the semantic analysis results. Table 1 lists the results of the Internet data and Table 2 demonstrates those of the interview data. In Table 1, the top 10 words or phrases are cross-culture, cultural differences, cross-cultural management, value, corporate culture, cultural background, executive competence, transnational corporations, cross-cultural staff management competence and cross-cultural training.

Table 1.

Results of Semantic Analysis on the Internet Data.

Number	High-frequency words or phrases	Weight	Number	High-frequency words or phrases	Weight
1	Cross-culture	0.863	16	Globalization	0.067
2	Cultural differences	0.483	17	Multinational corporations	0.059
3	Cross-cultural management	0.352	18	Cross-cultural business coordination competence	0.059
4	Value	0.182	19	Cultural integration	0.052
5	Corporate culture	0.171	20	Market operation	0.051
6	Cultural background	0.136	21	Cooperation partners	0.046
7	Executive competence	0.115	22	Cultural communication	0.045
8	Transnational corporations	0.102	23	Management model	0.042
9	Cross-cultural staff management competence	0.094	24	Corporate image	0.042
10	Cross-cultural training	0.082	25	Cultural atmosphere	0.041
11	Cross-cultural communication	0.082	26	Cultural heterogeneity	0.041
12	Cross-cultural execution	0.082	27	Business etiquette	0.034
13	Cross-cultural market operation competence	0.071	28	Joint ventures	0.034
14	Cross-cultural public relation competence	0.071	29	Differences/otherness	0.034
15	Cultural conflicts	0.069	30	Management personnel	0.033

Table 2.

Results of Semantic Analysis on the Interview.

Number	Words or phrases	Weight	Number	Words or phrases	Weight
1	Foreign market	0.126	16	Innovation competence	0.023
2	Competitiveness	0.096	17	At home and abroad	0.021
3	Corporate culture	0.075	18	Laws and regulations	0.021
4	Internationalization	0.062	19	Market demand	0.020
5	Globalization	0.052	20	International competition	0.020
6	Risks	0.044	21	Influence	0.019
7	Product quality	0.043	22	Extremely important	0.019
8	Logistics	0.041	23	Product superiority	0.018
9	Core technology	0.033	24	Market share	0.018
10	International trade	0.032	25	Salesmen	0.018
11	Localization	0.030	26	Market survey	0.017
12	Foreign trade	0.028	27	After-sale	0.017
13	After-sale service	0.026	28	Mastery	0.017
14	Cultural differences	0.024	29	Internet	0.017
15	Popularity level	0.024	30	Brand effect	0.017

As shown in Table 2, the top 10 words or phrases of the semantic analysis results on the interview data are foreign market, competitiveness, corporate culture, internationalization, globalization, risks, product quality, logistics, core technology, and international trade. The high-frequency words and phrases highlight the features of culturally competent enterprises and shape the preliminary items for observing an enterprise’s cross-cultural competence.

Scale Development

Basing on the literature review on the relevant study on enterprises’ cross-cultural competence and the results of semantic analysis, we made a preliminary draft of Enterprises’ Cross-cultural Competence Scale including 38 items, which were framed in terms of what the practitioners observed of their enterprises’ functioning. The items were developed with three strategies. The first strategy was one item was developed from one keyword. For example, basing on Keyword No. 27 “business etiquette” in Table 1, we framed the Item A15: The enterprise pays attention to business etiquette in cross-cultural communication. The second strategy was one item was generated by several keywords. For example, basing on Keyword No. 2 “cultural differences” in Table 1, Keyword No. 29 “differences” in Table 1 and Keyword No. 14 “cultural differences” in Table 2, we developed items on the enterprises’ awareness of cultural differences and Item A1was finally retained after deleting other items with cross-loading. A1 was worded as: The enterprise adopts flexible working methods according to different cultures. In the third place, several items were generated from one keyword. For instance, Item A8 and Item A13 were developed from the Keyword No. 10 “cross-cultural training” in Table 1 (Item A8: The company provides staff with cross-cultural training on business. Item A13: The enterprise stresses staff’s foreign language training). Table 3 elaborates how the items were developed on the basis of literature review and keywords in Tables 1 and 2.

Table 3.

Item Development Rationale.

Item	Wording	Keywords number
A1	The enterprise adopts flexible working methods according to different cultures	No. 2, 26, 29 in Table 1No. 14 in Table 2
A2	The enterprise shoulders international social responsibilities	No. 14 in Table 1
A3	The enterprise knows business partners’ cultural background well	No. 6 in Table 1
A4	The company is capable of product & service innovation targeting international markets and international market exploration	No. 9, 16 in Table 2
A5	The company implements effective marketing according to different market conditions	No. 1 in Table 1
A6	The enterprise has an integrated management system and cross-cultural communication model	No. 11, 22, 23 in Table 1
A7	The enterprise has a long-term international development plan and strategy system	Literature review
A8	The company provides staff with cross-cultural training on business	No. 9, 10 in Table 1
A9	The company effectively deals with cultural crisis event	No. 3 in Table 1
A10	The company is capable of dealing with cultural changes	No. 3, 7 in Table 1
A11	The enterprise is good at cross-cultural brand communication	No. 30 in Table 2
A12	The enterprise makes full use of trading and cross-cultural communication platforms	No. 11 in Table 1No. 10, 29 in Table 2
A13	The enterprise stresses staff’s foreign language training	No. 9,10 in Table 1
A14	The enterprise is good at maintaining sound relationship with foreign business partners	No. 21 in Table 1
A15	The enterprise pays attention to business etiquette in cross-cultural communication	No. 27 in Table 1
A16	The company effectively builds up and maintain an internationalized corporate image	No. 7, 24 in Table 1
A17	The company is good at managing cultural conflicts	No. 7, 15 in Table 1
A18	The company efficiently deals with cultural affairs and issues	No. 7 in Table 1

The respondents were requested to observe the enterprise on a five-point Likert-type scale (1 = never, 2 = almost never, 3 = sometimes, 4 = almost always, and 5 = always). The original version of the scale was Chinese which was handed out to Chinese respondents. When the scale was translated into English for publication, it was back translated by three fluent English and Chinese speakers with rich expertise on business administration and scale development. All the professionals agreed that the English version was equivalent to the original Chinese version in terms of both content and format.

Analysis Strategy for Instrument Validation

Two studies were carried out to validate the ECCS. We referred to the construct validation rationale of Chen and Peng (2008) and T. Liu et al.’s (2025) study. In Study 1, we provide the evidence for the construct validity with exploratory factor analysis (EFA) and confirmatory factor analysis (CFA). In Study 2, we provide discriminant validity evidence with CFA to differentiate the two variables of analysis (independent and dependent variable). AVE and CR are introduced to demonstrate the convergent validity and internal consistency of the variables respectively. The scale’s concurrent predictive validity evidence is documented by hierarchical regression analysis with enterprises’ performance (EP) as dependant variable.

ECC can be observed and approached from different perspectives: the individual competence perspective (Gu & Meng, 2022; Van Driel & Gabrenya, 2012); the critical component perspective (Bennett, 2015; Bustamante et al., 2009; Cross et al., 1989); and the enterprise systematic operating perspective (Bustamante et al., 2009; Kersiene & Savaneviciene, 2009; Kumra et al., 2020; Ljubica et al., 2016; Wu, 2008; Zhang, 2009). In light of the literature review and semantic analysis results, it seems to us that ECC is a composite, “congruent” (Bennett, 2015; Bustamante et al., 2009; Cross et al., 1989) and systematic set of competences covering all fields of the dynamic enterprise international business activities, which are implanted in all main players’ ideas and actions (implementations), articulated by institutions and policies, and realized by programs and projects of the enterprise. The realms include international development strategy making and implementation, staff’s recruiting, training, managers’ promoting and training, new products R&D and marketing, knowledge transfer and international image building. The main players contributing to ECC are culturally competent employees and leaders, who know foreign market, culture and cultural differences well. Tangible and articulated institutions, often made and implemented by culturally competent leaders, guarantee the sustainable ECC. The ECC can be viewed as one of the dynamic capabilities “resting on distinctive processes (ways of coordinating and combing)” (Teece et al., 1997, p. 509). Interestingly, Pitelis (2022) also holds that organizational dynamic capabilities (DCs) reside in humans and/or non-human structures, systems, processes, organizational routines, and cultures. So we expect to approach the ECC from the enterprise systematic operating perspective. The internal cross-cultural core competitiveness development dimension involves staff’s recruiting, training, managers’ promoting and training, new products R&D and marketing and knowledge transfer. The activities on this dimension facilitates the formation of product, service, and intellectual asset which the enterprise features. The cross-cultural relationship management dimension involves cross-cultural staff management, internal and public relation coordination, cross-cultural risk management, and international image building. The cross-cultural communication dimension centers around staff’s communication training, the enterprise’s knowledge on the foreign market and partners, etc. Therefore we set Hypothesis 1 and attempt to confirm it in Study 1.

Hypothesis 1: The ECCS is likely to consist of multiple dimensions involving enterprises’ key cross-cultural operating activities: cross-cultural core competitiveness, cross-cultural relationship management competence and cross-cultural communication competence.

Study 1

Method

Sample

We implemented a pilot study before the formal survey. 210 international business practitioners were recruited with convenience sampling (103 females, 107 males, mean age = 39 years; SD = 0.71 years). In the formal survey, the questionnaire was handed out to 376 international business practitioners using convenience sampling via the Chinese online survey platform WJX.cn. Three hundred and eight were valid responses (127 females, 181 males, mean age = 35 years; SD = 0.78 years). Limited by time, energy and access to the adequate number of sample for each type of enterprises, we only recruited and surveyed international business practitioners whom we had access to.

Procedure

We administered a pilot study with 210 respondents. 20 items with low factor loadings or high cross-factor loadings were discarded from the initial 38 items after several EFA. Eighteen items with more than 0.5 factor loading were retained to ensure the discriminability between factors. In the formal survey, the number of 154 responses was more than 5 times of the item number, which satisfied the sample size required by EFA (Floyd & Widaman, 1995, p. 295). The 154 responses were used for EFA with SPSS18 and the remaining were applied for CFA. The principal component analysis was applied to implement the EFA. The varimax rotation method was used to increase the difference among each factor loading.

Results: Study 1

The KMO value was 0.944, the Bartlett test of sphericity was 2,096.339 and the p value was .000, signifying the fitness of EFA. Initial eigenvalue and sum of squared loading were introduced as criteria of retaining factors (Bustamante et al., 2009; T. Liu et al., 2025). Table 4 shows the extracted three factors’ initial eigenvalue and sum of squared loading. The three factors with eigenvalue more than one are retained and rotated sum of squared loading are 25.731%, 25.417%, 21.136% respectively, with a cumulative contribution rate of 72.283%. This signifies that the three factors can explain most of the latent construct, so they were retained in the EFA (Floyd & Widaman, 1995).

Table 4.

The Total Variance Explained (n = 154).

Factor	Initial Eigenvalue			Extracted sum of squared loading			Rotated sum of squared loading
	Eigen value	Variance contributions (%)	Cumulative	Eigen value	Variance contributions (%)	Cumulative	Eigen value	Variance contributions (%)	Cumulative
1	9.646	53.590	53.590	9.646	53.590	53.590	4.632	25.731	25.731
2	1.789	9.938	63.528	1.789	9.938	63.528	4.575	25.417	51.147
3	1.576	8.755	72.283	1.576	8.755	72.283	3.805	21.136	72.283

Table 5 demonstrates the rotated component matrix. Item A1, A2, A13, A15, A14, A12, and A3 are grouped into one dimension involving the enterprise’s cognition and recognition of business partners’ cultural background, emphasis on staff’s foreign language training and international business etiquette, involvement in trading and cross-cultural communication platforms, flexibility in adopting culturally different working methods, willingness to shoulder international social responsibilities and competence in maintaining sound relationship with foreign business partners. This dimension is about enterprises’ active attitude and practice in communicating with the foreign counterparts. The second dimension is about enterprises’ sensitive and active reactions to the cross-cultural environment. The reactions are reflected by the enterprise’s institutions and long-term input such as international development plan and strategy system, integrated management system and cross-cultural communication model, cross-cultural product and service innovation, brand communication, brand marketing and staff’s cross-cultural business training, which focus on the enterprises’ cultural difference-oriented endogenous development as an international player. Item A9, A16, A17, A10, and A18 belong to the third dimension on the enterprise’s flexibility and efficiency in dealing with internal and external cross-cultural relationship such as cultural conflicts and changes or shocks, cultural crisis event, and international image. This dimension reflects the enterprises’ management of cross-cultural relationship with internal and external stakeholders such as the staff, the suppliers, the government, the consumers and the public. The first factor was labeled enterprises’ cross-cultural communication competence (CCC), the second cross-cultural endogenous development competence (CEDC) and the third cross-cultural relationship management competence (CRMC).

Table 5.

Varimax Rotated Component Matrix of ECCS (n = 154).

Item	Wording	Component
		1	2	3
A1	The enterprise adopts flexible working methods according to different cultures	0.835
A2	The enterprise shoulders international social responsibilities	0.772
A13	The enterprise stresses staff’s foreign language training	0.765
A15	The enterprise pays attention to business etiquette in cross-cultural communication	0.748
A14	The enterprise is good at maintaining sound relationship with foreign business partners	0.707
A12	The enterprise makes full use of trading and cross-cultural communication platforms	0.695
A3	The enterprise knows business partners’ cultural background well	0.662
A6	The enterprise has an integrated management system and cross-cultural communication model		0.884
A11	The enterprise is good at cross-cultural brand communication		0.834
A7	The enterprise has a long-term international development plan and strategy system		0.802
A5	The company implements effective marketing according to different market conditions		0.784
A8	The company provides staff with cross-cultural training on business		0.760
A4	The company is capable of product & service innovation targeting international markets and international market exploration		0.754
A9	The company effectively deals with cultural crisis event			0.827
A16	The company effectively builds up and maintains an internationalized corporate image			0.794
A17	The company is good at managing cultural conflicts			0.779
A10	The company is capable of dealing with cultural changes			0.777
A18	The company efficiently deals with cultural affairs and issues			0.708
Eigenvalue		9.646	1.789	1.576
Variance contributions (%)		25.731	25.417	21.136

Note. ECCS = Enterprises’ Cross-cultural Competence Scale; Component 1 = cross-cultural communication competence (CCC); Component 2 = cross-cultural endogenous development competence (CEDC); Component 3 = cross-cultural relationship management competence (CRMC).

Figure 2 depicts a conceptual diagram of the three-factor model for enterprises’ cross-cultural competence (ECC).

Figure 2.

A conceptual diagram of the enterprises’ cross-cultural competence model.

We introduced Cronbach α to test the reliability of the scale (Cronbach, 1951). A reliability analysis was made on the 18 items and the scale’s Cronbach α was .941 (>0.7). The Cronbach coefficients for the three dimensions were .921 (cross-cultural communication competence), .936 (cross-cultural endogenous development competence), and .903 (cross-cultural relationship management competence) respectively (n = 154). To further validate the construct domain of enterprises’ cross-cultural competence, we performed a CFA to test the structure of the measure. Amos 24 was applied to make a CFA with the other 154 responses. We followed the modification instruction and the fitness indices were improved. Figure 3 illustrates the ECC model, in which the three dimensions are confirmed.

Figure 3.

The enterprise’s cross-cultural competence model.

Fitness indices were used to testify the construct validity of the measure (Chen & Peng, 2008; T. Liu et al., 2025; Van Driel & Gabrenya, 2012). As shown in Table 6, in the modified model, the incremental fitness index (IFI) is 0.987 (>0.9), the comparative fitness index (CFI) is 0.987 (>0.9), normal fitness index (NFI) is 0.915 (>0.9), goodness of fit index (GFI) is 0.901 (>0.9), and TruckerLewis index (TLI) is 0.984 (>0.9), signifying sound fitness degree. The root mean square error approximation (RMSEA) is 0.033 (<0.1), the value of χ²/df is 1.170 (ranging between 1 and 3). The fitness indices show that the data and the three-factor model fit well according to the index thresholds recommended by Medsker et al. (1994) and the three-dimension ECC model is stable. Hypothesis 1 is confirmed.

Table 6.

Fitness Indices of the CFA.

Model	χ²/df	IFI	CFI	NFI	GFI	TLI	RMSEA
ECC	1.170	0.987	0.987	0.915	0.901	0.984	0.033

AVE and CR were applied to test the convergent validity and internal consistency of the measure respectively. As demonstrated in Table 7, the standard estimate of the factor loading coefficients are all above 0.7. All the AVE value are above 0.5 and CRs are above 0.7. The results support the convergent validity and internal consistency of the measure.

Table 7.

Convergent Validity and Internal Consistency Evidence of ECCS.

Dimension	Item	Std estimate	AVE	CR
CEDC	A4	0.748	0.580	0.892
	A5	0.700
	A6	0.775
	A7	0.807
	A8	0.706
	A11	0.825
CCC	A1	0.799	0.627	0.922
	A2	0.793
	A3	0.727
	A12	0.841
	A13	0.779
	A14	0.780
	A15	0.819
CRMC	A9	0.800	0.586	0.87
	A10	0.742
	A16	0.811
	A17	0.749
	A18	0.720

Note. CEDC = cross-cultural endogenous development competence; CCC = cross-cultural communication competence; CRMC = cross-cultural relationship management competence.

Study 2

Study 2 is devoted to testing the concurrent predictive validity of the ECCS. Hierarchical regression analysis was executed with enterprises’ performance (EP) as dependant variable. DCV suggests that an important purpose of DCs was to effect sustainable competitive advantage (SCA) and enhance organizational performance (Katkalo et al., 2010). An organization with strong DCs can achieve supernormal returns (Katkalo et al., 2010). The key measures of SCA were long-term profitability, sales revenue, and/or productivity (Pitelis, 2022). The relationship between dynamic capability and performance has been investigated by many studies (Baía & Ferreira, 2024). In addition, many researchers argue that culturally competent organizations can attain business success (Morley & Cerdin, 2010), successful activity of an organization (Kersiene & Savaneviciene, 2009), efficient work in cross-cultural situation (Bennett, 2015; Bustamante et al., 2009; Cross et al., 1989), and organizational development and innovative management (Ljubica et al., 2016). We hold that a culturally competent enterprise is expected to obtain outstanding performance, so Hypothesis 2 is set as follows.

Hypothesis 2: Scores on ECCS will predict the scores on EP.

Linna and Jaakkola (2010) think that the management of employees from multi-cultural backgrounds and the knowledge on the cultural backgrounds of customers and partners both facilitate enterprise development. Enterprises’ cross-cultural communication competence (CCC) facilitates their sensing (identifying, diagnosing, appraising, and selecting) productive opportunities (Pitelis, 2022) and orchestrating with foreign stakeholders such as business partners, foreign employees, and public. These factors may contribute to the enterprises’ performance. Therefore Hypothesis 2 a is set as follows.

Hypothesis 2a: Scores on CCC will predict the scores on EP.

Furthermore, the long-term international development strategy and endeavors in cultural difference-oriented product and service innovation, brand communication and marketing may promote the fit between the product and the foreign market. The transforming activities can strengthen the enterprises’ SCA and ensure their position and performance in the foreign market. B. W. Liu (2019) finds out that enterprises’ intercultural absorptive capacity positively influences their M&A financial performance. Therefore enterprises’ cross-cultural endogenous development competence (CEDC) is expected to promote their performance. Hypothesis 2 b is proposed as follows.

Hypothesis 2b: Enterprises’ CEDC will predict their EP.

In the third place, if enterprises can smoothly and efficiently address internal and external cross-cultural issues, their transaction cost might be significantly lowered. Orchestrating the cross-cultural issues might mitigate the friction in cross-cultural management and ultimately lend support to the performance. Gu and Meng (2022) also point out that corporates’ cross-cultural competence has positive impact on the social capital matching, bridging, and bonding process in cross-border M&A. Therefore enterprises’ cross-cultural relationship management competence (CRMC) is anticipated to contribute to their performance. Hypothesis 2 c is proposed:

Hypothesis 2c: Scores on CRMC will predict the EP scores.

Method

Sample

376 international business practitioners were recruited using convenience sampling. The respondents completed the ECCS and EP (ECCS for one time and EP for another time after 3 months) via the Chinese online survey platform WJX.cn. Three hundred and eight were valid responses (127 females, 181 males, mean age = 35 years; SD = 0.78 years).

Instruments

Enterprises’ Cross-Cultural Competence Scale

The 18-item ECCS developed in the present study was applied to assess the respondents’ perception on their enterprises’ cross-cultural competence. The response format was a 5-point Likert scale.

Enterprises’ Performance

Z. H. Wang (2013) incorporates composite indicators to assess foreign trade enterprises’ performance. The indicators on long-term performance include five dimensions on corporate image, environmental protection performance, staff learning and growth, new products development, and enterprises’ adaptability. Two dimensions of financial performance and delivery speed are involved in the short-term performance. The 31-item EP scale is reported to have sound fitness index: the CFI for the long-term EP and short-term EP are 0.984 and 0.990 respectively (Z. H. Wang, 2013). In the present study, the subjects were requested to assess their enterprises on a 5-point Likert scale (1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, 5 = strongly agree).

Other items were also designed to measure enterprise image (EI), enterprise coordinating competence (ECC²), and employee-oriented management (EM).

Procedure

The 308 respondents’ valid data were applied in this study. Z. H. Wang’s (2013) scale on foreign trade enterprises performance (EP) was finished by the respondents, who had completed the ECCS 3 months ago. Firstly, CFI analysis was performed to confirm the structure of the EP scale. Then we provided discriminant and convergent validity evidence with CFA to differentiate the two study variables: ECC and enterprises’ performance (EP). Pearson correlations were computed among the study variables. Furthermore, we introduced latent error variable to test the common method bias (CMB). The variance inflation factor (VIF) test was also executed to diagnose multicollinearity among the independent variables. Hierarchical regression analysis was made on the enterprises’ EP (as dependent variable) and ECC (as independent variable). The EI (enterprise image), enterprise coordinating competence (ECC²), and EM (employee-oriented management) were entered as control variables in each model.

Results: Study 2

Table 8 illustrates fitness indices of long-term and short-term EP. For the long-term EP model, the IFI is 0.942 (>0.9), the CFI is 0.941 (>0.9), normal fitness index (NFI) is 0.900 (=0.9), the GFI is 0.863 (near to 0.9), and the TLI is 0.932 (>0.9), signifying sound fitness degree. The RMSEA is 0.064 (<0.1), the value of χ²/df is 2.260 (ranging between 1 and 3). The fitness indices show that the data and the model fit well and the long-term EP model is stable. For the short-term EP model, the fitness indices are 0.992, 0.992, 0.986, 0.978, and 0.983, respectively. The RMSEA is 0.069 (<0.1), the value of χ²/df is 2.448, so the data fits the short-term EP model (Medsker et al., 1994).

Table 8.

Fitness Indices of the CFA.

Model	χ²/df	IFI	CFI	NFI	GFI	TLI	RMSEA
Long-term EP	2.260	0.942	0.941	0.900	0.863	0.932	0.064
Short-term EP	2.448	0.992	0.992	0.986	0.978	0.983	0.069

Referring to the study by Zang et al. (2024) and Jeong and Jeong (2024), we further administered a CFA analysis to discriminate the two variables (ECC and EP) of analysis. The four-factor model involved CCC, CEDC, CRMC, and EP respectively, the three-factor model encapsulated CCC, CEDC combining CRMC and EP. The two-factor model included the three components of the ECC model and EP. The three components of the ECC model together with EP constituted the one-factor model. As shown in Table 9, the analysis results demonstrate that the fitness indices of the four-factor solution are better than those of any other alternative model (IFI = 0.966 > 0.9, CFI = 0.966 > 0.9, NFI = 0.922 > 0.9, GFI = 0.900 > 0.9, TLI = 0.961 > 0.9, RMSEA = 0.048 < 0.1). The results support the distinctiveness of the two variables of analysis. The discriminant validity of the two measures is confirmed. Furthermore, as shown in Table A1 in Appendix A, most of the standard estimate of the factor loading coefficients are above 0.7. All the AVE values are above 0.5 or approximating 0.5. The convergent validity of the two measures is supported. All CRs are above 0.7, so the internal consistency of the measures are justified.

Table 9.

CFA Analysis Result of the Four Models.

Model	χ²/df	IFI	CFI	NFI	GFI	TLI	RMSEA
Four-factor model	1.698	0.966	0.966	0.922	0.900	0.961	0.048
Three-factor model	3.248	0.890	0.890	0.849	0.767	0.876	0.086
Two-factor model	4.893	0.808	0.807	0.770	0.662	0.785	0.113
One-factor model	9.362	0.587	0.585	0.559	0.493	0.538	0.165

Note. The four-factor model includes CCC, CEDC, CRMC, and EP; the three-factor model involves CCC, CEDC + CRMC and EP; the two-factor model involves CCC + CEDC + CRMC and EP; the one-factor model includes CCC + CEDC + CRMC + EP.

Pearson correlation analysis was made among the variables of EP, CCC, CEDC, CCMC, EI, enterprise coordinating competence (ECC²), and EM. The association between EP and CCC, CEDC, CCMC are 0.671 (p < .01), 0.655 (p < .01), and 0.671 (p < .01) respectively, indicating strong correlation. Moderate associations are demonstrated among the three dimensions of CCC, CEDC, and CRMC (p < .01; Table 10).

Table 10.

Pearson Correlation Analysis Result (n = 308).

Variable	1	2	3	4	5	6	7
1. EP	1.000
2. CCC	.671**	1.000
3. CEDC	.655**	.615**	1.000
4. CRMC	.671**	.563**	.596**	1.000
5. EI	.342**	.178**	.182	.214**	1.000
6. ECC²	.276**	.114*	.026	.081	.439**	1.000
7. EM	.259**	.125**	.075	.126	.206**	.268**	1.000

Note. EP = enterprise performance; CCC = cross-cultural communication competence; CEDC = cross-cultural endogenous development competence; CRMC = cross-cultural relationship management competence; EI = enterprise image; ECC² = enterprise coordinating competence; EM = employee-oriented management.

p < .05, Two-tailed. **p < .01, Two-tailed.

According to Zhu and Li (2019), common method bias (CMB) refers to the inflation or deflation of the measured data compared to the true data, which may be caused by one single data source, measurement time interval, measurement context, and scale format. Most studies use Harman test to examine whether CMB has a significant impact on research results, but the reliability of the single-factor test is limited. Since the enterprises’ cross-cultural competence and enterprise performance were both reported with scale method, we incorporated latent error variable to test the CMB (Williams & Anderson, 1994; H. Zhou & Long, 2004). We incorporated latent error variable in the CIF model and calculated the changes of model fit indices, which are shown in Table 11. After incorporating the latent error variable, the changes of model fit indices in the three models are all less than 0.05 except for the change of long-term EP’s GFI: 0.06 (<0.1). The results show that CMB does not significantly influence the fitness indices and the present study is not subject to the significant influence of CMB.

Table 11.

Changes of Model Fit Indices.

Model	ΔIFI	ΔCFI	ΔNFI	ΔGFI	ΔTLI	ΔRMSEA
ECC	0.003	0.002	0.012	0.014	0.002	0.001
Long-term EP	0.044	0.045	0.046	0.060	0.050	0.032
Short-term EP	0.006	0.006	0.009	0.015	0.004	0.010

Note. ECC = enterprise cross-cultural competence; EP = enterprise performance.

Before we administered the regression analysis, we examined the variance inflation factor (VIF) of the independent and control variables. Table 12 depicts that most of the results are more than 1 but less than 10, signifying little multicollinearity problem.

Table 12.

VIF Test Results.

Variable	CCC	CEDC	CRMC	EI	ECC²	EM
VIF	1.810	1.909	1.744	1.310	1.307	1.100

Note. CCC = cross-cultural communication competence; CEDC = cross-cultural endogenous development competence; CRMC = cross-cultural relationship management competence; EI = enterprise image; ECC² = enterprise coordinating competence; EM = employee-oriented management.

As shown in Table 13 on the regression analysis results, all the ECC individual factors contribute to enterprises’ EP in Model 2, 3, and 4, so Hypothesis 2a, Hypothesis 2b, and Hypothesis 2c are supported. In Model 5, the aggregate three factors of ECC are capable of predicting enterprises’ EP best (R² = .672, b = 0.278, 0.253, 0.285, respectively). Hypothesis 2 is supported. In particular, the cross-cultural relationship management competence dimension (CRMC) has the most influence upon enterprises’ EP (b = 0.285). Next is the cross-cultural communication competence dimension (CCC) (b = 0.278). The third is cross-cultural endogenous development competence (CEDC; b = 0.253).

Table 13.

Regression Analysis Results.

Control variable	EP
	Model 1	Model 2	Model 3	Model 4	Model 5
EI	.170***	.109***	0.085**	.083**	.062*
ECC²	.079	.069*	.112***	.094**	.096***
EM	.110*	.076**	0.089**	.074**	.067**
Independent Variables
CCC		.592^***			.278^***
CEDC			.584^***		.253^***
CRMC				.579^***	.285^***
R²	.164	.527	.530	.527	.672
Adjusted R²	.156	.521	.524	.520	.665

p < .05. **p < .01. ***p < .001.

Discussion

Contributions and Implications

There exists some related research on the factors of ECC (Bennett, 2015; Bustamante et al., 2009; Cross et al., 1989; Gu & Meng, 2022; Kersiene & Savaneviciene, 2009; Kumra et al., 2020; Ljubica et al., 2016; Van Driel & Gabrenya, 2012; Wu, 2008; Zhang, 2009), but research supported by more convincing empirical evidence is called for. The present study contributes to the research on ECC factor. Specifically, we explored and confirmed the three-factor model of ECC including cross-cultural communication competence (CCC), cross-cultural endogenous development competence (CEDC), and enterprises’ cross-cultural relationship management competence (CRMC). CCC includes the enterprise’s cognition and recognition of business partners’ cultural background, emphasis on staff’s foreign language training and international business etiquette, involvement in trading and cross-cultural communication platforms, flexibility in adopting culturally different working methods, willingness to shoulder international social responsibilities and competence in maintaining sound relationship with foreign business partners. This research finding echoes the study by Ljubica et al. (2016), who incorporate communication as one of the five indicators of organizational innovation driven by organization’s cultural competence. Furthermore, in Study 2 of Van Driel and Gabrenya’s (2012) research, organizational cultural knowledge and actions performed by an organization to obtain, manage, and use cultural knowledge are the two emerging factors for the proposed organizational CQ. This finding is in line with the point of Item A3 in ECCS: cognition and recognition of business partners’ cultural background. Ziade’s (2015) research also demonstrates that incorporating culture of host nations within leadership practice and expatriate training can lead to an increase of business global leadership competencies. From the dynamic capabilities perspective, three vehicles manifest the capabilities: sensing, seizing, and transforming/reconfiguring (Pitelis, 2022). Enterprises’ CCC facilitates their “sensing” cross-cultural opportunities through cognition and recognition of business partners’ cultural background, emphasis on staff’s foreign language training and international business etiquette, and involvement in trading and cross-cultural communication platforms. Maintaining sound relationship with foreign business partners promotes the creation of ecosystem. CEDC is about the enterprise’s cultural sensitivity and endeavors in the core competitiveness under the cross-cultural context: institutions and long-term international development plan and strategy, integrated management system and cross-cultural communication model, cross-cultural product and service innovation, brand communication, brand marketing and staff’s cross-cultural business training. The key factors in the enterprise operation are included in the second dimension. This finding conforms with Kumra et al.’s (2020) research on the primary care organization’s cultural competence assessment stressing cross-cultural human resource management (HRM) and marketing. Staff’s cross-cultural business training engenders what Pitelis (2022) calls human DCs (dynamic capabilities). The creation of cross-border markets and supporting ecosystems helps shape the context within which make/buy/ally decisions are taken, and they represent a manifestation of DCs par excellence (Pitelis, 2022). Cross-cultural product and service innovation, brand communication, brand marketing and staff’s cross-cultural business training facilitate the creation of cross-border markets and context shaping. The third dimension CRMC is on the enterprise’s flexibility and efficiency in dealing with cultural difference, cultural crisis event, cultural conflicts, and cultural changes. Ljubica et al. (2016) also stress the importance of cultural conflict management for a competent manager and an organization as well.

This study contributes to the existing theoretical research on organization’s cross-cultural competence and especially adds more insights from the the enterprise systematic operation perspective (Kersiene & Savaneviciene, 2009; Kumra et al., 2020; Ljubica et al., 2016; Wu, 2008; Zhang, 2009). The three-dimension ECC model broadens the research horizon of the existing study on organization’s cross-cultural competence. Pitelis (2022, p. 2) argues that one of the limitations hindering the DCV progress is the empirical testing. We make a difference in the empirical research on enterprises’ dynamic capability. In today’s international business, enterprises are situated in increasingly culturally complex environment and they have to adapt to the changing cultural uncertainties. MNEs excel by orchestrating complex, global networks of suppliers, partners, and customers (Cavusgil & Deligonul, 2024). Their excellent orchestration needs dynamic capability especially cross-cultural competence. Enterprises’ cross-cultural competence is a type of dynamic capabilities which can ensure their survival and sustainable development in the culturally divergent international business arena. It is the dynamic capability for dealing with culturally different business partners, employees, and customers. Interestingly, it can be noted that nearly all the items in the ECCS align with the three core categories of the dynamic capabilities. For example, Item A3, A12, and A13 belong to the sensing category, Item A1, A2, and A14 fall into the seizing category and Item A4, A5, and A11 belong to transforming category.

The 18-item ECCS, as one of the “proxies” (Pitelis, 2022) of dynamic capabilities, is a reliable measure (Cronbach α = .943, n = 308) and the EFA and CFA provide construct validity of the scale. The three-dimension ECC model is stable. In Study 2, CFA was applied to test the discriminant validity of the two measures: ECC and enterprise performance (EP). The four-factor model (CCC, CEDC, CRMC, and EP) confirmed the discriminant validity. The convergent validity of the two measures was also supported. We incorporated latent error variable to test the common method bias, which didn’t significantly influence the fitness indices of the models. The Pearson correlation analysis indicated that the CCC, CEDC, and CRMC dimensions of the ECCS had strong association with EP. Hierarchical regression analysis demonstrated that the ECC had a positive impact on EP, so the concurrent predictive validity of the ECCS was documented.

The 18-item ECCS can be used as a practical and feasible tool to observe and assess ECC. Van Driel and Gabrenya (2012) attempt to measure organization’s cross-cultural competence (OCC) basing on the data at the individual level, but they only provide partial support for the four-factor structure of the construct. The measure purported in the present study shows good reliability and validity, so it is a step forward in the related work on organization’s cross-cultural competence measurement. Yitmen (2013) measures organizational cultural intelligence or organization’s cross-cultural dynamic capabilities with the scale developed on the basis of Teece et al.’s dynamic capability framework. In Yitmen’s opinion, organizational cultural intelligence is not equal to the organization’s cross-cultural competence. In his study, the items on organizational cultural intelligence are developed by adding “cross-cultural” to the nine sub-categories of the three key factors of dynamic capability: process, position, and path capability. In his study, the cross-cultural competence is measured with the INCA (intercultural competence assessment) tool. However, it might not be appropriate to apply an individual-level tool to assess an organization’s cross-cultural competence. Compared with Kumra et al.’s (2020) measure which focuses more on primary care organization’s cross-cultural HRM and marketing, our scale items cover three important dimensions of enterprise operation and they broaden the measurement scope. Since the ECC covers important sectors in the process of enterprise operation, the items of ECCS reflect the reality of the systematic, congruent, and holistic ECC.

We developed the ECCS mainly basing on interviews with Chinese international practitioners and Internet data in China. The observed enterprises were Chinese foreign trade enterprises. Our study is featured by Chinese perspective and background and we have added Chinese insights to the existing literature and scholarship on enterprises’ cross-cultural competence and dynamic capabilities.

As indicated by the regression analysis result in the present study, the cross-cultural relationship management competence dimension, cross-cultural communication competence dimension, and cross-cultural endogenous development competence factor all contribute to enterprises’ EP. This research finding signifies that improving ECC facilitates obtaining enterprises’ performance. ECC can be improved by cultivating and developing the competences on the three dimensions. To enhance the cross-cultural relationship management competence, businesses should strengthen cross-cultural relationship department and cultivate coordinators so as to deal with the internal and external cross-cultural issues pertaining to stakeholders such as employees, suppliers, and consumers. Endeavors on efficiently handling cross-cultural relationship and shouldering international social responsibilities should also be made to build up and maintain good internationalized image. To strengthen enterprises’ cross-cultural communication competence, the enterprises’ employee training program should include not only language, but also culture and business etiquette as well. Flexible policies on working methods, commitment to international social responsibility and active involvement in the communication platform, showing sympathy and respect to different cultures, might be conducive to making the enterprise a resilient, trustworthy and active cross-cultural communicator. For example, before motivating the Mexican employees, the Chinese employers should first investigate the priorities in their value system and then design recruitment and motivation arrangements. The enterprises can strengthen the endogenous development competence by formulating long-term international development plan and strategy, implementing foreign market-oriented innovation, marketing and carrying out business-related staff and manager training. The enhanced core competitiveness might facilitate their SCA. The cases in point include Midea has made Indian market oriented modifications to their air-conditioners. Fuyao provided Chinese workers with cross-cultural training upon their arrival at US factory. Target market-oriented R&D program, target consumers’ preference-based marketing projects may be instrumental to address the challenges in international branding. Recruiting the Local Program can be conducive to getting to know the local culture, communicating with the local people, and orchestrating the internal and external cross-cultural issues. In these ways, enterprises’ cross-cultural competence and dynamic capabilities (Pitelis, 2022; Teece et al., 1997) can be honed.

Although the foreign trade enterprises were observed and studied with the 308 responses and foreign trade enterprises’ performance scale was introduced in the current study, our research findings have potential applicability for enterprises beyond foreign trade. This is because the ECCS was developed from Internet and interview data with international business practitioners instead of only practitioners from foreign trade industry. The ECC model and ECCS have potential applicability for enterprises dealing with other types of international business such as manufacturing, financing, logistics, insurance, consulting, and so on. That is the reason why we name the measure Enterprises’ Cross-cultural Competence Scale rather than Foreign Trade Enterprises’ Cross-cultural Competence Scale. We chose foreign trade enterprises only because they were typical enterprises engaged with international business and we had easier access to the respondents. In the future, we will choose enterprises from other industries to further test the model’s robustness and the scale’s reliability and validity.

Limitation and Future Research

According to Bustamante et al. (2009, p. 801), the observation checklist needs to be complemented by other mixed methods to fully portray a school’s cultural competence. It should be noted that in the current study, the ECCS was developed to observe and assess ECC. ECCS is only one tool to gauge the ECC among more possible mixed methods such as interviews, field observations and so on. This is the first limitation of the present study. Future study should address how to assess ECC with more mixed methods.

Our study is limited by the innate defect of the scale measure. The respondents’ self-perception is subjective, so the data on the ECC and EP might not be accurate enough to reflect the real status of the constructs. In the future, basing on the three-factor ECC model we will introduce third-party evaluation by experienced outside observers and behavioral measures to obtain more objective data.

The ECCS was developed mainly on the basis of the interview with Chinese international practitioners and Internet data in China. The observed enterprises were Chinese foreign trade enterprises. Although our study is featured with Chinese researchers and interviewees’ insights, the insights might be influenced by Chinese culture which is featured by collectivism, bigger power distance, higher motivation towards achievement and success, lower uncertainty avoidance, long term orientation, and less indulgence. The interview question was about Chinese enterprises so the interviewees’ opinions might be confined to their knowledge on the development logic and globalizing trajectory of Chinese enterprises. Whether the ECCS and ECC model apply to enterprises from other countries deserves careful consideration. We would also attempt to address this issue in future research.

Our study is limited by convenience sampling method. We have interviewed and surveyed international business practitioners whom we had access to. It might be a better solution to use quota sampling for each type of enterprise in terms of enterprise size, ownership, and industry. But limited by our time, energy, and access to the adequate number of sample for each type of enterprises, we only recruited and surveyed practitioners of international business instead of practitioners from each type or a certain type of enterprise. While the sample size satisfies statistical requirement and the sample meets the need of our research, the use of convenience sampling may limit generalizability of our study. In the future, we should focus on different types of enterprises respectively to test the generalizability of the ECCS and the invariance of the measure across samples.

Conclusion

We developed and validated an 18-item reliable Enterprises’ Cross-cultural Competence Scale (ECCS) basing on Python semantic analysis on interview and Internet data. The construct and concurrent predictive validity of the ECCS were confirmed, which broadens and deepens the existing work on ECC assessment. The three factors involved in the ECC model are cross-cultural communication competence (CCC), cross-cultural endogenous development competence (CEDC) and cross-cultural relationship management competence (CRMC). Enterprises’ cross-cultural competence (ECC) has a positive impact on enterprises’ performance (EP). We contribute to the extant theory on enterprises’ cross-cultural competence and organization’s cross-cultural competence, approaching the ECC construct from a holistic and enterprise systematic operation perspective. Additionally, we enrich the dynamic capabilities view with Chinese data and perspective and contextualize the dynamic capabilities view in cross-cultural context. The present study provides management implications for Chinese foreign trade and international business enterprises on which dimensions should be observed to assess ECC and what aspects should be strengthened to cultivate ECC. International business enterprises beyond China can also take advantage of our research findings to evaluate, cultivate, and strengthen their ECC.

Footnotes

The authors would like to show gratitude to the respected anonymous reviewers.

Ethical Considerations

We have obtained from the local Ethics Committee and the Academic Committee of School of Economics and Management,Shanxi University,the written consent on the human studies.

Funding

The author(s) received financial support of Promoting the Staff’s Intercultural Business Communication Competence (IBCC) Project No. 115020901160,2022 for the research of this article.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research,authorship,and/or publication of this article.

ORCID iD

Jing Jiao

Data Availability Statement

The data that support the findings of this study are availabe on request from the corresponding author.

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Towards an Enterprises’ Cross-Cultural Competence Scale

Abstract

Keywords

Introduction

Theoretical Basis

Literature Review

Related Study on Enterprises’ Cross-Cultural Competence

Enterprises’ Performance

The Scale Development Process

Practitioners Interview and Internet Data Collection

Python Semantic Analysis

Scale Development

Analysis Strategy for Instrument Validation

Study 1

Method

Sample

Procedure

Results: Study 1

Study 2

Method

Sample

Instruments

Enterprises’ Cross-Cultural Competence Scale

Enterprises’ Performance

Procedure

Results: Study 2

Discussion

Contributions and Implications

Limitation and Future Research

Conclusion

Footnotes

Ethical Considerations

Funding

Declaration of Conflicting Interests

ORCID iD

Data Availability Statement

References