10.5465/AMBPP.2015.206 THE EFFECT OF CULTURE ON EXPATRIATE DEPLOYMENT LEVELS: CULTURAL DISTANCE AND TIGHTNESS-LOOSENESS DUCKJUNG SHIN Ivey Business School Western University London, ON, N6G 0N1 VANESSA C. HASSE Western University, London, ON ANDREAS SCHOTTER Western University, London, ON INTRODUCTION This study was motivated by the prevalence of conflicting results in the existing literature on the relationship between cultural distance and expatriate deployment levels in international subsidiaries. While some studies found a negative relationship between cultural distance and expatriate deployment levels (e.g. Widmier et al., 2008; Tseng & Liao, 2009), others found a positive relationship (e.g. Boyacigiller, 1990; Smotherman, 2002; Gong, 2003; Wilkinson, Peng, Brouthers & Beamish, 2008; Colakoglu & Caligiuri, 2008). Yet other studies reported an insignificant or mixed relationship between cultural distance and expatriate deployment levels (e.g., Gaur, Delios, & Singh, 2007; Harzing, 2001a). In addition, prior research has often reported that only a limited amount of the variation is explained by cultural values (e.g. Kirkman, Lowe & Gibson, 2006). The conflicting findings and small effect sizes suggest that the impact of cultural differences on expatriate deployment levels may be more multifaceted than previously assumed. We attempt to advance this discussion by integrating the diverging perspectives on cultural distance and contrasting the value-based cultural distance construct (Kogut & Singh, 1988) with Gelfand, Nishii and Raver’s (2006) societal norms-based tightness-looseness concept. HYPOTHESIS DEVELOPMENT The Effect of Cultural Distance on Expatriate Deployment Ratios Cultural distance (Kogut & Singh, 1988) is one of the most widely used constructs in international business research (Tihanyi, Griffith & Russell, 2005), including the expatriate deployment literature. It is apparent, however, that findings about the relationship between cultural distance and expatiate deployment diverge considerably: Some studies found a positive relationship, some a negative one, and some mixed results or no significant relationship. We interpret this as an indication that the relationship between cultural distance and expatriate deployment is more complex than the linear modelling approaches used in prior studies suggest. Specifically, we hypothesize that these diverging perspectives could be integrated into one model. At low levels of cultural distance, multinational enterprises (MNEs) deploy expatriates in order to facilitate knowledge transfer (more so than for the purpose of exerting control). Once cultural distance increases towards medium levels of cultural distance, the advantages of expatriates over local staff become less obvious as the effectiveness of expatriates for the purpose of knowledge