Guest editorial: Cultural arbitrage: the forgotten strategy in international entrepreneurship?

Abstract

The concept of arbitrage refers, broadly, to the exploitation of differentials (Denrell et al., 2003). In a complexly interconnected globalized business landscape, navigating diverse commercial contexts effectively to generate and capture value is a cornerstone of cross-cultural and strategic management (Lumineau et al., 2021; Pattnaik et al., 2021; Zahra, 2022). Arbitrage has long been examined as a strategy mode for entering competitive landscapes whereby firms and/or entrepreneurs leverage differences to generate and capture value (Ghemawat, 2003a, b). It can consist of juxtaposing economic, administrative, geographic and cultural differences across markets to develop commercial opportunities explicitly stemming from these national or regional variations (Ghemawat, 2008).To date, economic, administrative and geographic arbitrage opportunities have been more tangible, and more knowledge has resulted (e.g. Ghemawat, 2003b; Jha et al., 2018; Liu et al., 2020). In contrast, cultural arbitrage opportunities are more intangible and remain (comparatively) elusive and less probed (Pidduck, 2022). And yet, cultural arbitrage has never been more relevant: as with digital technologies and democratized access to actionable information (Nambisan, 2017), societies across the globe can instantaneously “export” elements of their culture across time and space, meaning alert entrepreneurs have abundant opportunities to engage in cultural arbitrage. This special issue seeks to address this scholarly gap and shed light on this entrepreneurially important yet largely overlooked phenomenon. Our call-to-action sought to stimulate research on the big unanswered question: how, when and to what extent can cultural differences stimulate and strategically facilitate the development of entrepreneurial opportunities?Unique to cultural arbitrage are the cultural “raw materials” underpinning it, which possess a combination of qualities that make the arbitrage opportunities abundant (within and between nations and/or regions), malleable, pronounced and enduring. Yet, important questions remain unanswered surrounding how, when and where firms can leverage these potentially valuable yet oftentimes untapped strategies (Pidduck et al., 2024). Further, as the title of this special issue suggests, there are especially important linkages between cultural arbitrage and entrepreneurship. Drawing on cultural differences that reveal or generate arbitrage opportunities can be both (financially) uncostly and help to unveil the heterodox ideas entrepreneurship thrives upon (Pidduck et al., 2025). This is particularly useful for entrepreneurs as the contextual demands of new ventures require them to be both novel – in their ideation and value offerings in unforgiving markets – and resource-efficient – in that they are developing ventures with very limited financial runways (Shepherd and Gruber, 2021).Recent evidence suggests that individual entrepreneurs leverage the juxtaposition of cultural elements – typically through their own personal cross-cultural experiences (e.g. Pidduck et al., 2025a; Pidduck et al., 2022b; Vandor and Franke, 2016) – to bolster opportunity recognition (Clark et al., 2018) and creative performance (Pidduck and Zhang, 2022). But more research is needed to unpack and delineate the various multilevel elements, manifestations, efficacy and boundary conditions surrounding the deployment of cultural arbitrage as a form of strategy in international entrepreneurship.Unfortunately, there are real headwinds preventing this work. In 2006, Freidman's “the world is flat” hypothesis attracted much attention (scholarly and popular) for its implications for global business. Friedman predicted that in an era of increasing globalization and borderless digital communication, simple arbitrage opportunities would “flatten” out as information asymmetries would rapidly dissipate (Friedman, 2006). Indeed, within international entrepreneurship, there is growing focus on born globals (i.e. exporting; Cavusgil and Knight, 2015) and born digitals (i.e. Internet as collective producer and/or distributor; Monaghan, Tippman and Coviello, 2020) that specifically avoid culture differentials. These firm types, and the resulting scholarly interest they generate, suggest that Oviatt and McDougall's (2005, p. 540) “opportunities – across national borders – to create future goods and services” might be universal, existing without regard for culture or country context. However, recent theorization by Ramoglou and McMullen (2024) suggests we are engaging in circular reasoning to justify a mistaken conclusion: namely, opportunities are the desired end states that entrepreneurs want and then take action to manifest. In effect, entrepreneurs want international opportunities to be cultureless and contextless because it allows lower transaction costs and greater efficiency (Zacharakis, 1997), and thus, that is what they are trying to make them be.The reality is far more complex. It is appealing to think of Uber as this amazing platform that works anywhere in the world: turn on your phone and you have a car! But the reality of entrepreneurs desiring a universal solution has not really worked out: when Uber enters a market, it undertakes significant complexity and cost to localize (Rahman and Zafar, 2020), and where they have been outcompeted, it has been by companies more successful at localizing (e.g. Grab in Thailand; Neupane, 2023). The global platform, allowing well-funded tech companies to dominate a piece of the value chain, has enormous visceral appeal until it runs into the reality that “all business is local business” (Glauner, 2017). Indeed, 2 decades following Friedman, the existence of cross-national cultural differences that underpin the “raw materials” of cultural arbitrage strategies remain completely untouched and unaccounted for in such grand globalization (or “de-globalization”) predictions or theories. Put another way, as much as entrepreneurs might want to universalize their opportunities, their customers will push them to localize, and if they do not, those same customers will use their cultural advantage to realize new competing opportunities (Chandra and Coviello, 2010).The purpose of this special issue is to stimulate discussion, analysis, and debate on the how's, why's, when's and where's of cultural arbitrage as a mode of strategy in international entrepreneurship. Unlike the econometrics and finance-centric approaches and theories of international business inherited through our discipline's intellectual trajectory, we place culture at the heart of this strategic lens. Simple cost arbitrage is competed away at a rapid pace in today's digitalized competitive arena – in this sense, Friedman was accurate, but cross-cultural psychology research finds robustly and repeatedly that distinctive cultural norms and values themselves across different nations are going nowhere – if anything, in times of crisis, they can become even more pronounced (Gelfand et al., 2011, 2021). Indeed, the recent wave of the longstanding “Global Values Survey” – a large-scale initiative to track global cultural movements – suggests that cultural differences are becoming more, not less (as previously predicted) common globally: values diverge within high-income Western countries, between those Western countries and the rest of the world and even between regions (see Jackson and Medvedev, 2024).For instance, despite complex institutional and geopolitical dynamics, China is just as culturally “Chinese” today as it was when its economy opened in the late 1970s, and regardless of speculation over its continued technological or economic prowess, it is likely to be just as culturally “Chinese” decades from now too (Li, 2022). The appeal of consuming global media and products has not diminished that cultural uniqueness. The same can be said of other global markets such as Japan and Indonesia and for emerging economies – e.g. India, Brazil, or Botswana, to name a few (e.g. Nair et al., 2022). Further, cultural arbitrage opportunities exist within multicultural societies like the US (Vora et al., 2019); with regional differences – e.g. between coastal cosmopolitan states and more traditional inland states or immigrant diaspora communities – e.g. Cubans in Miami or Mexicans in Texas. Each has a unique cultural landscape that creates opportunities for culturally intelligent and savvy entrepreneurs to leverage when juxtaposed with distinct cultural norms in regional and/or foreign markets.In his seminal book, The Competitive Advantage of Nations, Michael Porter (1990) managed to write some 800 pages about country differences and their value without mentioning culture and its role therein. Regardless, within his treatise is the core of cultural arbitrage: countries have (cultural) factors conditions – unique goods and services they can produce – and (cultural) demand conditions – goods and services they want to consume; leveraging the former and satisfying the latter is a key strategy alert international entrepreneurs employ.Our central premise, which we believe (and hope) is a provocative call to action for international entrepreneurship and global strategy scholars, is that while some will continue to mine financial, geographic and administrative arbitrage opportunities in the search for easy returns and mass scaling, some degree of cultural arbitrage in just about any venture is valuable, a lesson that has been key to McDonald's international fast food success (Vignali, 2001). In other words, as financial, geographic, economic and administrative arbitration opportunities fade, cultural arbitrage remains a viable and enduring pillar. As cultural differences around the globe remain and may even be growing, this makes them a powerful foundation and source of potential arbitrage strategies for international entrepreneurs or MNC executives pursuing new markets.Our call solicited the interest of authors from disciplines across management, employing a variety of conceptual and empirical methods across a broad range of cultural contexts. As with any special issue, we received many interesting submissions and appreciate the interest and efforts of all submitting authors. The articles that are ultimately published here represent the richness of cultural arbitrage to advance work in a number of literature streams. In the following section, we introduce each of these articles and briefly explain how their work adds value to these emerging conversations. Following that, we then discuss some of the broader issues that motivated us to pursue this theme and unpack what we believe remains some of the most promising research opportunities in this area moving and in the arbitrage through the opportunity of develop a conceptual that with entrepreneurship to explain how entrepreneurs and pursue cross-cultural arbitrage that strategies (i.e. and the and of their in both and These in entrepreneurs on or in developing new ventures that cultural contexts. and how access and that opportunity development of the key of this in that is not a but a strategic of opportunity and exploitation for entrepreneurs across national and cultural makes a to the cultural arbitrage research more by as a core of arbitrage date, cultural arbitrage is abundant yet because conceptual to how cultural differences become actionable opportunity and help this gap by the and that when cultural that arbitrage is especially powerful for the special issue because it cultural differences not as to be (or as an of business but as strategically how and culturally knowledge across this in this research by cultural differences as and for entrepreneurial differences of ventures and by through the of cultural by and how entrepreneurs their ventures when in culturally a of ventures in the authors how of experiences and venture to the that cultural to entrepreneurial this that cultural differences their own unique particularly through these which to local and arbitrage distinct strategies by which entrepreneurs by and through arbitrage and when is these generate a of the in and to the of how generate in advance the special issue theme by that cultural arbitrage is not a of cultural – it in the of that remain even between culturally This may but few to have probed this This that when entrepreneurs cultural as they these how entrepreneurs cross-cultural knowledge and to the the broader that cultural differences continue to entrepreneurial opportunity even in an era of digital and that cultural arbitrage is not a but a of strategic by the and this special call for research that cultural arbitrage as a and strategically In this our of how arbitrage in contexts where cultural but remains for entrepreneurial et as a form of cultural arbitrage: a mode of strategy for emerging country in the and international entrepreneurship literature by as a for entrepreneurs through a cultural arbitrage As its name suggests, strategy with the of the country where products – or the of this into their through the use of the in and from the et al., and its In their in and et the efficacy of different which be to as for cultural arbitrage: and elements, and to around cultural arbitrage by an through the of with its and The of this in their is the they the of international entrepreneurs a strategy with to The authors the opportunity for to become an of as a and the uncostly of cultural arbitrage as an for entrepreneurs in emerging This the to around the boundary conditions of for how important is it that products and services are with the of their country of in to from is the of potential and how to or avoid are to this of cultural arbitrage in the special issue, as it a new for international entrepreneurship and in their in and cultural arbitrage in form of business the of as a on the of cultural (as by from in cultural contexts. This or knowledge of is a from which entrepreneurs may to their business and how immigrant entrepreneurs can to engage in cultural and they their from over entrepreneurs by the a of an of cultural which is in the and a creative of navigating both the and of of cultural arbitrage in action is venture authors that immigrant entrepreneurs to have and are by the of their (i.e. to and the time in the In with the about (and of and immigrant entrepreneurs have for their a between and their theorization of cultural arbitrage as a through which immigrant entrepreneurs to their The as a of cultural arbitrage into the venture of immigrant As cultural arbitrage is we the efforts to the and entrepreneurial in cross-cultural a novel conceptual that cross-cultural and with entrepreneurial on recent work that foreign cultural of differences and (e.g. Pidduck and the creative entrepreneurial as a the broad of entrepreneurial by cross-cultural – opportunity novel ideation and entrepreneurial Pidduck that the by do not they with the in (and thus, Drawing from Pidduck a for how of national cultural and produce for entrepreneurial this the as a yet overlooked boundary how, and for cross-cultural entrepreneurial the articles in this special issue the conceptual and empirical cultural arbitrage as an entrepreneurial contexts as as (or and and the foreign cultural can stimulate in these reveal a common cultural differences are not contextual but actionable that entrepreneurs strategically and for value believe this is an important from surrounding arbitrage in international business more and (2024) how opportunity and that even cultural differences generate arbitrage et that cultural can opportunity and the by culturally and Pidduck a to explain how cross-cultural with to for entrepreneurial more these to advance the special issues that cultural arbitrage is not a but a and that entrepreneurs and strategically cultural these articles we that are of these articles specifically with those that, through their in to leverage their cross-cultural to cross-cultural opportunities et al., This is as a would represent the form of cultural arbitrage: firm As we this focus is for a of at the However, as with any entrepreneurship is a et al., how cultural arbitrage opportunities facilitate and is a for future of these as a key in cultural arbitrage opportunity The value and of international as a of international are (e.g. Coviello, Pidduck et al., the of for the value within the cultural arbitrage opportunity is becoming particularly to the theme of it is to a cultural but may have to that to and leverage its As to the and our that “all business is local the role of local for growing cultural may be in the of cultural arbitrage entrepreneurship by (i.e. and et al., in an to Friedman and our upon a time it was easy to cultural arbitrage for its exploitation of cultural world has these opportunities and less valuable as the unique to mine them is to (e.g. And yet, as we even more cultural differences generate opportunities and 2025). this the of individual and 2015) and that what may be – as in Friedman – be as the cultural are complex and will remain to and some valuable empirical these articles help to cultural arbitrage take its place as a core for international entrepreneurship and research moving As the predicted in globalization have not diminished cultural but digital and global have and to cultural as strategic The in this special issue to a future research that culture as of the and strategically of differences for how entrepreneurs develop international opportunities (Pidduck et al., This in this to not cultural or cross-national cultural differences in a but by the of and the in successful in culturally foreign In this special issue sought to a a more and of strategic entrepreneurial action in a world where cultural far from continue to opportunity that cultural is not a strategy other of it is an for how entrepreneurs and an (and global landscape and a powerful foundation upon which future and empirical work can the section, we some on some by that not upon by the articles in this special issue but to important for the cultural arbitrage in entrepreneurship research believe that these are valuable to unpack because they on and growing research that are from international entrepreneurship and culture arbitrage work yet potential for cultural differences are going to become more for entrepreneurship in the These are economy and theories and the increasing of all and the business in recent we have an focus on how various of will or even out our of has been In recent special issues have how such might a variety of central to entrepreneurship (e.g. et in and et in date, some of these have sought to how of may how entrepreneurs (or develop new venture ideas and to as a for and efficiency (e.g. et al., 2021; and 2022). a more have can surrounding at the heart of the entrepreneurial (e.g. et al., Ramoglou et al., or if will create by to entrepreneurial opportunities much more abundant and and to the more of and information which is more in ideas on how are very much the the underpinning action In light of all of these emerging remains regardless of how become and regardless of how many entrepreneurs around the world much of this work in entrepreneurship away the role of culture and even that culture will become more as a strategic in as entrepreneurs the of or will be the same as entrepreneurs in Yet, on emerging work to culture and we that are to our on cultural arbitrage in entrepreneurship. while an may be the the entrepreneurs them are norms and very much what and into such we really not to across cultural recent (see et al., evidence that do in different cultural on the instance, when in a more and a more et al., 2025). we believe that far from on another potentially how cultural arbitrage may within an international valuable potential in the economy and theories. of the in international business in the era surrounding our of the commercial for firms and entrepreneurs has to be largely the of globalization and 2021). As research has been with how global (e.g. and or geopolitical (e.g. and or might continue international or or and by how or to what extent such for international this has been to some extent and some valuable research we that the (as of a for has its and is especially for how entrepreneurs will (or engage with the world and foreign markets in the The for this is that while the of information and the of global will be important to international business any the geopolitical and they have in recent far of the (or from world we that in the economy and are for of some of the emerging in recent the 2 era and the that has globalization as we have it are in this area have been attention to a of for (e.g. a is emerging that national culture a of geopolitical (and by for us international business we are by this out to a more (see 2025). this the global for which international entrepreneurs are to with in the is of and a a and an with many other regional nations into these in and it is the of this to these ideas at the we believe is both interesting and for cultural arbitrage moving is that to foreign markets will likely be by how entrepreneurs (or the differences in ideas that ultimately their commercial in these – especially when to a instance, while many have the unique commercial landscape in China and its with many business there with an (i.e. 2 – an that that while there are differences China is to in economy and international business that this is a (e.g. ideas about the of over the collective (i.e. and are not with the at Further, many of the recent to have to be largely through the of the (i.e. that are to likely when another Yet, through the of economy and (e.g. a different in a between values to states all engaging in efforts and (i.e. as a values to the that the is to norms (e.g. a focus on the this opportunities for cultural arbitrage in entrepreneurship will between these over more different national within the same that the efforts to on economy work have been limited to international entrepreneurship and is because of its and in and and our more empirical Yet, with the recent in going to and work between there is to believe such approaches may in in international business and entrepreneurship, increasing emerging in recent on trying to make of communities are to source products from local without the and of and ideas that from their the turn of the and with that, global where even products in markets have been with in many countries (e.g. that are in countries in this was (and by economies of and and in the few factors from for to (e.g. and to a of values and the to et al., have a of to their is in yet, that have from of globalization are not likely to be to the and that with access to products and services that from any and of the In a as it has been will continue to valuable opportunities for entrepreneurs are to leverage cultural arbitrage – on a of and from other to local through the of in which “the can in different the can be and by the local and then the world it is for a wave to through the local and to be by The local is not or or by globalization with globalization and the or end or as geographic and economic arbitrage are through a variety of a of global then cultural arbitrage is of the of arbitrage for the of As we this theme as a promising for international entrepreneurship research moving as it to take of some of these and in light of the economic that the of foreign for new this we out to cultural arbitrage as a yet strategy in international entrepreneurship, that cultural differences are not of a world but and strategically of The in this special issue that entrepreneurs do not within cultural they and cultural differences as for opportunity creative and venture of and these articles of cultural and how cultural – or – to entrepreneurial and this work a more and of international entrepreneurship, that culture not as or to be but as a central through which entrepreneurial value is this special issue to cultural arbitrage not as a but as a core for entrepreneurial action in an and culturally global