Objective - In the fast changing globalizing and liberalizing world, the concern is not only on the location-specific advantages of a host country but also on how multinational enterprises manage to survive ex-post entry in a different environment. The cultural distance between the home and host countries thus plays an important role in this context. Empirical studies have shown that cultural distance and cross-cultural adaptation are interrelated, and there is a moderating role played by cultural distance on the cross-cultural adaptation. The cross-cultural adaptation is thus an important dimension to be considered in order to extend the L-advantages. Many studies have been conducted to build a cultural distance scale. Yet only a few studies have been conducted to construct a cross-cultural adaptation scale. This study thus aims to build a cross-cultural adaptation index.

Methodology/Technique - The index is built based on the data collected from Chinese expatriates through in-depth interviews and questionnaire surveys.

Findings - Two simple cross-cultural adaptation scales were built. These are the Simple Sociocultural Adaptation Scale (SSAS) and Psychological Adaptation Scale (SPAS) with seven pillars. An average index score was computed for each pillar. Living (78.79), interaction (69.19), regulative (64.02), work (85.61), psychological well-being (68.33), satisfaction (63.64), and intention to stay (62.12). The sociocultural adaptation index scored 76.57, while the psychological adaptation index scored 65.91.

Novelty - This study provides insights for better understanding of Malaysian cultural environment to investors, expatriates, and policymakers as well as to extend and enrich the OLI paradigm.

Type of Paper: Empirical

Keywords: Extended location-specific advantages; Cross-cultural adaptation index; Sociocultural adaptation; Psychological adaption; OLI paradigm.

JEL Classification: F21, G14, Z13.