Recontextualization in International Business
Authors: Brannen Mary Yoko 
Published: April 2023

Recontextualization in international business (IB) refers to the transformation of meaning of firm offerings (technologies, work practices, products, etc.) as they are uprooted from one context and transplanted into another. The question of whether transferred firm assets will fit into receiving contexts abroad is one of the biggest concerns of multinational enterprises in the internationalization process. Whether a firm internationalizes by means of an international joint- venture, merger or acquisition, or a wholly owned subsidiary, this potential lack of strategic fit of firm assets is considered a major contributor to a firm’s liability of foreignness and ultimate lack of success abroad. As such, much research has been conducted in the field of IB to shed light on understanding the causes, implications, and recommendations for managing strategic fit in the internationalization process.

Most IB research has focused on the tangible, explicit, and codifiable aspects of lack of fit, such as differences in technology, metrics, and labor regulations, which are relatively easy to discern. Often overlooked are the more subtle, less visible, tacit differences between sending and receiving contexts that affect how firm offerings are understood in the new organizational environments. Organizational contexts are embedded in multiple and intersecting cultural environments, including the organizational culture internal to the firm and the larger, societal culture external to the firm, as well as the smaller, more particular work group environments within a firm characterized by disparate functional or expert practices. Every cultural environment is embedded with its own meaning system involving distinct work-related assumptions, behaviors, and norms. Given this, unforeseen misalignments easily occur between the sender and receiver contexts stemming from disparities or divergences in meaning systems attributed to the transferred firm offerings, which can significantly affect a firm’s global strategic success. Such are the misalignments that stem from recontextualization. Firm offerings go through a preliminary round of recipient cultural sense-making in which they are assimilated into pre-existing meanings. Then, as they are implemented, acted on, and interacted with, they continue to undergo recontextualization. Language is the vehicle by which firm offerings are transferred (with the rare exception of digital code or numerical formulas), and through which sense-making is processed by individuals in the receiving contexts, thus making semantic fit a necessary complement to strategic fit in elucidating the process of recontextualization.

Research in a variety of industries—from highly culturally sensitive ones such as entertainment, to seemingly culture-free, automated industrial contexts such as automotive—has shown that recontextualization will always happen no matter what the industry. This is because sending and receiving contexts can never be the same, so firm offerings will always undergo a certain amount of recontextualization to adjust to the new operating environment. Recontextualization can have positive or negative effects on a firm’s internationalization. Positive recontextualization, if the process is properly understood, can become a source of ongoing organizational learning and, in turn, become a valuable source of competitive advantage. Negative recontextualization, on the other hand, can result in lost opportunities for site-specific learning and strategic realignment, and, in the most severe cases, may seriously hinder transnational transfer and global integration efforts. Yet planning for and monitoring recontextualization are not simple matters. In most cases, managers are initially unaware of all but the most obvious sources of recontextualization, such as differences in language, metrics, organizational structure, or shop-floor layout. However, much of recontextualization happens in situ and cannot be planned for. At best, managers can opine where recontextualization might occur by utilizing industry-specific, cross-cultural consultants or internal boundary-spanners such as bilingual or bicultural employees. In some fortunate cases, managers may become aware of recontextualization early on in transfer efforts as they are confronted with organizational barriers to implementation such as significant differences in industrial and supplier relations. But, for the most part, recontextualization goes unrecognized until productivity plummets and financial goals go unmet without readily identifiable economic or other such quantifiable causes.