Mrcaonima Essay

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DRAFT Culture Matters: A Hierarchical Linear Random Parameters Model for Predicting Success of US Films in Foreign Markets C. Samuel Craig William H. Greene Susan P. Douglas Stern School of Business New York University August 2003 8/27/03 1 Abstract Culture matters in ways that are salient for products with significant cultural content. In particular, the cultural context in which a product is launched plays an important role in its success. The present study examines the impact of cultural context on the box office performance of US films in foreign markets. A hierarchical linear random parameters model is used to assess the impact of national culture, degree of Americanization, US box office and film genre on performance in eight foreign markets. The model allowed for film-specific heterogeneity to be accounted for and for hypotheses to be tested at both the film level and the country level. Results indicate that films perform better in countries that are culturally closer to the US and those that have a higher degree of Americanization. The genre of the film and US box office success also had a significant impact on performance. Some implications are drawn for managers releasing films in foreign markets. 2 Culture Matters: A Hierarchical Linear Random Parameters Model for Predicting Success of US Films in Foreign Markets 1. Introduction Film, along with other creative goods, represents a distinctive product category. Each film is unique and demand for any given film is difficult to predict (DeVany and Walls 1996, 1999). Even when a film uses the same talent, is of the same genre, is a sequel or a new version of a previously released film, there is still considerable uncertainty as to whether or not it will be successful. Caves (2000) characterizes this as, “nobody knows.” Further, while consumer testing is often used to guide

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