Discussion
This study is motivated by the emerging interest in the effects of within-country cultural diversity on MNEs (Beugelsdijk et al., 2014, 2015 ; Dow et al., 2016). On the one hand, within-country diversity can increase the opportunities firms have to target culturally close customer segments and, hence, positively influence their performance. On the other hand, a diverse host-country environment can be viewed as a deleterious condition, as it implies higher information costs, barriers to relationship development, and political risk. We argue that whether within-country diversity in the host country is an asset or a liability depends on managers' abilities to segment the market. In the infrastructure sector, the outputs of private participation projects are widely distributed geographically and socially, and they usually involve a wide range of stakeholders, making it difficult to target specific segments. Our study focuses on within-country religious diversity, as religion plays a critical role in determining which kinds of behaviors are tolerated in a society, and how its members communicate and interact (Dow & Karunaratna, 2006; Shenkar, 2001). Religious diversity also effects how corporate cultures evolve over time (Weber, 2011). Our results indicate that within-country religious diversity adversely affects the performance of private participation infrastructure projects (Hypothesis 1) due to the hazards arising from the increased complexity and the risk of becoming involved with stakeholders with incompatible goals and/or discordant ways of pursuing and fulfilling those goals.
