Asymmetric cultural proximity and greenfield foreign direct investment

Abstract

The Robert Schuman Centre for Advanced Studies (RSCAS), created in 1992 and directed by Professor Brigid Laffan, aims to develop inter-disciplinary and comparative research and to promote work on the major issues facing the process of integration and European society. The Centre is home to a large post-doctoral programme and hosts major research programmes and projects, and a range of working groups and ad hoc initiatives. The research agenda is organised around a set of core themes and is continuously evolving, reflecting the changing agenda of European integration and the expanding membership of the European Union.

Cultural change and the migration choice

“…As highlighted by Shenkar (2001), Tung and Verbeke (2010) and Li et al (2017) cultural relationships, which are relevant in the context of international economic exchanges, are far from being symmetric. Furthermore, Fiorini et al (2021) and Felbermayr and Toubal (2010) found evidence of cultural asymmetry between country pairs. Their evidence points to an important role in the asymmetric dimension of cultural affinity in determining cross-country socioeconomic interactions and calls for a broader notion of cultural proximity capable of reflecting asymmetric affinity between two countries.…”

“…To stress this argument even further, in reviewing the literature on gravity models for international migration, explicitly stated that cultural proximity is one of the most important "time invariant" dyadic components of bilateral migration costs. This definition of cultural proximity limits the capacity to capture all of the important dimensions of cultural affinity which have already been questioned in the international business, anthropological, sociological and economics literature (see Shenkar, 2001;Li et al 2017;Felbermayr & Toubal, 2010;Giuliano & Nunn, 2020;Fiorini et al 2021;Tung Verbeke, 2010). In this regard, Felbermayr and Toubal (2010).…”

“…They found that countries with similar cultural tastes have more intense trade relationships. Fiorini et al (2021) combine these two contributions by applying cultural trade to study its impact on FDI. Our analysis employs a similar conceptual framework to study the impact of the time variation of cultural affinity on international migration by using bilateral exports in cultural goods from OECD to sending countries (migrant origins) as a proxy cultural proximity.…”

“…To date, this is the first analysis exploring the relationship between cultural proximity and migration, which fully accounts for the time varying and asymmetric nature of VACP. In line with Disdier et al (2010) and Fiorini et al (2021), we employ cultural exports as a proxy for revealed cultural preferences. In other words, we assume that the value of bilateral exports of cultural goods reflects affinity towards the destination's (exporter's) culture for the citizens in the country of origin (importer).…”

Institutional Effects on the Internationalization of Entrepreneurial Firms

“…The economics literature has looked at a similar construct, cultural proximity, which has been found to influence trade (Felbermayr & Toubal, 2010) and foreign direct investment flows (Fiorini et al, 2021). Wang et al (2014) assert that it is easier for firms to engage in business with culturally close partners because of reduced uncertainty, which, in turn, makes it easier to share knowledge.…”