In many cross‐cultural management studies, culture and cultural differences across nations typically are assumed to be constant. The focus is on the impact of culture on other variables, such as the performance of multinational enterprises. However, is it possible that economic globalization results in cultural globalization? If yes, by how much? The purpose of this paper is to provide some evidence through studying the impact of foreign direct investment (FDI) on the Chinese culture.
An observable social indicator to represent each dimension of cultural value is chosen and statistical models are used to test whether FDI has significant impact on these indicators, after controlling for economic development level. Also this paper investigates whether FDI from a different cultural background has different effects on the Chinese culture.
Using data from major Chinese cities, it is found that FDI has significant effects on the degree of future orientation, performance orientation and in‐group collectivism. Also this paper found that FDI from the USA and the UK has a significant and negative effect on the degree of assertiveness; FDI from Japan, and Singapore, and the USA, and the UK has significantly negative effects on the degree of performance orientation; FDI from Japan and Singapore has a significantly positive effect on the degree of in‐group collectivism.
Unlike the traditional method of measuring culture values through what people say (interview or survey), this approach relies on what people do. This method helps avoid the measurement distortions caused by self‐deception and impression management problems with survey approach. In addition, this is believed to be the first study to test the impact of FDI on the change of culture values through econometric models.
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