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Cultural Distance and Foreign Direct Investment: Does it Matter for Swedish Firms?
KTH, School of Industrial Engineering and Management (ITM), Industrial Economics and Management (Dept.), Entrepreneurship and innovation.
2015 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

This thesis employs a random effects panel estimator to assess the relationship between Swedish outward foreign direct investment (FDI) stock and cultural distance for a panel of 75 countries covering the period 1998–2012. Cultural distance, operationalized by differences in Schwartz cultural orientations and gender equality, adds to the liability of foreignness and is hypothesized to have a negative impact on outward FDI stock. The theoretical underpinning for the hypothesis is based on a gravity model adapted to FDI, which shows that distance between countries reduces the amount of FDI that takes place between them. The results from the analysis provide partial support for the hypothesis as differences in some of Schwartz cultural orientations (harmony, embeddedness and egalitarianism) have a significant and negative effect on Swedish firms´ outward FDI stock. Moreover, differences in women´s economic rights are positively related to FDI, while no significant effects are found for differences in share of women in parliament.

Place, publisher, year, edition, pages
2015. , 33 p.
Examensarbete INDEK, 19
Keyword [en]
Foreign direct investment, Cultural distance, Schwartz cultural orientations, Liability of foreignness, Gender equality, International trade, Gravity equation
National Category
URN: urn:nbn:se:kth:diva-168657OAI: diva2:817789
2015-05-27, 12:54 (English)
Available from: 2015-06-12 Created: 2015-06-06 Last updated: 2015-06-12Bibliographically approved

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Norell Bergendahl, Anna
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