Artikel 1: Alesina, A. & P. Giuliano (2015). Culture and Institutions. Journal of
Economic Literature 53(4), 898-944.
The article explores how culture and institutions interact and influence economic and
social outcomes. Alesina and Giuliano highlight that both culture and institutions are
interdependent and subject to historical influences. They review empirical research
that suggests a two-way causal relationship between these factors, meaning culture
shapes institutions and, conversely, institutions also mold cultural norms over time.
1. Culture: Defined in economic literature as the customary beliefs and values that
social groups transmit through generations. It includes values related to trust,
family ties, individualism, and attitudes toward work.
2. Institutions: Refer to both formal (rules, laws) and informal systems (social
norms, conventions) that structure interactions. Formal institutions often evolve
from or interact with existing cultural beliefs.
3. Key Studies and Examples: The authors review various studies demonstrating
how historical events and pre-existing cultural norms have led to differing
institutional outcomes. For example, studies on Italian “free cities” illustrate
how early participatory governance fostered cooperative cultural values that
persist and impact regional economic success.
Hypotheses or Propositions
Alesina and Giuliano propose several interconnected hypotheses:
• Culture’s Influence on Institutions: Cultural traits, such as trust and
individualism, positively correlate with the development of formal institutions
supporting economic growth.
• Institutional Impact on Culture: Over time, the presence of certain institutions
can lead to changes in cultural values. For example, political reforms and public
policies can shift societal attitudes toward cooperation and collective norms.
• Endogeneity of Culture and Institutions: Historical, geographical, and
technological factors simultaneously shape and are shaped by cultural and
institutional frameworks, creating an intertwined evolution.
Methodology
The authors employ a review methodology to consolidate findings from a wide range of
theoretical and empirical studies on culture and institutions. They focus on studies
that:
, • Use survey data from sources like the World Values Survey to measure cultural
traits, including generalized trust and family values.
• Analyze immigrant behaviors to separate cultural influences from institutional
impacts, as immigrants bring their cultural values to new institutional settings.
• Conduct experimental studies (e.g., trust games) to observe behavioral
differences influenced by culture.
The authors discuss key limitations in existing methodologies, such as measurement
issues, reverse causality, and the challenge of isolating cultural influences from
institutional ones.
Key Findings
1. Trust and Social Capital: High levels of generalized trust, often found in
individualistic cultures, are strongly linked to economic performance and
effective institutional functioning. Societies with high trust tend to have
institutions that support economic activities like trade and innovation.
2. Family Ties and Economic Behavior: Strong family ties, common in collectivist
cultures, may limit economic development by promoting nepotism and reducing
societal trust beyond family networks. This often correlates with weaker formal
institutions in these regions.
3. Impact of Historical Shocks: Events such as wars and migrations can have
long-term impacts on both culture and institutions. For instance, historical
governance systems in certain regions have influenced modern-day trust levels
and cooperation, which in turn affect institutional efficiency.
4. Persistence and Evolution of Cultural Traits: Cultural traits, such as
individualism or work ethics, tend to persist over generations, although they
evolve gradually. This persistence explains why institutional reforms sometimes
have delayed or limited effects on economic outcomes.
5. Policy Implications: Understanding the relationship between culture and
institutions can inform policies aimed at economic development. For instance,
policies enhancing trust within society can improve institutional efficacy.
Conclusion
Alesina and Giuliano conclude that culture and institutions are deeply interwoven and
that both are critical for economic and social development. They argue that future
research should explore how specific institutional changes can gradually alter cultural
norms, as well as how enduring cultural traits can support or hinder the establishment
of effective institutions. This interaction, they suggest, is crucial for understanding
global economic disparities and guiding development strategies.
,Artikel 2: Beugelsdijk, S., Kostova, T., Kunst, V. E., Spadafora, E., & van
Essen, M. (2018). Cultural distance and firm internationalization: A meta-
analytical review and theoretical implications.
Main Findings
The study by Beugelsdijk et al. (2017) provides an extensive meta-analytical review of
literature on cultural distance (CD) and firm internationalization. This review, the most
comprehensive to date, evaluates how CD impacts firms' strategic choices in different
phases of the internationalization process. The authors focus on two main stages:
1. Pre-investment decisions: This includes critical choices about where to
expand (location choice), how to structure investments (ownership levels), and
entry modes.
2. Post-investment outcomes: This stage addresses how companies manage
integration and performance outcomes for subsidiaries and the multinational
corporation (MNC) as a whole.
The findings reveal that while cultural distance influences location choice and entry
mode, its effects on investment levels and organizational structure are more nuanced.
Specifically, CD tends to discourage firms from choosing distant locations unless
strategic motivations override the perceived risks. Firms that do enter culturally distant
markets often use greenfield investments (i.e., establishing a new operation rather than
acquiring an existing one) and transfer home-country practices to maintain control. CD
is shown to adversely affect subsidiary performance but has less impact on the MNC’s
overall performance.
Explanation of Core Concepts
1. Cultural Distance (CD): CD measures the differences in cultural values and
practices between two countries. This concept originated from the Uppsala
model of gradual internationalization, which posits that firms expand first to
culturally close markets before venturing further afield. CD influences cross-
border management strategies, particularly when integrating foreign
subsidiaries into the parent company’s framework. The Kogut and Singh index,
derived from Hofstede’s cultural dimensions, is a widely used tool in measuring
CD.
2. Firm Internationalization: This term encompasses the entire process through
which firms expand operations across borders, involving strategic decisions
about location, entry modes, ownership structures, and the management of
, foreign subsidiaries. Cultural distance plays a significant role in these decisions,
creating both obstacles and opportunities.
3. Meta-Analysis: The authors used meta-analysis to consolidate findings across
156 studies published from 1988 to 2015. This method allows for a rigorous
synthesis of past research, controlling for inconsistencies and drawing
conclusions with greater statistical power. The study incorporates various
cultural frameworks (e.g., Hofstede, GLOBE) and distinguishes between
different phases and levels within internationalization (e.g., subsidiary versus
corporate performance).
Hypotheses and Propositions
The authors propose several hypotheses centered on how CD affects each phase and
decision in the internationalization process:
• Location Choice: Higher CD is expected to reduce the likelihood that a firm will
invest in a particular country, as firms prefer entering culturally similar markets
to minimize integration costs and risks.
• Entry Mode: When CD is high, firms are hypothesized to prefer greenfield
investments over acquisitions to avoid the challenges of integrating an
unfamiliar organizational culture.
• Ownership and Investment Level: CD may limit the degree of ownership a firm
is willing to take on, opting for joint ventures or partnerships in culturally distant
markets to share risks.
• Integration and Practice Transfer: High CD is anticipated to complicate the
transfer of home-country practices, as adapting practices to the local context
becomes challenging. However, if successful, the transfer of practices may lead
to improved subsidiary performance.
• Performance Outcomes: CD is hypothesized to have a negative impact on
subsidiary performance due to the complexity and cost of managing cultural
differences. Conversely, the effect on the entire MNC may be limited, with
possible minor benefits from cross-cultural learning.
Methodology
To test these hypotheses, Beugelsdijk et al. systematically analyzed 156 studies
spanning various industries and regions. The studies employed both Hedges-Olkin-
type meta-analysis (HOMA) and meta-analytic regression analysis (MARA) methods:
• Data Selection: They sourced studies that examined CD's impact on various
internationalization aspects. Studies using firm-level data were prioritized over
Economic Literature 53(4), 898-944.
The article explores how culture and institutions interact and influence economic and
social outcomes. Alesina and Giuliano highlight that both culture and institutions are
interdependent and subject to historical influences. They review empirical research
that suggests a two-way causal relationship between these factors, meaning culture
shapes institutions and, conversely, institutions also mold cultural norms over time.
1. Culture: Defined in economic literature as the customary beliefs and values that
social groups transmit through generations. It includes values related to trust,
family ties, individualism, and attitudes toward work.
2. Institutions: Refer to both formal (rules, laws) and informal systems (social
norms, conventions) that structure interactions. Formal institutions often evolve
from or interact with existing cultural beliefs.
3. Key Studies and Examples: The authors review various studies demonstrating
how historical events and pre-existing cultural norms have led to differing
institutional outcomes. For example, studies on Italian “free cities” illustrate
how early participatory governance fostered cooperative cultural values that
persist and impact regional economic success.
Hypotheses or Propositions
Alesina and Giuliano propose several interconnected hypotheses:
• Culture’s Influence on Institutions: Cultural traits, such as trust and
individualism, positively correlate with the development of formal institutions
supporting economic growth.
• Institutional Impact on Culture: Over time, the presence of certain institutions
can lead to changes in cultural values. For example, political reforms and public
policies can shift societal attitudes toward cooperation and collective norms.
• Endogeneity of Culture and Institutions: Historical, geographical, and
technological factors simultaneously shape and are shaped by cultural and
institutional frameworks, creating an intertwined evolution.
Methodology
The authors employ a review methodology to consolidate findings from a wide range of
theoretical and empirical studies on culture and institutions. They focus on studies
that:
, • Use survey data from sources like the World Values Survey to measure cultural
traits, including generalized trust and family values.
• Analyze immigrant behaviors to separate cultural influences from institutional
impacts, as immigrants bring their cultural values to new institutional settings.
• Conduct experimental studies (e.g., trust games) to observe behavioral
differences influenced by culture.
The authors discuss key limitations in existing methodologies, such as measurement
issues, reverse causality, and the challenge of isolating cultural influences from
institutional ones.
Key Findings
1. Trust and Social Capital: High levels of generalized trust, often found in
individualistic cultures, are strongly linked to economic performance and
effective institutional functioning. Societies with high trust tend to have
institutions that support economic activities like trade and innovation.
2. Family Ties and Economic Behavior: Strong family ties, common in collectivist
cultures, may limit economic development by promoting nepotism and reducing
societal trust beyond family networks. This often correlates with weaker formal
institutions in these regions.
3. Impact of Historical Shocks: Events such as wars and migrations can have
long-term impacts on both culture and institutions. For instance, historical
governance systems in certain regions have influenced modern-day trust levels
and cooperation, which in turn affect institutional efficiency.
4. Persistence and Evolution of Cultural Traits: Cultural traits, such as
individualism or work ethics, tend to persist over generations, although they
evolve gradually. This persistence explains why institutional reforms sometimes
have delayed or limited effects on economic outcomes.
5. Policy Implications: Understanding the relationship between culture and
institutions can inform policies aimed at economic development. For instance,
policies enhancing trust within society can improve institutional efficacy.
Conclusion
Alesina and Giuliano conclude that culture and institutions are deeply interwoven and
that both are critical for economic and social development. They argue that future
research should explore how specific institutional changes can gradually alter cultural
norms, as well as how enduring cultural traits can support or hinder the establishment
of effective institutions. This interaction, they suggest, is crucial for understanding
global economic disparities and guiding development strategies.
,Artikel 2: Beugelsdijk, S., Kostova, T., Kunst, V. E., Spadafora, E., & van
Essen, M. (2018). Cultural distance and firm internationalization: A meta-
analytical review and theoretical implications.
Main Findings
The study by Beugelsdijk et al. (2017) provides an extensive meta-analytical review of
literature on cultural distance (CD) and firm internationalization. This review, the most
comprehensive to date, evaluates how CD impacts firms' strategic choices in different
phases of the internationalization process. The authors focus on two main stages:
1. Pre-investment decisions: This includes critical choices about where to
expand (location choice), how to structure investments (ownership levels), and
entry modes.
2. Post-investment outcomes: This stage addresses how companies manage
integration and performance outcomes for subsidiaries and the multinational
corporation (MNC) as a whole.
The findings reveal that while cultural distance influences location choice and entry
mode, its effects on investment levels and organizational structure are more nuanced.
Specifically, CD tends to discourage firms from choosing distant locations unless
strategic motivations override the perceived risks. Firms that do enter culturally distant
markets often use greenfield investments (i.e., establishing a new operation rather than
acquiring an existing one) and transfer home-country practices to maintain control. CD
is shown to adversely affect subsidiary performance but has less impact on the MNC’s
overall performance.
Explanation of Core Concepts
1. Cultural Distance (CD): CD measures the differences in cultural values and
practices between two countries. This concept originated from the Uppsala
model of gradual internationalization, which posits that firms expand first to
culturally close markets before venturing further afield. CD influences cross-
border management strategies, particularly when integrating foreign
subsidiaries into the parent company’s framework. The Kogut and Singh index,
derived from Hofstede’s cultural dimensions, is a widely used tool in measuring
CD.
2. Firm Internationalization: This term encompasses the entire process through
which firms expand operations across borders, involving strategic decisions
about location, entry modes, ownership structures, and the management of
, foreign subsidiaries. Cultural distance plays a significant role in these decisions,
creating both obstacles and opportunities.
3. Meta-Analysis: The authors used meta-analysis to consolidate findings across
156 studies published from 1988 to 2015. This method allows for a rigorous
synthesis of past research, controlling for inconsistencies and drawing
conclusions with greater statistical power. The study incorporates various
cultural frameworks (e.g., Hofstede, GLOBE) and distinguishes between
different phases and levels within internationalization (e.g., subsidiary versus
corporate performance).
Hypotheses and Propositions
The authors propose several hypotheses centered on how CD affects each phase and
decision in the internationalization process:
• Location Choice: Higher CD is expected to reduce the likelihood that a firm will
invest in a particular country, as firms prefer entering culturally similar markets
to minimize integration costs and risks.
• Entry Mode: When CD is high, firms are hypothesized to prefer greenfield
investments over acquisitions to avoid the challenges of integrating an
unfamiliar organizational culture.
• Ownership and Investment Level: CD may limit the degree of ownership a firm
is willing to take on, opting for joint ventures or partnerships in culturally distant
markets to share risks.
• Integration and Practice Transfer: High CD is anticipated to complicate the
transfer of home-country practices, as adapting practices to the local context
becomes challenging. However, if successful, the transfer of practices may lead
to improved subsidiary performance.
• Performance Outcomes: CD is hypothesized to have a negative impact on
subsidiary performance due to the complexity and cost of managing cultural
differences. Conversely, the effect on the entire MNC may be limited, with
possible minor benefits from cross-cultural learning.
Methodology
To test these hypotheses, Beugelsdijk et al. systematically analyzed 156 studies
spanning various industries and regions. The studies employed both Hedges-Olkin-
type meta-analysis (HOMA) and meta-analytic regression analysis (MARA) methods:
• Data Selection: They sourced studies that examined CD's impact on various
internationalization aspects. Studies using firm-level data were prioritized over
