Cultural risk and management strategy for Chinese enterprises' overseas investment

Linjing Dang and Jingfeng Zhao

China Economic Review, 2020, vol. 61, issue C

Abstract: Cultural differences between countries are the primary causes of cultural risk for foreign direct investment. The risk is associated with differences in language, religious belief, legal origin and other factors, in which values play a recessive and influential role. The paper shows that the potential cultural risk is minimal in the ASEAN region and transnational enterprises can adopt the investment strategy taking Chinese culture as the dominant culture. The potential cultural risk in Central Asia, South Asia and Commonwealth of Independent States is moderate, and transnational enterprises can adopt the investment strategy taking the integration of Chinese culture and host culture as the dominant culture. However, the potential cultural risk is great in Central and Eastern Europe and the Western Asia region. Therefore, transnational enterprises should adopt the investment strategy adaptive to host culture as the dominant culture.

Keywords: The belt and road initiative; Foreign direct investment; Cultural risks; Value distance; Cross-cultural management (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:61:y:2020:i:c:s1043951x20300304

DOI: 10.1016/j.chieco.2020.101433

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