The Culture-Promotion Effect of Multinationals on Trade: the IKEA case

Dylan Bourny, Daniel Mirza and Camelia Romocea Turcu

Working Papers from CEPII research center

Abstract: In this paper, we investigate how some MNEs which spread their home culture over time and space to the rest of the world are affecting, in turn, trade flows from home. By selling products embodying cultural information related to their country of origin, those MNEs embrace the role of ambassadors of their home country. We argue that IKEA offers an ideal case to identify a multinational's culture-promotion effect on trade. We build a dataset on IKEA's presence in foreign markets between 1995 and 2015 and merge it with disaggregated product level trade between pairs of countries. We find solid evidence of an externality linked to IKEA: a setting of an IKEA new store in a destination increases trade flows by around 2% from Sweden for products that resemble to what the multinational offers (despite being completely unrelated to that multinational). This result is driven primarily by the products identified to encompass a high-cultural content. Other robustness checks and tests seem to be very much consistent with the hypothesis of IKEA promoting the Swedish culture to the world.

Keywords: Export Promotion; Multinationals; Trade (search for similar items in EconPapers)
JEL-codes: E22 F12 F22 (search for similar items in EconPapers)
Date: 2022-07
New Economics Papers: this item is included in nep-cul and nep-int
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Related works:
Journal Article: The culture-promotion effect of multinationals on trade: the IKEA case (2023)
Working Paper: The culture-promotion effect of multinationals on trade: the IKEA case (2023)
Working Paper: The Culture-Promotion Effect of Multinationals on Trade: the IKEA case (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepidt:2022-06

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