The influence of cultural affinity for the boost of Brazilian investment in Portugal

Cristiano Cechella ()

ERSA conference papers from European Regional Science Association

Abstract: In response to a survey of Fortune 1000 companies enquiring about "the biggest barrier in doing business in the world market", cultural differences ranked at the top of the list (2007). For a long time culture and economy have been treated as broadly independent areas of research. Furthering the understanding of the determinants of economic activity promised to be one of the major research areas in the post-war era, although past analyses, especially those that are quantitatively based, are mainly focused on economic variables. Since the late twentieth century, however, there have been arguments respecting an increasingly close relationship between economy and culture. The failure to recognize these differences was the most common cause of failure for cross-national enterprises. Members of different cultures express different values and priorities when they make and implement decisions. These values influence work relationships, whether between superior and subordinate, peers, international joint venture partners, managers in head-quarters and subsidiaries, and others. This article seeks to measure the influence of factors such as history, language and culture in foreign direct investment (FDI) of Brazilian companies in Portugal, two countries with deep cultural affinity. Firstly, we will describe the luso-brazilian economic relations, especially after 1990s. Secondly, it will take surveys and assesses various approaches to the conduct of a multidimensional analysis of the FDI, in particular those related to culture. After that, through a regression analysis based on interviews answered by Brazilian companies in Portugal, we measure the influence of the Uppsala School, or Scandinavian, which postulates the importance of culture in corporate investment abroad. While geographic, political and economic approaches each have their own advantages, the cultural area is particularly useful for a long-term comparative economic analysis.

Date: 2011-09
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