The Research On The Influence Of Cultural Difference To International Direct Investment Networks

Internationa l direct investme nt as the contact of econo my in heteroge neousculture, no doubt the culture is an influence factor worth to be attached. There havebeen lots of studies about influe nce on Internationa l direct investme nt which theculture difference makes, such as locatio n choice, entry mode and operationperformance. Simultaneous ly, the flow of capita l in the world strengths economicrelations a mong the countries, whic h leads the internationa l d irect investment to a netmodel. but less of researches force on the effect whic h culture expose on internationa ldirect investme nt. There fore, to cover this shortage, this artic le will try to exp la in therole that culture will take on the internationa l direct investment networks specia lly.In this article, we first do expound the connotatio n of culture and apply the coreof culture-cultural va lues to define the culture dista nce. It makes a ana lys is o n thecurrent culture distance in the world using the Hofstede’s culture dimensions aftercompare on three different culture values. It shows that countries preserve uniquecultura l va lues and culture difference is ins ignifica nt. At the same time, this paperuses comple x network analys is to build a internationa l d irect investme nt network anda weighted network applying the relative data fro m2006to2008. It was found thatthe degree distribution is not scale-free, and sma ll world effect and a core-perip herystructure is obvious in internationa l direct investment networks. The account of directinvestme nt in most of counties is sma ll and the difference is obvious when directinvestme nt reach some account, so it means the internatio nal d irect investme ntweighted network is also not scale-free. Besides, the mortgage cris is in America had agreat influence on internationa l d irect investment netwo rk and Chinese status isgrowing obvio us ly and these results have something with culture.In the view of this, we expla in that culture distance will increase cost of themultinationa l corporation, suc h as informatio n cost and negotiation cost basing thetransaction cost theory. It is said that culture will affect investors to choose investablelocatio n and scale through antic ipated profit decided by transaction cost, whic h willdecide the re lation a mong counties in the internationa l d irect investme nt networ k andfurther form d ifferent investme nt networks. On this basis, this paper uses the MRQAPto study the effect of culture distance on internatio nal direct investme nt networkbased on the data of47countries from2006to2008and the Hofstede’s national cultura l score. The research result revea ls that total culture d istance has a badinflue nce on internationa l d irect investme nt and culture d istance from d ifferentdimens ions show different effect. The d istance of PDI and UAI has negative effect,while the distance of IDV and MAS do not influence internatio na l direct investment.Some other factor such as economic scale, internationa l trade and geographica ldistance also exhib it the ir ro le. Economic sca le and internatio na l trade will promotedirect investment, while geographica l distance will get in the way of direct investme nt.Fina lly, the enlighte nments are taken in the aspect of Enterprise and governme ntaccord ing the conclus ion o f this study.