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National And Organizational Culture As An Attractor For Foreign Direct

Investments

Raluca Elena Iloie

Phd Student, Babes-Bolyai University, Doctoral School in Economics and Business

Administration, 400591, Cluj-Napoca, Romania

Abstract

Investments are the primordial factor in the development and strategy of national economies, affecting all

areas and economic sectors, representing a condition of increasing individual and national income,

improving living standards. Foreign Direct Investments (FDI) are increasing the firms’ efficiency and

productivity, reducing unemployment, improving managerial skills at the organizational level, advanced

technology transfer and access to foreign markets. These, according to several statistical results, are the

reasons behind the nations’ efforts for attracting foreign direct investment. At the same time, the amount of

FDI varies from country to country, in accordance to their “attractivity” in the eyes of the international

business community. This paper intends to focus upon the correlation between FDI flows and national

culture, according to Hofstede’s model (model that can be employed for describing organizational and

national culture, both), for CEE (Central Eastern Europe) area, in an effort to ascertain if national culture

represents one of the host-country “attractors” for foreign investments. The analysis will be two folded:

first, we will study if there is a connection between the FDI flows and the host nation’s culture, in other

words if there is an “attractive” national culture for foreign finances. Second, we will test the hypothesis

that states that countries with a certain type of culture tend to invest in host-systems that have similar

cultural values – that is, we will identify if the major investors (by geographical origin) in an CEE (Central

and Eastern Europe) country have a propensity to direct their investments toward countries with similar

national cultural systems. As stated above, the unit of analysis will be CEE countries, and the data

encompass a period of 11 years (2001-2012).

Keywords: FDI, economic growth, national and organizational culture, uncertainty, risk-avoidance

Section: Economics and Management

1. Introduction

In order to ensure economic growth and competitiveness in various economic sectors, to be able

to create new jobs, increase household incomes, promote exports and transfer advanced knowledge

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and technology countries, mainly, need FDI, which is the purpose of integration into the European

economic system.

The decision to invest in a certain organization, institution or country is taken by individuals

like managers and leaders or by a group of people. These managers, leaders, as well as the people

they work with – at the level of organizations - are part of national societies (national cultures). “If

we want to understand their behavior, we have to understand their societies. In culture there is no

shortcut to the business world.” (Geert Hofstede, Gert Jan Hofstede, 2005, Cultures and

Organizations: Software of the Mind, p.20)

Many researchers, sociologists, anthropologists, population biologists and even economists

(Stiglitz, Joseph E. 2006) tried to explain why Globalization isn`t working in the same way for

every nation. Globalization, as a general concept, involves the international circulation of ideas,

information, shared cultural experiences, a global civil society and global environmental

movement.

Strictly economic, Globalization involves intensified circulation of goods, services, capital and

labor, contributing to raising living standards throughout the countries and foreign investors’ access

to new markets, open borders for people who want to travel, to train and even to work.

But, as observed in the late 80s, this process meets with fierce local resistance because

economic systems are not culture free. “We cannot change the way people in a country think, feel

and act by simply importing foreign institutions” (Hofstede, 2005, p.20), because there is a ”general

spirit of a nation” and institutions/ organizations that function in a geographical area follow mental

programs by adapting to local/ national culture (Montesquieu, C.-L., 1979 [1742], p.310).

“One point anthropologists have always made is that aspects of life which do not seem to be

related to another, actually are related (Marvin Harris, 1981, p. 8)”. The norms, values and patterns

of behavior exhibited by the employees of a certain organization are the product of a merging

process between the values and norms of the host-culture (national culture = the culture of the

society within which that organization functions) and those created by the rules, regulations and

structure of that particular organization.

Organizational culture improves stability and provides its members the understanding they need

to discover the meaning of events and activities taking place in the organization (within daily

activities). Thus, Hofstede, Neuijen, Ohayo and Sanders (1990) have shown that the essence of

organizational culture seems to be more in daily practice than shared values. This conclusion was

derived from a study of twenty organizations in Denmark and the Netherlands, which revealed that

the employee values differ more according to demographic characteristics such as nationality, age

or education, rather than organizational characteristics.

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After many conceptual reasoning and statistical studies, the emphasis was placed more and

more on national cultures and its` dimensions. Researchers believed that all societies (modern and

traditional) face the same basic problems (Benedict, R. 1934,Mead, M. 1962). Also, in 1954 was

published a broad survey of the English-language literature on national culture, where psychologist

Daniel Levinson and sociologist Alex Inkeles suggested that issues like relation to authority,

conception of self (in particular, the relationship between individual and society and the

individuals` concept of masculinity/ femininity) and ways of dealing with conflicts were the basic

problems worldwide.

The most important statistical study was developed by Geert Hofstede (1960 - 1970) on values

of people in more than fifty countries around the world (IBM study). In this study he discovered

that different countries confront themselves with common problems in areas like social inequality

(power distance – first dimension of national culture), the control of aggression and the

expression of emotions (uncertainty avoidance – second dimension of national culture), the

relationship between individual and the group (individualism versus collectivism – third

dimension of national culture), and the social and emotional implications of having been born as a

boy or a girl (masculinity vs. femininity – the fourth dimension of national culture). Meanwhile,

his study continued and there were added another two dimensions:long- versus short-term

orientation (the fifth dimension-stability, perseverance, oriented toward future vs. oriented toward

present, thinking for oneself) and indulgence versus restraint (the sixth dimension-enjoying life

and having fun vs. strict social norms).

This paper will focus mainly on the dimensions of national cultures mentioned above because,

as scientists agree, organizations and their people, along with organizational cultures, are part of the

national culture of the host – country they function in. The Central Eastern European (CEE)

countries analyzed will be: Germany, Switzerland, Poland, Austria, Czech Republic, Romania,

Hungary, Ukraine, Bulgaria, Slovakia, Croatia, Serbia, Slovenia and Moldova.

1.1 Foreign Direct Investments

Foreign direct investment is the name given to the process where a firm / company from one

country invests capital in a business / company existing or newly created in another country.

“Broadly, foreign direct investment includes mergers and acquisitions, building new facilities,

reinvesting profits earned from overseas operations and intra company loans.” (Wikipedia)

However, the Organization for Economic Cooperation and Development (OECD) calls direct

investment (FDI) as more than just movement of capital - investment that adds to, deducts from or

by which you can have a long-term interest and profit in a firm / company operating in the

economy, capital - direct investment coming from a country other than the firms` / company

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receiving the investment and implies that the investor exerts a significant influence on the

management of the investee company.( OECD 1996, pg. 7)

Types of FDI

• Greenfield refers to the establishment of companies - Greenfield investment;

• Mergers and acquisitions: full or partial takeover of companies by foreign investors;

• Business development: increasing FDI holdings in companies - foreign direct investment.

FDI Flows:

Data on FDI flows are on a net basis (capital transactions´ credits less debits between direct

investors and their foreign affiliates). FDI flows with a negative sign indicate that at least one of the

three components of FDI (equity capital, reinvested earnings or intra-company loans) is negative

and not offset by positive amounts of the remaining components. These are instances of reverse

investment or disinvestment. (United Nations Conference on Trade and Development – UNCTAD,

World Investment Report 2014, www.unctad.org)

Reasons why companies engage in FDI:

FOREIGN DIRECT INVESTMENT CLASSIFIED BY MOTIVATION

Resource seeking

FDI in natural resources (minerals, raw materials, and agricultural products)

FDI seeking low-cost or specialized labor

Market seeking

FDI into markets previously served by exports, or into closed markets protected by high import or other barriers

FDI by supplier companies following their customers overseas

FDI that aims to adapt products to local tastes and needs, and to use local resources

Efficiency seeking

Rationalized or integrated operations (regionally/globally) leading to cross-border product or process specialization

Strategic asset seeking

Acquisitions and alliances to promote long-term corporate objectives

Source: World Bank Group – Investment Climate 2014

1.2 Organizational Culture

Organizational culture is defined as “the collective programming of the mind that distinguishes

the members of one organization from another.” (Hofstede, G. 2005, p. 402)

For Hofstede, organizational culture is the interface between society and organization, a result

of the interaction and combination of values from these two different levels (Hatch, 2006).

Geert Hofstede’s model regarding organizational culture is structured along six dimensions of

practices in organizations:

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process-oriented versus results-oriented,

job-oriented versus employee-oriented,

professional versus parochial,

open systems versus closed systems,

tightly versus loosely controlled,

pragmatic versus normative.

The dimensions of organizational culture are about organizational units. Also, these dimensions

show us how to manage different types of organizational culture. Organizations place themselves

on dimensions depending on the business or industry they are part of.

1.3 National Culture

National culture is “the programming of the mind acquired by growing up in a particular

country.” (Hofstede, G. 2005, p.402)

The relative position of a country on a scale from 0 (low) to 100 (highest) on each of the six

cultural dimensions is a good predictor of human behavior and social norms in family and

education, workplace behavior, organization of state institutions, politics, national and

organizational decision making.As researchers claim, we may say that people`s way of thinking are

culturally determined.

The 6 dimensions of national culture:

Power distance (PDI),

Uncertainty avoidance (UAI),

Individualism versus collectivism (IDV),

Masculinity vs. femininity (MAS),

Long- versus short-term orientation (LTO),

Indulgence versus restraint (IVR).

These dimensions will not directly predict any future events or nation`s dynamics, but only the

understanding of what is likely to happen. Also, these dimensions have to be correlated with

national history, national wealth, personalities and coincidences.They are very useful when we

want to see and study cases of trends, averages or expectations.

2. Data and Empirical Methodology

In the present article we will analyze two hypotheses: first, we will study if there is a

connection between the FDI flows and the host nation’s culture (if there is an “attractive” national

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culture for foreign investors), and second, we will identify if the major investors (by geographical origin) in an Eastern or Central European country

tend to invest in host-systems that have similar national cultures. Data gathered about FDI flows (foreign direct investments flows) and national culture

for Central Eastern Europe (CEE countries) will cover a period of 11 years from 2001 to 2012.

Table1. Hierarchy of 14CEE countries by FDI flows in millions of US dollars, from 2001 – 2012, and their major investors by geographical origin

Germany Switzerland Poland Austria Czech Rep. Romania Hungary Ukraine Bulgaria Slovakia Croatia Serbia Slovenia Moldova

Total/ World

428 886 223 845 149 363 82 475 77 190 63 337 61 944 50 588 49 846 28 929 28 680 21 724 9 135 2 890

Nr. Cty. Total Cty. Total Cty. Total Cty. Total Cty. Total Cty. Total Cty. Total Cty. Total Cty. Total Cty. Total Cty. Total Cty. Total Cty. Total Cty. Total

1 NED 78 247 NED 82 331 GER 31 424 ITA 37 038 GER 16 115 AUT 15 766 GER 19 124 CYP 16 900 AUT 7 291 GER 5 389 AUT 8 060 AUT 3 457 AUT 4 651 UNS 2 211

2 LUX 65 398 AUT 37 990 FRA 20 111 GER 17 913 AUT 11 608 NED 12 424 L.A.&C 12 280 GER 6 076 NED 7 238 AUT 3 378 NED 3 730 NED 1 943 SUI 1 283 GER 234

3 ITA 51 839 O.EC 31 593 ESP 10 917 L.A.&C 7 406 NED 10 838 GER 10 365 AUT 11 891 NED 4 807 GRE 4 386 CZE 2 990 HUN 3 296 LUX 1 681 ITA 492 ROU 211

4 USA 42 068 FRA 20 136 NED 10 402 GBR 6 423 ESP 4 604 FRA 5 477 GBR 4 008 RUS 3 498 GER 3 270 ITA 2 703 GER 2 705 NOR 1 641 NED 483 RUS 150

5 SUI 30 186 L.A.&C 15 592 SWE 8 402 SUI 4 886 FRA 4 267 GRE 3 672 BEL 3 982 AUT 3 276 GBR 3 229 KOR 2 328 LUX 1 754 GER 1 633 GER 447 UKR 64

6 AUT 20 113 GER 12 616 GBR 6 530 NED 3 758 LUX 4 159 ITA 3 098 FRA 3 739 GBR 2 244 CYP 2 586 CYP 2 184 FRA 1 628 GRE 1 329 CRO 254 - - 7 IRL 19 679 O.DE 12 076 AUT 5 607 ESP 3 270 SUI 3 561 USA 1 329 LUX 3 699 CAR 1 916 RUS 2 197 FRA 1 667 ITA 1 385 ITA 1 329 GBR 240 - - 8 FRA 18 757 LUX 11 552 ITA 5 588 LUX 3 220 CYP 3 253 CZE 1 096 SUI 2 707 FRA 1 726 HUN 1 663 NED 1 248 SLO 1 324 SLO 895 BEL 223 - - 9 BEL 15 591 USA 5 555 CYP 5 426 RUS 2 818 SVK 2 998 L.A.&C 1 082 ESP 1 470 SWE 1 522 SUI 1 544 LUX 1 229 AHO 1 280 RUS 730 LUX 120 - - 10 SWE 12 345 O.EU 4 789 BEL 4 694 BRA 2 476 USA 2 992 LUX 1 077 USA 1 431 ITA 944 CZE 1 473 HUN 757 CAR 1 268 SUI 637 FRA 114 - - 11 JPN 11 412 CAN 4 045 DEN 3 760 BEL 1 941 GBR 2 293 CYP 1 051 SWE 881 SUI 943 USA 1 451 ESP 250 BEL 763 FRA 631 CYP 93 - - 12 CAY 9 510 JPN 2 304 USA 3 732 CHN 1 845 BEL 2 093 SUI 976 JPN 880 POL 856 FRA 1 415 L.A.&C 236 SWE 707 CRO 527 USA 89 - - 13 ESP 7 433 O.DGE 1 881 FIN 1 995 CYP 1 639 POL 1 895 HUN 950 KOR 823 HUN 637 BEL 1 327 SWE 234 SUI 455 HUN 501 SRB 82 - - 14 QAT 6 368 SWE 1 453 POR 1 655 AFR 1 140 KOR 1 550 GBR 903 LIE 412 LUX 551 ITA 1 264 GBR 216 CZE 318 GBR 495 SWE 77 - - 15 BAH 5 587 O.DC 46 JPN 911 USA 1 020 CAR 764 ESP 763 SIN 394 GRE 444 ESP 1 195 DEN 204 GBR 295 USA 314 RUS 72 - - 16 BER 5 329 ESP -449 HUN 907 FRA 971 ITA 719 AHO 634 ITA 391 USA 297 CAR 1 096 BEL 192 RUS 249 BUL 218 HUN 63 - - 17 DEN 5 269 ITA -1 636 NOR 732 FIN 757 MLT 719 BEL 556 NOR 368 KAZ 255 IRL 1 078 USA 192 IRL 235 MNE 193 IRL 53 - - 18 RUS 3 777 BEL -2 531 GRE 560 SWE 698 SWE 696 TUR 321 POR 325 PAN 196 TUR 584 SUI 137 CYP 233 CYP 184 DEN 27 - - 19 AUS 3 578 DEN -4 149 KOR 466 LIE 595 DEN 669 CHN 299 CZE 305 DEN 188 DEN 407 FIN 115 NOR 219 ESP 152 BIH 22 - - 20 MLT 2 457 GBR -7 874 UKR 403 TUR 502 LIE 469 ISR 260 FIN 277 EST 165 LUX 338 BRA 54 MLT 196 BIH 111 AUS 20 - -

Source: UNCTAD – WORLD Investment Report 2014 (countries profile), http://unctad.org/en , Own computation

AFR=Africa, AHO=Netherland Antilles,AUS=Australia, AUT=Austria, BAH=Bahamas, BEL=Belgium, BER=Bermuda, BIH=Bosnia & Herzegovina, BRA=Brazil,

BUL=Bulgaria,CAN=Canada, CAR=Caribbean, CAY=Cayman Islands, CHN=China, CRO=Croatia, CYP=Cyprus, CZE=Czech Republic, DEN=Denmark, ESP=Spain,

EST=Estonia,FIN=Finland, FRA=France, GBR=United Kingdom, GER=Germany, GRE=Greece, HUN=Hungary, IRL=Ireland, ISR=Israel,ITA=Italy, JPN=Japan,

KAZ=Kazakhstan, KOR=Korea,L.A.&C= Latin America & Caribbean, LIE=Liechtenstein,LUX=Luxembourg, MLT=Malta, MNE=Montenegro,NED=Netherlands,

NOR=Norway,O.DC=Other Developed Countries, O.DE=Other Developed Economies, O.DGE=Other Developing Economies, O.EC=Other European Countries, O.EU=Other

European Union, PAN=Panama, POL=Poland, POR=Portugal, QAT=Qatar, ROU=Romania, RUS=Russia, SIN=Singapore, SLO=Slovenia, SRB=Serbia,SUI=Switzerland,

SWE=Sweden, SVK=Slovakia,TUR=Turkey, UNS=UNSPECIFIED, USA=United States, UKR=Ukraine.

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From Table 1. we can see that the CEE countries that benefit from a large flow of investments

from 2001 – 2012 are Germany (428 886 millions of US dollars), Switzerland (223 845 millions of

US dollars) and Poland (149 363 mill. of US dollars), being the first 3 countries, in this order, from

the 14 countries we analyzed. Next in line are Austria, Czech Republic, Romania, Hungary,

Ukraine and Bulgaria. The countries which benefit less from FDI flows in the 11 years studied are:

Slovenia (9 135 mill. of US dollars) and Moldova (2 890 mill. of US dollars). Some data in Table

1. were available only for regions like Africa, Caribbean, Latin America & Caribbean, Other

Developed Economies, Other Developing Economies, Other European Countries, or Other

European Union, not for individual countries. “FDI flows with a negative sign indicate that at least

one of the three components of FDI (equity capital, reinvested earnings or intra-company loans) is

negative and not offset by positive amounts of the remaining components. These are instances of

reverse investment or disinvestment.”

(UNCTAD – FDI flows, http://unctad.org/en/Pages/DIAE/Investment%20and%20Enterprise/FDI_Flows.aspx)

Figure 1. Representation on 6 dimensions of National Cultures – 14 CEE countries

Scale: 0 – 100 (from 0 – 50 = low score, 51 – 100 = high score)

From Figure 1. we can observe the scores of CEE countries` national culture, on each

dimension (Power Distance, Individualism vs. Collectivism, Masculinity vs. Femininity,

National Culture

0

10

20

30

40

50

60

70

80

90

100

pdi idv mas uai ltowvs ivr

Dimensions

SC

AL

E

Austria Bulgaria Croatia Czech Rep Germany Hungary Moldova Poland Romania

Serbia Slovak Rep Slovenia Switzerland Ukraine

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Uncertainty Avoidance, Long-term Orientation vs. Short-term Orientation and Indulgence versus

Restraint).

We can see that Germany, Switzerland, Poland, Austria, Czech Republic, Hungary and

Slovakia have high scores on Individualism (IDV) and Masculinity (MAS) dimensions. The same

countries plus Romania, Bulgaria, Croatia, Serbia and Slovenia, have high scores on Uncertainty

Avoidance (UAI). Romania, Bulgaria, Croatia, Serbia and Slovenia have low scores on

Individualism and Masculinity dimensions. Power Distance (PDI) dimension scores low for

Germany, Switzerland, Austria and Hungary and high for Poland, Czech Republic, Romania,

Bulgaria, Slovakia, Serbia and Slovenia. Data about these dimensions are not available for Ukraine

and Moldova. We have only 2 countries that “manifest” Short-term Orientation namely Poland and

Slovenia, and also only 2 countries that score high on Indulgence versus Restraint dimension

(IVR), like Switzerland and Austria.

3. Findings based on the first set of gathered data

If we correlate Table 1. with Figure 1 we can observe that countries with very high levels of

foreign direct investment flows have in common high scores on IDV, MAS and UAI dimensions

(Germany, Switzerland, Poland, Austria, Czech Republic). Also, the countries with lower or very

low level of FDI flows have high scores on Power Distance (PDI) dimension (Bulgaria, Slovakia,

Croatia, Serbia, Slovenia). There are two exceptions from these “rules”: Romania and Hungary.

Even though Romania scores high on PDI dimension and low on IDV and MAS dimensions (with

high score on UAI dimension), and Hungary scores low on PDI and high on IDV, MAS, UAI

dimensions, Romania got more foreign investments over the period of 11 years (2001-2012) than

Hungary. Slovakia`s national culture scores high on IDV, MAS, UAI, but also has the highest score

on PDI, which can explain its` 10th place in the hierarchy of FDI flows from the 14 CEE countries

analyzed. Again, there is no data available on these dimensions for Ukraine and Moldova.

Based on gathered data and correlations between them we can say that the national culture that

“attracts” the most FDI flows is a culture that values more individualism, masculinity, avoidance of

uncertainty and has a democratic national/ institutional system (low score PDI).

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Figure 2. SPSS statistical reprezentation of country groupings around the world, in clusters with

similar national culture, based on the 6 cultural dimensions (PDI, IDV, MAS, UAI, LTO, IVR).

Source: www.geerthofstede.com, Own SPSS computation

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From Figure 2. we can extract and group countries from aroundthe world that have similar

national cultures. We are interested, in this second part of our analyses, to study the similitude of

national cultures between CEE countries and their major investors.The grouping will be into 7

major clusters,as follows:

- Cluster A: Australia, United States, Canada, New Zeeland, Ireland, Great Britain, Denmark,

Sweden, Finland, Norway, Nederland;

- Cluster B: Mexico, Venezuela, Colombia, Africa West, Trinidad & Tobago;

- Cluster C: Estonia, Lithuania, Latvia;

- Cluster D: Germany, Switzerland, Luxembourg, Austria, Belgium, France, Hungary, Italy, Czech

Republic, Poland, Japan;

- Cluster E: Malaysia, Philippines, Indonesia, Vietnam, Hong Kong, India, China, Singapore;

- Cluster F: Africa East, Thailand, Arab Countries, Morocco, Iran, Chile, El Salvador, Portugal,

Uruguay, Peru, Slovenia, Brazil, Turkey, Spain, Malta, Greece, Argentina;

- Cluster G: Korea South, Taiwan, Romania, Serbia, Bulgaria, Croatia, Russia, Bangladesh,

Pakistan.

Slovakia is the exception because, its` national cultural dimensions can be included in any of

the other clusters, except cluster A.

Ukraine and Moldova do not appear in any of the clusters because there isn`t sufficient data

about the 6 dimensions of their national culture.

4. Findings based on the second set of gathered data

From Table1. and Figure 2. we observe that 7 countries from 14 CEE analyzed have between 7

- 12 major investors from the same cluster as their own. From the point of view of the FDI flows

these investors are among the most important ones for the host countries.As such, Germany

benefits from FDI flows from Luxembourg, Italy, Switzerland, Austria, France, Belgium and Japan

in this order; Switzerland gets FDI flows from Austria, France, Germany, Luxembourg, Japan,

Italy, Belgium; Poland from Germany, France, Austria, Italy, Belgium, Japan and Hungary; Austria

from Italy, Germany, Switzerland, Luxembourg, Belgium and France; Czech Republic from

Germany, Austria, France, Luxembourg, Switzerland, Belgium, Poland and Italy. Hungary follows

the same “trend” in receiving FDI flows from the same countries from Cluster D, as well as the

exception Slovakia.

Slovenia, from Cluster F, didn`t have, on the first 20 major investors by geographical origin,

any investors from the same cluster, but only from the next closest cluster (Cluster G: Croatia,

Serbia and Russia). Countries from Cluster G, like Romania, Bulgaria, Croatia and Serbia had very

few major investors from the same cluster, all of them benefiting of FDI flows more from countries

in Cluster F. Romania had no investor from Cluster G, but 3 from cluster F (Spain, Greece and

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Turkey), Bulgaria had only one investor from Cluster G (Russia), and the same investors from

Cluster F, Croatia also got FDI flows from Russia and Cluster F (Spain, Slovenia, Malta).

And so, 7 from 14 CEE countries have major foreign investors from countries with similar

national culture, 5 CEE countries analyzed have very few investors from the same cultural cluster

and 2 countries couldn`t be analyzed in this context (Ukraine and Moldova), because of lack of

data.

As a result, we can state that the second hypothesis (that postulated that countries with a certain

type of culture tend to invest in host-systems that have similar national culture) is uncertain, the

information available only partially supporting it.

5. Conclusions

The confirmation of our first hypothesis is backed up by studies that demonstrate correlations

between high scores in IDV, MAS, UAI and low scores for PDI cultural dimension. Nearly all

wealthy countries score high in Individualism or Masculinity and score low in PDI (power distance

dimension).

For example, high scores in PDI are related to bribery and scandals that are usually covered up

in corrupt countries.

Individualism is usually correlated to small power distance were the role of state in the

economic system is restrained, joint stock companies are owned by individuals and Per Capita

GNP tend to be higher, indicating the level of wealth forthosecountries.

In countries that manifest Masculine culture there is a preference for large organizations, more

status product are sold, people live in order to work, you find more opportunities for high earnings,

competitive manufacturing and economic growth at the national level.

Also, high scored UAI countries like law and order, dislike ambiguity and chaos, have more

specialists in organizations that show an inner urge to work hard and like precision and

formalization.

For the first and second hypothesis, the small difference in FDI flows between Romania and

Hungary (even though Hungary has more similar cultural dimensions and comes from the same

Cluster D as Germany, Switzerland, Poland and Austria) can be explained by Romania’s sea access

to international trade. In the case of Slovakia weobserve an extremely high score on the PDI

cultural dimension. Multinational companies avoid countries like this because they want to invest

in democratic systems, where decentralization is popular and there is fewer supervisory personnel,

qualities much needed for companies` long-distance management; this country also has an

extremely high score of MAS dimension which indicates that their national culture shows

disrespect for cooperation and employment security.

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National culture represents only one of many factors that can explain the FDI flows within host

economies and there is need of further research to completely explore this relationship to its full

extent.

References:

Harris, M. 1981, America now: The anthropology of a changing culture, New York: Simon &

Schuster;

Hofstede, G., Hofstede, G.J., 2005, Cultures and Organizations: Software of the Mind, ed.

McGraw Hill;

Hofstede, G., Neuijen, B., Ohayv, D., & Sanders, G. (1990). Measuring organizational cultures:

A qualitative and quantitative study across twenty cases. Administrative ScienceQuarterly, 35, 286-

316;

Mead, M. 1962, Male and Female, London: Penguin Books [Original work published 1950];

Montesquieu, C.-L. de. 1979, De l'esprit des lois, vol. I, Paris: GF – Flammarion. [Original

work published 1742];

Porter, Michael, 2008, DespreConcurență, Ed. Meteor Business;

Rainelli, Michel, 2004ComerțulInternațional, Perspective generale/ NouaTeorie a

ComerțuluiInternațional, Ed. Arc;

Stiglitz, Joseph E.,2008,MecanismeleGlobalizării, Ed. Polirom, Bucuresti

http://www.bnr.ro/Investitiile-straine-directe-%28ISD%29-in-Romania-3174.aspx – StatisticaAnuala

BNR asuprafluxului net de ISD-uri;

http://geert-hofstede.com/national-culture.html - National culture dimensions;

http://geerthofstede.com/dimension-data-matrix - Statistical data base on countries cultural dimensions;

http://unctad.org/SearchCenter/Pages/Results.aspx?k=investment%20report – World Investment Report

2014, country profiles;

http://unctad.org/en/Pages/DIAE/Investment%20and%20Enterprise/FDI_Flows.aspx - UNCTAD – FDI

flows.

Acknowledgement: This work was cofinanced from the European Social Fund through Sectoral Operational

Programme Human Resources Development 2007-2013, project number POSDRU/159/1.5/S/134197 „Performance

and excellence in doctoral and postdoctoral research in Romanian economics science domain”./ Această lucrare a fost

cofinanțată din Fondul Social European, prin Programul Operațional Sectorial Dezvoltarea Resurselor Umane 2007-

2013, proiect numărul POSDRU/159/1.5/S/134197 „Performanață şi excelență în cercetarea doctorală și

postdoctorală în domeniul ştiințelor economice din România”