National culture and corporate investment

Liang SHAO, Chuck C.Y. Kwok*, Ran Zhang

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review

    137 Citations (Scopus)


    We explore the relation between individualism and horizons and types of corporate investment, based on individualism's implications for risk taking. We find that firms in individualistic countries invest more in long-term (risky) than in short-term (safe) assets. Moreover, the effect of individualism on long-term investment hinges on R&D: firms in individualistic countries invest more in R&D projects but not more in physical assets. To test whether risk taking is the channel through which individualism works, we employ two-stage ordinary least squares and other analyses to nullify alternative explanations, such as: (1) uncontrolled institutions determine both individualism and R&D; and (2) firms in individualistic countries invest more in R&D because they have higher investment efficiency, or pick less-risky R&D projects. We further find that individualistic firms tend to employ excess cash to increase R&D rather than increase dividends, and R&D decisions are less reliant on internal financing but more responsive to growth opportunities in individualistic countries.

    Original languageEnglish
    Pages (from-to)745-763
    Number of pages19
    JournalJournal of International Business Studies
    Issue number7
    Publication statusPublished - Sept 2013

    Scopus Subject Areas

    • Business and International Management
    • Business, Management and Accounting(all)
    • Economics and Econometrics
    • Strategy and Management
    • Management of Technology and Innovation

    User-Defined Keywords

    • cultural dimensions
    • finance
    • innovation and R&D
    • national culture
    • technology and innovation


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