National culture and corporate investment

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

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

83 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 - Sep 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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