Egalitarianism and International Investment

41 Pages Posted: 1 May 2006 Last revised: 10 Nov 2010

See all articles by Jordan I. Siegel

Jordan I. Siegel

University of Michigan

Amir N. Licht

Reichman University; European Corporate Governance Institute (ECGI)

Shalom H. Schwartz

Hebrew University of Jerusalem - Department of Psychology; National Research University Higher School of Economics (Moscow)

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Date Written: November 4, 2010


This study identifies how country differences on a key cultural dimension - egalitarianism - influence the direction of different types of international investment flows. A society's cultural orientation towards egalitarianism is manifested by intolerance for abuses of market and political power and a desire for protecting the weak and less powerful actors. We show egalitarianism to be based on exogenous factors including social fractionalization, dominant religion circa 1900, and war experience from the 19th century era of state formation. Controlling for a large set of competing explanations, we find a robust influence of egalitarianism distance on cross-national investment flows of bond and equity issuances, syndicated loans, and mergers and acquisitions. An informal cultural institution largely determined a century or more ago, egalitarianism exercises its effect on international investment via an associated set of consistent contemporary policy choices. But even after controlling for these associated policy choices, egalitarianism continues to exercise a direct effect on cross-border investment flows, likely through its direct influence on managers’ daily business conduct.

Keywords: culture, informal institutions, social institutions, egalitarianism, cultural distance

JEL Classification: F21, F23, G32, G34, K22, K4, Z13

Suggested Citation

Siegel, Jordan I. and Licht, Amir N. and Schwartz, Shalom H., Egalitarianism and International Investment (November 4, 2010). Available at SSRN: or

Jordan I. Siegel (Contact Author)

University of Michigan ( email )

Ann Arbor, MI
United States

Amir N. Licht

Reichman University ( email )


European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
952-9-9513323 (Fax)

HOME PAGE: http:/

Shalom H. Schwartz

Hebrew University of Jerusalem - Department of Psychology ( email )

National Research University Higher School of Economics (Moscow) ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017

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