IDEAS home Printed from https://ideas.repec.org/a/oup/jecgeo/v23y2023i4p771-800..html
   My bibliography  Save this article

The culture-promotion effect of multinationals on trade: the IKEA case

Author

Listed:
  • Dylan Bourny
  • Daniel Mirza
  • Camelia Turcu

Abstract

In this article, we investigate how some MNEs which spread their home culture over time and space to the rest of the world are affecting, in turn, trade flows from home. By selling products embodying cultural information related to their country of origin, those MNEs embrace the role of ambassadors of their home country. We argue that IKEA offers an ideal case to identify a multinational’s culture-promotion effect on trade. We build a dataset on IKEA’s presence in foreign markets between 1995 and 2015 and merge it with disaggregated product level trade between pairs of countries. We find solid evidence of an externality linked to IKEA: a setting of an IKEA new store in a destination increases trade flows by around 2% from Sweden for products that resemble to what the multinational offers (despite being completely unrelated to that multinational). This result is driven primarily by the products identified to encompass a high-cultural content. Other robustness checks and tests seem to be very much consistent with the hypothesis of IKEA promoting the Swedish culture to the world.

Suggested Citation

  • Dylan Bourny & Daniel Mirza & Camelia Turcu, 2023. "The culture-promotion effect of multinationals on trade: the IKEA case," Journal of Economic Geography, Oxford University Press, vol. 23(4), pages 771-800.
  • Handle: RePEc:oup:jecgeo:v:23:y:2023:i:4:p:771-800.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/jeg/lbac033
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Keith Head & Thierry Mayer, 2019. "Brands in Motion: How Frictions Shape Multinational Production," American Economic Review, American Economic Association, vol. 109(9), pages 3073-3124, September.
    2. Anne-Célia Disdier & Silvio Tai & Lionel Fontagné & Thierry Mayer, 2010. "Bilateral trade of cultural goods," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(4), pages 575-595, January.
    3. de Sousa, José, 2012. "The currency union effect on trade is decreasing over time," Economics Letters, Elsevier, vol. 117(3), pages 917-920.
    4. Maystre, Nicolas & Olivier, Jacques & Thoenig, Mathias & Verdier, Thierry, 2014. "Product-based cultural change: Is the village global?," Journal of International Economics, Elsevier, vol. 92(2), pages 212-230.
    5. Nicolas Maystre & Jacques Olivier & Mathias Thoenig, 2014. "Product-based cultural change: Is the village global?," Post-Print halshs-00979107, HAL.
    6. Rubén Segura-Cayuela & Josep M. Vilarrubia, 2008. "The effect of foreign service on trade volumes and trade partners," Working Papers 0808, Banco de España.
    7. Andrew K. Rose, 2007. "The Foreign Service and Foreign Trade: Embassies as Export Promotion," The World Economy, Wiley Blackwell, vol. 30(1), pages 22-38, January.
    8. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8o0n71o2 is not listed on IDEAS
    9. Fally, Thibault, 2015. "Structural gravity and fixed effects," Journal of International Economics, Elsevier, vol. 97(1), pages 76-85.
    10. Jens Hultman & Thomas Johnsen & Rhona Johnsen & Susanne Hertz, 2012. "An interaction approach to global sourcing: A case study of IKEA," Post-Print hal-00858667, HAL.
    11. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2009. "Cultural Biases in Economic Exchange?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(3), pages 1095-1131.
    12. Erik Brynjolfsson & Xiang Hui & Meng Liu, 2019. "Does Machine Translation Affect International Trade? Evidence from a Large Digital Platform," Management Science, INFORMS, vol. 65(12), pages 5449-5460, December.
    13. Bart J. Bronnenberg & Jean-Pierre H. Dube & Matthew Gentzkow, 2012. "The Evolution of Brand Preferences: Evidence from Consumer Migration," American Economic Review, American Economic Association, vol. 102(6), pages 2472-2508, October.
    14. Ignatius J. Horstmann & James R. Markusen, 2021. "Endogenous market structures in international trade (natura facit saltum)," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 2, pages 25-45, World Scientific Publishing Co. Pte. Ltd..
    15. repec:hal:wpspec:info:hdl:2441/c8dmi8nm4pdjkuc9g8o0n71o2 is not listed on IDEAS
    16. Smarzynska Javorcik, Beata, 2004. "The composition of foreign direct investment and protection of intellectual property rights: Evidence from transition economies," European Economic Review, Elsevier, vol. 48(1), pages 39-62, February.
    17. Mariassunta Giannetti & Yishay Yafeh, 2012. "Do Cultural Differences Between Contracting Parties Matter? Evidence from Syndicated Bank Loans," Management Science, INFORMS, vol. 58(2), pages 365-383, February.
    18. Anne-Célia Disdier & Silvio Tai & Lionel Fontagné & Thierry Mayer, 2010. "Bilateral trade of cultural goods," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(4), pages 575-595, January.
    19. repec:hal:pseose:halshs-01109509 is not listed on IDEAS
    20. C. S. Agnes Cheng & Weihang Sun & Kangtao Ye & Ning Zhang, 2020. "The Effect of Auditing on Promoting Exports: Evidence from Private Firms in Emerging Markets," Management Science, INFORMS, vol. 66(4), pages 1692-1716, April.
    21. Bruce Blonigen, 2005. "A Review of the Empirical Literature on FDI Determinants," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 33(4), pages 383-403, December.
    22. Burt, Steve & Johansson, Ulf & Thelander, Åsa, 2011. "Standardized marketing strategies in retailing? IKEA’s marketing strategies in Sweden, the UK and China," Journal of Retailing and Consumer Services, Elsevier, vol. 18(3), pages 183-193.
    23. repec:hal:spmain:info:hdl:2441/mlkvtnbqe9pg8nsvf612mcnbs is not listed on IDEAS
    24. Antrà s, Pol & Yeaple, Stephen R., 2014. "Multinational Firms and the Structure of International Trade," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 55-130, Elsevier.
    25. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    26. Glass, Amy Jocelyn & Saggi, Kamal, 2002. "Intellectual property rights and foreign direct investment," Journal of International Economics, Elsevier, vol. 56(2), pages 387-410, March.
    27. S. Lael Brainard, 1993. "An Empirical Assessment of the Proximity-Concentration Tradeoff between Multinational Sales and Trade," NBER Working Papers 4580, National Bureau of Economic Research, Inc.
    28. Keith Head & Thierry Mayer, 2019. "Brands in Motion: How Frictions Shape Multinational Production," American Economic Review, American Economic Association, vol. 109(9), pages 3073-3124, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Olivier BARGAIN & Jean-Marie CARDEBAT & Raphaël CHIAPPINI, 2020. "Trade Uncorked: Genetic Resistance and Quality Heterogeneity in Wine Exports," Bordeaux Economics Working Papers 2020-18, Bordeaux School of Economics (BSE).
    2. Li, Chang & Wang, Chu & Yang, Lianxing & Chu, Baoju, 2023. "Impact of cultural trade on foreign direct investment: Evidence from China," Emerging Markets Review, Elsevier, vol. 55(C).
    3. Maystre, Nicolas & Olivier, Jacques & Thoenig, Mathias & Verdier, Thierry, 2014. "Product-based cultural change: Is the village global?," Journal of International Economics, Elsevier, vol. 92(2), pages 212-230.
    4. Isaac Holloway, 2014. "Foreign entry, quality, and cultural distance: product-level evidence from US movie exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 371-392, May.
    5. Eiji Yamamura & Inyong Shin, 2016. "Effect of consuming imported cultural goods on trading partners’ tolerance toward immigrants: the case of Japanese anime in Korea," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(4), pages 681-703, November.
    6. Yanfen Wang, 2020. "A Literature Review of Empirical Research on Trade of Cultural Goods," Applied Finance and Accounting, Redfame publishing, vol. 6(1), pages 9-14, February.
    7. Jeon, Doh-Shin & Jullien, Bruno & Klimenko, Mikhail, 2021. "Language, internet and platform competition," Journal of International Economics, Elsevier, vol. 131(C).
    8. Pol Antràs & Davin Chor, 2021. "Global Value Chains," NBER Working Papers 28549, National Bureau of Economic Research, Inc.
    9. Brian McCaig & Nina Pavcnik & Woan Foong Wong, 2022. "Foreign and Domestic Firms: Long Run Employment Effects of Export Opportunities," CESifo Working Paper Series 10168, CESifo.
    10. Jaime DE MELO & Marcelo OLARREAGA, 2017. "Trade Related Institutions and Development," Working Papers P199, FERDI.
    11. Omar Martin Fieles‐Ahmad & Matthias Huber, 2022. "Learn German, Buy German? Language‐learning opportunities abroad and exports," The World Economy, Wiley Blackwell, vol. 45(10), pages 3031-3058, October.
    12. Alessia LO TURCO & Daniela MAGGIONI, 2016. "For God's sake. The impact of religious proximity on firms' exports," Working Papers 418, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    13. Ahn, JaeBin & Greaney, Theresa M. & Kiyota, Kozo, 2022. "Political conflict and angry consumers: Evaluating the regional impacts of a consumer boycott on travel services trade," Journal of the Japanese and International Economies, Elsevier, vol. 65(C).
    14. TANI Naoki & OGAWA Eiji, 2024. "Firms' Internationalization Decisions and Demand Learning," Discussion papers 24019, Research Institute of Economy, Trade and Industry (RIETI).
    15. Shon Ferguson & Rikard Forslid, 2019. "Sizing Up the Impact of Embassies on Exports," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(1), pages 278-297, January.
    16. Onur A. Koska & Ngo Van Long & Frank Stähler, 2018. "Foreign direct investment as a signal," Review of International Economics, Wiley Blackwell, vol. 26(1), pages 60-83, February.
    17. Pedro Albarran & Raquel Carrasco & Adelheid Holl, 2013. "Domestic transport infrastructure and firms’ export market participation," Small Business Economics, Springer, vol. 40(4), pages 879-898, May.
    18. Kenji Fujiwara, 2015. "Trade and FDI Liberalization in Multiple Oligopolies," Discussion Paper Series 131, School of Economics, Kwansei Gakuin University, revised Jul 2015.
    19. Harms, Philipp & Shuvalova, Daria, 2020. "Cultural distance and international trade in services: A disaggregate view," Economic Systems, Elsevier, vol. 44(2).
    20. Coşar, A. Kerem & Grieco, Paul L.E. & Li, Shengyu & Tintelnot, Felix, 2018. "What drives home market advantage?," Journal of International Economics, Elsevier, vol. 110(C), pages 135-150.

    More about this item

    Keywords

    Export promotion; multinationals; trade;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:jecgeo:v:23:y:2023:i:4:p:771-800.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/joeg .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.