The influence of culture and framing on investment decision-making

TLDR

Cultural studies in business and economics are limited to particular cultures, yet understanding cultural differences can help firms adapt practices and the Germany–Vietnam setting is unique and important because western–eastern differences may not generalize. This paper investigates escalation of commitment and framing within a German–Vietnamese cultural context. The authors conduct a laboratory experiment with student participants from Germany and Vietnam. Vietnamese participants exhibit a stronger tendency to invest additional resources, and negatively framed information heightens escalation of commitment.

Abstract

Purpose Cultural studies in business and economics research are still limited to particular cultures. Knowledge on cultural differences may help international corporations to adapt management practices according to the markets they are operating in. The purpose of this paper is to study the issue of escalation of commitment and framing in a new cultural setting involving Germany and Vietnam. This setting is unique and particularly interesting, for Germany being the biggest European market and Vietnam being one of the fastest growing emerging markets in Asia. Design/methodology/approach The authors use a lab experiment with student participants from Germany and Vietnam. Findings In a 2×2 in between-experiment, the authors find strong support that Vietnamese participants have a stronger tendency to invest additional resources and evidence that negatively framed information leads to the higher escalation of commitment. Implications are discussed. Originality/value The unique empirical comparison is important because differences between other western and eastern countries do not necessarily generalize to the setting.