Cultural distance, language dissimilarity and trade disputes

Sun, Jianqiang; Mostafiz, Fahmida; Cai, Yumei; Yang, Fujing

doi:10.1080/00036846.2023.2174932

Cited by 2 publications

(4 citation statements)

References 48 publications

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“…This finding also aligns with earlier studies (Kitenge & Lahiri, 2022;Melitz & Toubal, 2014;Wilkinson, 2009). Language barriers may make it difficult for traders to interact (Grinblatt & Keloharju, 2001), negotiate, comprehend export market demands (Sun, Mostafiz, et al, 2023), and build trusting relationships with their trading partners (Selmier & Oh, 2013). The findings also highlighted the challenges of using a different trade language from the native language to overcome linguistic barriers and improve effective communication (Egger & Toubal, 2016;Fidrmuc & Fidrmuc, 2016).…”

Section: Discussionsupporting

confidence: 89%

“…Language is an essential element of culture (Dylman et al, 2020;Lazear, 1999). Language differences can serve as proxies for cultural differences (Sun, Mostafiz, et al, 2023). In this study, we filled this gap, using linguistic distance as a measure of cultural distance and integrating it into the gravity model.…”

Section: Linguistic Distance and Tradementioning

confidence: 99%

“…Existing researches identify visible trade barriers such as trade cost (Kokko & Tingvall, 2014;Liu et al, 2021;Sun, Mostafiz, et al, 2023) communication problems (Fregidou-malama et al, 2023), and consumer preferences (He & Wang, 2015;Khan et al, 2024;Liu et al, 2020) among other barriers, which are influenced by invisible obstacles such as cultural differences in terms of values, beliefs, perceptual differences.…”

Section: Cultural Distance and Tradementioning

confidence: 99%

“…Exporting manufacturing goods to culturally distant nations can present challenges related to cultural standards, language barriers, and differences in business processes (Aroshidze et al, 2019). Existing literature also identify cultural differences that cause unfamiliarity, diminished levels of mutual trust, and misunderstandings (Bobina et al, 2023;Heid & Lu, 2022;Sun, Mostafiz, et al, 2023).…”

Section: Cultural Distance and Tradementioning

confidence: 99%

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Cultural distance and bilateral trade: A transitional economy perspective

Mostafiz,

Akter,

Rahman

2024

Bus Strat Dev

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Cultural differences represent significant trade barriers between transitional economies and their trading partners, which has been overlooked in recent studies. This paper investigates the effect of cultural distance (CD) on bilateral trade from Bangladesh. We conceptualize a research model by employing the extended gravity model as a theoretical base, where we amplify the theory by proposing that linguistic distance (LD) as a part of cultural distance has a profound effect on bilateral trade based on bilateral trade data from 1995 to 2019 and Hofstede's culture indices between Bangladesh and 157 trading partner countries. Using a pseudo‐poisson maximum likelihood model, we find that cultural distance has a significant and negative impact on Bangladesh's trade, with a significance level of 1%. Our empirical results indicate that one unit increase in cultural distance decreases trade by 40.84% and cultural distance has a greater impact on Bangladesh's exports than on its imports. Findings also reveal that the effect is substantial with high‐income nations than with low‐income nations, and for manufacturing products than primary products trade. Further, this study suggests that in addition to cultural distance (CD), linguistic distance (LD) from trading partners has a tantamount effect on bilateral trade, which is significant at 1%. Theoretically, this study suggests that linguistic distance (LD) should be added on gravity model for analyzing effects of cultural distance on bilateral and multilateral trade. Practically, this study contributes by providing valuable insights to policymakers to pay attention to cultural differences, especially during these economic transition periods to increase bilateral trade.

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