Social Environment and Healthy Investment Behavior: Joint Influence of Culture and Institution on China

Abstract

The influence of the social environment on healthy investment behavior is a vital research topic. This paper focuses on foreign direct investment (FDI) as an important part of its broad impact in improving the level of capital circulation and diversifying the non-systemic risk of a single country portfolio. Using data from 35 countries on direct investment in China, we find that the impact of the social environment on healthy investment behavior is mainly reflected in investors’ resistance to cultural distance and their benefit compensation across institutional distance. In addition, their joint influence is still negative, dominated by cultural distance, which can still verify that institutional distance mitigates the negative effect of cultural distance on FDI. Therefore, in order to promote international healthy investment behavior, it is feasible to improve both the mitigation effect of the institution in the short term and promote the level of cultural exchange in the long term, according to the research results of this paper.

Research on the Heterogeneity Threshold Effect of Foreign Direct Investment and Corporate Social Responsibility on Haze Pollution

“…Furthermore, in the context of the influx of FDI into China’s economic construction, FDI may indirectly influence the level of haze pollution in China through corporate social responsibility (CSR). Foreign companies with high CSR compliance standards may gradually lower their compliance standards whilst adapting to the already tricky and ineffective CSR compliance situation in China [ 22 ], thereby forming a vicious circle of ‘competition to the bottom’ with domestic companies [ 23 ]. Low-quality CSR activities vastly reduce discriminatory barriers and the transparency of international production activities.…”