cover image: The Culture-Promotion Effect of Multinationals on Trade: the IKEA case

20.500.12592/g2g3b6

The Culture-Promotion Effect of Multinationals on Trade: the IKEA case

27 Jul 2022

DT n° 2022-06, July 2022 In this paper, 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.
export promotion; multinationals; trade; e22; f12; f22

Authors

Dylan Bourny; Daniel Mirza & Camelia Turcu

Pages
52
Published in
France