Tuesday, June 23, 2015

Culture Can Impact ROI

Some cultures are just made for good business.  Countries with Anglo-Saxon common law and Protestant work ethics have high per capita GDP, like the good old USA.  Japan and South Korea manage to do well economically.  The rest of the world makes me wonder about the connection between culture and ROI.  Richard Lewis' When Cultures Collide explores the relationship between culture and business in some depth.  I'll just throw my own thoughts about the subject onto the Interwebs.

I would like to find some Big Data on cultural habits.  Searching Google doesn't help much at this point.  Big Data practitioners are forming their own professional cultures but they have little to say about data on national or sub-national cultural traits.  The most immediate waypoint I have found is a description of the Big Five personality traits and their measurement across cultures.  One NIH NCBI paper on cross-cultural personality studies offers more formal models that are more relevant for psychiatric diagnoses than business case studies.

High-functioning cultures should generate reliably higher GDPs and project ROIs than more primitive cultures.  It's an a priori conclusion supported with deep dives into global indexes for corruption, economic freedom, and other measures of well-being.  Countries in Scandinavia, the Pacific Rim, and North America tend to cluster at the top of most global rankings.

Culture has implications for common currencies and economic unions.  The tightest unions (like the EU and euro) are only viable with very closely linked cultures.  Looser unions (like the managed trade areas the US is trying to forge with Europe and Asia) work if they only involve business elites whose common outlook will facilitate large projects.  Transnational elites have more in common with each other than they do with common citizens in their own countries.  

The EU and euro became nonviable when the common market grew so large that too many ordinary citizens from incompatible cultures were required to interact.  I have long believed that a "Holy Roman Euro" of former Franks, Gauls, and Germanic tribes is the only viable future for Europe's common currency after the periphery explodes.  The former Hapsburg countries are better off having their own common market.  Poland and the Baltics need to go their own way.

The Alfidi Capital thesis offers the US as the most viable geostrategic link for loose common markets that would otherwise include incompatible cultures.  The US's long coasts with natural ports are the geographic links to European and Asian traders who would otherwise transit unfriendly waters (yes, China, this means you and your lack of commitment to freedom of navigation).  American business elites include many upwardly mobile Asian and Latin American immigrants with cosmopolitan outlooks.  We figured out the winning formula for linking culture and economic success right here at home.