Cultural Bias, Trust and Consumption: An Empirical Study ( 2015 )
Associate Professor Chu Junhong
Cultural proximity and trust have been found to affect international trade, portfolio investment and direct investment (Guiso, Sapienza and Zingales 2009), product adoption (Albuquerque, Bronnenberg and Corbett 2007), and pro-social lending (Burtch, Ghose and Wattal 2014). However, no study has examined the mechanisms through which culture and trust influence consumer demand. Existing studies tend to focus on cross-country cultural differences and trust. In geographically vast countries like China, India and the US, there are huge regional differences in culture and trust. There has not been any attempt to study the impact of within-country cultural differences on domestic trade and consumption and their policy implications.
This project has two research questions and objectives. First, how cross-country cultural proximity and trust influence consumer’s brand preference and price sensitivity, and consequently consumer’s demand. I will use the European car market as an empirical context. Second, how within-country cultural proximity and trust affect choices of sellers of different destination provinces by buyers of different origin provinces on online consumer-to-consumer (C2C) shopping, and what are the policy implications for regional e-commerce development and digital divide. I use the Chinese online C2C shopping as the empirical context.
Not only will this project help deepen our understanding of cultural elements in demand and consumption, it will also help policy makers to take relevant measures to alleviate the possible negative impact of cultural biases in demand and consumption.