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Religious freedom, religious diversity, and Japanese foreign direct investment
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Research in International Business and Finance 22 (2008) 29–39
Religious freedom, religious diversity, and Japanese foreign direct investment Eric Dolansky a,1 , Ilan Alon b,∗ a
Richard Ivey School of Business, 1151 Richmond Street North, London, Ontario N6A 3K7, Canada b Rollins College, 1000 Holt Ave-2722, Winter Park, FL 32789, United States Received 30 June 2006; received in revised form 15 November 2006; accepted 17 November 2006 Available online 18 December 2006
Abstract Research into the links between religion and foreign direct investment is scarce, partly because research on religion has not been the traditional domain of business and economics. Nevertheless, religion affects the economies, political structures, legal environments, and social behaviors of people around the world and is, therefore, an important element of the international business environments. Foreign direct investment (FDI) decisions are often made after an assessment of the international business environments. This article makes a singular contribution by focusing on the impact of religion – religious freedom and religious diversity – on the foreign direct investment of Japanese companies. We find that national income and religious diversity significantly influence Japanese decisions to invest. © 2006 Published by Elsevier B.V. Keywords: Religion; Freedom; Diversity; Foreign direct investment (FDI); Japan
1. Introduction Religion forms the basis of many of the institutions in government and society that play key roles in our everyday lives. Today’s cultures are rooted in theological interpretations of reality and existing laws are based on holy texts such as the Torah, Bible, and Qur’an. Many wars and international conflicts have arisen due to religious conflict, from ancient times to the present. These differences, whether they are called religious or cultural, make up the diverse
∗ 1
Corresponding author. Tel.: +1 407 646 1512; fax: +1 407 646 1550. E-mail address: [email protected] (I. Alon). Tel.: +1 416 363 8839; fax: +1 519 661 2089.
0275-5319/$ – see front matter © 2006 Published by Elsevier B.V. doi:10.1016/j.ribaf.2006.11.003
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world. Weber (1930) postulated that religious beliefs and practices impact economic development, as it is through religion that many learn rules regarding honesty, integrity, and hard work. Lavoie and Chamlee-Wright (2000), while not studying religious freedom directly, alluded to it in reference to their investigation of culture and economic processes. They observed that religion has its basis in culture. The authors stated that economists often ignore the role of culture in favor of material and institutional conditions in analyses of economic prosperity. According to the authors more attention needs to be given to the “spiritual” realm of the economy, and other elements of culture, such as an “enterprising spirit.” Other researchers (e.g., Huntington, 1996; Landes, 1999; Barro and McCleary, 2003) have also suggested that culture is a key antecedent to economic growth, and religion (its practice as well as its role in society, in terms of tolerance, freedom, and diversity) is a key component of culture. Johnson and Lenartowicz (1998), in a study of economic growth, considered a model with two measures of culture (developed by Hofstede) and an index of economic freedom; they found significant relationships between the variables. Easterly and Levine (1997), in a cross-country study of countries, examined the differences in countries with high levels of ethnic diversity (an element of the social environment related to religion). They found that ethnic-group polarization led to rent-seeking behavior and reduced the consensus of public goods, creating long-term reductions in economic growth. The present study contributes to the literature of religion and business by examining the impact of two religious variables, freedom and diversity, on the foreign direct investment of the Japanese. Because this relationship has not been directly explored to date, there is comparatively little literature with direct bearing on our topic. In the sections that follow we develop a rationale as to why religion should affect foreign direct investment and hypotheses relating religion-based variables to FDI, and, then, discuss the results and their implications. 1.1. Japan and foreign direct investment This paper utilizes the Toyo Keizai (TK) foreign direct investment database. This database is published by Toyo Keizei Incorporated, a market research firm based in Tokyo, Japan; the 2001 edition was used here. The data is compiled for publication through a mail and telephone survey of important public and private Japanese firms, regarding their foreign affiliates, along with some archival data. The use of this database limits the scope of the study to the behavior of Japanese firms, though we feel that these results are not atypical. Table 1 shows a profile of Japan in comparison to the United States (used as a comparison point due to its prominence). The other factor worth discussion is the religion of the Japanese, as this paper does concern the role of religion in investment decisions. Japan is an intriguing subject; 84% of the population espouses Buddhism and/or Shintoism as their major religion(s) (Wright, 2004). What makes this interesting is that 54% of Japanese practice both religions concurrently, an unusual circumstance compared with other peoples around the world. Typically, Buddhism and Shintoism exist peacefully together, which indicates a relatively high degree of religious tolerance in Japan; for this reason, it seems less likely that the Japanese would avoid investing in a country that practices a particular religion. Refusing to invest in countries that primarily practice a different religion would severely limit Japanese investment options, as Japan is the only country in the world with a significant number of Shinto practitioners, though Buddhism is more widespread throughout Southeast Asia.
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Table 1 Comparison of Japan and U.S. on key economic indicators and cultural dimensions Japan
United States
Economic factorsa Population (millions) GNP (billions) GNP per capita
127.8 $4623 $36,172
293.7 $11,712 $39,877
Foreign direct investmenta Outgoing FDI (millions) Incoming FDI (millions) Outgoing FDI per capita Incoming FDI per capita Outgoing FDI as a percentage of GNP Incoming FDI as a percentage of GNP
$32,577 $7398 $254.91 $57.89 0.70% 0.16%
$173,798 $39,889 $591.75 $135.82 1.48% 0.34%
Hofstede cultural scores Power distance Individuality Masculinity H-uncertainty avoidance Long-term orientation
50 42 91 88 76
36 88 59 41 24
Shinto and buddhist (84%); christian (0.7%)
Protestant (56%); roman catholic (28%); jewish (2%); no religion (10%) 1 0.64
Religion Major religion(s)
Religious freedom score Religious diversity
2 0.46
Sources: World Bank, U.N. www.geert-hofstede.com, Marshall (2000), Wright (2004), Barro and McCleary (2003) and Barrett et al. (2001). a All monetary figures in U.S. dollars.
2. Religion and foreign direct investment Since very little research exists linking directly religion and foreign direct investment, we review more generally related variables to foreign direct investment and, from this literature, attempt to form testable hypotheses relating to religious freedom and diversity. Foreign direct investment (FDI) is very important to any national economy (Drabek and Payne, 2001; Brewer, 1993; Boddewyn et al., 1986). While it is possible to survive using only funds generated from within one’s own borders, this type of isolationism can too often have a negative impact on the growth prospects of the country. Although it is not the governments themselves that directly receive the funds, a stronger business economy is a boon to governments as it promises more jobs, a higher standard of living, and a greater tax base. And though target companies are under great scrutiny as far as profitability, growth, and potential are concerned, national factors such as country risk, political stability, and population and gross national product (GNP) growth can be deciding factors for investing companies (Dunning, 1998). One factor that has not been adequately explored is the impact of a country’s policy and historical record regarding religion on its ability to attract FDI. Religion has long played a role in the everyday lives of people and the way they socialize, organize, and govern. Even efforts to separate church and state are not completely successful because of the pervasive role that
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religion plays in culture. Kogut and Singh (1988) link culture and cultural distance with FDI: specifically, larger cultural distance inhibits the development of FDI. Because FDI plays a large role in the rate of economic growth (Drabek and Payne, 2001), it follows that religion should have some effect on FDI. Dunning (1988) and others have emphasized that location (part of his OLI framework) of FDI is a key variable to be studied. There are many aspects to a potential investment location, and religion is arguably one of them given its centrality to the various business environments. Furthermore, religious practice (the celebration of the Muslim holy month of Ramadan in particular) has been shown to impact financial activity (Seyyed et al., 2005). Religion and commerce are studied directly in Stulz and Williamson (2003), in which the authors link protection of property (primarily shares) and debt to the primary religions practiced in varying countries. The intention of the study is to link culture and finance, using religion as a proxy; here we study religion directly and how the government’s attitude towards diversity of religion affects foreign investment. The effect of dominant religion on creditor rights in Stulz and Williamson (2003) was also impacted by the openness of a country to international trade and investment, which relates to our study inasmuch as there is a logical argument to be made that less tolerant and diverse countries could be less naturally open to international participation. 2.1. Religion in society and culture In the past, countries tended to be more homogenous in the religions represented, either by choice or by force. Apart from a few religions (e.g. Jews), citizens of a nation were typically all or mostly of the same faith, and so the concept of religious freedom was a non-issue, due to religion being so closely intertwined with everyday life, law, and government. A citizen of England was typically Anglican; a citizen of Arabia was typically Muslim. In present times and in the advent of globalization, however, societies tend to be more multicultural and, as a result, have had to cope with greater pluralism in religion and culture. How governments treat their religious and cultural minorities impacts political stability, global image, and cultural environment. North and Thomas (1973) proposed that property rights within a given country correspond to that country’s economic success. Further findings indicate that common-law countries (e.g. United Kingdom) protect property more strongly than civil-code countries (e.g. France, La Porta et al., 1998). After all, why would a populace be motivated to gain material wealth (and thereby raise their standard of living and contribute more to the state) if their property could be seized at any time? This notion of property rights could also extend to intellectual property, or the right to control one’s own thoughts, including religious beliefs. If a nation suppressed its citizenry with regard to freedom of thought, the citizenry would rebel, either overtly or covertly. Independence of the judiciary and the adaptability of the legal system, which may also indicate tolerance for diversity, were examined in Beck et al. (2005) and Levine (2005), where it was found that the type of legal system a country has can affect firms’ access to finance. A lack of religious freedom was shown to be related to increased country and political risk (Alon and Spitzer, 2003). These legal, religious, and infrastructural factors all have a profound effect on the economy of a country, but tend to be entrenched and are often part of a national character. 2.2. Government, economy, and religion In most of the Western world there is an attempt to separate church and state. While this prevents any explicit influence of a particular religion from taking hold, faith still holds a great deal of sway over government. The individuals who debate and write the laws, and guide nations often are
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religious themselves—in fact, involvement with an accepted religion tends to be seen as a positive quality in an elected official. Other ways religion affects government include preferential tax or subsidy status for certain churches or the banning of religious clothing or paraphernalia (such as the prohibition of the Hijab in French schools). Table 2 provides information on countries’ religions—degrees of freedom and pluralism and the presence of a state religion, as per Barrett et al. (2001). There are two competing theories regarding the link between economic growth and religion. The first, known as the secularization hypothesis (Weber, 1930), postulates that greater economic development causes individuals to abandon their faith and become less religious. This hypothesis also claims that as the economy becomes stronger, it plays a larger role in the government than does religion. The other prominent theory is more of a market theory, with religion as the good being sold (Smith, 1791). This theory claims that as a society becomes more religiously diverse, the different religions compete and the consumer/believer gets a better religion “product,” thereby stimulating more interest in religion as the belief systems are made more and more appealing. This second hypothesis is strengthened by the study of Chaves and Cann (1992), which shows that greater governmental sponsorship of religion paradoxically decreases the individual’s interest in it. On the other hand, there are societies, most notably communist, where the dominant religion is “no religion”. Communist ideology purports that religion is the opium of the masses, and religious freedom and diversity are suppressed by the state, as religions are seen as anathema. The above-mentioned theories examine religion as an outcome of economic development or policy; comparatively little research (e.g. Barro and McCleary, 2003; Alon and Chase, 2005) has been done on religion as an antecedent to economic growth. Alon and Chase (2005) examined political and economic freedoms alongside religious freedom in explaining economic prosperity and found that religious freedom is a significant antecedent of economic prosperity. Diversity can be seen as an indicator of several other variables within a society. More freedom allotted to citizens regarding their own thought and speech encourages diversity; tolerance of other cultures, languages, and habits is indicated by diversity; the lesser degree of national isolationism would be indicated by diversity. Freedom of religion can range from a central tenet of the constitution in some countries to something that must be stamped out in others. Using a different metric, diversity of religion can indicate a welcoming culture that supports the individual’s position within a society. 3. Hypotheses Building on the above discussion, three hypotheses are proposed and reviewed below: 3.1. H1: There is a positive relationship between religious freedom and FDI, i.e. a freer country will receive more investments H1 is based on the notion that a more liberal society is more attractive to foreign investors, who will feel more secure with the host country’s government. A government that does not grant personal rights or freedoms is not one where property rights or individual business concerns will be addressed in favor of the investor (North and Thomas, 1973). The metric used here for FDI is number of investments made by Japanese investors, from the TK Japanese foreign direct investment database. The measurement of freedom is the religious freedom score (Marshall, 2000), which measures countries around the world based on record of religious rights and freedoms, the
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Table 2 Religious freedom scores, religious pluralism (diversity) index, and the presence/absence of a state religion for 54 countries Country
Religious freedom scorea
Religious pluralism indexb
State religionc
Argentina Australia Austria Bangladesh Belgium Brazil Bulgaria Cameroon Canada Chile Colombia Cyprus Czech Republic Denmark Dominican Republic Estonia Finland France Germany Ghana Greece Hungary Iceland India Ireland Israel Italy Korea Malaysia Mexico Netherlands New Zealand Norway Pakistan Peru Philippines Poland Portugal Romania Russia Singapore Slovak Republic Slovenia South Africa Spain Sweden Switzerland Taiwan Thailand Turkey United Kingdom United States Uruguay Venezuela
3 2 2 6 3 2 4 5 1 3 4 3 3 2 3 1 1 3 3 4 4 3 3 5 1 3 3 2 4 4 1 2 1 6 5 3 2 3 3 4 4 3 3 2 3 2 3 2 3 5 2 1 3 3
0.13 0.51 0.15 0.24 0.05 0.20 0.28 0.73 0.56 0.22 0.05 0.36 0.43 0.02 0.05 0.48 0.03 0.17 0.54 0.72 0.04 0.47 0.03 0.31 0.08 0.19 0.01 0.33 0.68 0.05 0.53 0.37 0.01 0.06 0.09 0.28 0.19 0.02 0.40 0.51 0.63 0.34 0.12 0.63 0.00 0.08 0.51 0.58 0.14 0.01 0.33 0.64 0.14 0.08
Yes No No Yes No No No No No No Yes No No Yes Yes No Yes No No No Yes No Yes No Yes Yes Yes No Yes No No No Yes Yes Yes No No Yes No No No No No No Yes Yes No No Yes No Yes No No Yes
a Marshall (2000). b Barro and McCleary (2003). c Barrett et al. (2001).
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presence of religion in the government, diversity of religion within the country, and faith-based acts of hatred or violence within the country. According to Marshall (2000), the scale is based on criteria developed by the International Covenant on Civil and Political Rights, the European Convention on Human Rights, and the United Nations Declaration on the elimination of all forms of intolerance and of discrimination based on religious belief. More specifically, Marshall alludes to freedom of organizations (educational, houses of worship, etc.); freedom of practice (dress, prayer, proclamation, etc.); and human rights in general as they relate to religion. The scale is such that a “1” indicates a very religiously free country, and a “7” indicates a very religiously restrictive country. Japan, as the investing country, is rated as a “2” on the scale, suggesting a high level of religious freedom. 3.2. H2: The presence of a de facto state religion will decrease the likelihood of foreign direct investment The existence of a state religion, whether explicitly claimed by the state or implied through state actions (subsidies, intolerant policies) leads to a greater likelihood of intolerance for other religions. State religions may lead to a lesser degree of religiosity (Chaves and Cann, 1992), but they also lead to a greater degree of homogeneity. Using the data in Table 2, there is a strong negative correlation (Pearson correlation = − 0.573, p < 0.0005) between the existence of a state religion and religious pluralism, which is a measure of diversity (see Hypothesis 3, below). The presence or absence of a state religion is based on Barrett et al. (2001). There is some controversy regarding some of the rulings, particularly in some European countries (e.g. Spain—see Barro and McCleary, 2003). Japan does not have a state religion. 3.3. H3: A more religiously diverse country will attract more foreign direct investment Barro and McCleary (2003) discuss the issue of diversity in some detail, and conclude that greater diversity leads to greater economic growth. Because FDI is a key component of economic growth (Drabek and Payne, 2001), it follows that religious diversity should stimulate FDI. This argument is bolstered by the fact that that there is a significant positive correlation between the pluralism index and investment (Pearson correlation = 0.382, p < 0.01). Although it is possible to argue for causation flowing the other way (a stronger economy leads to a more diverse culture), there are theoretical and empirical findings negating that argument (Barro and McCleary, 2003). Nations’ scores on the religious pluralism index are adapted from the Herfindal Index, which equals the sum of the squares of the population fractions belonging to each of the major religions, and is the probability that two random persons within a given nation belong to the same religion. Thus, if everyone within a nation is of the same religion, the index equals 1; if there is great diversity, the index approaches zero. The adaptation (to the Pluralism index) referred to is a reversal of the index; the Pluralism index is the probability that two random individuals within a nation’s population will be of different religions. Thus, a score of “1” indicates great diversity and a zero indicates complete religious homogeneity. Japan scored a 0.46, which is near the median of possible scores. It also indicates that Japan has a fairly high degree of religious diversity within its own borders, and thus the Japanese should be accustomed to dealing with those who embrace different religions. The research question here, however, is not how willing the Japanese are to invest in particular religions or different religions, but rather whether the diversity and freedom within host countries affects the amount of FDI they receive. Even so, the fact that the Japanese are assumed to be accustomed to diversity removes a potential inhibiting factor.
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3.4. Control variables Two other variables, intended as controls, were used throughout the quantitative analysis: gross national income and cultural distance. The GNP numbers1 are for 1997, which is within the period that the TK data was collected, and 1997 is roughly the same time period in which pluralism index, religious freedom scores, and presence/absence of a state religion were tabulated. Cultural distance, developed by Kogut and Singh (1988) is based on scores by Hofstede (1980), which indicate that cultural similarity should play a role in FDI. GDP has a significant correlation with the number of investments (Pearson correlation = 0.848, p < 0.0005). 3.5. Sample selection The data used is from the TK database, covering the years 1986–2001. The metric chosen was the number of investments made in specific host countries (see below for selection of countries), rather than the dollar amount invested: the decision to invest or not invest in a particular nation is the focus of our investigation. The primary criterion for selecting which countries were included in the analysis (the list is in Table 2) was that data existed for each of the variables in the analysis. A religious pluralism score was calculated (in Barro and McCleary, 2003) for 59 countries, and the existence of a state government was claimed in the same paper for the same countries. Two of these countries, China and Japan, were excluded. Japan was removed because it is the source country, and China was excluded because it is an outlier. Two more nations, Latvia and Lithuania, were excluded because there was no Japanese FDI information for these countries. All remaining countries had a religious freedom score (according to Marshall, 2000) except Hong Kong, which was therefore also removed from the analysis. 4. Results Our first model included an intercept, GNP, religious diversity, religious freedom and the presence/absence of a state religion (see Table 2). The model is significant overall explaining almost 80% of the variation in Japanese FDI. To test the hypotheses MANCOVA was used, primarily due to the nature of the variables. While the religious freedom score is ordinal, it is not necessarily in equal intervals or scalar, and, therefore, an analysis of variance would be more effective and appropriate than regression. While a regression dummy variable could be used for the existence of a state religion, it was deemed appropriate to include this variable in the MANCOVA as well. Since there is also a possibility for an interaction effect between the variables, we controlled for this possibility as well. Both GNP and the religious pluralism index were found to be significant. From this analysis we can infer that both gross national income and religious pluralism may contribute to the decision of Japanese to invest in a particular country. That is, Japanese may prefer to invest in markets in which the economy is large and in which cultural/religious diversity is high. On the other hand, although pluralism and GDP are significant as covariates, neither religious freedom2 nor the presence/absence of a state religion is significant. The interaction between the
1 2
For all analyses, GNP was divided by one billion to keep numbers small and manageable. The seven-level scale was recoded into three levels to ensure each cell had a sufficient number of data points.
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Table 3 Results from the MANCOVA to test Hypotheses 1 and 2 Variable
F-statistic
p-Value
Significant
Intercept Gross national product (covariate) Religious pluralism index (covariate) Religious freedom score State religion (yes/no) Interaction between religious freedom and state religion
2.88 106.95 13.08 1.22 0.03 0.31
0.097 0.000 0.001 0.276 0.968 0.736
Yes Yes Yes No No No
R2 for the model = 0.796. Based on data in the TK (Toyo Keizai Database, 2001). Table 4 Regression results Coefficient beta Regression 1—GNP only (R2 = 0.72) Intercept GNP/1 billion
144.434 0.834
Regression 2—GNP and religious pluralism (R2 = 0.78) Intercept −143.779 GNP/1 billion 0.767 Religious pluralism index 1173.959
Standardized beta
p-Value
– 0.848
0.089 0.000
– 0.781 0.252
0.203 0.000 0.001
Based on data in the TK (Toyo Keizai Database, 2001).
two is also insignificant. While religious freedom has a marginally significant correlation with Japanese FDI (Pearson correlation = − 0.234, p < 0.1), the effect is less significant in the complete model. The Japanese may not be concerned with religious freedom and the presence of a state religion in their investment decisions. Using our first model, we confirm Hypothesis 3, but not 1 and 2. Our second set of models are regressions: the first regression uses only GNP and the second uses GNP and religious diversity, focusing on the significant variable found in the earlier model. The variables used were GNP, cultural distance from Japan, and the religious pluralism index. A stepwise regression was used with a cutoff of p < 0.05. The resulting regression model can be seen in Table 3. Religious pluralism proved to be a significant predictor in the regression too; however, it is evident that GNP alone contributes to most of the explanation in the variance (Table 4). While GNP is by far the stronger predictor of FDI, there is an effect above and beyond GNP of religious pluralism, amounting to an increase in R2 of approximately 6%. Cultural distance, though previously assumed to be a factor in FDI, is not significant in our stepwise regression. Because of the positive effect of religious diversity on FDI, this regression supports the findings of Barro and McCleary (2003) and extends their findings not only to economic growth but also to FDI. And while the relative effect size (compared to GDP) is small, it is still material. 5. Discussions and future research This paper advances the idea that greater religious freedom and diversity will help attract more FDI. However, the empirical findings show that only religious diversity has an impact on FDI, and that impact is relatively smaller as compared to the size of the economy.
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A key policy implication is how malleable religious diversity is within a nation. It is not possible for a country to easily change its faith-based composition, just as it is not possible to change a country’s history with regard to its judicial system (Beck et al., 2005). While our study indicates that there would be positive impact on FDI, the impact on other economic, political and social conditions can be quite different. For example, one might attempt to calculate the impact of liberal immigration policy that encourages religious diversity on, for example, social acceptance and tolerance towards the minority immigrant groups. There may be a threshold level above which religious diversity rises concomitantly with religious freedom. There is also a strong relationship between the existence of a state religion and religious diversity (Pearson correlation = − 0.573, p < 0.0005). The presence of a state religion deters the development of religious diversity. How might a change in the formal status of religion in politics affect religious diversity and foreign direct investment? It is possible that the non-significant findings regarding state religion may be due to measurement issues. Because the existence of a state religion does not necessarily mean religious repression (e.g. in Scandinavia) and its absence does not necessarily denote religious freedom (e.g. China, Cuba), state religion as a variable may not properly reflect religious liberalism. The curve might resemble an inverted U—the more committed a nation is to either having or not having a state religion, the more repressive it is likely to be; the more secondary in nature religion is to a country, the freer its people will be. Another interesting line of inquiry is religiosity and differences between faiths. Religiosity, the degree to which a person or population espouses religion, has been studied in various contexts (Barro and McCleary, 2003; Kelley and De Graaf, 1997). While these studies propose interesting scales based on factors such as church attendance, beliefs, and diversity, no comprehensive measure of religiosity is prominent in the literature. The other concept, that of how different religions fare with regard to economic indicators, would be very interesting—do Western religions (Judaism, Christianity, Islam, etc.) fare better than do Eastern religions (Hinduism, Buddism, etc.), or are certain religions more/less attractive to foreign investors perhaps because they create political instability or promote a good work ethic? Future studies could examine these questions, once suitable scales are developed. This paper demonstrates a clear correlation and theorizes a specific link between religious diversity and FDI. This novel finding indicates that there is more to the foreign-investment decision than economic factors (law, finance, GNP); the attractiveness of a company or a host nation can also be based on social indicators and how the government addresses diversity of religion and tolerance of it. References Alon, I., Chase, G., 2005. Religious freedom and economic prosperity. Cato J. 25, 399–406. Alon, I., Spitzer, J., 2003. Does religious freedom affect country risk assessment? J. Int. Area Stud. 10, 51–62. Barrett, D.B., Kurian, G.T., Johnson, T.M., 2001. World Christian Encyclopedia, 2nd ed. Oxford University Press, Oxford. Barro, R.J., McCleary, R.M., 2003. Religion and economic growth across countries. Am. Soc. Rev. 68, 760–781. Beck, T., Demirguc-Kunt, A., The World Bank, Levine, R., 2005. Law and firm’s access to finance. Am. Law Econ. Rev. 7, 211–252. Boddewyn, J.J., Halbrich, M.B., Perry, A.C., 1986. Service multinationals: conceptualization, measurement and theory. J. Int. Business Stud. 17, 41–57. Brewer, T.L., 1993. Government policies, market imperfections, and foreign direct investments. J. Int. Business Stud. 24, 101–120. Chaves, M., Cann, D.E., 1992. Regulation, pluralism, and religious market structure. Rational. Soc. 4, 272–290.
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Religious freedom, religious diversity, and Japanese foreign direct investment Eric Dolansky a,1 , Ilan Alon b,∗ a
Richard Ivey School of Business, 1151 Richmond Street North, London, Ontario N6A 3K7, Canada b Rollins College, 1000 Holt Ave-2722, Winter Park, FL 32789, United States Received 30 June 2006; received in revised form 15 November 2006; accepted 17 November 2006 Available online 18 December 2006
Abstract Research into the links between religion and foreign direct investment is scarce, partly because research on religion has not been the traditional domain of business and economics. Nevertheless, religion affects the economies, political structures, legal environments, and social behaviors of people around the world and is, therefore, an important element of the international business environments. Foreign direct investment (FDI) decisions are often made after an assessment of the international business environments. This article makes a singular contribution by focusing on the impact of religion – religious freedom and religious diversity – on the foreign direct investment of Japanese companies. We find that national income and religious diversity significantly influence Japanese decisions to invest. © 2006 Published by Elsevier B.V. Keywords: Religion; Freedom; Diversity; Foreign direct investment (FDI); Japan
1. Introduction Religion forms the basis of many of the institutions in government and society that play key roles in our everyday lives. Today’s cultures are rooted in theological interpretations of reality and existing laws are based on holy texts such as the Torah, Bible, and Qur’an. Many wars and international conflicts have arisen due to religious conflict, from ancient times to the present. These differences, whether they are called religious or cultural, make up the diverse
∗ 1
Corresponding author. Tel.: +1 407 646 1512; fax: +1 407 646 1550. E-mail address: [email protected] (I. Alon). Tel.: +1 416 363 8839; fax: +1 519 661 2089.
0275-5319/$ – see front matter © 2006 Published by Elsevier B.V. doi:10.1016/j.ribaf.2006.11.003
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world. Weber (1930) postulated that religious beliefs and practices impact economic development, as it is through religion that many learn rules regarding honesty, integrity, and hard work. Lavoie and Chamlee-Wright (2000), while not studying religious freedom directly, alluded to it in reference to their investigation of culture and economic processes. They observed that religion has its basis in culture. The authors stated that economists often ignore the role of culture in favor of material and institutional conditions in analyses of economic prosperity. According to the authors more attention needs to be given to the “spiritual” realm of the economy, and other elements of culture, such as an “enterprising spirit.” Other researchers (e.g., Huntington, 1996; Landes, 1999; Barro and McCleary, 2003) have also suggested that culture is a key antecedent to economic growth, and religion (its practice as well as its role in society, in terms of tolerance, freedom, and diversity) is a key component of culture. Johnson and Lenartowicz (1998), in a study of economic growth, considered a model with two measures of culture (developed by Hofstede) and an index of economic freedom; they found significant relationships between the variables. Easterly and Levine (1997), in a cross-country study of countries, examined the differences in countries with high levels of ethnic diversity (an element of the social environment related to religion). They found that ethnic-group polarization led to rent-seeking behavior and reduced the consensus of public goods, creating long-term reductions in economic growth. The present study contributes to the literature of religion and business by examining the impact of two religious variables, freedom and diversity, on the foreign direct investment of the Japanese. Because this relationship has not been directly explored to date, there is comparatively little literature with direct bearing on our topic. In the sections that follow we develop a rationale as to why religion should affect foreign direct investment and hypotheses relating religion-based variables to FDI, and, then, discuss the results and their implications. 1.1. Japan and foreign direct investment This paper utilizes the Toyo Keizai (TK) foreign direct investment database. This database is published by Toyo Keizei Incorporated, a market research firm based in Tokyo, Japan; the 2001 edition was used here. The data is compiled for publication through a mail and telephone survey of important public and private Japanese firms, regarding their foreign affiliates, along with some archival data. The use of this database limits the scope of the study to the behavior of Japanese firms, though we feel that these results are not atypical. Table 1 shows a profile of Japan in comparison to the United States (used as a comparison point due to its prominence). The other factor worth discussion is the religion of the Japanese, as this paper does concern the role of religion in investment decisions. Japan is an intriguing subject; 84% of the population espouses Buddhism and/or Shintoism as their major religion(s) (Wright, 2004). What makes this interesting is that 54% of Japanese practice both religions concurrently, an unusual circumstance compared with other peoples around the world. Typically, Buddhism and Shintoism exist peacefully together, which indicates a relatively high degree of religious tolerance in Japan; for this reason, it seems less likely that the Japanese would avoid investing in a country that practices a particular religion. Refusing to invest in countries that primarily practice a different religion would severely limit Japanese investment options, as Japan is the only country in the world with a significant number of Shinto practitioners, though Buddhism is more widespread throughout Southeast Asia.
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Table 1 Comparison of Japan and U.S. on key economic indicators and cultural dimensions Japan
United States
Economic factorsa Population (millions) GNP (billions) GNP per capita
127.8 $4623 $36,172
293.7 $11,712 $39,877
Foreign direct investmenta Outgoing FDI (millions) Incoming FDI (millions) Outgoing FDI per capita Incoming FDI per capita Outgoing FDI as a percentage of GNP Incoming FDI as a percentage of GNP
$32,577 $7398 $254.91 $57.89 0.70% 0.16%
$173,798 $39,889 $591.75 $135.82 1.48% 0.34%
Hofstede cultural scores Power distance Individuality Masculinity H-uncertainty avoidance Long-term orientation
50 42 91 88 76
36 88 59 41 24
Shinto and buddhist (84%); christian (0.7%)
Protestant (56%); roman catholic (28%); jewish (2%); no religion (10%) 1 0.64
Religion Major religion(s)
Religious freedom score Religious diversity
2 0.46
Sources: World Bank, U.N. www.geert-hofstede.com, Marshall (2000), Wright (2004), Barro and McCleary (2003) and Barrett et al. (2001). a All monetary figures in U.S. dollars.
2. Religion and foreign direct investment Since very little research exists linking directly religion and foreign direct investment, we review more generally related variables to foreign direct investment and, from this literature, attempt to form testable hypotheses relating to religious freedom and diversity. Foreign direct investment (FDI) is very important to any national economy (Drabek and Payne, 2001; Brewer, 1993; Boddewyn et al., 1986). While it is possible to survive using only funds generated from within one’s own borders, this type of isolationism can too often have a negative impact on the growth prospects of the country. Although it is not the governments themselves that directly receive the funds, a stronger business economy is a boon to governments as it promises more jobs, a higher standard of living, and a greater tax base. And though target companies are under great scrutiny as far as profitability, growth, and potential are concerned, national factors such as country risk, political stability, and population and gross national product (GNP) growth can be deciding factors for investing companies (Dunning, 1998). One factor that has not been adequately explored is the impact of a country’s policy and historical record regarding religion on its ability to attract FDI. Religion has long played a role in the everyday lives of people and the way they socialize, organize, and govern. Even efforts to separate church and state are not completely successful because of the pervasive role that
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religion plays in culture. Kogut and Singh (1988) link culture and cultural distance with FDI: specifically, larger cultural distance inhibits the development of FDI. Because FDI plays a large role in the rate of economic growth (Drabek and Payne, 2001), it follows that religion should have some effect on FDI. Dunning (1988) and others have emphasized that location (part of his OLI framework) of FDI is a key variable to be studied. There are many aspects to a potential investment location, and religion is arguably one of them given its centrality to the various business environments. Furthermore, religious practice (the celebration of the Muslim holy month of Ramadan in particular) has been shown to impact financial activity (Seyyed et al., 2005). Religion and commerce are studied directly in Stulz and Williamson (2003), in which the authors link protection of property (primarily shares) and debt to the primary religions practiced in varying countries. The intention of the study is to link culture and finance, using religion as a proxy; here we study religion directly and how the government’s attitude towards diversity of religion affects foreign investment. The effect of dominant religion on creditor rights in Stulz and Williamson (2003) was also impacted by the openness of a country to international trade and investment, which relates to our study inasmuch as there is a logical argument to be made that less tolerant and diverse countries could be less naturally open to international participation. 2.1. Religion in society and culture In the past, countries tended to be more homogenous in the religions represented, either by choice or by force. Apart from a few religions (e.g. Jews), citizens of a nation were typically all or mostly of the same faith, and so the concept of religious freedom was a non-issue, due to religion being so closely intertwined with everyday life, law, and government. A citizen of England was typically Anglican; a citizen of Arabia was typically Muslim. In present times and in the advent of globalization, however, societies tend to be more multicultural and, as a result, have had to cope with greater pluralism in religion and culture. How governments treat their religious and cultural minorities impacts political stability, global image, and cultural environment. North and Thomas (1973) proposed that property rights within a given country correspond to that country’s economic success. Further findings indicate that common-law countries (e.g. United Kingdom) protect property more strongly than civil-code countries (e.g. France, La Porta et al., 1998). After all, why would a populace be motivated to gain material wealth (and thereby raise their standard of living and contribute more to the state) if their property could be seized at any time? This notion of property rights could also extend to intellectual property, or the right to control one’s own thoughts, including religious beliefs. If a nation suppressed its citizenry with regard to freedom of thought, the citizenry would rebel, either overtly or covertly. Independence of the judiciary and the adaptability of the legal system, which may also indicate tolerance for diversity, were examined in Beck et al. (2005) and Levine (2005), where it was found that the type of legal system a country has can affect firms’ access to finance. A lack of religious freedom was shown to be related to increased country and political risk (Alon and Spitzer, 2003). These legal, religious, and infrastructural factors all have a profound effect on the economy of a country, but tend to be entrenched and are often part of a national character. 2.2. Government, economy, and religion In most of the Western world there is an attempt to separate church and state. While this prevents any explicit influence of a particular religion from taking hold, faith still holds a great deal of sway over government. The individuals who debate and write the laws, and guide nations often are
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religious themselves—in fact, involvement with an accepted religion tends to be seen as a positive quality in an elected official. Other ways religion affects government include preferential tax or subsidy status for certain churches or the banning of religious clothing or paraphernalia (such as the prohibition of the Hijab in French schools). Table 2 provides information on countries’ religions—degrees of freedom and pluralism and the presence of a state religion, as per Barrett et al. (2001). There are two competing theories regarding the link between economic growth and religion. The first, known as the secularization hypothesis (Weber, 1930), postulates that greater economic development causes individuals to abandon their faith and become less religious. This hypothesis also claims that as the economy becomes stronger, it plays a larger role in the government than does religion. The other prominent theory is more of a market theory, with religion as the good being sold (Smith, 1791). This theory claims that as a society becomes more religiously diverse, the different religions compete and the consumer/believer gets a better religion “product,” thereby stimulating more interest in religion as the belief systems are made more and more appealing. This second hypothesis is strengthened by the study of Chaves and Cann (1992), which shows that greater governmental sponsorship of religion paradoxically decreases the individual’s interest in it. On the other hand, there are societies, most notably communist, where the dominant religion is “no religion”. Communist ideology purports that religion is the opium of the masses, and religious freedom and diversity are suppressed by the state, as religions are seen as anathema. The above-mentioned theories examine religion as an outcome of economic development or policy; comparatively little research (e.g. Barro and McCleary, 2003; Alon and Chase, 2005) has been done on religion as an antecedent to economic growth. Alon and Chase (2005) examined political and economic freedoms alongside religious freedom in explaining economic prosperity and found that religious freedom is a significant antecedent of economic prosperity. Diversity can be seen as an indicator of several other variables within a society. More freedom allotted to citizens regarding their own thought and speech encourages diversity; tolerance of other cultures, languages, and habits is indicated by diversity; the lesser degree of national isolationism would be indicated by diversity. Freedom of religion can range from a central tenet of the constitution in some countries to something that must be stamped out in others. Using a different metric, diversity of religion can indicate a welcoming culture that supports the individual’s position within a society. 3. Hypotheses Building on the above discussion, three hypotheses are proposed and reviewed below: 3.1. H1: There is a positive relationship between religious freedom and FDI, i.e. a freer country will receive more investments H1 is based on the notion that a more liberal society is more attractive to foreign investors, who will feel more secure with the host country’s government. A government that does not grant personal rights or freedoms is not one where property rights or individual business concerns will be addressed in favor of the investor (North and Thomas, 1973). The metric used here for FDI is number of investments made by Japanese investors, from the TK Japanese foreign direct investment database. The measurement of freedom is the religious freedom score (Marshall, 2000), which measures countries around the world based on record of religious rights and freedoms, the
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Table 2 Religious freedom scores, religious pluralism (diversity) index, and the presence/absence of a state religion for 54 countries Country
Religious freedom scorea
Religious pluralism indexb
State religionc
Argentina Australia Austria Bangladesh Belgium Brazil Bulgaria Cameroon Canada Chile Colombia Cyprus Czech Republic Denmark Dominican Republic Estonia Finland France Germany Ghana Greece Hungary Iceland India Ireland Israel Italy Korea Malaysia Mexico Netherlands New Zealand Norway Pakistan Peru Philippines Poland Portugal Romania Russia Singapore Slovak Republic Slovenia South Africa Spain Sweden Switzerland Taiwan Thailand Turkey United Kingdom United States Uruguay Venezuela
3 2 2 6 3 2 4 5 1 3 4 3 3 2 3 1 1 3 3 4 4 3 3 5 1 3 3 2 4 4 1 2 1 6 5 3 2 3 3 4 4 3 3 2 3 2 3 2 3 5 2 1 3 3
0.13 0.51 0.15 0.24 0.05 0.20 0.28 0.73 0.56 0.22 0.05 0.36 0.43 0.02 0.05 0.48 0.03 0.17 0.54 0.72 0.04 0.47 0.03 0.31 0.08 0.19 0.01 0.33 0.68 0.05 0.53 0.37 0.01 0.06 0.09 0.28 0.19 0.02 0.40 0.51 0.63 0.34 0.12 0.63 0.00 0.08 0.51 0.58 0.14 0.01 0.33 0.64 0.14 0.08
Yes No No Yes No No No No No No Yes No No Yes Yes No Yes No No No Yes No Yes No Yes Yes Yes No Yes No No No Yes Yes Yes No No Yes No No No No No No Yes Yes No No Yes No Yes No No Yes
a Marshall (2000). b Barro and McCleary (2003). c Barrett et al. (2001).
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presence of religion in the government, diversity of religion within the country, and faith-based acts of hatred or violence within the country. According to Marshall (2000), the scale is based on criteria developed by the International Covenant on Civil and Political Rights, the European Convention on Human Rights, and the United Nations Declaration on the elimination of all forms of intolerance and of discrimination based on religious belief. More specifically, Marshall alludes to freedom of organizations (educational, houses of worship, etc.); freedom of practice (dress, prayer, proclamation, etc.); and human rights in general as they relate to religion. The scale is such that a “1” indicates a very religiously free country, and a “7” indicates a very religiously restrictive country. Japan, as the investing country, is rated as a “2” on the scale, suggesting a high level of religious freedom. 3.2. H2: The presence of a de facto state religion will decrease the likelihood of foreign direct investment The existence of a state religion, whether explicitly claimed by the state or implied through state actions (subsidies, intolerant policies) leads to a greater likelihood of intolerance for other religions. State religions may lead to a lesser degree of religiosity (Chaves and Cann, 1992), but they also lead to a greater degree of homogeneity. Using the data in Table 2, there is a strong negative correlation (Pearson correlation = − 0.573, p < 0.0005) between the existence of a state religion and religious pluralism, which is a measure of diversity (see Hypothesis 3, below). The presence or absence of a state religion is based on Barrett et al. (2001). There is some controversy regarding some of the rulings, particularly in some European countries (e.g. Spain—see Barro and McCleary, 2003). Japan does not have a state religion. 3.3. H3: A more religiously diverse country will attract more foreign direct investment Barro and McCleary (2003) discuss the issue of diversity in some detail, and conclude that greater diversity leads to greater economic growth. Because FDI is a key component of economic growth (Drabek and Payne, 2001), it follows that religious diversity should stimulate FDI. This argument is bolstered by the fact that that there is a significant positive correlation between the pluralism index and investment (Pearson correlation = 0.382, p < 0.01). Although it is possible to argue for causation flowing the other way (a stronger economy leads to a more diverse culture), there are theoretical and empirical findings negating that argument (Barro and McCleary, 2003). Nations’ scores on the religious pluralism index are adapted from the Herfindal Index, which equals the sum of the squares of the population fractions belonging to each of the major religions, and is the probability that two random persons within a given nation belong to the same religion. Thus, if everyone within a nation is of the same religion, the index equals 1; if there is great diversity, the index approaches zero. The adaptation (to the Pluralism index) referred to is a reversal of the index; the Pluralism index is the probability that two random individuals within a nation’s population will be of different religions. Thus, a score of “1” indicates great diversity and a zero indicates complete religious homogeneity. Japan scored a 0.46, which is near the median of possible scores. It also indicates that Japan has a fairly high degree of religious diversity within its own borders, and thus the Japanese should be accustomed to dealing with those who embrace different religions. The research question here, however, is not how willing the Japanese are to invest in particular religions or different religions, but rather whether the diversity and freedom within host countries affects the amount of FDI they receive. Even so, the fact that the Japanese are assumed to be accustomed to diversity removes a potential inhibiting factor.
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3.4. Control variables Two other variables, intended as controls, were used throughout the quantitative analysis: gross national income and cultural distance. The GNP numbers1 are for 1997, which is within the period that the TK data was collected, and 1997 is roughly the same time period in which pluralism index, religious freedom scores, and presence/absence of a state religion were tabulated. Cultural distance, developed by Kogut and Singh (1988) is based on scores by Hofstede (1980), which indicate that cultural similarity should play a role in FDI. GDP has a significant correlation with the number of investments (Pearson correlation = 0.848, p < 0.0005). 3.5. Sample selection The data used is from the TK database, covering the years 1986–2001. The metric chosen was the number of investments made in specific host countries (see below for selection of countries), rather than the dollar amount invested: the decision to invest or not invest in a particular nation is the focus of our investigation. The primary criterion for selecting which countries were included in the analysis (the list is in Table 2) was that data existed for each of the variables in the analysis. A religious pluralism score was calculated (in Barro and McCleary, 2003) for 59 countries, and the existence of a state government was claimed in the same paper for the same countries. Two of these countries, China and Japan, were excluded. Japan was removed because it is the source country, and China was excluded because it is an outlier. Two more nations, Latvia and Lithuania, were excluded because there was no Japanese FDI information for these countries. All remaining countries had a religious freedom score (according to Marshall, 2000) except Hong Kong, which was therefore also removed from the analysis. 4. Results Our first model included an intercept, GNP, religious diversity, religious freedom and the presence/absence of a state religion (see Table 2). The model is significant overall explaining almost 80% of the variation in Japanese FDI. To test the hypotheses MANCOVA was used, primarily due to the nature of the variables. While the religious freedom score is ordinal, it is not necessarily in equal intervals or scalar, and, therefore, an analysis of variance would be more effective and appropriate than regression. While a regression dummy variable could be used for the existence of a state religion, it was deemed appropriate to include this variable in the MANCOVA as well. Since there is also a possibility for an interaction effect between the variables, we controlled for this possibility as well. Both GNP and the religious pluralism index were found to be significant. From this analysis we can infer that both gross national income and religious pluralism may contribute to the decision of Japanese to invest in a particular country. That is, Japanese may prefer to invest in markets in which the economy is large and in which cultural/religious diversity is high. On the other hand, although pluralism and GDP are significant as covariates, neither religious freedom2 nor the presence/absence of a state religion is significant. The interaction between the
1 2
For all analyses, GNP was divided by one billion to keep numbers small and manageable. The seven-level scale was recoded into three levels to ensure each cell had a sufficient number of data points.
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Table 3 Results from the MANCOVA to test Hypotheses 1 and 2 Variable
F-statistic
p-Value
Significant
Intercept Gross national product (covariate) Religious pluralism index (covariate) Religious freedom score State religion (yes/no) Interaction between religious freedom and state religion
2.88 106.95 13.08 1.22 0.03 0.31
0.097 0.000 0.001 0.276 0.968 0.736
Yes Yes Yes No No No
R2 for the model = 0.796. Based on data in the TK (Toyo Keizai Database, 2001). Table 4 Regression results Coefficient beta Regression 1—GNP only (R2 = 0.72) Intercept GNP/1 billion
144.434 0.834
Regression 2—GNP and religious pluralism (R2 = 0.78) Intercept −143.779 GNP/1 billion 0.767 Religious pluralism index 1173.959
Standardized beta
p-Value
– 0.848
0.089 0.000
– 0.781 0.252
0.203 0.000 0.001
Based on data in the TK (Toyo Keizai Database, 2001).
two is also insignificant. While religious freedom has a marginally significant correlation with Japanese FDI (Pearson correlation = − 0.234, p < 0.1), the effect is less significant in the complete model. The Japanese may not be concerned with religious freedom and the presence of a state religion in their investment decisions. Using our first model, we confirm Hypothesis 3, but not 1 and 2. Our second set of models are regressions: the first regression uses only GNP and the second uses GNP and religious diversity, focusing on the significant variable found in the earlier model. The variables used were GNP, cultural distance from Japan, and the religious pluralism index. A stepwise regression was used with a cutoff of p < 0.05. The resulting regression model can be seen in Table 3. Religious pluralism proved to be a significant predictor in the regression too; however, it is evident that GNP alone contributes to most of the explanation in the variance (Table 4). While GNP is by far the stronger predictor of FDI, there is an effect above and beyond GNP of religious pluralism, amounting to an increase in R2 of approximately 6%. Cultural distance, though previously assumed to be a factor in FDI, is not significant in our stepwise regression. Because of the positive effect of religious diversity on FDI, this regression supports the findings of Barro and McCleary (2003) and extends their findings not only to economic growth but also to FDI. And while the relative effect size (compared to GDP) is small, it is still material. 5. Discussions and future research This paper advances the idea that greater religious freedom and diversity will help attract more FDI. However, the empirical findings show that only religious diversity has an impact on FDI, and that impact is relatively smaller as compared to the size of the economy.
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A key policy implication is how malleable religious diversity is within a nation. It is not possible for a country to easily change its faith-based composition, just as it is not possible to change a country’s history with regard to its judicial system (Beck et al., 2005). While our study indicates that there would be positive impact on FDI, the impact on other economic, political and social conditions can be quite different. For example, one might attempt to calculate the impact of liberal immigration policy that encourages religious diversity on, for example, social acceptance and tolerance towards the minority immigrant groups. There may be a threshold level above which religious diversity rises concomitantly with religious freedom. There is also a strong relationship between the existence of a state religion and religious diversity (Pearson correlation = − 0.573, p < 0.0005). The presence of a state religion deters the development of religious diversity. How might a change in the formal status of religion in politics affect religious diversity and foreign direct investment? It is possible that the non-significant findings regarding state religion may be due to measurement issues. Because the existence of a state religion does not necessarily mean religious repression (e.g. in Scandinavia) and its absence does not necessarily denote religious freedom (e.g. China, Cuba), state religion as a variable may not properly reflect religious liberalism. The curve might resemble an inverted U—the more committed a nation is to either having or not having a state religion, the more repressive it is likely to be; the more secondary in nature religion is to a country, the freer its people will be. Another interesting line of inquiry is religiosity and differences between faiths. Religiosity, the degree to which a person or population espouses religion, has been studied in various contexts (Barro and McCleary, 2003; Kelley and De Graaf, 1997). While these studies propose interesting scales based on factors such as church attendance, beliefs, and diversity, no comprehensive measure of religiosity is prominent in the literature. The other concept, that of how different religions fare with regard to economic indicators, would be very interesting—do Western religions (Judaism, Christianity, Islam, etc.) fare better than do Eastern religions (Hinduism, Buddism, etc.), or are certain religions more/less attractive to foreign investors perhaps because they create political instability or promote a good work ethic? Future studies could examine these questions, once suitable scales are developed. This paper demonstrates a clear correlation and theorizes a specific link between religious diversity and FDI. This novel finding indicates that there is more to the foreign-investment decision than economic factors (law, finance, GNP); the attractiveness of a company or a host nation can also be based on social indicators and how the government addresses diversity of religion and tolerance of it. References Alon, I., Chase, G., 2005. Religious freedom and economic prosperity. Cato J. 25, 399–406. Alon, I., Spitzer, J., 2003. Does religious freedom affect country risk assessment? J. Int. Area Stud. 10, 51–62. Barrett, D.B., Kurian, G.T., Johnson, T.M., 2001. World Christian Encyclopedia, 2nd ed. Oxford University Press, Oxford. Barro, R.J., McCleary, R.M., 2003. Religion and economic growth across countries. Am. Soc. Rev. 68, 760–781. Beck, T., Demirguc-Kunt, A., The World Bank, Levine, R., 2005. Law and firm’s access to finance. Am. Law Econ. Rev. 7, 211–252. Boddewyn, J.J., Halbrich, M.B., Perry, A.C., 1986. Service multinationals: conceptualization, measurement and theory. J. Int. Business Stud. 17, 41–57. Brewer, T.L., 1993. Government policies, market imperfections, and foreign direct investments. J. Int. Business Stud. 24, 101–120. Chaves, M., Cann, D.E., 1992. Regulation, pluralism, and religious market structure. Rational. Soc. 4, 272–290.
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