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British and Chinese Cultural and Financial Differences Proposal

The Purpose of the Study

This study aims at analysing how the cultural differences between the British and Chinese influence financial services. It seeks to give recommendations for the best ways to navigate those variations for better international business amongst financial institutions.

Background to the Study

While globalisation has led to the convergence of some cultural habits and practices, it is worth noting that numerous aspects of cultural differences still exist and determine how people or nations relate on a global scale (Ghemawat & Reiche 2011). The existence of these cultural differences affects international trade at various levels. Institutions that operate in more than one country deal with individuals from more than one culture (Ghemawat & Reiche 2011). Continued movement of people between different countries has also meant that even institutions that do not operate at an international level have to deal with different cultures at some point in their operations.

Rationale of the Proposed Study

One of the areas that are affected by the differences in cultures is the pecuniary services sector. With financial institutions increasingly expanding into international markets, it is vital to study ethnic differences to understand how they affect the handling of monetary resources and advancement of smooth international trade among countries.

Issues and Sub-Problems to Be Addressed by the Study

The business environment is changing at a very high rate. This situation has significantly increased competitions in almost all aspects of trade (Chhokar, Brodbeck & House 2013). As a result, large financial institutions have resorted to global expansion for growth opportunities. To thrive at the international level, financial institutions must find ways to gain a competitive edge on a global scale. In the face of globalisation, culture has become an integral part of foreign investment (Chhokar, Brodbeck & House 2013). To operate in a distant market, it is imperative that financial institutions acquaint themselves with the cultures of the destination nations especially in the way they conduct financial matters. In this manner, they will seamlessly blend in the foreign business environments and provide services that will not only ensure their growth but also the overall satisfaction of the local customers (Branco & Rodrigues 2006; Pankaj & Sebastian 2011).

It is vital to understand that cultural attitudes have a major influence on the financial behaviour of different groups in the society (Marchi, Maria & Micelli 2013; Karolyi 2016). For example, some social norms condemn paying or receiving interests. Therefore, a financial institution that intends to operate in such an environment and is unaware of the existing cultural provisions may end making losses. Such cultural attitudes are inherent in many societies around the world and must be studied so that businesses can find the best ways to balance between the expectations of the people and optimisation of profits.

Research Boundaries

This research will study the differences between the British and Chinese cultures by focusing on their influence on financial decisions made by the citizens of the respective countries. The study will specifically relate the social positions of these two countries to the provision of banking services.

Key Terms

Culture: A set of values, beliefs, and assumptions that are shared among individuals who live in a society and which are learned by and taught to members of that society.

Financial Services: A broad range of financial services offered by companies operating in the financial sector.

Research Aim and Objectives

The aim of the study is to analyse the differences between the influence of the British and Chinese cultures on financial services. The specific objectives of the research will include the following:

  1. A critical analysis of the literature on the relationship between culture and financial services.
  2. Analysis and comparison of the aspects of British and Chinese cultures that influence financial services in the respective countries.
  3. Recommendation on ways in which international financial institutions can use culture to leverage financial markets.
  4. Initial Review of Relevant Literature

The success of any organisation depends on how it adapts to the macroeconomic environment of the country in which it operates. It is important that firms appreciate the differences in culture in diverse geographical destinations. Financial institutions that operate globally not only deal with a culturally diverse customer base but also a group of employees who come from different ethnic origins (Green & Peloza 2011). Among other factors, success in the global market is dependent on the objective evaluation of society’s cultures and implementing business strategies that will steer the financial institutions to succeed.

Cultural Differences Indicators

Culture can be defined as a set of values, beliefs, and assumptions that are shared among individuals who live in a society, which are learned and taught to members of that society (Moran, Abramson & Moran 2014). These conjoint aspects determine the behaviours and attitudes towards financial dealings (Burtch, Ghose & Wattal 2013). These aspects of culture that characterise members of a given society are different in various regions of the world. Different societies hold differing spiritual beliefs. There are approximately 190 religions in the world, which have different beliefs that determine how they conduct various activities including business (Maoz & Henderson 2013).

Another aspect of culture that indicates variations between societies is language. People from different countries communicate using diverse languages. In some cases, there are multiple dialects spoken within the boundaries of a country. The linguistic difference defines how members of a society conduct themselves towards other individuals (Chiesa, Scot & Hinton 2012). These kinds of behaviours regulate various aspects of human relationships such as business. Language determines corporate aspects such as the flow of products and negotiations (Chiesa, Scot & Hinton 2012). It also affects daily operations at various organisations since people use it as a medium for communication.

The knowledge of these cultural differences and their main indicators is important to this study because they will be used to determine which ones among them are significant in the financial sector (Pankaj & Sebastian 2011). It will also be helpful to find out which of these pointers bring about distinctive characteristics between the British and Chinese cultures.

Culture and Financial Services

According to financial concepts, the financial return on investments in assets is entirely dependent on the rational decisions made by the individual investors (Chen et al. 2012; Dudley 2014). However, studies have shown that cultural norms affect financial aspects such as taking risks, investment negotiations, stock and bonds at local stock markets, and mergers and acquisitions (Ahern, Daminelli & Fracassi 2015).

On individual risk-taking, studies have found that people from Asian counties are more risk tolerant and less risk averse when it comes to financial risks (Li et al. 2013). It is argued that when people live in communist societies such as China, they presume that their families will rescue them from financial challenges. Because of this thinking, they become more tolerant to financial risks (Hvide & Panos 2014). In British societies where there are capital economies, this kind of reliance on family for financial support does not exist. Therefore, people become less tolerant of financial risks (Hvide & Panos 2014).

Culture also influences the choices investors make on the stocks to put in their investments (Zheng et al. 2012). In diverse societies, people may choose to buy shares of the companies headed by people from their own cultures. This kind of decision making has little to do with rational thinking and more to do with cultural considerations of the individuals involved.

Apart from the relationship between culture and financial services discussed above, studies have also shown that cultural aspects such as art have an influence on the financial services in a country (Frey 2013). In some cultures, art is a form of investment and financial institutions in these societies are sometimes called upon to be intermediaries for private and business dealers in works of art (Frey 2013; Green & Peloza 2011).

Financial institutions have also been heavily involved in hosting exhibitions of works of art. These exhibitions are normally viewed as opportunities for public relations activities and as marketing opportunities (Frey 2013). Sponsorship of art events in societies where talent is highly valued by members is also a way of showing corporate social responsibility (Branco & Rodrigues 2006). Such actions end up enhancing the reputation of the institutions and may earn them more customers in the environments in which they operate.

Shoham and Malul (2012) postulate cultural attributes affect the rates of savings in a particular society. Social qualities offer an explanation as to the differences in saving rates between British and Chinese environments (Green & Peloza 2011). They postulate that people, who live in societies where collectivism exists, tend to save at higher rate because they are afraid of uncertainties and do not want to be a burden to members of their society in the near future ((Shoham & Malul 2012).

This underpinning explains the high saving rates in China. Despite the average household income in China being lower than most of the countries, their saving rates are higher because of the fabric of their society which breeds a saving culture within its members (Shoham & Malul 2012). The knowledge that culture is an important determinant of the level of saving in a country is critical to both policymakers and companies that operate internationally (Shoham & Malul 2012). For such organisations, the understanding of the effect of culture on savings will help them know that even if the interest laws in a country change, the saving rates will not be affected much (Shoham & Malul 2012). This knowledge will help them to make decisions on which markets to target.

Research Methods


Primary and secondary data will be collected for the purpose of this study. To gain knowledge about the relationship between culture and financial services and to gain an insight into the differences between the British and cultures and how they dictate the attitude of the citizens towards financial services, both quantitative data, and qualitative data will be appropriate. Quantitative data will provide the penetration of financial services in different cultures while qualitative data will be used to provide information on the cultural aspects that affect financial services. To ensure the right data is collected, some of the questions that will be asked include the following:

  1. Does culture have effects on people’s use of financial services?
  2. What aspects of culture influence financial services?
  3. What are the differences between British and Chinese cultures?
  4. How do the differences between the British and Chinese cultures do influence the financial sectors in the respective countries?

Data Collection Methods

The primary data for this study will be collected using questionnaires and interviews. Respondents will be asked about what cultural factors they consider before making financial decisions such as the decision to invest in stocks or which bank services to use. The questionnaires to be used for this study will be semi-structured and administered mainly to financial institutions like banks to get their perspectives on the cultural influence of financial services. For the secondary data, databases such as libraries will be searched for data on culture and financial services. Online databases will also be searched for relevant information on the topic.

The advantages of using the questionnaires method are that they give data that can be analysed scientifically, they allow for easy comparison of data, and the results are easily quantifiable (Terrell 2012). The interview method will be used because they will help collect detailed data on the feelings and the perceptions of various participants on the topic of study (Zivkovic 2012). The online administration of questionnaires makes it easy to reach a large number of people within a short period of time and makes the research less costly (Kirsch 2012).

Data Analysis

The quantitative data will be analysed by the use of statistical methods such as linear regression through SPSS. The qualitative data collected from the interviews will be analysed through coding and classification.

Timeline of Dissertation.

Activity Duration (days) Start date End date
Handing in proposal 1
Wait for feedback 7
literature review 25
Prepare questionnaire and interview questions 3
Organise online data collection 2
Collect responses 14
Enter data into analysis tools 1
Conduct interviews 12
Analyse data 14
Discuss and add findings to the draft report 10
Complete writing the remaining sections (Conclusions, recommendations, limitations, areas of further research) 7
Draft the report 1
Proofread the draft report 5
Write abstract 7
Submit Draft 1
Wait for Feedback 21
Correct according to feedback 7
Hand in 1

Reference List

Ahern, K, Daminelli, D & Fracassi, C 2015, ‘Lost in translation? The effect of cultural values on mergers around the world’, Journal of Financial Economics, vol. 117, no. 1, pp. 165-189.

Branco, M & Rodrigues, L 2006, ‘Corporate social responsibility and resource-based perspectives’, Journal of business Ethics, vol. 69, no. 2, pp. 111-132.

Burtch, G, Ghose, A & Wattal, S 2013, ‘Cultural differences and geography as determinants of online pro-social lending’, MIS Quarterly, vol. 1, no.1, pp. 14-21

Chen, H, Yu-Chih Liu, J, Shin Sheu, T & Yang, M 2012, ‘The impact of financial services quality and fairness on customer satisfaction’, Managing Service Quality: An International Journal, vol. 22, no. 4, pp. 399-421.

Chhokar, J, Brodbeck, F & House, R 2013, Culture and leadership across the world: The GLOBE book of in-depth studies of 25 societies, Routledge, London.

Chiesa, B, Scott, J & Hinton, C 2012, Languages in a Global World: learning for better cultural understanding, OECD Publishing, Paris.

Frey, B 2013, Arts & economics: analysis & cultural policy, Springer Science & Business Media, London.

Ghemawat, P & Reiche, S 2011, ‘National cultural differences and multinational business’, Globalisation Note Series, vol. 11, no, 1, pp. 1-18.

Green, T & Peloza, J 2011, ‘How does corporate social responsibility create value for consumers?’, Journal of Consumer Marketing, vol. 28, no. 1, pp. 48-56.

Hvide, H & Panos, G 2014, ‘Risk tolerance and entrepreneurship’, Journal of Financial Economics, vol. 111, no. 1, pp. 200-223.

Karolyi, G 2016, ‘The gravity of culture for finance’, Journal of Corporate Finance, vol. 41, no. 1, pp. 610-625.

Kaustia, M & Knüpfer, S 2012, ‘Peer performance and stock market entry’, Journal of Financial Economics, vol. 104, no. 2, pp. 321-338.

Kirsch, G 2012, Writing studies research in practice: methods and methodologies, SIU Press, Carbondale.

Li, K, Griffin, D, Yue, H & Zhao, L 2013, ‘How does culture influence corporate risk-taking?’, Journal of Corporate Finance, vol. 23, no. 1, pp. 1-22.

Maoz, Z & Henderson, E 2013, ‘The world religion dataset, 1945-2010: logic, estimates, and trends’, International Interactions, vol. 39, no. 3, pp. 265-291.

Marchi, V, Maria, E & Micelli, S 2013, ‘Environmental strategies, upgrading and competitive advantage in global value chains’, Business Strategy and the Environment, vol. 22, no. 1, pp. 62-72.

Moran, R, Abramson, N & Moran, S 2014, Managing cultural differences, Routledge, London.

Pankaj, G & Sebastian, R 2011, . Web.

Shoham, A & Malul, M 2012, ‘The role of cultural attributes in savings rates’, Cross Cultural Management: An International Journal, vol. 19, no. 3, pp. 304-314.

Terrell, S 2012, ‘Mixed-methods research methodologies’, The Qualitative Report, vol. 17, no. 1, pp. 254-280.

Zheng, X, El Ghoul, S, Guedhami, O & Kwok, C 2012, ‘National culture and corporate debt maturity’, Journal of Banking & Finance, vol. 36, no. 2, pp. 468-488.

Zivkovic, J 2012, ‘Strengths and weaknesses of business research methodologies: two disparate case studies’, Business Studies Journal, vol. 4, no. 2, pp. 91-99.

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