This article presents a new framework for investigating a simple yet fundamental question: In what ways does the law on the books reflect cultural values? The authors analyze relations between indices of investors’ legal rights and national cultural profiles. The authors correlate cultural priorities with these measures. The cultural priorities must be consistent with societal acceptance of legal actions.
When countries are grouped by legal families, this provides only a partial representation of the corporate governance regimes. The author casts doubt on the alleged general supremacy of snippets of common law in commonwealth countries. The findings have a major orientation towards accepting diversity in corporate leadership. Additionally, the results form a basis for a systematic analysis of the border between law and social institutions.
The paper presents a state-of-the-art review of several innovative advances in culture and international business in stimulating new areas for future research. The article reviews the issues surrounding cultural convergence and divergence. The study also looks at the processes critical to cultural dynamism. Additionally, the authors look into the fresh ways for defining cultures, and how to augment the accuracy of cultural models.
The authors do this investigating when cultural effects are significant. Conclusively, the authors decide the usefulness of experimental methods that are seldom used by international business researchers. How are these elements and dimensions integrated by locals conducting business in the nation?
A close look at Portugal and Spain who were late entrants into the European Union depicts profound developments in those two countries. Since entering the euro zone, Spain has recorded a favorable economic climate highlighted by increased trade within Europe, access to the European budget, and favorable infrastructure. However, many pundits believe that the inclusion of Spain and Portugal was not purely for economic reasons.
The European community strives to ensure that they have a functioning democratic union, with a common military purpose and a common defensive approach. Some economists argue that there cannot be a functioning economic integration without a political integration of some kind. This is because many economic policies are spawned from political decisions. Hence, it follows that many Euro Zone countries do not have the political free will to make decisions as others may have.
Mostly, policymakers consider two extreme options. The government of Greece had been borrowing money from the European Union members and from its citizens to fund expenditure budgets. It reached a point where the government was unable to meet its obligations and this resulted in a budget and debt crisis. The options were quite limited to the Greece government. This is because they were not allowed to make hard financial decisions independently.
Hence, the extreme options were to pull out of the Euro Zone and renege on debt payments to Germany and other big lenders or to abide by the demand from Euro Zone members to cut budgetary spending in exchange for a bailout agreement. The bailout agreement, too, had many obligations. This includes the need to curtail government spending. This means the government will have to cut loose a massive working population from its structure. The other option will be to tax the Greek nationals more to meet the required budgetary requirements.
Reference
Licht, A Goldschmidt, C & Schwartz, S 2005, Culture, law, and corporate governance. International Review of Law and Economics, Vol. 25 no. 2 pp 229-255.