Cultural affinity and its effects on internationalisation: an empirical investigation on Taiwanese banks

This study examines cultural affinity as a novel role in country-institution specific factors and its effects on the degree of internationalisation (DOI) of Taiwanese banking firms. The empirical results indicate that after considering the cultural affinity factor, estimated coefficient effects of firm age at home country, advertisement intensity, outward direct investment of Taiwanese manufacturing industry, relative interest rate, relative per capita GDP and cultural affinity/liking have positive effects on the DOI of Taiwanese banks, whereas cultural distance and global financial crisis have negative effects on the DOI of Taiwanese banks. Overall, the effects of country-specific factors influencing the DOI for Taiwanese banks are higher than firm-specific factors. Hopefully, our empirical results may provide government and management decision makers with guidance when considering cultural issues and interacting or expanding into international markets.