Relevance of nationality in cross-border economic transactions

Abstract

How relevant is nationality in global economic behavior? The aim of this paper is to scrutinize the relevance of nationality affiliations and nationality conceptions in cross-border economic transactions, using the case of foreign investment exchanges. In particular, I examine how nationality affiliations may shape the types of commitments that actors will want to realize through foreign investment transactions, and how nationality categorizations influence the evaluation of potential partners in economic transactions. I also stipulate when nationality affiliations and categorizations play a more- or less-salient role. To develop these propositions I use illustrations from cases of foreign investment attempts in which investors from the West try to acquire firms in post-socialist Slovenia. The analysis is grounded in economic sociology and advances a relational understanding of nationality, seen as interpretive codes embedded in actors' cultural repertoires, situationally invoked, and made relevant (or not) in interactions.

Keywords:

• nationality affiliations
• economic transactions
• globalization
• economic nationalism

Acknowledgements

I thank Rogers Brubaker, John R. Hall, Gail Kligman, and the participants of the Comparative Analysis Workshop at UCLA for useful comments.

Notes

While I argue here that cultural similarity works to encourage FDI between culturally matched partners, it is also possible that under some conditions, investors will expressly not want to deal with their compatriots. While discussing potential reasons why this may be the case is beyond the scope of this paper and would require different data, it is possible that reasons for such behavior lie in explicit or implicit dislike of how their nationals do business, including potential corruption practices or demands of reciprocity.

Personal interview, February 1, 2002.

In fact, George Soros is probably one of the most famous investors of East European origin who has played a major economic role in the region after the fall of the communist regimes.

Personal interview, 1 February 2002.

All names are altered to protect anonymity.

This case is based on information gathered from seven semi-structured face-to-face interviews (average length 1.5 hours) with Slovan and AmeriCo managers, media reports and companies' documents.

For an excellent ethnographic account of contemporary Slovene and Italian relations and tensions see Ballinger.

It is likely that the less specific knowledge the actors have about the other potential partner in the exchange, the more they are going to revert to typifications. On the contrary, if they have more time to deliberate and gather additional information, they may override typifications, unless this additionally acquired information supports pre-existing conceptions.

Affect can serve as a heuristic in decision making. However, as with any heuristic, affect can be misleading. Slovic et al. report several experimental studies that show how actors who follow affective judgments make suboptimal decisions.

It is possible that protection of territorial national sovereignty was also pronounced in Slovenia because of the war in neighboring former Yugoslav countries.

It is important to reiterate that macro-policies of economic nationalism do not necessarily lead to high salience of nation-based categorization and affiliation for everyday people (cf. Brubaker et al., Nationalist Politics). However, I propose that such policies make the nation-based schema more prevalent and thus more readily available for people to use.

I thank an anonymous reviewer for this point and references.

In fact, one manager in the Slovan case had a sister who married an Italian, and thus had frequent, positive, interactions with Italians. His understanding of the role of Italians in the transaction was significantly different, but he did point to the fact that his other colleagues seemed biased against Italians.