A Study on Factors Affecting Foreign direct Investment in Korea -Focused on Hofstede's Culture Dimensions and CPI Index-

한국의 외국인직접투자에 영향을 주는 요인에 관한 연구 - 문화적 차원과 부패인식지수를 중심으로-

  • Choi, A-Reum (Dept. of International Trade Graduate School, Sungkyunkwan University) ;
  • Koo, Jee-Hyun (Dept. of Business Administration, Hankuk University of Foreign Studies)
  • 최아름 (성균관대학교 일반대학원 무역학과) ;
  • 구지현 (한국외국어대학교 경영학과)
  • Received : 2017.02.03
  • Accepted : 2017.06.20
  • Published : 2017.06.28


This study examined the factors influencing foreign direct investment(FDI) in OECD countries where Korea is a target country. The differences in the cultural distances of host and home countries and the difference in the perceptions of corruption have been used to identify the factors affecting foreign direct investment. As a result of the study, it was found that there are differences in foreign direct investment according to cultural dimension and corruption perceptions index. Foreign direct investment may increase or decrease depending on the cultural tendency and the higher the perceptions of corruption, the more active the investment. The smaller the power distance between host country and home country in the factors affecting foreign direct investment, the larger the number of investments and the larger the size of individualism versus collectivism. Foreign direct investment increased when the investing country's corruption perceptions index was high. The results of this study confirm that cultural and corruption perceptions can affect trade transactions. Therefore, it is necessary to consider the cultural tendency and the cultural distance in the trade transaction by confirming that the degree of culture and corruption perceptions can affect the trade transaction. And that it can influence trade and economic growth by appropriately managing social variables such as public corruption.


Foreign direct investment;Hofstede cultural dimension;Culture distance;Corruption perceptions index;Trade


  1. A. R., Choi, J. H., Koo, "A study on the effect of firm internationalization: focused on the corporate social responsibility", Journal of Digital Convergence, Vol. 14, No. 6, pp. 109-118, 2016.
  2. Chen, C., Ding, Y., Kim, C., "High-level politically connected firms", Corruption and analyst forecast, 2010.
  3. E. Y., Cho, "A study on convergence relation of corporate ethical management, consumers' perceived trust, and purchasing behavior", Journal of Digital Convergence, Vol. 13, No. 8, pp. 113-121, 2015.
  4. Egger, P., Winner, H., "Evidence on corruption as an incentive for foreign direct investment", European Journal of Political Economy, Vol. 21, pp. 932-952, 2005.
  5. Godinez, J. S., Liu, L., "Corruption distance and FDI flows into Latin America", International Business Review, Vol. 24, pp. 33-42, 2015.
  6. H. J. Lim, H. L. Lee, "A empirical study of th effects of cultural differences on trade sale", International Commerce and International Review, Vol. 16, No. 5, pp. 343-359, 2014.
  7. Habib, M., Zurawicki, L., "Corruption and foreign direct investment", Journal of International Business Review, Vol. 33, No. 2, pp. 291-307, 2002.
  8. Henisz, W. "The institutional environment for multinational investment", The Journal of Law, Economics and Organization, Vol. 16, pp. 334-364, 2000.
  9. Huntington, S., "Political order in changing societies". New Heaven: Yale University Press, 1968.
  10. J. S., Park, J. N., Choi, "The overview of foreign direct investment research in the Korean Journal of International Business Review 1997-2012", INTERNATIONAL BUSINESS REVIEW, Vol. 18, No. 1, pp. 125-144, 2014.
  11. K. H., Kim, D. W., Yang, "A study on the effect of CEO ethics on the business performance of company: focusing on construction companies", Journal of Digital Convergence , Vol. 14, No. 4, pp. 173-183, 2016.
  12. K. I., Kim, J. Y., Park, "Cultural Differences impact on the ERP System Implementation," Journal of IT Convergence Society for SMB, Vol. 6, No. 2, pp. 1-9, 2016.
  13. Kogut, B., Singh, H., "The effect of national culture on the choice of entry mode", Journal of International Business Studies, Vol. 19, No. 3, pp. 411-432, 1988.
  14. Leff, N., "Economic development through bureaucratic corruption", American Behavioral Scientist, Vol. 8, pp. 8-14, 1964.
  15. Lippmann, W., "Public Opinion", N. Y.:The Macmillan Company, 1992.
  16. Mauro, P. "Corruption and growth", The Quarterly Journal of Economics, Vol. 110, No. 3, pp. 681-712, 1995.
  17. M. S., Son, Y. M., Seo, B. H., Hyun, "An empirical study on the strategy and implications of M&A in Korea IT companies", Journal of the Korea Convergence Society, Vol. 8. No. 3, pp. 245-252, 2017.
  18. M. Y., Cha, "Enhancement of SMB global compentency for overseas market entry," Journal of Convergence for Information Technology, Vol. 7, No. 1, pp. 11-16, 2017.
  19. S. C. Park, "The impacts of cultural proximity on the intensive and extensive margins of exports, Korean Journal of EU Studies, Vol. 19, No. 2, pp.71-92, 2014.
  20. S. C. Park, "Impacts of cultural differences on trade: application to East Asia", Journal of northeast Asian economic studies, Vol. 23, No. 2, pp. 35-54, 2011.
  21. S. G., Kim, "The study on the CSR: focused on LG electronics, Journal of Digital Convergence, Vol. 14, No. 6, pp. 69-83, 2016.
  22. S. H. Lee, S. W. Park, "A study on the impact of political risk on the FDI inflow", Journal of trade and Credit Insurance, Vol. 16, No. 2, pp. 87-115, 2015.
  23. S. J., Lee, D. W., Jeong, J. G., Yu, "The industrial economic costs of unsupplied electricity in OECD countries using input-output analysis", Journal of the Korea Convergence Society, Vol. 7. No. 4, pp. 191-198, 2016.
  24. S. K., Kwon, "Legal issues and policy implications of electronic commerce chapters of the Korea․ China FTA", Journal of Digital Convergence, Vol. 13, No. 10, pp. 9-17, 2015.
  25. Voyer, P., Beamish, P., "The effect of corruption on Japanese foreign direct investment", Journal of Business Ethics, Vol. 50, pp. 211-224, 2004.
  26. Wei, S., "How taxing is corruption on international investors?", Review of Economics and Statistics, Vol. 82, No. 1, pp. 1-11, 2000a.
  27. Wei, S., "Local corruption and global capital flows", Brookings Papers on Economic Activity, Vol. 31, No. 2, pp. 303-354, 2000b.
  28. Wheeler, D., Mody, A., "International investment location decisions: The case of US firms", Journal of International Economics, Vol. 33, pp. 57-76, 1992.
  29. Woo, J., Heo, U., "Corruption and foreign direct investment attractiveness in Asia", Asian Politics and Policy, Vol. 1, No. 2, pp. 223-238, 2009.
  30. Y. M. Park, "Cultural difference and international tourism demand: focusing on Hofstede's culture dimensions theory", Journal of Tourism Sciences, Vol. 143, pp. 183-202, 2016.
  31. Y. R. Park, Y. S, Yang "Determinant of foerign direct investment of Korean firms: types of FDI and institutional distance", The International Association of Area Studies, Vol. 15, No. 3, pp. 429-449, 2011.
  32. Y. M., Seo, L., S., E. K., Kim, "The influence of national image, brand image and country of-origin image on purchase attitude and purchase intention: focus on the purchase of korean cosmetics which applied a high and/or convergence technology in chinese consumers, Journal of Digital Convergence, Vol. 13, No. 6, pp. 69-79, 2015.
  33. Y. R. Park, Y. S, Yang "Determinant of foreign direct investment of Korean firms: types of FDI and institutional distance", The International Association of Area Studies, Vol. 15, No. 3, pp.429-449, 2011.