The Impact of Social Norms on Foreign Direct Investments

This study examines the impact of social norms, measured through the Cultural Tightness-Looseness (CTL) index, on foreign direct investments (FDI) across 67 countries. I aimed to highlight a new approach from the sphere of cultural influences on bilateral FDI flows and to demonstrate the direct connection between the strictness imposed by a country’s social norms and the investment decisions based on them. The results obtained were in line with the initial expectations, validating the level of constraint/permissiveness as a truly influential factor in relation to foreign direct investments.