Document Type

Dissertation

First Faculty Advisor

Ramirez, Andres

Second Faculty Advisor

Annavarjula, Madan

Keywords

national culture; pass-through; commodities; coffee; cotton; steel; uncertainty avoidance

Publisher

Bryant University

Abstract

This study analyzes the impact of national culture on the pass-through of commodity price shocks to retail goods. In particular, this study explores the commodities of coffee, cotton and steel. Through the use of regression analysis, this study looks to determine the relationship between two key predictive variables: risk tolerance of a country and commodity shocks within a company’s associated commodity market, and their impact on the value of companies within that country. Additional factors are explored at the firm financial level and the firm country level. The purpose of this study is to examine if consumers of one country will pay more overall for retail goods than consumers of another country, based on the culture of companies involved in the supply chain of that good. An analysis of firms in countries with varying levels of risk tolerance will indicate which countries absorb or pass more of the shock to consumers.

Findings indicate that national culture and commodity shocks do not have an overall influential effect on the price that consumers are paying across the commodity chains explored. Culture, in terms of the level of uncertainty avoidance in the country of incorporation, plays no significant role in the pass-through of commodity price shocks. While it was seen that culture does not have significant implications on commodity price shocks, it does begin to suggest that the recent globalization phenomenon has taken a formal standing in the way that businesses are performing internationally. Implications for global managers are found within the context of this research and its application henceforth in the field of international finance.

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