Economic Factors Outweigh Cultural Values in Explaining Country Variance: The Limited Role of Value Dimensions after Accounting for GDP

Differences between nations are a main topic of interest in business studies. Country-level variables such as GDP per capita, legislation, type of government and culture are used in studies to explain differences and similarities between countries. These variables are mostly related to the economic situation of countries and their inhabitants. There is a relationship between wealth and form of government (democracies are more affluent), and between wealth and culture dimensions (individualistic countries are more affluent). Despite this link between culture and wealth, the level of affluence (measured in GDP per capita) is not always considered in studies in which culture is included. The question is whether this is justified. At a more specific level, more affluent countries have a better retail infrastructure to provide goods and services and consumers also have, on average, greater purchasing power to buy goods and services.Our results of analyses of consumer purchases across 22 product groups in over 50 countries per cultural values framework, covering a period of 30 years (1990-2019) can be summarized in three points. (i) Culture dimensions (Individualism-collectivism by Hofstede, Embeddedness – Autonomy by Schwartz and both dimensions identified by Inglehart) are strong correlates of consumer expenditure. (ii) These dimensions explain only a very limited proportion of additional variance (in the order of .00 - .01) after national differences in GDP per capita have been accounted for. (iii) A statistically significant proportion of variance in Share of Wallet for a few product categories is explained by cultural dimensions, but effect sizes are small. Economic and cultural sources of variance are confounded, but the findings suggest that only a very limited proportion of variance can be ascribed uniquely to national differences in culture dimensions.