International Journal of Management Science and Business Administration
Volume 2, Issue 4, March 2016, Pages 28-43
A Cross-National Study of the Relationships between Cultural Determinants, Sustainable Governance and Sustainable Development
¹Diana Tsoy, ²Gao Yongqiang
¹ ²Huazhong University of Science and Technology, Wuhan, Hubei, 430074, China
Abstract: The study investigates the drivers of Sustainable Development presented by Hofstede cultural dimensions and Sustainable Governance in OECD and EU countries. The relationships between predictors and Sustainable Development were tested by multiple regression analysis, which confirmed that Sustainability-oriented Governance leads to Sustainable Development, emphasizing the importance of Sustainable Governance. The impact of cultural variables on Sustainable Development was sensitive to the existence of Sustainable governance, confirming the hypothesized role of the Sustainable governance in the relationship among the national cultural differences and Sustainable Development as a moderator. Sustainable governance contributes to the growth of positive influence of Masculinity, decreasing, at the same time, the importance of Power distance in the relationship with Sustainable Development, presented by Sustainability-adjusted Global Competitiveness Index.
Keywords: Sustainable development, Sustainable governance, Hofstede cultural dimensions
Nowadays, the issue of sustainability is of high priority in the development of any country. It’s not a fashionable trend, but it’s a need to direct the development of countries toward more responsible and ethical behavior. Ethics is tightly linked to the economics, taking its origin from the moral point of view by creating equal conditions for human well-being (Sen, 1999). However, through the time the goal of enrichment and creating wealth made the governments of countries violate human rights, neglect nature, pursuing technological and industrial development. Facing environmental problems now and understanding the picture of future without taking appropriate actions, there is an urgent need in the establishment of sustainability as a main priority of the development for all countries (Brundtland et al., 1987). Successful Sustainable Development can lead to only positive processes: starting from the sustainable economic growth, elimination of social problems, prevention of ecological catastrophes (Elliott, 2012) and ending with the reconstruction of educational processes (Gagnidze, 2014), changes in cultural values (Husted, 2005), political systems toward sustainability (Friedman et al., 2011) and mutual respect of others and environment (Sen, 1999).
Therefore, the essential goal of the government – to take this safe path by taking into account economic, social and environment conditions of its country, makes it sustainable-oriented itself (Bosselmann et al., 2008). However, the reasons in decision-making on the country-level can be stipulated not only by differences of geographical location but also by the differences in cultural values of nations as well. There are many works approved the existence of the cultural footprint in Human Development (Gaygısız, 2013), socio-economic development and GDP (Cox et al., 2011), Environment sustainability (Park et al., 2007m Husted, 2005) and quality of governance (Kyriacou, 2015). Thus, on the assumption of all mentioned areas, subjected to the influence of culture, the study expects to establish the link between the cultural characteristics and Sustainable Development.
Furthermore, Sustainable Development is judged by the current situation and condition of economy, society and environment of the country. Whereas, these pillars of Sustainable Development are: firstly, the result of the policies undertaken by the government in the past and secondly, the attitude and understanding of the duties and rights by the citizens (Bosselmann et al., 2008). According to Singh, (2014), humans are ready to pay more for some products, knowing that it’s recycling material or that’s not harmful for nature. Such a behavior can be a result of the specific cultural perceptions and habits.
Nonetheless, the study of the interaction between national culture, governance, and sustainability, as a complete mechanism, is of great importance as well. The importance of the correct and sustainable-oriented institutions of decision-making in the formation of Sustainable Development in many countries based on the cultural features of each nation leads to the idea of the need for a comprehensive study of the cultural characteristics and their impact on Sustainable Development together with Sustainable Governance as a moderator in this relationship.
2. Literature Review
2.1 The concept of Sustainable Development
All countries in the world, especially developed countries are always aiming the goal of economic growth (Bell, 1976), which was associated with human well-being, the increase of living standards. Many authors emphasize that the history of Sustainable Development begins from the WCED Report or Brundtland Commission Report, which gave the definition of Sustainable Development for the first time. “Process of change in which the exploitation of resources, the direction of investments, the orientation of technological development, and institutional change are made consistent with future as well as present needs” (Brundtland et al., 1987).
Moreover, in recent studies the necessity, a crucial role of Sustainable Development and its value for various outcomes has been well established by many authors. Given this, according to Elliott (2012), Sustainable Development is a key instrument and the only possible solution to current ecological problems which influence both on the health of people and on the future generations’ lives (Bosselmann et al., 2008).
Contradiction in objectives is one of the main obstacles to achieving Sustainable Development. According to Lele (1991), the idea of Sustainable Development as a continuous economic growth but in a sustainable way can be considered only in short-term perspective, due to the fact that, economic growth means an increased usage of resources to achieve the development.
Figure 1: Sustainable Development
Source: Lele, 1991
However, the compromise between these processes can be fulfilled if the governments pursue the provision of basic needs and improvement of social and ecological problems (Lele, 1991). Notwithstanding, owing to the technological progress, innovation, and increase of renewable resources, the balance between achieving economic growth and solving social and environment problems is possible (Dincer, 2000).
2.2 Drivers and Pillars of Sustainable Development
Given its significance for a wide spectrum of topics, part of the research has been aimed to explore the antecedents of Sustainable Development. There are 3 pillars, which majority of authors consider as the main ones in Sustainable Development, and namely: social, economic and environmental aspects. However, sometimes these elements are studied separately and it is hard to say whether Sustainable Development is either socio-economic or environmental approach (Moir and Carter, 2012), which in fact are both.
According to the author and the Brundtland Report, Sustainable Development should have at least 2 levels: horizontal – is ethical concern among all the individuals and vertical – considers the interaction between generations. Moreover, Maréchal (2008) as well as Gagnidze (2014) emphasized the existence of weak and strong sustainability.
Figure 2: Weak sustainability (“a”) and strong sustainability (“b”)
(Source: Gagnidze, 2014)
Considering weak and strong sustainability, it is obvious that in first proposed scheme 3 spheres interact between each other only partially, meanwhile in strong sustainability one includes another, making the process of one impossible without any other. It is interesting that, although economic sphere occupies the core position, however, it is strongly stipulated by social requirements and ecological conditions.
2.3 Cultural Dimensions
As the concept of Sustainable Development involves social environmental aspects and together with the economic pillar, each of which is a result of policies, initiatives, and decisions made by people, there is always important to consider the background, reasons, and motives of such decisions. Therefore, many authors deem the national cultural dimensions as a fourth pillar of Sustainable Development along with three abovementioned ones. Moreover, referring to Nurse (2006), cultural pillar should be considered as the central and the main one among others.
According to the definitions given by Kluckhohn et al. (1953), the relationship can have either dominance or fate orientation. In both cases, the interactions go to extremes: either control by humans over nature or vice-versa. However, the only possible way to combine all the interests is through balance orientation, which is the most closest to the Sustainable Development – respectful attitude toward the environment. The same approach was proposed by Hawcroft and Milfont (2010) by calling it new environmental paradigm – attempt to combine the interests of individuals and respect for the nature or egalitarianism (Douglas, et al., 2003).
Cultural dimensions proposed by Hofstede (1997, 2001) are the most comprehensive criteria of measuring cultural and national differences. Basing on the research done, the aforementioned author defined four cultural dimensions: 1) Power Distance 2) Uncertainty Avoidance 3) Individualism and Collectivism 4) Masculinity and Femininity (Hofstede, 1997).
2.4. Sustainable Governance
When it comes, to the governance, it is important to understand that this word combines both government and everything that can impact on human behavior, for instance, social and ethical norms and rules (Zaelke, 2005).
Moir and Carter (2010) emphasized the need to transformation in terms of institutional adjustments toward Sustainable Development, which should be effective but not to slow due to the existing environmental problems. According to Robert (1974), governance can be interpreted as a complex of forbidden and allowed rules, however, Sustainable governance is different. Sustainable governance can be defined in two ways: firstly as governance that understands and pursues Sustainable Development by following the principles of sustainability, and secondly, governance that manages to combine the interests of business, needs of people and future generations (Leal Filho et al., 2015). Moreover, according to Meadowcroft et al., (2005), Sustainable governance can be a middle of the balance between three pillars of Sustainable Development.
3. Research Model and Hypotheses
3.1 Cultural National Dimensions and Sustainable Development
The study done by Husted (2005) revealed that low levels of power distance, collectivism and masculinity positively impact on environment sustainability, meanwhile Park et al., (2007) criticized the importance of individualism. Nonetheless, individualism was strongly supported by the research of Cox et al. (2011) as the main predictor in the relationship between economic dynamic and the creation of environmental sustainability. However, all above mentioned studies, including the researches done by Tang and Koveos (2008) and Park et al. (2007) didn’t reveal any strong influence of uncertainty avoidance on the social-economic institutions and capacity for sustainability. Moreover, there are several attempts to investigate the influence of culture on Sustainable Development (Chu, 2011, Vachon, 2010). Summarizing, the results of all above mentioned studies emphasized the crucial role of the culture in the investigation of Sustainable Development.
Hypothesis 1: National culture has a positive influence on Sustainable Development.
However, due to the fact that the concept of national culture is wide (Chu, 2001), we investigate the influence of concrete cultural dimensions, videlicet four main Hofstede cultural dimensions on Sustainable Development.
Power Distance and Sustainable Development
Basing on the definition given by Hofstede, the concept of power distance can be explained by unequal and unfair distribution of power among society members in countries with high power distance. Thus, it can lead to the aggregation of control in one’s hand and as a result to the misbalance of power and abuse of authority, referring to the Pareto distribution (Pareto and Page, 1971).
Husted (2005) associated low power distance with egalitarianism, another cultural variable which is close to the concept of power distance and was proposed Schwartz (1994), and mentioned by (Douglas, et al., 2003), who defined that nature is considered as a fragile substance. According to the findings of Husted (2005), low level of power distance as a factor determines the sustainable values in society.
Hypothesis 1a: There is a negative impact of Power Distance on Sustainable Development
Uncertainty Avoidance and Sustainable Development
The fear to act in risky situations can be a “rope” that ties people’s hands. In this point of view, uncertainty avoidance is considered as an obstacle for the innovation and innovative process of the country, the latter is also a part of the Sustainable Development (Gennari, 2007). Under constantly economic growth and hi-tech development, it’s essential to act in accordance with the present and future perspective adjusting actions and upgrading the technology and thus to be more sustainable in country level aspect. Furthermore, the government can also restrict the freedom of its citizen and can dictate the certain pattern of behavior (Husted 2005). However, Cox et al. (2011) and Tang and Koveos (2008) haven’t discovered any relationship between this cultural variable and sustainability as well as economic dynamic. Moreover, within the research of Husted (2005), the results weren’t supported and even appeared to be opposite to expected ones.
Hypothesis 1b: There is a negative effect of Uncertainty Avoidance (UAI) on Sustainable Development
Individualism-Collectivism and Sustainable Development
Humans in countries with individualistic culture are more independent in their decisions, they appreciate their own interests, goals more than group’s ones. People are tending to be more initiative and open to the innovations and entrepreneur’s behavior. Meanwhile, collectivistic individuals are close to the family, group, which they are related to. They are bounded by the social duties, where the prestige of the family plays an important role.
Kyriacou (2015) and Tang and Koveos (2008) discovered the tendency that low level of collectivism has a positive influence on the economic development, which is one of Sustainable Development pillars. Nonetheless, the concept of individualism was criticized by other authors as well, which consider it as an “egoism” which contradicts to the concept of Sustainable Development (Sen, 1999). Sustainable Development can be successful only when people start thinking not only themselves and their interests but also others – nature, people around and future generations (Maréchal, 2008).
Hypothesis 1c: There is a positive impact of Individualism on Sustainable Development
Masculinity and Sustainable Development
Masculinity as a cultural variable is associated with the competence, strength, and protection. Meanwhile, comfort and care are more associated with femininity. It is in the nature of women to take care not only of present but our future as well. This can be referred to the stakeholder theory – one of the basic elements of Sustainable Development (Visser, 2008).
There is no doubt that it’s an integral part of Sustainable Development to establish a good interpersonal relationship among all people and create equal conditions for them, nonetheless, without any competition spirit, there is no progress. The relationships and influence of this cultural dimension are quite complex, due to the fact that several authors haven’t found any impact on the economic ability to support sustainability (Cox et al., 2011). Moreover, Gaygısız (2013) also haven’t found any significant relationship between masculinity and human development, however, the direction of the relationship was positive.
Hypothesis 1d: There is a positive effect of Masculinity on Sustainable Development
3.2 Sustainable Governance and Sustainable Development
There were many works devoted to the influence of Good governance on economic growth (Friedman et al., 2011, Kyriacou, 2015); however there is a lack of studies done in the field of namely Sustainable Governance and its influence on Sustainable Development. The main feature of the Sustainable Governance Indicator is to direct the actions of policymakers in the way of long-term perspective of sustainability (Sustainable Governance Indicators, 2015).
Moreover, Sustainable governance can be considered in terms of rights and duties toward the society. Rights provide freedom in individual, social, economic and political aspects. Meanwhile, duties are the driver of responsibilities for own actions in terms of respecting ecology, for instance (Bosselmann et al., 2008). Findings of Leal Filho et al. (2015) confirmed the importance of Sustainable governance in Baltic countries.
Hypothesis 2: There is a positive impact of Sustainable Governance on Sustainable Development.
3.3 The Role of the Sustainable Governance in the Relationship between Sustainable Development and Cultural Dimensions
Lower level of corruption as well as the principles of democracy (individualism – collectivism), the spirit of competitiveness (masculinity – femininity), innovative desire (uncertainty avoidance), freedom and equality in rights (power distance) are drivers of Sustainable Development which can be unpredictable in the sense of Sustainable Governance and its policy performance.
The role of governance as a moderator was approved between culture and human development (Gaygısız, 2013) and economic development as well (Kyriacou, 2015); assuming this, Sustainable Governance can be a prism that changes the influence of national cultural characteristics on Sustainable Development.
Hypothesis 3: There is a positive moderate impact of Sustainable Governance (SG) between cultural variables and Sustainable Development.
Figure 3: Research model
As our study is based on the concepts of Sustainable Development, Sustainable governance concepts, and national cultural dimensions, therefore the research is focused on the data from available online sources (Hofstede, World Economic Forum, and Bertelsmann Foundation databases), using the archival method as the main research strategy. Basing on the previous researches done, the secondary data were gained using the quantitative method to analyze the relationship between cultural differences, Sustainable governance, and Sustainable Development.
Basing on the definition of the time horizons and due to the difficulty of conducting of longitudinal studies, the research was done within the frameworks of the cross-sectional study. The credibility of the research done can be approved by its data reliability and validity. Although, there are some authors doubt that cultural differences measured by Hofstede are reliable, due to the fact, that data was collected in 1970 (McSweeney, 2003, Tang and Koveos, 2008), however as the social and cultural values tend to change slowly, therefore, these indexes are presumed to remain stable (Ke-young Chu, 2006). Moreover, cultural variables were tested by many authors (Husted, 2005, Cox et al., 2011, Gaygısız, 2013) who approved the reliability of Hofstede cultural indexes.
There is no one approved index that can measure Sustainable Development, however, several authors compute it basing on the indexes, provided by the Global Competitiveness Report (Vachon, 2008, 2010). This report (World Economic Forum, 2014 – 2015) is available online and has additional data of Sustainability adjusted Global Competitiveness Index (GCI) 2014 – 2015, which include the ranking of countries judging from their sustainability. Dos Santos & Brandi (2014) revealed a strong correlation between competitiveness and sustainability along with the findings of the World Economic Forum, stating that countries with the relatively high level of competitiveness are successfully performing in the area of sustainability as well.
The relationship between the governance and Sustainable Development was studied before and their link was approved (Friedman et al., 2011, Gaygısız, 2013, Kyriacou, 2015), however, the majority of researchers used the data of World Bank, provided in accordance with the description of the good governance. Nevertheless, there is a need of the usage more precise indicator for measuring namely sustainable governance (Bosselmann et al., 2008, Leal Filho et al., 2015, Meadowcroft et al., 2005). Therefore, the database of Sustainable Governance Indicators 2015 was used in the study (Sustainable Governance Indicators, 2015). The database is available online as well as the Hofstede cultural dimensions, used for the measurements of national differences in countries (Hofstede, 2001).
According to Husted, 2005 economic dimensions of the Environmental sustainability cannot be considered in isolation of national and cultural ones. Supporting this viewpoint, economic, governmental and cultural indicators were used, to reveal their influence on Sustainable Development. The analysis of the literature allowed creating the following model: first of all, we use Sustainability-adjusted GCI as Sustainable Development index, secondly national cultural Hofstede dimensions and finally Sustainable Governance.
The index of Sustainable Development was measured using the archival data provided by the Global Competitiveness Report (2014 – 2015) and namely, Sustainability-adjusted Global Competitiveness Index. The index measures mainly the productivity of an economy in different countries; furthermore, the index is adjusted by factors that characterize both social and environmental sustainability as well. According to Schwab (2015), there are 113 countries which are covered by the Sustainability-adjusted GCI and 2 main parts that separate the index into social, consisting of 9 sections and environmental, consisting of 11 sections. Each of separate section of 2 pillars of Sustainability-adjusted GCI varies from 1 – 7. All of them define different factors, policies and the set of institutions that determine the sustainability of countries.
When it comes to Hofstede dimensions, the data provided by Hofstede were collected from 1967 till 1973 (Hofstede, 2001) and are available online. In our study, we used four main cultural dimensions, due to their reliability and validity. Power distance is the measurement showing to which degree power is normally distributed in the country, basing on the response about the attitude to different styles of leadership, Uncertainty Avoidance also indicates the attitude toward unstable and stressful situations at work. The dimension of Individualism and Collectivism shows which of working conditions are more attractive for respondents. The last cultural dimension is also related to preferences at work: Masculinity oriented cultures choose high beneficial work with difficulties instead of comfort.
The Sustainable Governance Index was used for measurement of governance. The index is available for 41 countries: the EU and the OECD and consists of 3 elements: Policy Performance Index, Democracy Index and Governance Index. Each of elements varies from 1 to 10, indicating at the same time ranking of countries. The higher the score is the more sustainable-oriented is the governance (Bruneau, 2014).
Figure 4: The elements of Sustainability-adjusted GCI
Source: Schwab, 2015
Table 1: Construct operationalization table
|Construct name||Construct definition||Source|
|Sustainable Development||The process of reevaluating values regarding the attitude toward environment, natural resources, investments, changing the direction of technological growth, governmental institutions for better present and future (Brundtland et al., 1987).||World Economic Forum, Schwab (2015)|
|National cultural dimensions||Cultural pillar is the central and the main one among others in Sustainable Development, it is a wide concept which is core of all the individuals’ actions starting from interactions between people, nature and ending with cross-national relationships (Nurse, 2006).||Hofstede database, Hofstede (2001)|
|Sustainable Governance||Governance that understands and pursues Sustainable Development by following the principles of sustainability and that manages to combine the interests of business, needs of people and descendants (Leal Filho et al., 2015).||Bertelsmann Foundation database, Bruneau (2014)|
5. Data Analysis and Results
At initial step part of data analysis, it is necessary to calculate the compute values of the variables. Thus, basing on the methodology of Sustainable Governance Indicators, the variable – Sustainable Governance can be aggregated by calculating the average of the above mentioned 3 pillars and sub-pillars.
Secondly, before the analysis of the dataset, all the variables should be measured correctly. All the data are scale measured, except the category of countries, which is nominal. The methodology of measurement was described previously in the methodology chapter.
After all the values for each indicator were determined, a preliminary analysis consisting of descriptive statistics analysis and normality assessment was performed. As part of descriptive statistics, the mean values for each variable were calculated, as well as standard deviation, minimum and maximum values and others. Afterward, in order to assess whether the data were normally distributed, normality tests were done. Albeit there are several ways to evaluate the normality of data distribution, the analysis was focused on the most common techniques: Kolmogorov-Smirnov and Shapiro-Wilks tests and Q-Q probability plots.
Basing on the statistical method of normality evaluation, all the data are normally distributed, demonstrating large probabilities and varying from 0.069 to 0.86. Moreover, graphical method of evaluation also approved that all the data are normally distributed.
5.1 Correlation Analysis
Judging from the correlation analysis, all the variables are moving in the right direction according to the theoretical knowledge, giving a good reason to support our hypothesizes on a univariate level. And namely: <0.01 demonstrates high significance between Sustainable Governance and Sustainable Development and the =0.693 which means: 1) as one variable increases or decreases so will the other one (Leal Filho et al., 2015); 2) there is a good reason to suppose that Sustainability-adjusted GCI and Sustainable Governance could be inversely related. And vice versa tendency can be seen regarding Uncertainty avoidance, showing that, as soon as the independent cultural goes up, and the level of Sustainable Development goes down. Power Distance has a negative -value= 53.3% (Tang and Koveos, 2008), meanwhile positive -value = 0.475 denotes following: when Individualism variable increases, Sustainable Development also increases, the same as in the researches done by Husted (2005) and Cox et al. (2011). During the correlation analysis, it was found that value of Masculinity is higher than 0.05, however, the association between Masculinity and Sustainable Development is positive and slightly less than 10%.
|Table 2: Correlations|
|**. Correlation is significant at the 0.01 level (2-tailed).|
|*. Correlation is significant at the 0.05 level (2-tailed).|
As a part of the analysis, the correlations between Sustainable Governance and cultural variables were analyzed as well. Power Distance together with Uncertainty Avoidance and Masculinity are negatively correlated with Sustainable governance with -value equals to -0.727, -0.720 and -0.343 accordingly, meanwhile, the association between Individualism governance indicator is positive ( -value=0.563). Moreover, all associations have high Sig. 2-tailed level less than 0.01 and are moving to the right, theoretically accepted directions.
5.2 Multiple Regression Analysis
Assuming that, Sustainable Governance can influence on cultural variables, it is necessary to examine regression analyzes between cultural predictors and Sustainable Development.
According to the correlation analysis, all the cultural variables are correlated with Sustainable Development, presented by Sustainability-adjusted GCI, in expected directions, and namely Individualism and Masculinity have positive correlation sign, meanwhile Power Distance and Uncertainty Avoidance have opposite one. Furthermore, basing on the data received, 33.9% of variability was accounted for in the relationship between Sustainable Development and Hofstede variables. Albeit, the significance of -test=3.84 is equal to 0.12, it is still acceptable. The directions of all relationships are under theoretical expectations, meaning that high level of Power Distance, Uncertainty Avoidance with = 0.42 and =0.13 accordingly, have a negative impact on Sustainable Development. And high scores of Individualism along with Masculinity are forcing to increase the level of Sustainable Development. However, almost all the cultural variables, except Power Distance have -value more than 0.05 (Cox et al., 2011, Tang and Koveos 2008).
Table 3: Regression analysis results of the Hofstede’s cultural dimensions on Sustainable Development
|Coefficientsa National cultural dimensions -test=3.84, < .05; =.34|
Dependent Variable: normalised_GCI
In order to confirm the relationships between independent variables, presented by Hofstede cultural dimensions and Sustainable Governance and the dependent variable of Sustainable Development, presented by Sustainability-adjusted GCI, a multiple regression analysis was preceded.
According to the data received, 64.2% of the variance in the Sustainable Development is accounted for by the independent variables. Furthermore, 50%< <100% gives a good reason to state that the data points are falling quite close to the fitted regression line. The difference between adjusted and equals to 0.06, which is quite small and acceptable. -test is equal to 10.4 and <0.001.
Finally, all the normalized variables were put into the multiple regression model to be analyzed. Judging from the Table 4, the hypothesis, stating that there is a positive impact of Sustainable Governance on Sustainable Development was approved with significant positive regression weights =0.000 = 0.962 (Friedman et al., 2011, Kyriacou, 2015). Regarding cultural variables, Masculinity also was approved to have a positive effect on Sustainable Development, as it was theoretically supposed. Power Distance and Individualism remained the hypothesized direction: countries with low level of Power Distance and Collectivism will have higher Sustainable Development (Tang and Koveos, 2008); however the results appeared to be not significant, that can be explained by a moderate effect of Sustainable governance. Here it is necessary to pay particular attention to Uncertainty Avoidance: the relationship between this variable and Sustainable Development changed the sign to opposite, however not significant, the same as in the study by Cox et al., (2011) and Husted (2005).
Table 4: Regression analysis results of the Hofstede’s cultural dimensions and Sustainable Governance (SG) on Sustainable Development
|Coefficientsa National cultural dimensions and SG ( -test=10.4, < .001; =.64)|
a. Dependent Variable: normalised_GCI
6.1 Findings of the Study
The study indicates that Sustainable Governance has a significant positive impact on Sustainable Development. Governance, as a composite variable consisting of Policy Performance, Quality of Democracy and Governance can, therefore, be characterized as key for achieving Sustainable Development. The level of influence is quite high, indicating the importance of this variable in Sustainable Development. Furthermore, basing on the existence of the parallel between Good governance and Sustainable governance and being supported by the study of Leal Filho et al. (2015), who approved the role of Sustainable governance toward Sustainable Development in Baltic countries, the regression analyses were conducted revealing firstly, the role of Sustainable Development in the relationship between Sustainable Development and cultural Hofstede indicators and secondly, testing the existence of the relationship between cultural variables and Governance. Findings of the current study were in the line of what was expected.
The study was based on the previous findings done by Gaygısız (2013) and Kyriacou (2015) which established the moderate effect of the Governance indicator in the relationship between cultural differences and economic development and partly Sustainable Development, the need of revealing the character of the relationship between our variables was obvious.
The relationship between Sustainable governance and cultural differences were in the expected direction and namely high level of egalitarianism together with femininity and decreased level uncertainty avoidance approved to be positively related to Sustainable governance. When it comes to the investigation of the role Sustainable governance between Sustainable Development and Hofstede dimensions, we revealed the moderate effect of Sustainable governance.
The findings received within our study, showed that power distance is negatively related to Sustainable Development, meaning that low level of power distance positively impacts on Sustainable Development, which was measured by Sustainable-adjusted GCI within our study. This result is in the line with previous studies done by Cox et al. (2011), Tang and Koveos (2008) confirming that low level of power distance can predict economic growth together with environmental sustainability. Moreover, power distance has another form and videlicet egalitarianism, proposed by Schwartz (1994) and which was also mentioned and supported by Husted (2005) as a factor influencing on the institutional capacity, leading to sustainability. Interestingly, that power distance was moderated by the governance variable in the relationship with human development and as a result, the influence of power distance wasn’t significant Gaygısız (2013). Nonetheless, the same as in our study, the results obtained revealed the existence of the negative relationship between power distance and Sustainable Governance and as soon as the last mentioned variable is calculated together with Sustainable Development and power distance, the sign of power distance remained negative but the significance was notably reduced. Basing on these results we can conclude that there is a moderation effect of Sustainable Governance in the relationship between power distance and Sustainable Development.
The positive influence of high level of individualism wasn’t approved within our study and it can be explained due to the fact, the idea of individualism, proposed by Hofstede is more appropriate to the concept of rationalism. According to Amartya Sen, one of the way to interpret rationality is the maximization of own profits. In other words, the authors criticized the nature of rationalism as motivation to reach own goals no matter what, considering all other factors irrational and thus not important (Sen, 1999).
It is undoubtedly true that individualistic countries have strong economies like the USA, at the same time the country with vice versa cultural characteristics are replacing it. China is a nice example of the gradual growth of the economy and is the country with Confucius cultural values. However, within the current study, Confucius cultural values are not considered as a long-term orientation, proposed by Hofstede, but as a characteristic of collectivistic countries. Furthermore, Dore (1984), proposed Confucius formula for industrial development, emphasizing the importance of cultural values in Confucius countries which can be a good combination of economic growth and respect for others’ interests.
And furthermore, according to Smith (1937), the existence of all the goods and products is stipulated by the egoistic desire of enrichment, but not by a gesture of generosity and desire to feed others. However, results of our study, revealing the only partial significance of individualism to achieve sustainability are supported by theoretical findings of other authors. Summarizing the importance of the sense of collectivism, it is important to emphasize that Sustainable Development is basing on “WE” concept, where the understanding that our actions today can influence other people including future generations is the core of Sustainable Development, meanwhile individualistic countries are relying on “I” concept, which theoretically is contradictive to the values of Sustainable Development.
Although the findings regarding the influence of uncertainty avoidance on Sustainable Development weren’t supported with high level of significance, however, such result was expected as most of the previous studies also didn’t reveal any relationship between this cultural variable and economic wealth (Cox et al. (2011), environment sustainability (Husted 2005). It can be stipulated by the assumption that uncertainty avoidance is rooted in more stable cultural institutions and traditions (Tang and Koveos, 2008).
Initially, the direction of the relationship between two mentioned variables was expected to be negatively related to Sustainable Development, reflecting that high level of Femininity corresponds to high level of equality in society, the wish to take care of others (Cox et al., 2011). However being supported by results obtained by Gaygısız (2013) and due to the fact that the indicator of Sustainable Development within our study is Sustainability-adjusted GCI, which is mainly based on the competitiveness of countries, thus, the results obtained during testing the influence of masculinity on Sustainable Development was successfully approved to be positive. On the contrary, high level of femininity is positively associated with Sustainable Governance. Making conclusion from these results, it is obvious that Hofstede cultural dimension can be interpreted in a different way, and can effect on Sustainable Development differently depending on other variables taken at the same time. Therefore, there is a need for additional examination of these relationships in future studies.
All the findings regarding the impact of cultural variables and SG on Sustainable Development are of great importance as well and for better understanding the reasons of all the processes conducted in the previous part of the research, the discussion chapter contains precise information clarifying them.
6.2 Theoretical Implications of the Study
Our study resulted in several contributions to the current theory of Sustainable Development. First, the role of Sustainable Governance has been confirmed as a key factor in achieving Sustainable Development. So far, studies have failed to support the relationship between governance and Sustainable Development with empirical evidence. By conducting a quantitative study on a sample of 35 world economies we were able to prove that such relationship, does not only exists but is fairly strong.
Furthermore, the research model which we constructed was based on a national culture theory of Hofstede. Macroeconomic level studies rarely employ culture as an element which is used to explain certain economic outcomes. By introducing the aspect of national culture we acknowledged the significance of predetermined characteristics of a nation that can play a role in shaping economic and social future of the country.
6.3 Implications for the Practice
The findings, obtained within the current study are essential for the practical implementation of Sustainable Governance, the role of which was proved to be very important in pursuing Sustainable Development. Both of the indicators are relatively new, however, approved that, by improving governance toward sustainability thinking there are more chances to increase the level of Sustainable Development itself. The reliability of Sustainable Governance and Sustainable-adjusted GCI was approved, which means that they can be used in future studies.
Due to the wideness of the Sustainable Development’s concept given in Brundtland Report, many authors usually used indicators related to Sustainable Development or combined some, but not the indicator of Sustainable Development itself. Thus, the Sustainability adjusted GCI was taken as the index of Sustainable Development, the reliability of which was approved during the testing of hypotheses.
When it comes to the Governance indicator, such studies like (Friedman et al., 2011, Gaygısız, 2013, Kyriacou, 2015) were based on Good Governance concept, provided by World Bank. However, Good Governance doesn’t necessarily mean Sustainable one (Meadowcroft et al., 2005); therefore, we used the indicator of Sustainable Governance, proposed by Bosselmann et al. (2008) within our study. Furthermore, the role of Sustainable Governance in the relationship between cultural variables and Sustainable Development was estimated as a moderator. Due to the new aspects, which Sustainable governance includes, it is of great importance to start bringing the feeling of responsibility and understanding of own social rights and duties in educational institutions.
When it comes to a business sphere, green investments which are becoming popular all over the world, and the main goal of which is to support environmentally friendly projects, it is necessary to know which factors can lead to high level of sustainability and which obstacles can prevent its development. Moreover, Sustainable Development and Sustainable Governance have a long term direction, which can lead to the results, which can be seen several decades only. Due to the fact, that Sustainable Governance has to choose between interests of business Leal Filho et al., 2015), society, environment, it is more likely that it will undertake policy alterations which can reduce some parts of business revenue.
The first limitation that we should address in the study is the limitation of our research model. Even though the predictive value of the model was acceptable, other factors may be more influential in determining Sustainable Development. And due to the fact that Sustainable–adjusted GCI is a relatively new index, its validity together with reliability hasn’t been completely confirmed.
Secondly, the sample for which analysis was performed consisted of only 34 OECD and EU countries. The size of the sample may pose a threat to infer any conclusions that may apply to other countries which were not a part of the studied sample.
Heterogeneity of the sample is another limitation given that socio-economic development of the countries varies extensively. At various economic stages of development, different factors may have different impact strengths. Furthermore, we did not use triangulation in the investigation process and data was collected from a secondary source only.
7.2 Recommendations for Future Studies
Basing on the analysis done and results obtained, several suggestions were revealed for future studies. Due to the fact that index of Sustainable Development is partly based on competitiveness analysis of different countries, it is advisable to take into considerations some other measurements, related to Sustainable Development as well, like GDP, socio-economic growth, environmental index, as control variables.
Moreover, within the next study, it is necessary to cover a bigger sample of countries, which can provide more precise information in the investigation of cultural dimensions, Sustainable Governance, and Sustainable Development. Albeit, cultural dimensions used in the current study, were collected by Hofstede in the period of 1967 till 1973 and seemed to change slowly (Husted, 2005), however, there is a need to consider some alteration in culture since that period till present time (Tang and Koveos, 2008).
And finally, it is essential to use other methods of data collection. The future study is aiming to conduct interviews with members of governmental institutions for exploration political methods leading to Sustainable Development and additional Hofstede cultural dimensions as well.
Sustainable Development represents a key concept of economic studies. Its significance is demonstrated by a wide variety of disciplines researching it, from philosophy, to mathematics, economics and management science. It is not only responsibility of research to further develops the studies on the subject, but it is a responsibility of each and every human to find ways to grow and develop in a way that does not result in any negative consequences (Bosselmann et al., 2008).
Our study has explored the concept of Sustainable Development within the economic context. The empirical research on 34 counties is an extension of prior studies which have tackled the subject from various perspectives. As a part of the study, we have developed a research model testing relationship between governance and Sustainable Development. Additionally, national culture was introduced as an independent variable impacting Sustainable Development. Secondary data on which the analysis was performed was collected from Hofstede, World Economic Forum and Bertelsmann Foundation databases.
Via statistical analysis using multiple regression we were able to support several hypotheses of our model. The results indicated that Sustainable governance has a significant influence on Sustainable Development, whereas certain dimensions of national culture also have a partly strong impact. Moreover, the study provided the significance of Sustainable Governance in the relationship between national cultural indicators and Sustainable Development.
Such findings suggest that while national culture may be a factor in certain cases it is not a key factor highly impacting Sustainable Development. In fact, stating that certain cultural characteristics jeopardize sustainability could be considered stereotyping and certainly requires further exploration. On the other hand, what is certain is that countries should focus more on effective policy creation and implementation which would result in growth that can be maintained in the future.
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