ESS/EVS-based Cultural Distance Indices

These indicators were created in Kaasa, A.; Vadi, M.; Varblane, U. (2016) A new dataset of cultural distances for European countries and regions. Research in International Business and Finance, 37: 231 - 241.

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This dataset provides measures of cultural distance both as a composite index of cultural distance and the distances according to separate dimensions that are calculated using the ESS/EVS-based indicators of cultural dimensions.

The dataset and information about the ESS/EVS-based indicators of cultural dimensions can be found here.

Cultural distance is usually defined as the degree to which shared cultural norms and/or values in one country are different from those in another country. The term ‘cultural distance’ has often been used interchangeably with ‘psychic distance’. While ‘cultural distance’ refers to the cultural differences between countries or regions and thus has to be assessed at the society level, ‘psychic distance’ is an individual-level concept usually defined as the individual’s perception of differences between two countries or regions. This dataset provides society level cultural distance measures.

For measuring cultural distance, the index of cultural distance has been calculated using the logic of Kogut-Singh (1988) index as the most popular measure of cultural distance. Cultural distance indices for all pairs of regions covered in the analysis can be presented as a table similar to a correlation matrix.

Culture is a very complex phenomenon and calculating the composite index of cultural distance provides a simple, tangible and convenient tool for including cultural distance into research. However, sometimes one specific cultural dimension may be of interest. Also, it may happen, for example, that two pairs of countries have the same cultural distance according to a composite index, but a closer inspection shows that in one case this comes mainly from different levels of one dimension, but in the other case from different extents of some other dimension. Hence, it is often reasonable to include cultural dimensions separately into the analysis instead of using the composite index. Hence, cultural distances according to single dimensions were calculated as well while preserving the same scales allowing comparisons with the composite index. More information about the methodology used can be found here.

The cultural dimensions are based on the widely-used original model of Hofstede (1980) which argued that many of the most important cultural differences can be captured by four cultural dimensions: power distance, uncertainty avoidance, individualism-collectivism, and masculinity-femininity.

Power distance (PDI) describes the extent to which hierarchical relations and unequal distribution of power in organisations and societal institutions are accepted in a culture. Uncertainty avoidance (UAI) measures the degree to which a society’s members feel comfortable with uncertainty and ambiguity. Masculinity (MAS) (as opposed to femininity) reveals to what degree traditionally masculine societal values, such as orientation towards achievement and success, prevail over values such as modesty, solidarity or tolerance. Individualism (IND) (as opposed to collectivism) reflects the extent to which people prefer to act as individuals rather than as members of groups. More information can be found here.

The indicators of cultural dimensions used for creating this dataset came from the dataset created by Kaasa et al. (2014) by applying confirmatory factor analysis on the indicators chosen from the European Social Survey (ESS) and the European Values Study (EVS) based on Hofstede’s (2001) overview of the characteristics and differences of dimension extremes. More information about the data used is provided here.

More information can be found in the article.