Sociocultural and Technological Effects on the Economy of Ireland

Differences in cultures among countries, as argued by cultural researchers such as Hofstede and Trompenaars (e.g. discussed in Nardon & Steers, 2009), could affect the outcomes of businesses in international locations, for instance, via their influence on negotiations (Hurn, 2007). Additionally, cultural differences arising from subscription to a particular political system and the institutions it embodies, could determine the managerial approaches that are effective in such locations (Chevrier, 2009). Accordingly, wide cultural differences may deter entry of foreign investment. Ireland, in this respect, has created a favourable environment by facilitating cultural convergence of its populations with that of most of its foreign investors. For instance, in addition to two organizations set up to promote FDI in the country, the government set up an organization – Udaras – solely responsible for such a role in regions where the predominant language is Irish (Hill, 2007). Such an approach helped bridge the communication-gap that would otherwise exist between the region and predominantly English-speaking foreign investors. Additionally, to cater for the projected shortage in skilled workforce, the government started initiatives to attract foreign labour into the country (Hill, 2007). Such a pool of foreign labour could help in the process of cultural adjustment to meet the expectations of foreign investors.

Technological aspects such as access to broadband connection also influenced Ireland’s status as a FDI destination. Before government’s intervention that increased competitiveness hence innovation and cheaper prices in the telecommunications industry, companies such as Microsoft had shunned locating their operations in the country (Hill, 2007). However, with timely government’s response to such concerns, Ireland has subsequently become a key exporter of software and hardware solutions, with companies such as Microsoft, IBM, Siemens and Oracle locating their operations in the country (Hill, 2007). Ireland’s technological disadvantage when compared to other EU countries however continue to affect its suitability as a FDI, for instance with its lower expenditure on research and development being lower than the European average (Hill, 2007).

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