EXPLORING THE IMPACT OF CROSS CULTURE ADJUSTMENT TOWARDS ECONOMIC GROWTH IN MALAYSIA

(1)

1

EXPLORING THE IMPACT OF CROSS CULTURE ADJUSTMENT TOWARDS ECONOMIC GROWTH IN MALAYSIA

Razinda Tasnim Abdul Rahim (Corresponding author)

Faculty of Business and Management Science, Kolej Universiti Islam Perlis, Kuala Perlis, Perlis, 02000, Malaysia,

E-Mail: [email protected]

Mai Syaheera M. Shaari

E-Mail: [email protected] Muhammad Aizat Md Sin

E-Mail: [email protected]

ABSTRACT

Last two and a half decades, economic growth theory has expanded the list of fundamental development processes to include not only income but also human capital, demographic transition, technology/urbanization, institutions and economic integration. Some of these processes are closer to be the main causal backbone of economic development than others. One major characterization of economic development is the cross-culture adjustment. This paper explores the impact of cross culture adjustment towards economic growth from year 2017 until 2019 by employing the ARDL bounds testing approach to cointegration and Error Correction Model (ECM) for the short run relationship. Through this study, hopefully an effective model can be proposed in order to enhance the development of cross culture adjustment towards economic growth in Malaysia.

Keyword: ARDL approach, Cross cultural adjustment, Economic growth

INTRODUCTION

Religion initiate the formation of individual characteristics in a society. Every religion teaches its followers good things for daily life. Individuals who have a religion will be able to distinguish between things that should be practiced and things that should be avoided. A study by ¹ and ² has supported that religion helps its adherents to have noble morals, including avoiding corruption. Meanwhile, ³ stated that

1 Suyadi, Sumaryati, Hastuti, D. & Saputro, A., D. (2020). Elementary Education Online, Ilkogretim Online, 19 (3), 1703- 1714.

2 Seregig, I. K., Suryanto, T., Hartono, B., Rivai, E., & Prasetyawati, E. (2018). Preventing the acts of corruption through legal community education. Journal of Social Studies Education Research, 9(2), 138-159.

3 Tom, E. J., & Bamgboye, P. O. (2017). The role of religion in combating corruption: The Nigerian. International Journal of Social Sciences, 11(2), 128–142.

(2)

2 most of the religious do not accept crime and Islam bears that wrongdoing as a great sin and grater shirk.⁴ However, most scholars are not interested in discussing issues related to religion because this issue will be misunderstood due to the variation of religions around the world.

Every individual should know that religion is a belief and belief is one of the culture’s elements.

According to ⁵ which were the earliest scholars on culture, defined culture as collective programming of the mind that distinguishes the members of one category of people from those of another. As a result, the cultures that were practiced by society lead to changes in environment, historical, economic, political, technological, individual creativity and others ⁶,⁷. For example, the latest study by ⁸ examined the relationship between religion and national culture with financial decision.

Researchers have found numerous studies stated that culture influence economic growth. Started with, ⁹ indicated that culture is the factors of societies grow rich and culture contributed to individual work quality. Then, economic growth responds positively to the extent of religious beliefs, notably those in hell and heaven, but negatively to church attendance. ¹⁰ Besides, ¹¹ had tested of Hofstede’s cultural indices on real GDP per capita in the countries of South and Southeast Asia Therefore, this study emphasized cross culture adjustment between international students and economic growth.

This paper focus on several elements such as social support, religion and educational. Previous studies focused more on cross culture adjustment (social support) towards culture. To our knowledge, there is very limited study focused on cross culture adjustment (religion and education) towards economic growth. Therefore, this paper will look at the prophetic approach implemented by the international students in their education systems supported by their family and friends towards the economic growth of the host country.

Economic Growth

Rapid economic growth represented high output of a country. This phenomenon able to measure economy status of a country and another. Moreover, economic growth contributed to better standard of living and reducing poverty. Regarding that, all countries put the highest effort to achieve high economic

4 Alim, H., Ramdlan, M. M., Wahid, M., Irfan, M. N., & Ahmad, R. (2017). Jihad nahdlatul ulama melawan korupsi.

Jakarta: Lakpesdam-PBNU.

5 Hofstede, G. and Bond, M.H. (1988). The Confucius connection: from cultural roots to economic growth. Organizational Dynamics, 16 (4), 5-21.

6 Ferreira, J. J. M., Fernandes, C. I., & Ferreira, F. A. F. (2020). Technology transfer, climate change mitigation, and environmental patent impact on sustainability and economic growth: A comparison of European countries. Technological Forecasting & Social Change, 150, 1-8.

7 Tella, R., D. & MacCulloch, R. (2014). Culture, Beliefs and Economic Performance. Motu Economic and Public Policy Research, Motu Working Paper 14-06.

8 Mättö, M. and Niskanen, M. (2019). Religion, national culture and cross-country differences in the use of trade credit:

Evidence from European SMEs. International Journal of Managerial Finance, 15 (3), 350-370.

9 Weber, Max (1946). The Social Psychology of World Religions. 267-301, in From Max to Weber, H. H. Gerth and C.

Wright Mills (editors). New York: Oxford University Press.

10 Barro, R., J. & McCleary, R., M. (2003). Religion and Economic Growth. NBER Working Paper No. 9682.

11 Thach, N., G. (2020). How Values Influence Economic Progress? An Evidence from South and Southeast Asian Countries. In Trung N., Thach N., Kreinovich V. (eds). Data Science for Financial Econometrics. ECONVN 2020. Studies in Computational Intelligence, Springer, Cham (2020), to appear.

(3)

3 growth. Based on the neoclassical theory of economic growth, there are two indicators influence economic gowth which are capital and labour. Several past reaserch have found that there are relationship between capital and labor (¹²; ¹³; ¹⁴).

Capital formation is one of the outputs that lead to economic growth. In general, capital formation includes accumulated accounting or assets of a country. Furthermore, capital formation involves land, building, machinery, power, transportation, and medium of communication. The activities of producing and gaining all these production merchandises is termed as capital formation. Capital formation escalates the accessibility of capital per labor. Subsequently, the productivity of labor rises, which at the last outcomes in the escalate in output and growth of the economy.

Besides, capital formation, labor participation also indicated country’s output. Quality and quantity of labor participation are required to increase economy productivity. However, quality of labor was depending on skills, creativity, training, education and other related job description. A country that have enough quantity of labor participation and meet the quality able to boost national economy.

15started to examine the effects of human capital on economic growth not only in one single country but also many countries. The results were consistent that human capital can boost economic growth. The findings were based on a panel data analysis and data from 1967 to 2011 collected from as many as 65 developing countries. ¹⁶extended the study by ¹⁷ and contributed to the findings that the effects of human capital are impaired when education is expanded. In addition, the effect of human capital is less than that of physical capital on economic growth. These findings were based on data from 32 developing countries with data period 2000-2004.

18explore the linkage between female labor force participation rates and structural adjustment in the Middle East and North Africa (MENA). The period is between 1970 to 2000. On the other hand, ¹⁹ investigated the causal linkage between gross domestic investment (INV) and GDP for Middle East and North Africa (MENA) region nations. The data collection period is between 1970 to 2010. Thus, these two studies proved that MENA region had been tested for their economic growth. Besides, ²⁰ discovered

12 Aznin, N. A. B., & Norehan, A. (2007). Labor force participation of women in Malaysia. Paper for International Economic Conference on Trade & Industry, 3-5 December 2007. The City Bayview, Penang, Malaysia.

13 Osoba, A.M., & Tella, S. A., (2017). Human capital variables and economic growth in Nigeria: An interactive effect.

EuroEconomica, 36(1), 131-143.

14 Xu, Y., & Li, A., (2020). The relationship between innovative human capital and interprovincial economic growth based on panel data model and spatial econometrics. Journal of Computational and Applied Mathematics, 365. Retrieve from https://www.sciencedirect.com/science/article/abs/pii/S037704271930384X

15 Atlatas, S., & Cakir, M., (2016). The effect of human capital on economic growth: A panel data analysis. Yönetim Bilimleri Dergisi, 14(27), 539 – 555.

16 Altiner, A., & Toktas, Y. (2017). Relationship Between Human Capital and Economic Growth: An Application to Developing Countries. Eurasian Journal of Economics and Finance, Eurasian Publications, 5(3), 87-98.

17 Atlatas, S., & Cakir, M., (2016). The effect of human capital on economic growth: A panel data analysis. Yönetim Bilimleri Dergisi, 14(27), 539 – 555.

18 Karshenas, M. & Moghadam, V.M. (2001). Female labor force participation and economic adjustment in the MENA region. The Economics of Women and Work in the Middle East and North Africa (Research in Middle East Economics, Vol.

4), Emerald Group Publishing Limited, Bingley, 51-74

19 Mehrara, M. & Musai, M. (2013). The Relationship between Economic Growth and Human Capital in Developing Countries. International Letters of Social and Humanistic Sciences 5: 55-62.

20 Ugochukwu, U., S. & Chinyere, U., P. (2013). The Impact of Capital Formation on the Growth of Nigerian Economy.

Research Journal of Finance and Accounting, 4(9), 39-42.

(4)

4 the effect of capital formation on output in Nigeria. The data was collected between year 1982 to 2011.

Later, ²¹ were investigated the capital formation lead economic development of Nigeria. The time series data was from 1960 to 2013. The finding proved that there is a significant linkage between capital formation and economic development in Nigeria.

Cross Culture Adjustment

Culture was intrepreted as collective programming of the mind that distinguishes the members of one category of people from those of another ²². According to ²³ culture involves knowledge, beliefs, arts, morals, law, custom and any other capabilities and habits showed by an individual as a member of society. Meanwhile, in few years earlier, ²⁴stated similar definition of culture which was culture as a collection of values, beliefs, behaviours, habits and attitudes that differentiate societies.

Globalization today impacted economy. This is because trading has been much liberalized, with enterprises operating both on the local and global market, having numerous links with entities from different countries. All countries in the world have a culture that differentiates them from others.

Different country has a different culture. Consequently, there is a specific culture in each region or country that makes each one of them different as one examines looking at some factors. Cultural dimensions are important factors to analyse when joining the international market. On the other hand, international students facing the same challenges of culture like business people and expatriate. It may cause misunderstandings, miscommunication and it diminishes image if they fail to respect culture and customs of other countries. In the same time, it will difficult to improve growth economic.

Cross culture related to both management and adjustment. The cross-cultural adjustment framework developed by ²⁵ consists of three dimensions: namely general, work, and interaction adjustment. General adjustment is associated with factors such as living conditions, facilities, and transportation. Interaction adjustment focuses on the extent of socializing with the host country nationals after work. Work adjustment refers to the degree of comfort with work-related factors. Cross-cultural management is the process of resolving the conflicts among different cultural groups in business-related interaction for cultural integration. Meanwhile, the cross-culture adjustment involves adaptation of groups with different cultural backgrounds, such as governments, nations, consumers, managers, employees and others.

26defined cross-cultural adjustment as culture shock generated in the process of an individual adjusting to a different culture in a foreign country. Collie et al. (2015) regarded cross-cultural adjustment as individual psychological stress relief, when encountering cross-culture shock in different environments,

21 Shuaib, I. M. & Ndidi, D. E. (2015). Capital Formation: Impact on The Economic Development of Nigeria 1960-2013.

European Journal of Business, Economics and Accountancy, 3(3), 23-40.

22 Hofstede, G. and Bond, M.H. (1988). The Confucius connection: from cultural roots to economic growth. Organizational Dynamics, 16 (4), 5-21.

23 Kroeber A.L. (2002), Istota kultury (The nature of culture), Wydawnictwo Naukowe PWN, Warszawa.

24 Griffin, R. W.; Pustay, M. W. (1999). International business: a managerial perspective. 2 ed, Addison-Wesley: New York.

25 Black, J.S. (1988). Work Role Transitions: A Study of American Expatriate Managers in Japan. Journal of International Business Studies, 19(2), 277– 294

26 Rui, J. R., & Wang, H. (2015). Social network sites and international students’ cross-cultural adaptation. Computer Human Behavaviour, 49, 400–411.

(5)

5 to reduce conflict and stress at work or outside of work and achieve psychological comfort and ease ²⁷. Cross-cultural adjustment reflects the degree to which an individual has become psychologically comfortable with various aspects of a new setting ²⁸such as living and working in a foreign culture.

Research has found inadequate cross-cultural adjustment to be a key determinant of poor expatriate performance and early repatriation ²⁹. In addressing this issue, the expatriation literature has identified a series of antecedents that are strongly associated with cross-cultural adjustment, including individual characteristics such as personality traits ³⁰, goal orientations³¹ , cultural intelligence ³², as well as organizational factors such as expatriate supporting practices ³³and social support ³⁴.

In the global trend of economic integration, multinational corporations and cross-cultural enterprises are in continuous world economy development and play an increasingly important role in it. However, the overseas expansion of enterprises is always confronted with cultural and management differences in the host country, resulting in different perspectives and attitudes in some of the basic issues such as business objectives, management styles and the decision process. The cultural conflict in multinational corporations poses great difficulties in business and increase management costs. Same goes to the international students who go abroad for pursuing study. They need to aware on culture diversity and different education implemented in host country. Besides, they need to prepare themselves in getting the information and knowledge about the others culture. Thus, cross culture adjustment is the main scope of culture in managing human globally whether for business purpose or education purpose.

Social Support

Family adjustment to a new country plays a significant role in expatriate success. ³⁵found that the expatriate must find a balance between the family and work domains. The family members are helpful and supportive of each other have been found to play a very important role in expatriate adjustment ³⁶.

27 Stilianos, P., Georgios, A., Vasilik, K., and Labros, S. (2017). The Erasmus student mobility program and its contribution to multicultural education: the case of Technological Education Institute of Thessaly. J. Educ. Soc. Res. 3, 181–200.

28 Black, J.S. (1988). Work Role Transitions: A Study of American Expatriate Managers in Japan. Journal of International Business Studies, 19(2), 277– 294.

29 Kraimer, M.L., and Wayne, S.J. (2004). An Examination of Perceived Company Support as a Multidimensional Construct in the Context of an Expatriate Assignment. Journal of Management, 30(2), 209– 237.

30 Shaffer, M.A., Harrison, D.A., Gregersen, H., Black, J.S., and Ferzandi, L.A. (2006). You Can Take it with You:

Individual Differences and Expatriate Adjustment. Journal of Applied Psychology, 91(1), 109– 125.

31 Wang, M., & Takeuchi, R. (2007). The Role of Goal Orientation during Expatriation: A Crosssectional and Longitudinal Investigation. Journal of Applied Psychology, 92, 5, 1437– 1445.

32 Templer, K.J., Tay, C., and Chandrasekar, N.A. (2006). Motivational Cultural Intelligence, Realistic Job Preview, Realistic Living Conditions Preview, and Cross-Cultural Adjustment. Group and Organization Management, 31(1), 154–

173.

33 Caligiuri, P., Phillips, J., Lazarova, M., Tarique, I., and Burgi, P. (2001). The Theory of Met Expectations Applied to Expatriate Adjustment: The Role of Cross-cultural Training. International Journal of Human Resource Management, 12(3), 357– 372.

34 Mansor, M. F. B., Hamid, N. B. A., Kamil, S. B., & Abu. N. H. (2014). Determinants of Expatriate Manager Failures in the International Assignment. Advances in Environmental Biology, 8(9), 584-592

35 Shaffer, M. A., & Harrison, D. A. (2001). Forgotten partners of international assignments: Development and test of a model of spouse adjustment. Journal of Applied Psychology, 86(2), 238–254.

36 Mansor, M. F. B., Hamid, N. B. A., Kamil, S. B., & Abu. N. H. (2014). Determinants of Expatriate Manager Failures in the International Assignment. Advances in Environmental Biology, 8(9), 584-592

(6)

6 The characteristics of the family also have an important impact on expatriate failure experience. Most importantly, lack of family preparation to the foreign culture results in critical challenges for the family in their adjustment. Currently, the family members’ relationships and concerns for one another contribute towards expatriates’ success and failure experience many empirical studies have stated that family factors in expatriation can serve as an important role for the expatriate adjustment ³⁷.

Expatriates and their families face many complexities and pressures, such as learning a new language, finding new friends, and dealing with everyday issues as buying groceries, shopping, banking, and providing education for their children. Even though family and spouse are the major expatriate stresses on foreign assignment ³⁸, the family support especially from spouse can help with expatriate to adjust in the stressful new environment³⁹.

Cross-cultural training refers to formal educational effort to help elicit affective, behavioural, and cognitive changes for improving cross-cultural adjustment and communication⁴⁰. The main cross-cultural training includes cultural sensitivity training, language learning, cross-cultural communication, conflict management, and environmental simulation. According to⁴¹, cultural training, language training, and practical training are essential to lessen expatriate dissatisfaction. The training program should include the whole family to provide vital knowledge about host country’s culture and business practices. It is also important to arrange a familiarization trip before the actual transfer. Lack of cultural awareness will result into inability to successfully live and work in another country for the employee and his or her family.

Beside family, friend contribute to the emotion support of the exptariate too. Friendships are especially important among younger individuals, who value developing new relationships beyond the traditional family context ⁴². Friendships at work may provide a source of social contact, intimacy and support with establishing an adult identity. When the work is high in social intensity, co-workers have been demonstrated to have a greater influence on employees⁴³. When majority group members realize that their immigrant friends strive for culture adoption as well as culture maintenance, they may be more sympathetic toward immigrants and more supportive of their efforts to maintain their cultural heritage⁴⁴. Hence, Cross-group friendship has been identified as a special form of contact that is likely to promote positive intergroup attitudes⁴⁵.

37 Takeuchi, R., Lepak, ., P., Marinova, S., V., & Yun, S. (2007). Nonlinear influences of stressors on general adjustment:

the case of Japanese expatriates and their spouses. Journal of International Business Studies, Palgrave Macmillan; Academy of International Business, 38(6), pages 928-943.

38 Shaffer, M. A., & Harrison, D. A. (2001). Forgotten partners of international assignments: Development and test of a model of spouse adjustment. Journal of Applied Psychology, 86(2), 238–254.

39 Kraimer, M. L., Wayne, S. J., & Jaworski, R. A. (2001). Sources of support and expatriate performance: The mediating role of expatriate adjustment. Personnel Psychology, 54(1), 71–99.

40 Landis, D., Bennett, J. M., & Bennett, M. J. (Eds.). (2004). Handbook of intercultural training. Thousand Oaks, California: Sage.

41 Hill, C. 2015. International business: Competing in the global marketplace (10th Edition). New York: McGraw Hill Education.

42 Tokuno, K. A. (1986). The early adult transition and friendships: Mechanisms of support. Adolescence, 21(83), 593–606

43 Chiaburu, D. S., & Harrison, D. A. (2008). Do peers make the place? Conceptual synthesis and meta-analysis of coworker effects on perceptions, attitudes, OCBs, and performance. Journal of Applied Psychology, 93(5), 1082–1103.

44 Van, A. K., & Vanbeselaere, N. (2011). Bringing together acculturation theory and intergroup contact theory: Predictors of Flemings’ expectations of Turks’ acculturation behavior. International Journal of Intercultural Relations, 35, 334–345.

45 West, T. V., & Dovidio, J. F. (2013). Intergroup contact across time: Beyond initial contact. In G. Hodson & M.

Hewstone (Eds.), Advances in intergroup contact (p. 152–175). Psychology Press.

(7)

7 Religious

Changing lifestyles and consumption patterns has been a common feature of most developing Asian nations in recent decades. This is much more difficult in developing or transition countries trying to emulate Western lifestyles. The economic successes in these developing Asian countries have resulted in considerable improvements of people’s quality of life. Large sections of the population have been experiencing a transition from poverty to better standard of living. Majority, quality lifestyle by getting nutrient food, comfortable living, better health care and other quality services.

Religion is parallel to lifestyle. The impact of religion in the business world varies from country to country. Religion also affects the type of products that consumers buy and the seasonality of some purchases. Religious restrictions are also imposed to individuals affecting their capacity for work as well as their availability for the work journey. Religion creates attitudes and values among people which are effective on their consumption and purchase patterns. In addition, understanding the mechanisms through which religious behaviours and practices affect performance is important from a practical perspective.

Studies such ⁴⁶and Barro and ⁴⁷explore on the religious towards economic growth. Nevertheless, the current study by ⁴⁸ opposed that religion can play a significant role in the economy of any nation especially Nigeria. In addition, this study suggested religious education for leaders with respect to these values to pragmatically addressing the economic situation in Nigeria. A study in Malaysia investigated Islamic religious revenues on economic development. The data was gained from 1991 to 2017. The results revealed that positive relationship between Islamic religious revenues and economic development

49.

Educational

Better education system have supported cross boarder students. The contribution of education to economic growth has also been the focus of the new growth theory which emerged in the 1980s. With this work ⁵⁰ argued that investing in education, training and research and other forms of human capital may help overcome the problem of diminishing returns and to achieve long run economic growth. Also,

51argued that the level of output is a function of the stock of human capital where human capital refers to

47 McCleary, Rachel, M., & Robert J. Barro. 2006. "Religion and Economy." Journal of Economic Perspectives, 20 (2): 49- 72.

48 Koko, J., C. (2020). Religion and Economic Recovery in Nigeria: A Prognosis of Modern Economics of Religion. An African Journal of Arts and Humanities, 6(2).

49 Ismail, A., G. (2019). Impact of Islamic Religious Revenues on Economic Development across States in Malaysia. IESTC Working Paper Series, Working Paper No. 18. Bangi: Organization of Islamic Economic Studies and Thoughts.

50 Romer, P. M. (1986). Increasing Returns and Long-run Growth. Journal of political Economy, 94, 1002-1037.

51 Lucas, R. E. (1988). On the Mechanics of Economic Development. Journal of Monetary Economics, 22, 3-42.

(8)

8 knowledge acquired through education rather than skills. Later, ⁵²and ⁵³suggests that education is important because some of the educated will create new ideas, which is a direct function of human capital.

These knowledge spill overs are a form of externality, which leads to technological progress and hence to long run economic growth. This investment in human capital promotes growth in physical capital and will result in economic growth.

54examined the impact of human capital using various education levels such as primary, secondary and tertiary levels in Malaysia from 1982 to 2011. The study employed the Johansen co-integration method and Granger causality and the results showed that labour force with secondary education can influence economic growth while labour force with primary and tertiary does not. In the same year, ⁵⁵opposed that labour force without addressing education levels does not affect economic growth. The results were based on data ranging from 1980 to 2012 in Pakistan. The study also employed the Johansen co-integration with VECM. The results also showed that gross fixed capital formation does not influence economic growth.

Several variables can be derived from the discussed literatures. In the case of Malaysia, the results may be different from those in the literature due to dissimilar economic development and structures. Since the focus of this paper is to explore the impact of cross culture adjustment towards economic growth, we included three cross culture adjustment (Social Support, Religion and Educational) variables as independent variables.

METHODOLOGY

Prior to testing for cointegration relationship, unit root tests were conducted to check the stationarity, as well as the order of the series variables used, by using the Augmented Dickey Fuller ⁵⁶, Phillips Perron

57and KPSS ⁵⁸ tests.

The ARDL bound test ⁵⁹was employed for cointegration analysis as it can be applied irrespective of whether the regressors are purely I (0), purely I(1) or mutually cointegrated. Moreover, it is unnecessary

52 Romer, P. M. (1986). Increasing Returns and Long-run Growth. Journal of political Economy, 94, 1002-1037.

53 Olopade, B., C., Okodua, H., Oladosun, M., Matthew, O., Urhie, E., Osabohien, R., Adediran, O., & Johnson, O., H.

(2020). Economic Growth, Energy Consumption and Human Capital Formation: Implication for Knowledge-based Economy. International Journal of Energy Economics and Policy, 10(1), 37-43.

54 Shaari, M.S., Zhuairi, N.A.I.M., & Rahim, H.A. (2014). The relationship between educational attainment and economic growth in Malaysia. Advances in Environmental Biology, 8(9), 395-401.

55 Shahid, M. (2014). Impact of labour force participation on economic growth in Pakistan. Journal of Economics and Sustainable Development, 5(11), 89-93.

56 Dickey, D.A. & Fuller, W.A. (1979). Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 74(366), 427-431

57 Phillips, P.C.B., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335-346.

58 Kwiatkowski, D., Phillips, P.C.B., Schmidt, P. & Shin, Y. (1992). Testing the null hypothesis of stationarity against the alternative of a unit root. Journal of Econometrics, 54(1–3), 159-178.

59 Pesaran, M.H., Shin, Y., & Smith, R. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326.

(9)

9 that the order of integration of the underlying regressors be determined prior to testing the existence of a level relationship between two variables ⁶⁰

In this study, the ARDL bounds equation for GDP growth is estimated as shown in Equation (1).

∆𝑌_𝑡= 𝛼₀+ ∑ 𝛽_𝑖∆𝑌_𝑡−𝑖

𝑝

𝑖=0

+ ∑ 𝜇_𝑖∆𝐺_𝐾_𝑡−𝑖

𝑝

𝑖=0

+ ∑ 𝛾_𝑖∆𝐼𝐺𝐷𝑃_𝑡−𝑖

𝑝

𝑖=0

+ ∑ 𝛿_𝑖∆𝐺_𝐿_𝑡−𝑖

𝑝

𝑖=0

+ ∑ 𝜃_𝑖∆𝐻𝑈𝑀𝐴𝑁_𝑡−𝑖

𝑝

𝑖=0

+ ∑ 𝜋_𝑖∆𝐼𝑁𝐹_𝑡−𝑖

𝑝

𝑖=0

+ ∑ 𝛽_𝑖∆𝑆_𝑡−𝑖

𝑝

𝑖=0

+ ∑ 𝛽_𝑖∆𝑅_𝑡−𝑖

𝑝

𝑖=0

+ ∑ 𝛽_𝑖∆𝐸_𝑡−𝑖

𝑝

𝑖=0

+ 𝜎₁𝑌_𝑡−1+ 𝜎₂𝐺_𝐾_𝑡−1

+ 𝜎₃𝐼𝐺𝐷𝑃_𝑡−1+ 𝜎₄𝐺_𝐿_𝑡−1+ 𝜎₅𝐻𝑈𝑀𝐴𝑁_𝑡−1+ 𝜎₆𝐼𝑁𝐹_𝑡−1+ 𝜎₇𝑆_𝑡−1+ 𝜎₈𝑅_𝑡−1+ 𝜎₉𝐸_𝑡−1 + 𝜎₁₀+ 𝜀_𝑡

(1) where, GKt-I is capital growth, GLt-I is labour growth, IGDPt-i is initial GDP, HUMANt-i is human capital, INFt-i is inflation S t-i is social support, R t-i is religion, E t-i is educational, p is the optimal lag length and Δ refers to the first difference of variables. The first part of Equation (1) with ρ, β, μ, γ, δ, θ and π refer to the short run. The rest with σk are the long run parameters.

Relying on the presence of a cointegrating relationship, the ECM can be written as in Equation (2),

𝑌_𝑡 = 𝛼_10,0+ ∑ 𝑎_11,𝑖𝐹𝐴_𝐾_𝑡−𝑖

𝑝

𝑖=1

+ ∑ 𝑎_12,𝑖𝐺_𝐾_𝑡−𝑖

𝑝

𝑖=1

+ ∑ 𝑎_13,𝑖𝐼𝐺𝐷𝑃_𝑡−𝑖

𝑝

𝑖=1

+ ∑ 𝑎_14,𝑖𝐺_𝐿_𝑡−𝑖

𝑝

𝑖=1

+ ∑ 𝑎_15,𝑖𝐻𝑈𝑀𝐴𝑁_𝑡−𝑖

𝑝

𝑖=1

+ ∑ 𝑎_16,𝑖𝐼𝑁𝐹_𝑡−𝑖

𝑝

𝑖=1

+ ∑ 𝑎_17,𝑖𝑆_𝑡−𝑖

𝑝

𝑖=0

+ ∑ 𝑎_18,𝑖𝑅_𝑡−𝑖

𝑝

𝑖=0

+ ∑ 𝑎_19,𝑖𝐸_𝑡−𝑖

𝑝

𝑖=0

+ 𝐸𝐶𝑇_𝑡

(2) where φECTt-1 is the error correction term. All other variables are as defined before.

Several socio-economic studies on economic growth have been conducted previously. Among others are those by ⁶¹, ⁶². However, the first three studies focused more on GDP growth at the aggregate level.

However, this paper differs from the above studies as it will explore the impact of cross culture adjustment towards economic growth at both the long run and short run.

CONCLUSION

60 Pesaran, M.H., Shin, Y., & Smith, R. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326.

62 Barro, R., J. & McCleary, R., M. (2003). Religion and Economic Growth. NBER Working Paper No. 9682.

(10)

10 This paper explores the impact of cross culture adjustment towards economic growth from year 2017 until 2019. The paper will employ the ARDL bounds testing approach to cointegration and Error Correction Model (ECM) for the short run relationship. ADF, PP and KPSS unit root tests examine stationarity of the series. Through this study, hopefully an effective model can be proposed in order to enhance the development of cross culture adjustment towards economic growth in Malaysia.

REFERENCES

Alim, H., Ramdlan, M. M., Wahid, M., Irfan, M. N., & Ahmad, R. (2017). Jihad nahdlatul ulama melawan korupsi. Jakarta: Lakpesdam-PBNU.

Altiner, A., & Toktas, Y. (2017). Relationship Between Human Capital and Economic Growth: An Application to Developing Countries. Eurasian Journal of Economics and Finance, Eurasian Publications, 5(3), 87-98.

Atlatas, S., & Cakir, M., (2016). The effect of human capital on economic growth: A panel data analysis.

Yönetim Bilimleri Dergisi, 14(27), 539 – 555.

Aznin, N. A. B., & Norehan, A. (2007). Labor force participation of women in Malaysia. Paper for International Economic Conference on Trade & Industry, 3-5 December 2007. The City Bayview, Penang, Malaysia.

Barro, R., J. & McCleary, R., M. (2003). Religion and Economic Growth. NBER Working Paper No.

9682.

Black, J.S. (1988). Work Role Transitions: A Study of American Expatriate Managers in Japan. Journal of International Business Studies, 19(2), 277– 294.

Caligiuri, P., Phillips, J., Lazarova, M., Tarique, I., and Burgi, P. (2001). The Theory of Met Expectations Applied to Expatriate Adjustment: The Role of Cross-cultural Training. International Journal of Human Resource Management, 12(3), 357– 372.

Chiaburu, D. S., & Harrison, D. A. (2008). Do peers make the place? Conceptual synthesis and meta- analysis of coworker effects on perceptions, attitudes, OCBs, and performance. Journal of Applied Psychology, 93(5), 1082–1103. https://doi.org/10.1037/0021-9010.93.5.1082

Collie, R. J., Shapka, J. D., Perry, N. E., and Martin, A. J. (2015). Teachers’ beliefs about social–

emotional learning: identifying teacher profiles and their relations with job stress and satisfaction. Learn.

Instr. 39, 148–157. doi: 10.1016/j. learninstruc.2015.06.002

Dickey, D.A. & Fuller, W.A. (1979). Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 74(366), 427-431.

(11)

11 Ferreira, J. J. M., Fernandes, C. I., & Ferreira, F. A. F. (2020). Technology transfer, climate change mitigation, and environmental patent impact on sustainability and economic growth: A comparison of European countries. Technological Forecasting & Social Change, 150, 1-8.

Griffin, R. W.; Pustay, M. W. (1999). International business: a managerial perspective. 2 ed, Addison- Wesley: New York.

Hill, C. 2015. International business: Competing in the global marketplace (10th Edition). New York:

McGraw Hill Education.

Hofstede, G. and Bond, M.H. (1988). The Confucius connection: from cultural roots to economic growth. Organizational Dynamics, 16 (4), 5-21.

Ismail, A., G. (2019). Impact of Islamic Religious Revenues on Economic Development across States in Malaysia. IESTC Working Paper Series, Working Paper No. 18. Bangi: Organization of Islamic Economic Studies and Thoughts.

Karshenas, M. & Moghadam, V.M. (2001). Female labor force participation and economic adjustment in the MENA region. The Economics of Women and Work in the Middle East and North Africa (Research in Middle East Economics, Vol. 4), Emerald Group Publishing Limited, Bingley, 51-74.

Koko, J., C. (2020). Religion and Economic Recovery in Nigeria: A Prognosis of Modern Economics of Religion. An African Journal of Arts and Humanities, 6(2).

Kraimer, M. L., Wayne, S. J., & Jaworski, R. A. (2001). Sources of support and expatriate performance:

The mediating role of expatriate adjustment. Personnel Psychology, 54(1), 71–

99. https://doi.org/10.1111/j.1744-6570.2001.tb00086.x

Kraimer, M.L., and Wayne, S.J. (2004). An Examination of Perceived Company Support as a Multidimensional Construct in the Context of an Expatriate Assignment. Journal of Management, 30(2), 209– 237.

Kroeber A.L. (2002), Istota kultury (The nature of culture), Wydawnictwo Naukowe PWN, Warszawa.

Kwiatkowski, D., Phillips, P.C.B., Schmidt, P. & Shin, Y. (1992). Testing the null hypothesis of stationarity against the alternative of a unit root. Journal of Econometrics, 54(1–3), 159-178.

Landis, D., Bennett, J. M., & Bennett, M. J. (Eds.). (2004). Handbook of intercultural training. Thousand Oaks, California: Sage.

Lucas, R. E. (1988). On the Mechanics of Economic Development. Journal of Monetary Economics, 22, 3-42.

Mansor, M. F. B., Hamid, N. B. A., Kamil, S. B., & Abu. N. H. (2014). Determinants of Expatriate Manager Failures in the International Assignment. Advances in Environmental Biology, 8(9), 584-592.

(12)

12 Mättö, M. and Niskanen, M. (2019). Religion, national culture and cross-country differences in the use of trade credit: Evidence from European SMEs. International Journal of Managerial Finance, 15 (3), 350-370.

McCleary, Rachel, M., & Robert J. Barro. 2006. "Religion and Economy." Journal of Economic Perspectives, 20 (2): 49-72.DOI: 10.1257/jep.20.2.49

Mehrara, M. & Musai, M. (2013). The Relationship between Economic Growth and Human Capital in Developing Countries. International Letters of Social and Humanistic Sciences 5: 55-62.

10.18052/www.scipress.com/ILSHS.5.55

Musai, M., & Mehrara, M. (2013). The Causality between Capital Formation and Economic Growth in MENA Region. International Letters of Social and Humanistic Sciences, 8, 1-7.

Olopade, B., C., Okodua, H., Oladosun, M., Matthew, O., Urhie, E., Osabohien, R., Adediran, O., &

Johnson, O., H. (2020). Economic Growth, Energy Consumption and Human Capital Formation:

Implication for Knowledge-based Economy. International Journal of Energy Economics and Policy, 10(1), 37-43.

Osoba, A.M., & Tella, S. A., (2017). Human capital variables and economic growth in Nigeria: An interactive effect. EuroEconomica, 36(1), 131-143.

Pesaran, M.H., Shin, Y., & Smith, R. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326.

Phillips, P.C.B., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335-346.

Takeuchi, R., Lepak, ., P., Marinova, S., V., & Yun, S. (2007). Nonlinear influences of stressors on general adjustment: the case of Japanese expatriates and their spouses. Journal of International Business Studies, Palgrave Macmillan; Academy of International Business, 38(6), pages 928-943.

Tokuno, K. A. (1986). The early adult transition and friendships: Mechanisms of support. Adolescence, 21(83), 593–606.

Romer, P. M. (1986). Increasing Returns and Long-run Growth. Journal of political Economy, 94, 1002- 1037.

Romer, P. M. (1990). Technological change. Journal of Political Economy, 98, pp. 71-102

Rui, J. R., and Wang, H. (2015). Social network sites and international students’ cross-cultural adaptation. Computer Human Behavaviour, 49, 400–411. doi: 10.1016/j. chb.2015.03.041

Seregig, I. K., Suryanto, T., Hartono, B., Rivai, E., & Prasetyawati, E. (2018). Preventing the acts of corruption through legal community education. Journal of Social Studies Education Research, 9(2), 138- 159.

(13)

13 Shaffer, M. A., & Harrison, D. A. (2001). Forgotten partners of international assignments: Development and test of a model of spouse adjustment. Journal of Applied Psychology, 86(2), 238–

254. https://doi.org/10.1037/0021-9010.86.2.238

Shaffer, M.A., Harrison, D.A., Gregersen, H., Black, J.S., and Ferzandi, L.A. (2006). You Can Take it with You: Individual Differences and Expatriate Adjustment. Journal of Applied Psychology, 91(1), 109–

125.

Shaari, M.S., Zhuairi, N.A.I.M., & Rahim, H.A. (2014). The relationship between educational attainment and economic growth in Malaysia. Advances in Environmental Biology, 8(9), 395-401.

Shahid, M. (2014). Impact of labour force participation on economic growth in Pakistan. Journal of Economics and Sustainable Development, 5(11), 89-93.

Shuaib, I. M. & Ndidi, D. E. (2015). Capital Formation: Impact on The Economic Development of Nigeria 1960-2013. European Journal of Business, Economics and Accountancy, 3(3), 23-40.

Stilianos, P., Georgios, A., Vasilik, K., and Labros, S. (2017). The Erasmus student mobility program and its contribution to multicultural education: the case of Technological Education Institute of Thessaly.

J. Educ. Soc. Res. 3, 181–200.

Suyadi, Sumaryati, Hastuti, D. & Saputro, A., D. (2020). Elementary Education Online, Ilkogretim Online, 19 (3), 1703-1714.

Tella, R., D. & MacCulloch, R. (2014). Culture, Beliefs and Economic Performance. Motu Economic and Public Policy Research, Motu Working Paper 14-06.

Templer, K.J., Tay, C., and Chandrasekar, N.A. (2006). Motivational Cultural Intelligence, Realistic Job Preview, Realistic Living Conditions Preview, and Cross-Cultural Adjustment. Group and Organization Management, 31(1), 154– 173.

Thach, N., G. (2020). How Values Influence Economic Progress? An Evidence from South and Southeast Asian Countries. In Trung N., Thach N., Kreinovich V. (eds). Data Science for Financial Econometrics.

ECONVN 2020. Studies in Computational Intelligence, Springer, Cham (2020), to appear.

Tom, E. J., & Bamgboye, P. O. (2017). The role of religion in combating corruption: The Nigerian.

International Journal of Social Sciences, 11(2), 128–142.

Tokuno, K. A. (1986). The early adult transition and friendships: Mechanisms of support. Adolescence, 21(83), 593–606.

Ugochukwu, U., S. & Chinyere, U., P. (2013). The Impact of Capital Formation on the Growth of Nigerian Economy. Research Journal of Finance and Accounting, 4(9), 39-42.

Van, A. K., & Vanbeselaere, N. (2011). Bringing together acculturation theory and intergroup contact theory: Predictors of Flemings’ expectations of Turks’ acculturation behavior. International Journal of Intercultural Relations, 35, 334–345. https://doi.org/10.1016/j.ijin trel.2010.06.004

(14)

14 Wang, M., & Takeuchi, R. (2007). The Role of Goal Orientation during Expatriation: A Crosssectional and Longitudinal Investigation. Journal of Applied Psychology, 92, 5, 1437– 1445.

Weber, Max (1946). The Social Psychology of World Religions. 267-301, in From Max to Weber, H. H.

Gerth and C. Wright Mills (editors). New York: Oxford University Press.

West, T. V., & Dovidio, J. F. (2013). Intergroup contact across time: Beyond initial contact. In G.

Hodson & M. Hewstone (Eds.), Advances in intergroup contact (p. 152–175). Psychology Press.

Xu, Y., & Li, A., (2020). The relationship between innovative human capital and interprovincial economic growth based on panel data model and spatial econometrics. Journal of Computational and

Applied Mathematics, 365. Retrieve from

https://www.sciencedirect.com/science/article/abs/pii/S037704271930384X