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F... . tlllltllltll This is to certify that the thesis entitled U.S. Newspaper Portrayals of Foreign Direct Investment in the United States: A Comparative Study of German, Japanese, British, and Hong Kong Coverage Date Dec. presented by Naoko Harada has been accepted towards fulfillment of the requirements for Master of Artfiegree in Communication Major professor 7, 1992 0-7 639 MS U is an Affirmative Action/Equal Opportunity Institution Li’BRARY Mficmgan State University PLACE IN RETURN BOX to remove this checkout from your record TO AVOID FINES return on or before date due. DATE DUE DATE DUE DATE DUE Nil? 0 i 1994‘ I Estnggfi 28.303 E *oaiwglfiet 45430; 3 MSU Is An Affirmative Action/Equal Opportunity Institution U.S. NEWSPAPER PORTRAYALS OF FOREIGN DIRECT INVESTMENT IN THE UNITED STATES: A COMPARATIVE STUDY OF GERMAN, JAPANESE, BRITISH, AND HONG KONG COVERAGE BY Naoko Harada A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of MASTER OF ARTS Department of Communication 1992 ABSTRACT U.S. NEWSPAPER PORTRAYALS OF FOREIGN DIRECT INVESTMENT IN THE UNITED STATES: A COMPARATIVE STUDY OF GERMAN, JAPANESE, BRITISH AND HONG KONG COVERAGE BY Naoko Harada The purpose of this thesis is to examine how economic power and cultural distance influence portrayals by U.S. journalists of four cases of foreign direct investment in the United States. For testing these two factors, U.S. newspaper articles about British, German, Japanese, and Hong Kong investments were analyzed. The study entails a 2x2 research design involving two degrees of cultural distance and two degrees of economic power. Four selected cases represent the following four conditions: Britain -~ low economic power and low cultural distance; Germany -- high economic power and low cultural distance; Japan -- high economic power and high cultural distance; and Hong Kong -- low economic power and high cultural distance. Findings from this study suggests that economic power and cultural distance may be important factors in terms of drawing attention of the U.S. newspapers studied to the cases. They may also negatively influence portrayals of the foreign investors’ countries of origin although their influence was not statistically significant. The possibility of a combined effect of these two factors is discussed. Copyright by NAOKO HARADA 1992 ACKNOWLEDGMENTS I would like to thank the many people who made this thesis possible. First, I would like to thank Dr. James Dearing, my academic advisor and chair person of my committee, for his esteemed guidance and encouragement throughout my program. His comments and suggestions were very precious. Very special thanks to Dr. Vernon Miller, for his detailed suggestions and criticism on my research design and statistical analysis of the data, and to Dr. Michael Mullen for his helpful advice from a different standpoint. I am greatly obliged to all of my committee members for their expertise, encouragement, and patience, especially in some last-minute emergencies. Many thanks are extended to the following people. Dr. Denis Gilliland and Kanchan Mukherjee, PhD, in Statistical Consulting Service, for their thorough assistance for statistical problems; Dan Cooper and Jeff Albright for their great help in content analysis regardless of the time constraint; Dr. Barry Dubner and Bonnie Dubner for their emotional support and being there as people I can always rely upon; and other friends who encouraged me, sometimes iv pushed me to work hard, and made it enjoyable living in a foreign country. Finally, I would like to thank my parents who, through their sacrifices and love, gave me the opportunity to attend the graduate school in the U.S. Also, I must thank my friends in Japan, who have always rooted for me in spite of the long distance. PREFACE The foundation of my thesis dates back to the last summer when I was working on my independent study with Dr. James Dearing. This independent study dealt with two cases of direct investment by Japanese companies, Sony’s purchase of Columbia and Matsushita’s purchase of MCA. When the giant entertainment company in Hollywood was first acquired by Sony in 1989, I was still in Japan and was hoping to study in a graduate school in the United States someday. The news about the deal spread around Japan quickly. In reflecting upon it, the deal caused many different responses, both positive and negative. However, mostly negative images about the deal remained in my mind. From the way the Japanese mass media reported it, I received an impression that they were proud of the deal because it demonstrated Sony's (and hence, Japan's) economic power in buying a huge American company. At the same time, however, I got another impression that they were blaming Sony’s aggressiveness which might cause more economic conflict between the two countries. Some of Japan’s mass media pointed out that Sony was insensitive because they bought an vi important cultural asset of the U.S., and did not carefully handle the possible reactions which could lead to so called "Japan-bashing." How these acquisitions were portrayed differently by the U.S. mass media and by the Japanese mass media became one of my interests in communication studies. However, due to the difficulties in collecting data for portrayals by the Japanese media in the U.S. and the time limitation, I studied portrayals of these cases only by the U.S. mass media (newspapers) for my independent study. As a result, it was found that there were many more articles which were critical about these two deals than ones which were supportive. (Since the independent study took a qualitative approach in analyzing the data, the results were not statistically proven.) When going through all the articles about these cases, I found some articles implying that other cases of acquisitions in Hollywood were received differently by Americans from these two cases. For example: Funny, those questions [whether or not the foreign owner will interfere with the content of books, records and movies] did not immediately come up when Australians bought 20th Century Fox or when Italians purchased MGM/UA (The Los Angeles Times, Nov. 28, 1990). For their part, many Japanese detect a tinge of racism in charges that they are hijacking American culture. No one complained, they point out, when an Italian businessman took over MGM-Pathe a few months ago, or when Rupert Murdoch’s Australian—based News Corporation bought 20th Century Fox (The New York Times, Dec. 2, 1990). This study gave me a hint to come up with cultural distance between involved countries as an important factor in considering foreign direct investment, and thus, the mass media portrayals of it. In a charged news conference, the 68-year-old Mr. Morita said that it was unfortunate that the Americans still viewed the Japanese as "strangers" (The Wall Street Journal, Oct. 4, 1989). If this is the case, lack of cultural information necessary in understanding subtle cues may have made each other strangers even though they have enough economic, politic, or other information about each other. Another great factor in influencing portrayals of these cases may have been Japan’s rapid economic growth in these decades. viii The Atlantic Monthly’s May issue featured James Fallow's report called "Containing Japan", which said that "Japan's runaway economy will harm the rest of the world if some limits aren't set" (The Washington Post, Oct. 1, 1989). Because Columbia and MCA are culturally important to U.S. citizens, a lot of articles emphasized cultural factors. However, economic power could also be considered to be a distinguished factor in causing these articles to be written. Through this study, I began to question: whether or not these two factors are general factors in influencing newspaper portrayals of foreign direct investment. If so, then these factors should be able to be applied to cases of foreign direct investment from different countries in the United States. This became a basis of the research design of my thesis. By identifying real factors in influencing newspaper portrayals (which may influence public opinion about foreign direct investment or foreign countries), it is hoped that the research contributes to encouraging peaceful international business activities and to preventing unnecessary stereotypes of foreign countries from emerging. I hope this research can be the first step in this area of study. ix TABLE OF CONTENTS LIST OF TABLES I I I I I I I I I I I I I I I I I I LIST OF FIGURES I I I I I I I I I I I I I I I I I I INTRODUCTION . . . . . . . . . . . . . . . . . . . CHAPTER 1: THE ROLE OF THE U.S. MASS MEDIA IN INFLUENCING AMERICAN AUDIENCE PERCEPTIONS. . . . . The Role of the U. S. Mass Media in Modern Society. Mass Media and Public Opinion. . . Differences Among the Mass Media in Influencing Perceptions. . . . Theories That May Explain the Mass Media Influence on Public Perceptions. . . . . . . . . . . . . . . CHAPTER 2: CONCEPTUAL OVERVIEW . . . . . . . . . . The Concept of Foreign Direct Investment: Historical Review and Current situation. . . . . . The Definition of Foreign Direct Investment. . . . The History of Foreign Direct Investment . . . . The Current Trend of Foreign Direct Investment and Its Importance . . . . Foreign Direct Investment in the United States . Economic Power Between Nations . . . . . . . . . . The Concepts of Power and Economic Power . . . . . Measurement of Economic Power. . Why Economic Power Could Be a Factor Influencing Perceptions About Foreign Direct Investment. . . Cultural Distance Between Nations. . . . . . . . . The Concept of Cultural Distance Between Nations Measurement of Cultural Distance . Why Cultural Distance Could Be a Factor Influencing X 04> 12 16 16 16 21 25 31 32 35 37 37 Perceptions About Foreign Direct Investment. . . . . 42 The Integration of the Concepts of Economic Power and Cultural Distance. . . . . . . . . . . . . . . . 45 CHAPTER 3: RESEARCH METHOD . . . . . . . . . . . . . 52 Research Design. . . . . . . . . . . . . . . . . . . 52 Sample . . . . . . . . . . . . . . . . . . . . . . . 63 Content Analysis . . . . . . . . . . . . . . . . . . 69 Pretest Discussion . . . . . . . . . . . . . . . . . 71 CHAPTER 4: FINDINGS AND DISCUSSION . . . . . . . . . 84 The Result of the Content Analysis . . . . . . . . . 84 Discussion I: Hypotheses Testing . . . . . . . . . . 87 Discussion II: Further Discussion of Hypotheses and Other Findings . . . . . . . . . . . . . . . . 100 Suggestions for Improvement. . . . . . . . . . . . . 106 Conclusion . . . . . . . . . . . . . . . . . . . . . 108 APPENDIX Appendix A . . . . . . . . . . . . . . . . . . . . . 112 BIBLIOGRAPHY Bibliography . . . . . . . . . . . . . . . . . . . . 119 General References . . . . . . . . . . . . . . . . . 124 xi Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table 5: 6: 10 11: 12: 13: 14: 15: 16: 17: LIST OF TABLES Estimated Stock of Accumulated Foreign Direct Investment by Country of Origin, 1914 - 1978 . . . . . . . . . . . . Foreign Direct Investment Position in the U.S., 1950 -1989. . . . . . . . . . . Overall Predicted Outcome of the Study. Circulation of Major Newspapers . . . . Matrix of the Research Design . . . . . . The U.S. Trade Balance with Germany, the U.K., Japan, and Hong Kong, 1950 —1990. Demographic Data of the U.S., the U.K., Germany, Japan, and Hong Kong . . Typical Types of Foreign Investment . . Sample Population . . . . . . . . . . . . . Content Analysis Results, By Decision - Category in Numbers and Percentages, and By Case For the Four Countries of Study . . Chi Square Value of the Number of Articles. Chi Square Test for Hypothesis 1.a. Chi Square Test for Hypothesis 1.b. Chi Square Test for Hypothesis 1.c. . . N 9’ Chi Square Test for Hypothesis N U Chi Square Test for Hypothesis Chi Square Test for Hypothesis 2.c. xii 18 29 51 54 56 59 61 66 68 85 86 89 91 92 93 94 95 Table Table Table Table 20: 21: Comparison of Percentages of Each Category in Each Condition . . . . . . . . . . . . . 97 Comparison of the Function of Cultural Distance Between in Economically Strong and in Economically weak Conditions . . . . 98 The Percentages of Positive, Neutral, and Negative Articles in Economically Strong and Economically Weak Conditions. . . . . . . . The Percentages of Positive, Neutral, and Negative Articles in Culturally Distant and Culturally Proximate Conditions . . . . . . 104 xiii Figure 1: Figure 2: Figure 3: LIST OF FIGURES Index of Current Value of Exports and Foreign-Direct-Investment Outflows, 1975 - 1989. . . . . . . . . . . . . . . . 23 Direct Investment Position of Germany, the U.K., and Japan in the United States . 57 GNP per capita of the U.S., the U.K., Germany, Japan, and Hong Kong, 1950 - 1989. . . . . . . . . . INTRODUCTION This study attempts to identify how U.S. newspapers portray major cases of foreign direct investment in the United States by analyzing the content of newspaper articles. Through examining the reactions of the mass media, it attempts to determine the extent to which two factors, economic power and cultural distance, influence journalistic portrayals of certain cases of foreign direct investment. Journalistic portrayals are important because such portrayals may influence how readers think about foreign countries, their companies, and their people. Economic power, according to Kelso, is "the power to produce goods and services; it is the power to earn income through engaging in the production of goods or services for purchase by consumers in the marketplace" (Kelso, 1986, p. 166-167). Economic power is intertwined with political power. These two kinds of power are major constituents of social power, which is essential in international relations. Social power in international relations could be defined as a country's power to change other countries’ diplomatic policy or attitudes in international society. If the 2 economic power of country A is strong enough to be a threat to people in country B, it is quite possible that this economic power will affect the perceptions of the people in country B toward country A which has strong economic power, especially on issues such as foreign direct investment. The second factor, cultural distance between nations, is the degree to which two countries are different or are perceived to be different, in their value systems, their social norms and rules, or other components of culture. If two nations are culturally dissimilar, it would be more difficult for citizens in either country to imagine the other country’s situation and to predict its future behavior. This uncertainty could lead to feelings of insecurity or lack of trust, which might bias perceptions of the other country and its citizens. In order to test the factors of cultural distance and economic power, four countries have been chosen as investors’ countries of origin: Britain, Germany, Japan and Hong Kong. Britain and Germany are generally perceived to be culturally similar to the United States, while Japan and Hong Kong are considered culturally distinct from the U.S. (This is illustrated in detail in Chapter 2). Currently, Germany and Japan are economically strong relative to the ‘U.S., while the U.K. and Hong Kong are perceived as having less economic strength. By analyzing newspaper articles (about current direct investment cases from these countries, 3 this study will present the possibility of synergic effects of the two factors in influencing American journalistic portrayals of the cases of foreign direct investment. This research entails content analysis of newspaper articles about the selected cases of foreign direct investment. The portrayal in the mass media of issues is not a perfect indicator of the U.S. public’s perceptions, yet it is related. In U.S. society, the mass media do influence audience perceptions, and, at the same time, reflect the audience perceptions. Thus, it is imperative to discuss the significance of the U.S. mass media in influencing perceptions at the beginning of the present study. In Chapter 2, essential concepts in this study, such as foreign direct investment, economic power, and cultural distance, will be discussed in detail. The current situation of foreign direct investment in the U.S. and its relevance to the concepts of economic power and cultural distance will also be discussed. In Chapter 3, research methods of this study will be detailed. In Chapter 4, the results of the study will be presented, and the effect of the two factors of study, economic power and cultural distance, will be examined. Finally, suggestions for future research will then be made. CHAPTER 1. THE ROLE OF THE U.S. MASS MEDIA IN INFLUENCING AMERICAN AUDIENCE PERCEPTIONS The Role of the 0.8. Mass Media in Modern Society Since the first American newspaper, Publick Occurrences Both Forreign and Domestick, was established in 1690, many kinds of mass media have developed in the United States. Development of media became more rapid with technological innovation. Nowadays, mass communication media are everywhere. Television, newspapers, magazines, video screens, audio and video recorders, compact discs, photographs, newsletters, and computer networks all play a significant role in industrially-advanced countries. As these media become more diversified and accessible, they can reach larger and more diverse audiences. The role of the mass media has become increasingly complex and varied. According to Pember (1974), mass communication in the U.S.,in a broad sense, offers four basic services-—an information processing service, an economic service, an entertainment service and a public opinion service. As information processing services, the mass media transmit news, instruction, data, and messages to mass audiences. While the mass media perform the fundamental function of 5 processing information, they often activate the economy of the society by providing important business information. Moreover, the role of advertising through mass media is ‘vital in a capitalist system like that of the U.S. Entertainment is also an important function of both the electronic media and the print media. Almost all kinds of American mass media contain an element of entertainment to attract people's attention. Pember (1974) relates mass media to mass culture: "The mass media play a distinct and important role in American culture because, in large part, the mass culture of America today is a creature of the mass media" (p. 39). All these factors--how the mass media deal with information, how they select and present entertainment, how advertising and economics relate to each other and to these processes--are probably linked to developing some types of public opinion or a sense of community. Although there have been a number of controversies about whether or not the mass media actually shape public opinion, much research has shown that the mass media provide the agenda of issues that people discuss by choosing topics about which to inform their audiences. However, having a common agenda may be necessary for reaching a consensus on issues as a nation. In this sense, the public opinion service of the mass media has always been closely related to politics; but, at the same ‘time, it has a tremendous impact on economic, social, and cultural issues. Mass Media and Public Opinion In order to determine whether or not the mass media actually play a role in shaping public opinion, the term "public opinion" must be better understood. Lemert (1981), who has researched the relationship between mass communication and public opinion, has defined public opinion as "a perception imposed by the perceiver on information about citizen attitudes toward a publicly debated issue, personality, candidate, practice, or outcome" (p. 12). If public opinion is a perception of receivers of information, it is a subjective phenomenon based on information provided about a certain issue. It is often the mass media which decide what information is to be transmitted in society. This means that the U.S. mass media can, and probably do, have some influence in shaping Americans' perceptions by deciding the priority of agendas of information and then stating and transmitting the information in a specific way. Page, Shapiro, and Dempsey (1987), in the field of political science, examined the potential for the mass media to influence or change people's perceptions, which could eventually become public opinion. They argue that there is :some information that may alter some individuals' beliefs 7 and eventually affect their judgments. Their research also reveals what moves public opinion within the realm of short and medium-term effects: "TV news variables, together with opinion at the time of an initial survey, account for well over 90 per cent of the variance in public opinion at the time of a second survey. The news variables alone account for nearly half the variance in opinion change" (Page, Shapiro, and Dempsey, 1987, p. 38). An important factor in the mass media effects in shaping public opinion is the concept of stereotypes, which was imported into media study from psychology. According to Walter Lippmann in Public Opinion (1936), stereotypes are the "pictures in our heads." The psychological approach to the study of stereotypes deals with "the origins of attitudes" more broadly, especially those that are particularly difficult to change. Thus, stereotypes are closely associated with the notion of prejudice: "Prejudice implies an attitude that pre-judges reality and that is based not on experience but on some firmly fixed belief or dogma. The stereotypes [become] the content of this belief, as they [are] projected on to particular persons or groups" (Barrat, 1986, p. 43). Barrat (1986) also argues that the mass media reinforce stereotypes. For example, "the ‘housewife'... is a role women are invited to copy and men to reinforce. Both stereotypes and labels reflect power relations in the wider society and both exist as powerful ; 8 forces in the real world as well as being reinforced through the media" (p. 43). The stereotypes that are reinforced through the mass media could be.a key factor in shaping public opinion. The process of forming public opinion is "enhanced by stereotypes; stereotypes spread quickly in conversation and immediately convey negative or, in some cases, positive associations. They guide perceptions: They draw the attention to certain, usually negative, elements and lead to selective perception" (Noelle-Neumann, 1984, p. 144). Although Lippmann emphasizes the stereotype as a vehicle for spreading public opinion, Noelle-Neumann also argues for the importance of "firsthand observation of reality" as well as "observation of reality through the eyes of mass media" as sources for obtaining information about the distribution of opinions in society (Noelle-Neumann, 1984). However, it seems reasonable to suppose that stereotypes are closely associated with the formation of public opinion. Differences Among the Mass Media in Influencing Perceptions From their very roots, mass media have always had a role in shaping what the community thinks about itself and many other things. The development of printed media centuries ago was tied to the efforts of writers 9 and printers who felt strongly about various issues, usually religious issues, and hoped to shape the thoughts of others on these matters. So the tasks of aiding the development of public opinion on important questions and creating a sense of community for people who share similar geographic boundaries has been a service we have traditionally sought from mass communication (Pember, 1973). From its inception, the press was fostered primarily by political motivation, and the press was actually very influential before the advent of television. However, the relative importance of the various media for people in the U.S. is changing. According to Roper’s report, in 1959, 57% of people got most of their news about what was happening in the world from newspapers, 51% from television, 34% from radio, and 8% from magazines. In contrast, in 1982, 65% of people named television, 44% named newspapers, 18% named radio, and 6% named magazines as their main source of news (The Roper Organization Inc., 1983). The position of newspapers as the leading information source has been replaced by television. However, it would be premature to conclude that newspapers are not as influential as television. Each media has a distinct function in our society. 10 In considering the nature of print and broadcast news, it is essential to distinguish between events and developments. Most wire service stories, (...) all radio newscasts, and much of TV newscasting deal with events. That is, they report on specific occurrences that have just taken place and that the audience is expected to be able to position in relation to their acquaintance with what has happened earlier (Bogart, 1989, p. 225). Developments refer to "the researched, considered, digested, and edited analysis of news developments" that are usually found in printed media and provide more complete and complex information: The symbols of written language permit abstraction, synthesis, and rapid marshaling of much disparate information for the record with an efficiency that has no counterpart for broadcast messages that flow in time (Bogart, 1989, p.225). While television’s strengths are immediateness, a sense of reality derived from visual images, and a high degree of entertainment, a well-prepared newspaper article can include enormous amounts of information in a limited space and probably can deepen understanding. 11 There are some statistics that may answer the question of how television and newspapers function differently as news media. Although the majority of U.S. citizens relies on television for daily information, research cited by Bogart (1989) has shown that, for news that interests them most, 50% of the public are more likely to read newspapers and 46% to watch television. For very complicated news, 36% read newspapers and 19% watch television. In terms of the preferred media varied with topics, television was most often chosen to provide information on foreign and national politics, disasters, space, and science. Newspapers were chosen for news of local events by the majority and for fashion and lifestyles by a small group. However, when it comes to the most important national problems, 49% of newspaper readers named newspapers as the most reliable information source, and 28% named television. Another study has shown that "those who rely on newspapers were better educated, more involved in politics, more likely to vote, and less likely to hold highly intolerant views or to be highly religious or politically alienated" (Bogart, 1989, p. 246). Investigations of the relationship between income and educational level and television viewing and newspaper readership found that as their income and educational levels go up, people read newspapers more and spend less time viewing television. Moreover, the National Opinion Research Center reported that 12 people who are active in civic affairs and organizations read newspapers more than the average citizen does (Bogart, 1989). Social position tends to reflect the degree of participation in voluntary organizations and the range of interests and activities. Considering the results of these surveys, it can be concluded that those who read newspapers regularly and value them as information sources have more potential for becoming opinion leaders on complicated economic and political issues because of their economic and social achievements and greater participation in civic affairs. These opinion leaders could be powerful in influencing the entire public’s perceptions under a capitalistic social structure like that in the U.S. Television is the most common media nowadays, and it is very influential as a news source because of its immediate penetration and distribution of information. However, the profound impact of newspapers, as a written communication tool, together with its indirect impact throughout our social structure should not be overlooked. Theories That May Explain the Mass Media Influence on Public Perceptions There are three main types of theories regarding media effects. The first suggests that the mass media have 13 powerful effects. This belief was popular from the turn of the century until the late 19305. The second type of theories emphasizes the importance of "group or interpersonal effects and selectivity," which is called the limited—effects model (Littlejohn, 1989, p. 273). However, the arrival of television in the 19505 and 1960s dissuaded researchers from accepting this "minimal effects" conclusion. The slogan of Noelle-Neumann (1973) was "return to the concept of powerful mass media." This represents the third phase of theories and research. The renewal of media effects research is marked by a shift of attention toward "long-term change; cognition rather than attitude and affect; the part played by intervening variables of context, disposition and motivation; collective phenomena such as climates of opinion, structures of belief, ideologies, cultural patterns and institutional forms of media provision" (McQuail, 1987, p. 254). This study will use current research on intermediate mass media effects and review agenda-setting theory as a theory most relevant to the phenomena of influencing perceptions. \V/ Agenda-Setting The term "agenda-setting" was used by McCombs and Shaw (1972) to describe the distinct role that the media play in determining the salience of issues to media audiences: 14 The impact of the mass media--the ability to effect cognitive change among individuals, to structure their thinking--has been labeled the agenda-setting function of mass communication. Here may lie the most important effect of mass communication, its ability to mentally order and organize our world for us. In short, the mass media may not be successful in telling us what to think, but they are stunningly successful in telling us what to think about" (McCombs and Shaw, 1977, p. 5). Critics of this theory point out that such studies have not distinguished correlation from causation. The media agenda could simply be a reflection of what the public thinks about. This is a "chicken/egg question": which comes first? Davis and Robinson (1986) also criticize past agenda-setting research for ignoring possible effects on what people think about: who or what is important and why things are important. However, a more recent study of agenda-setting clarifies the concepts of media agenda, public agenda, policy agenda, and the relationships among them. Rogers and Dearing (1988) reach this conclusion: the public agenda, once set by, or reflected by, the media agenda, influences the policy agenda of elite decision makers, and in some cases, policy 15 implementation; the media agenda seems to have direct, sometimes strong, influence upon the policy agenda of elite decision makers, and in some cases, policy implementation; and for some issues the policy agenda seems to have a direct, sometimes strong, influence upon the media agenda (p. 579-580). Hundreds of research studies have been conducted which, in one way or another, support the theory that the mass media has a role in influencing perceptions. In general, it seems reasonable to conclude that the U.S. mass media do have a distinct impact on Americans’ perceptions by providing agendas of issues to think about in shaping public opinion and by reflecting public opinion. CHAPTER 2. CONCEPTUAL OVERVIEW The Concept of Foreign Direct Investment: Historical Review and Current situation The Definition of Foreign Direct Investment Foreign direct investment is the "ownership of assets by foreign residents for the purpose of controlling the use of those assets" (Graham and Krugman, 1989, p. 7). More specifically, the U.S. government defines foreign direct investment in the U.S. as "the ownership by a foreign person or business of ten percent or more of the voting equity of a firm located in the United States" (U.S. Department of Commerce, 1991, p. 3). Two forms of foreign direct investment are feasible: acquisition of an existing business through "buyout" of all or part of a company's stock, and establishing a new facility, or "greenfield" investment. For both forms of investment, it is important, though difficult, to define the nationality of a firm, and what constitutes control of the investment. The History of Foreign Direct Investment 16 17 The term "foreign direct investment" began to be used relatively recently. There had been practices, however, which probably became the foundation for the modern concept of foreign direct investment. In a broad sense, British capital export to India in the 19th century and even the process of colonization could be considered to be foreign direct investment, even though investments in that period often involved military forces which contradicts the definition of foreign direct investment. The foreign direct investment to which the current definition refers, however, grew during four periods in the last century, from about 1870 to 1914, 1919 to 1939, 1945 to the mid-19605, and the mid-19605 to the late 19705. In the first phase of recent investments (1870-1914), as can be seen in Table 1 (p. 18), the United Kingdom was by far "the largest foreign capital stake holder" in 1914, and the U.S. was the second largest. The U.S. was the largest single recipient of those investments in 1914. Around that time, the U.K. was economically strong enough to buy enormous foreign assets, while the U.S. was heading in the direction of economic growth "by developing a comparative investment advantage in the newer technology—intensive industries" (Dunning, 1983, p. 6). Dunning (1983) describes the U.K. at that time as the most cosmopolitan foreign investor; inter alia, 18 this reflected the diversity of her overseas possessions, her earlier technological lead and her established trading links. (p. 6) Table 1: Estimated Stock of Accumulated Foreign Direct Investment by Country of Origin, 1914-1978 1914 1938 1960 1971 1978 Sm ‘5 Sm 5 Sb 1 5 Sb 5 3b % Developed countries 14302 100.0 26350 100.0 66.0 99.0 168.1 97.7 162.7 96.8 North America USA 2562 18.5 7300 27.7 32.8 49.2 82.8 48.1 162.7 41.4 Canada 150 1.0 700 2.7 2.5 3.8 6.5 3.8 13.6 3.5 Europe UK 6500 45.5 10500 39.8 10.8 16.2 23.7 13.8 50.7 12.9 Germany 1500 10.5 350 1.3 0.8 1.2 7.3 4.2 28.6 7.3 France 1750 12.2 2500 9.5 4.1 6.1 7.3 4.2 14.9 3.8 Belgium 1.3 1.9 2.4 1.4 5.4 1.4 Italy 1.1 1.6 3.0 1.7 5.4 1.4 Netherlands 7.0 10.5 13.8 8.0 28.4 7.2 Sweden 1250 8 .7 3500 13 .3 0.4 0.6 2.4 1.4 6.0 1.5 Switzerland 2.0 3.0 9.5 5.5 27.8 7.1 Other developed countries Russia 300 2.1 450 1.7 - — -- -- -- -- Japan 20 0.1 750 2.8 0.5 0.7 4.4 2.6 26.8 6.8 Australia New Zealand 180 1.3 300 1.1 1.5 2.2 2.5 1.4 4.8 1.2 South Africa Other neg neg neg neg 1.2 1.8 2.5 1.4 5.2 1.3 Developing countries neg neg neg neg 0.7 1.0 4.0 2.3 12.5 3.2 Total 14302 1111.0 26350 100.0 66.7 100.0 172.1 100.0 392.8 100.0 (Source: Dunning, 1983, p. 5.) 19 The second phase of direct investments (1918-1938) is characterized by World War I and the postwar years, which included several changes in the level, form, and structure of international production. Because of the turmoil of the war, intra-Continental European corporate activity was reduced. The U.S. did not suffer damages from these political events, but the collapse of international capital markets affected the U.S. economy in the late 19205 and early 19305 (Dunning, 1983). Nevertheless, the U.S. expanded its share in the international capital market from 18.5 percent in 1914 to 27.7 percent in 1938 because it activated branch plant businesses through multinational enterprises. Although growth rate of the U.K.'s international investment declined, the overall international capital stake rose considerably in the inter-war years. After the end of World War II, the world economy was rapidly restored and grew almost without interruption, although international business had declined in the inter- war years. During the third phase of direct investment (1939-1960), the expansion of U.S. investments was remarkable. The U.S. made almost half of the foreign direct investment in the world and replaced the U.K. as the world leader in this field. The U.K., which held a 39.8 percent share of foreign direct investment in 1938, owned only 16.2 percent in 1960, in contrast to the U.S. share of 49.2 percent. Dunning (1983) reports that "as a percentage of 20 both world output and trade, the international direct investment stake rose modestly between 1938 and 1960" (p. 11). He points out that in this period there was a trend toward multinational enterprises favoring developed countries for new venture activity, whereas they had mainly invested in developing countries in 1914 (Dunning, 1983). The fourth phase of direct investment started in the 19605 when the international capital stake grew most rapidly. The very peak of the growth rate came in the late 19605; and, the growth rate then decelerated, but went up again in the latter 19705. A characteristic of this period is the continuous fall of the U.K. share, and the beginning of the decline of the U.S. share, while Germany, Switzerland, and Japan began to make gains. Many corporations from the U.K. and the U.S. divested their investments in developing countries, but Japanese investments were concentrated in these countries. In 1978, Japanese investments in developing countries accounted for 56.5 percent, the U.S. for 27.4 percent, and the U.K. for 19.8 percent. Two more features of this period are active investments in newly industrialized countries (NICs), such as Taiwan, Singapore, Hong Kong and Korea, and utilizing regional ties (e.g., European Economic Community and Latin American Free Trade Association), in international investment. In recent years, foreign direct investment activities 21 in the world have been growing rapidly again after the decline in the early 19805. Pressures for protectionism in trade have recently emerged because of slow economic growth and high unemployment. Furthermore, the rapid growth of direct foreign investment and the expanding role of multinational enterprises became increasingly controversial, particularly in the less developed countries" (Poniachek, 1986, p. 1). Nevertheless, worldwide outflows of foreign direct investment almost tripled between 1984 and 1987 and increased by another 20 percent both in 1988 and in 1989. Its growth rate is three times faster than that of exports and four times that of the growth of the world output since 1983 (United Nations Centre of Transnational Corporations, 1991). It seems that the importance of foreign direct investment is dramatically increasing and may have a different meaning than it had in the past. The Current Trend of Foreign Direct Investment and Its Importance As a means of international economic integration, 22 foreign direct investment is in its take-off phase; perhaps in a position comparable to world trade at the end of the 19405 (Julius, 1990, p. 36). As Julius (1990) points out, the recent increase of foreign direct investment has some resemblance to the rapid growth of world trade after World War II. In fact, foreign direct investment has been sharply growing since 1985 relative to world exportsl (United Nations Centre on Transnational Corporations, 1991). (See Figure 1, p. 23). ‘. World exports are still much greater than the flow of foreign direct investment (exports were seventeen times as high as in 1988) although the growth rate of foreign direct investment is remarkably larger than that of exports. 23 Figure 1: Index of Current Value of Exports and Foreign- Direct-Investment Outflowsfl 1975-1989 . 19752100“ . ‘ 800 ‘ 700 600 500 400 300 200 100 0 1 1 1 11 11 1 1 111 1 75 76 77 78. 79 80.8182 83 84 85 86 87 88‘89 (Source: World Investment Report 1991, p. 5) The United Nations Centre on Transnational Corporations (1991) suggests three major reasons for "the unparalleled growth" of foreign direct investment. First, the world economy has recovered from the recession of the early 19805, and the recovery inspires both developed and developing countries. This economic growth enabled developing 2. The data originally came from UNCTC estimates, based on UNCTC, World Investment Directory (New York, UNCTC 1991), International monetary Fund balance-of—payments tape, retrieved on 10 January 1991; and United Nations, Monthly Bulletin of Statistics, October 1984 and october 1990. 24 countries to reverse some factors which had been inhibiting foreign investment in the early 19805. Second, the number of developed countries that became vital investors increased, thereby eroding the positions of the United States and the United Kingdom. An investing country that has shown rapid growth from 1985 to 1989 is Japan. This is primarily because of the appreciation of the yen, which rendered overseas assets less expensive than domestic assets, along with "large current account surpluses and protectionist forces in its export markets" (The United Nations Centre on Transnational Corporations, 1991, p. 4). In addition, newly industrialized countries, such as Singapore, Hong Kong, and Taiwan, have emerged as outward investors "facing current account surpluses, appreciating currencies and rising production costs at home and fearing protectionist forces in their export markets" (The United Nations Centre on Transnational Corporations, 1991, p. 4). Third, the rise of the service industries in the world economy, coupled with the liberalization of regulations on capital flows, has increased international investment by transnational service corporations due to the difficulty of trading service products. "The growth in the number of cross-border mergers and acquisitions, driven by technological and competitive forces, has contributed significantly to the rise of foreign direct investment" (United Nations Centre on Transnational 25 Corporations, 1991, p. 5). The recent trend of strengthening regional ties, such as the integration of the European Economic Community (EEC), has led to a rise in foreign direct investment into the Community, as well as to an increase in investments between the EC countries. As a result, the flow of foreign direct investment has grown faster than the world gross domestic product in recent years. This means that a larger share of the world output may be accounted for by foreign direct investment. It can be concluded that the importance of foreign direct investment has recently increased in both developed and developing countries (though it is more significant in developed countries) and in the entire world economy. Foreign Direct Investment in the United States As noted earlier, the U.S. not only has invested massively in foreign countries but also has attracted a number of foreign investors since the early 20th century. The following factors may have encouraged many other countries to invest in the U.S.: 1. Growth potential and accessibility to the immense U.S. market 2. Availability of high technology and highly skilled \ 26 and stable labor force 3. Relatively easy access to financial markets in the U.S. 4. Undervaluation of some companies’ common stocks 5. The proximity of resources and the efficient distribution system in the U.S. 6. Lower production costs in the U.S. brought about by rising real wages, falling productivity, and increased taxes abroad 7. Relatively limited government intervention in industry 8. Political stability in the U.S. The poor political climate in some home countries, coupled with an expanding public sector and the threat of nationalization, has stimulated foreign investment activity. 9. Currency fluctuation 10. The need to secure access to the U.S. market in light of growing protectionism and the desire to increase vertical integration (Poniachek, 1986, p. 15). These factors probably have made the U.S. market relatively more attractive than those of many other developed countries. This trend toward immense foreign investment in the U.S. has shifted U.S. public attention from the effects of U.S. investment abroad to that of 27 foreign direct investment in the U.S. The U.S.’s concern today is whether foreign direct investment brings favorable outcomes to the U.S. in terms of employment, economic growth, and national security. In this discussion there have been both positive and negative perspectives. From the positive perspective, foreign direct investment furthers U.S. employment, technological progress, and the U.S.’s overall competitiveness in the international market. The United States Department of Commerce (1991) examined the role of U.S. foreign-owned affiliates in the U.S. and concluded that (1) overall, they account for a still small share of the U.S. economy, even though their share doubled between the late 19705 and early 19805, (2) they play a considerably more important role in the output, employment, and foreign trade of several industries' than others, and (3) during 1984-87, the share of the overall U.S. trade deficit represented by non- manufacturing U.S. affiliates was relatively large and growing compared to that represented by all other U.S. businesses (p. 30). The U.S. Department of Commerce points out that foreign- ,) +PG(1—PG) fiHKu—PHK) 930—193) N] NG NHK NB (0.143) (0.857) (0.091) (0.909) (0.053) (0.947) 0(1) 56 22 19 + 12 = 0.0217 Hence, 2 = —0.001/./0.0217 = —0.0068 which has a p-value of .05, significant (Bhattacharyya, This test compares the and is not statistically c. K. & Johnson, R. A., 1977). difference between the Japanese case and the German case with the difference between the Hong Kong case and the British case. If there were interactions of these two factors, the difference between the Japanese case and the German case should be significantly larger than the other. However, there was no significant difference between these two. the Therefore, interactions between economic power and cultural distance was not found. 100 Discussion II Further Discussion of Hypotheses and Other Findings These findings discussed through hypotheses testing are statistically valid within the mass media studied (the Wall Street Journal, The New York Times, the Los Angeles Times, and the Chicago Tribune) and the particular four cases selected. Because the researcher studied all of the articles published about the selected cases, the population is not a random sample. This limits the generality of this study to some extent. However, tendencies which were found in this study about the four selected cases may be likely to be the general tendencies of ordinary cases of foreign direct investment. With the recognition of these limitations of this study, further discussion of findings will be presented. In terms of testing the effects of each factor, the results were in the direction of research hypothesis 1.a and slightly of hypothesis 2.a, but do not support hypotheses 1.b, 1.c, 2.b, and 2.c to the same degree. None of the hypothesis tests were statistically significant (with the sample size of 109, it is not easy to get statistical significance unless the data show an extreme tendency). Thus, economic power may have negative influence on newspaper portrayals of a foreign investor’s country of origin, but not on the case of foreign direct investment nor 101 on its investor. Cultural distance may slightly influence newspaper portrayals of a foreign investor’s country of origin negatively, but not necessarily of a particular case nor of its foreign investor. The results of Fisher’s Exact one-sided also show that economic power is a more powerful factor than cultural distance in influencing the newspaper portrayals studied negatively. It is more reasonable that these two factors can be influential in portrayals about a foreign investor’s country of origin because economic power and cultural distance are attributes of the country, not of the investor or the case directly. The results show that portrayals about a case or an investor can vary depending on a particular case of foreign direct investment and a particular investor. Factors derived from a foreign investor’s country, such as the image of a country, may affect portrayals about the case and the investor. However, the influence is probably not so strong unless the case, the investor, or the acquired U.S. company has a special meaning to U.S. citizens, and hence, to U.S. journalists. Another indicator which could be important in this discussion is the number of articles issued about each case. (See Table 11, p. 86). The Japanese case yielded more than twice as many articles as the second highest number of articles about a case (Germany). Although the amount of capital involved in the British case was almost the same as 102 that of the Japanese and German cases, the British case yielded the least number of articles. For the Hong Kong case, there were 19 articles. However, considering that this case involved the least amount of capital (about a third of that as in the British case and a fourth of that as in the German case), and the fact that the case ended up with an equity increase, 19 articles is a lot for this particular case. In summary, the Japanese case attracted the most attention from U.S. journalists. The German and Hong Kong cases also attracted a lot of attention, and the British case attracted the least attention. In terms of drawing attention from U.S. journalists, the percentage of neutral articles should also be counted as an indicator of journalistic tendencies. 103 . , a Table 20: The Percentages of PoSitive, Neutral, and Negative Articles in Economically Strong and Economically Weak Conditions. (a) About the foreign investor's country of origin + N - Economic Power Hi 3.8 83.3 12.8 Economic Power Lo 0 96.8 3.2 (b) About the case of foreign direct investment + N - Economic Power Hi 30.8 51.3 17.9 Economic Power Lo 29.0 54.8 16.1 (c) About the foreign investor + N - Economic Power Hi 12,3 32.1 5.1 Economic Power Lo 12.9 74.2 12.9 104 Table 21: The Percentages of Positive, Neutral, and Negative Articles in Culturally Distant and Culturally Proximate Conditions. (a) About the foreign investor's country of origin + N - Cultural Distance Hi 4.0 84.0 12.0 Cultural Distance Lo 0 94.1 5.9 (b) About the case of foreign direct investment + N — Cultural Distance Hi 32.0 48.0 20.0 Cultural Distance LO 26.5 61.8 11.8 (c) About the foreign investor + N - Cultural Distance Hi 14.7 75.0 9.3 Cultural Distance Lo 8-3 88-2 2.9 Throughout these four cases, the largest percentage of articles was neutral toward the country of origin of the foreign investor, but not toward the investor or the case. This is probably because journalists in general are particularly sensitive about portrayals of foreign countries 105 for political, social and other reasons. Toward the cases, on the other hand, articles most frequently indicated either positive or negative attitudes (not neutral). Noticeably, both the economically strong condition and the culturally distant condition always gained a less percentage of neutral articles than economically weak and culturally proximate conditions, except in Table 20, (c). This suggests that economic power and cultural distance may be able to draw the attention and induce U.S. journalists to have some type of attitudes toward the issue. However, they do not necessarily shape either positive or negative perceptions toward the case and the investor. Testing hypotheses 3 showed that there was no combined effect of economic power and cultural distance in these four cases. Again, the four cases of foreign direct investment were intentionally chosen as cases which do not have cultural meaning to U.S. citizens. Thus, as can be seen in the results of testing hypotheses 1 and 2, cultural distance has shown only slight influence on newspaper portrayals. It may be difficult to examine the combined effect of these two factors through the selected cases because they have little cultural meaning to U.S. citizens. 106 Suggestions for Improvement Cases of foreign direct investment are generally varied depending on the type of investment, the type of industry, the process of investment, the particular companies or the people involved, and other factors. Among the many factors, there should be some which may be influential on many cases in common in terms of newspaper portrayals of these cases. Thus, cultural distance and economic power, which are relatively stable over time and pertinent to every case of foreign direct investment, were chosen and tested. However, four major weaknesses in this study can be pointed out. First, the selected four cases of foreign direct investment may not be representative of all cases of foreign direct investment. Since they were chosen as major cases which are balanced in terms of (1) the amount of capital involved, and (2) not having cultural meaning to U.S. citizens, the results from this study are limited. Second, as discussed earlier, the research design could not eliminate other possible factors, such as recent policy acts, political relations, economic situations in the U.S., conditions particular to the selected cases, and so forth. The results from this study imply tendencies in newspaper portrayals of foreign direct investment. Further research about other factors will be necessary in order to prove this conclusion theoretically. 107 Third, the selection of countries may not represent all the economically strong or weak countries, or all the culturally distant or proximate countries to the U.S. The results could be particular to the countries chosen. Fourth, the use of only two levels of cultural distance and economic power may produce results which are too linear. Categorization into two levels ignores subtle differences which exist between countries. The first and the third weaknesses of this study can be improved by having more cases of direct investment from more countries which suffice each condition of the four conditions (high economic power + high cultural distance, high economic power + low cultural distance, low economic power + high cultural distance, and low economic power + low cultural distance). More cases are strongly recommended for future research in order to achieve higher generality and validity. In terms of the fourth weakness, a future design would benefit by having a quantitative limit in deciding economic strength or weakness, and to take into account differences among economically strong countries and differences among economically weak countries. This safeguard will not avoid linear categorization, but would provide a finer-grained selection and categorization criteria. On the other hand, it is very difficult to determine the degree of cultural distance. Since there is no quantitative measurement for 108 culture, Hall’s (1976) distinction of cultures and demographic information about each country are still useful in distinguishing cultures, even if Hall’s distinction is not based on the collection of quantitative data. CONCLUSION Through content analysis, the following conclusions can be drawn about the selected four cases: (1) Newspaper articles about the four cases of foreign direct investment were mostly neutral, and this is probably the general tendency of portrayals about cases of foreign direct investment which do not center around cultural industries; (2) Economic power and cultural distance are important factors in drawing the attention of the U.S. newspapers studied to a case of foreign direct investment, but do not always shape either positive or negative perceptions toward a case or an investor; (3) Economic power may negatively influence only portrayals of a foreign investor’s country of origin, and cultural distance may also slight negative influence on them; and (4) The combined effects of two factors, cultural distance and economic power, was not found in negatively influencing portrayals of a foreign investor's country of origin. There are other factors which might have affected the 109 results of this study, including (1) special conditions or situations in a particular case, (2) political situations at that time, (3) economic situations in the U.S., and (4) the differences of industries. Ninic and Russett (1979) point out "recent policy acts by foreign countries" as a factor in shaping the public's attitude toward foreign countries. This type of factor is probably influential on the issue of foreign direct investment. When considering these other factors, it might be dangerous to attribute all of the present results from this content analysis to cultural distance and economic power. However, among identified factors, cultural distance and economic power are more stable factors over time than most of the other factors. A country’s culture is long- established, and economic power also tends to be fostered over a long period of time. These do not change in a month. Other factors, such as a political situation, could. The two factors of study may shape stereotypes about foreign countries. As discussed in Chapter 1, a stereotype may enhance the formation of public opinion. Preconceptions derived from these two factors may always be in people's, and in journalists’ minds, consciously or unconsciously. Uncertainty about a foreign country due to the cultural distance and a feeling of threat because of economic power can make people interested in certain cases of foreign direct investment. Indeed, the economically strong 110 condition and the culturally distant condition elicited smaller numbers of neutral articles. Therefore, they are factors which should not be neglected. The factors of economic power and cultural distance tend to cause more articles to be written about cases of foreign direct investment. If more newspaper articles mention a certain case of foreign direct investment, the public is likely to assume that the case is more important than other cases which yield only a few articles, as agenda- setting theory suggests. Thus, these two factors may indirectly facilitate an increase in the importance of a certain case of foreign direct investment through the mass media. It generally can be said that with more articles observed, there is a greater variety of content. This is probably one of the reasons why these two factors did not shape either positive or negative attitudes toward a case. In fact, the Japanese case, which yielded the largest number of articles, had both more positive and more negative articles overall, and had less neutral articles. Perry (1990) found that more exposure to news about a foreign country and enhanced knowledge about the country leads to more favorable attitudes toward that country. A perspective for the future is that more newspaper articles about a foreign country may gradually help shorten cultural distance between the U.S. and that foreign country. Thus, cultural 111 distance and economic power may aid to increase the importance of certain cases of foreign direct investment by attracting attention from U.S. journalists, and may reduce the cultural distance by providing more information about the foreign country. Another important factor in this study was that the selected cases were not culturally special to U.S. citizens. This means that their cultural identity is not likely to be threatened in these selected cases of foreign direct investment. Cultural distance as a factor may be relatively weak in this study compared to economic power, which appears to be a more influential factor on this issue. If cases which had a culturally special meaning to U.S. citizens were chosen as samples for this study, the results may have shown the impact of cultural distance more clearly. It is very difficult, however, to balance the degree and the type of cultural meaning in cases of foreign direct investment in order to make a fair comparison. APPENDIX APPENDIX A Guideline for Coders Content Analysis of Newspaper Articles About Foreign Direct Investment in The United States Content Analysis "Content Analysis is any technique for making inferences by objectively and systematically identifying specified characteristics of messages"(Holsti, 1969, p. 14). In other words, content analysis is a research technique used to identify needed characteristics of messages in a scientific manner. A scientific manner means that content analysis, as a research technique, requires "objectivity, system, and generality" so that the analysis can be replicable by other researchers. In scientific fields where quantitative measurement is often possible, it may be easier to achieve these three requirements. However, a verbal or written message is not as easy to measure precisely because human messages are not usually numerical and interpreting messages often involves subjectivity. Content analysis is a technique used to eliminate these problems in research of social science or humanities as much as possible and to achieve high credibility in interpreting messages. The term, content analysis, is often interchangeably used with the term "coding" and a person who actually content analyzes messages is called a "coder". The Purpose of Content Analysis in This Study Borrowing words from the definition of content analysis, the purpose of content analysis in this study is to make inferences as to what type of perception a newspaper article about foreign direct investment is likely to induce on its readers by identifying the types of portrayals;(1) positive, (2) somewhat positive, (3) neutral, (4) somewhat negative, and (5) negative, about three objects;(a) the investor’s country of origin, (b) the case of foreign direct investment, and (c) the foreign investor. In short, this content analysis is meant to examine how the U.S. newspapers 112 113 portray the case of foreign direct investment, the foreign investor, and the investor’s country of origin in their articles about the selected cases of foreign direct investment. The Process of Content Analysis of Newspaper Articles About Foreign Direct Investment 1. Familiarization (Training of Coders) --Familiarize coders with a content unit, categories for types of portrayals, and criteria for categorization in this content analysis. In addition, examples of positive, somewhat positive, neutral, somewhat negative, and negative articles will be provided to the coders to reassure them how to categorize articles. A Content Unit -- an article Categories For Types of Portrayals and Their Definition Positive -- Presenting or implying favorable attitudes toward an object through an article. Dominantly stating facts which may imply constructive or good thoughts and emotions about an object. Somewhat -- Presenting or implying favorable Positive attitudes toward an object to some extent through an article. Moderately stating facts which may imply constructive or good thoughts and emotions about an object. Neutral -- "Not supporting or assisting either side in a dispute or conflict" (The Oxford English Dictionary). Neither positive nor negative about an object. Somewhat Presenting or implying unfavorable Negative attitudes toward an object to some extent through an article. Moderately stating facts which may imply destructive or faulty thoughts and emotions about an object. Negative -- Presenting or implying unfavorable attitudes toward an object through an article. Dominantly stating facts 114 which may imply destructive or faulty thoughts and emotions about an object. Criteria For Categorization of Articles Positive -- Somewhat -- Positive Neutral -- Somewhat -- Negative An article which includes almost entirely positive quotations, comments, or facts about an object; an article which includes some negative quotations, comments, or facts about an object in order to retort against the negative idea and to make the impression of the object from the article positive; or an article which is mostly stated neutrally, but includes some strongly positive quotations, comments, or facts about an object, enough to make the impression of the object from the article positive. An article which includes both positive and negative quotations, comments, or facts about an object, but the impression of the object from the article is inclined to be positive; or an article which is mostly stated neutrally, but includes some relatively positive quotations, comments, or facts about an object, and thus, could hardly be categorized as neutral. An article which states facts without either positive or negative connotations about an object; or an article which includes both positive and negative quotations, comments, or facts about an object to the same extent and does not support either side. An article which includes both negative and positive quotations, comments, or facts about an object, but the impression of the object from the article is inclined to be negative; or an article which is mostly stated neutrally, but includes some relatively negative quotations, comments, or facts about an object, and thus, could hardly be categorized 115 as neutral. Negative -- An article which includes almost entirely negative quotations, comments, or facts about an object; an article which includes some positive quotations, comments, or facts about an object in order to retort against the positive idea and to make the impression of the object from the article negative; or an article which is mostly stated neutrally, but includes some strongly negative quotations, comments, or facts about an object, enough to make the impression of the object from the article negative. 2. Pretest -- 10 newspaper articles about foreign direct investment, which are not involved in this study, will be provided. Coders may begin content analyzing the articles on a provided sheet according to the following instructions. *Instructions [4] [5] [5] Read the articles as you normally read newspapers. Follow the coding rules. After reading an article, think about three objects; (a) the investor’s country of origin, (b) the case of foreign direct investment, and (c) the foreign investor. If the article did not refer to an/some object(s) at all, leave the appropriate scale(s) in the coding sheet blank. For the objects the article referred to, try to decide whether its portrayal toward an object was 1) positive, 2) somewhat positive, 3) neutral, 4) somewhat negative, and 5) negative, according to the detailed rules of coding and criteria for categorization of articles. Try not to make a judgment as to whether an article is positive or negative based on your opinion. Negative articles are not the ones with which you disagree, and positive articles are not the ones with which you agree. If you decide which categorization is appropriate for each object, circle the number corresponding to the category you chose on the 116 coding sheet. 3. Calculation of Intercoder Reliability -- The results of the pretest by two coders will be utilized to calculate intercoder reliability in order to test objectivity and generality of coding. If intercoder reliability in the pretest is not high enough (.85), training of the coders will be continued. If intercoder reliability is high enough, coders may begin content analyzing the articles which are sample population in this study. 4. Content Analysis of the Sample Population -- One coder content analyzes 54 articles, and another does 55 articles (109 articles in total) according to the instructions given in the pretest. Coding Rules 1. The coder will underline the word(s), the sentence(s), or the paragraph(s) which indicate(s) positive or negative connotations if there is any. 2. If the word(s), the sentence(s), or the paragraph(s) give(s) a positive or somewhat positive impression about the object (a) (the investor’s country of origin), the coder will place "+ C" (Country), place "+ D" (Deal) about the object (b) (the case of foreign direct investment), and place "+ I" about the object (c) (the investor) at the beginning of the word(s), the sentence(s), or the paragraph(s). Example A + D The acgpisition of America Co.‘:fits perfectly with B & I? ’s strategy of operating basic businesses which meet essential human needs. This sentence is somewhat positive toward the case, and thus, "+ D" should be placed because it is talking about the compatibility of the two companies, which may lead America Co. to a better direction in the future due to the deal. Example B 1. America Co. -- a U.S. company which was or will be acquired by a foreign investor. 2. B & B Co. -- a foreign investor. 117 + D + I Breathing New Life into America Co. B & B Co.'s $1 billion renovation of America Co. world wide was discussed yesterday after the deal was made. This paragraph should be categorized as positive toward the case and the foreign investor because it implies that America Co’s operation has been in a bad shape, however, it is being restored due to the acquisition by B & B Co. Thus, it makes positive impression about both the case and the investor. Example C + C The Italians are producing needed capital and some technical expertise. They are increasing the global competitiveness of U.S. industry. This paragraph is very positive toward the foreign investor’s country because the paragraph talks about the foreign country’s contributions to the U.S. economy. 3. If the word(s), the sentence(s), or the paragraph(s) give(s) a negative or somewhat negative impression about the object (1) (the investor's country of origin), the coder will place "- C", place "- D" about the object (2) (the case of foreign direct investment), and place "- I" about the object (3) (the investor) at the beginning of the word(s), the sentence(s), or the paragraph(s). Example D - I Mr. B (the president of B & B Co.) also sidestepped another political issue that has dogged B & B for some time: Its observance of the Arab trade embargo of Israel. This sentence sounds negative toward the foreign investor because of negative connotation of two words, "sidestepped" and "dogged". Example E - D - I Their mission is to overcome possible political objections to the America - B & B deal by critics who 118 might argpe that it involves the sale of a national resource to a foreign predator. This sentence should be categorized as negative toward the case and the foreign investor because it mentions about possible political objections to the case and it includes a strongly negative word, "predator", to express the foreign investor. Example F - D - C __§ U.S. arm of Saudi Arabian conglomerate B & B Co. agreed to acguire America Co, a diversified U.S. manufacturer in a rou hl 1.8 billion takeover that heats up the already feverish Saudi Arabian buying spree of American corporations. This sentence is negative toward the foreign investor’s country of origin and the case. It implies that the Saudi Arabians have been buying a great amount of American assets and that this case may facilitate the trend (which may not be good for Americans) by using words, such as takeover, feverish, and spree, in this particular context. Thus, "- D - C" should be placed. 4. 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