Development of Measurement Models for Globalization, Consumption Patterns and Culture - A Case Study of Three Big Cities of Punjab, Pakistan

• Author: ATIF KHAN JADOON, ABDUL RAUF BUTT AND MUHAMMAD AZMAT HAYAT

Abstract. Over the course of human history, people all over the world have developed progressively closer contacts. However, in the past few decades, some remarkable developments in the fields of information technology, transportation and communication have provided the process of globalization a new impetus. As a result of this increased global integration, the world has started experiencing its micro level (in addition to macro level effects) effects as well. This has greatly affected the choice of goods and services that people consume in their routine life. In this regard, globalization is considered to have both direct as well as indirect impacts on culture and consumption patterns. The present study is designed to construct measurement variables for globalization, consumption patterns and culture, which can then be used to investigate the nexus between these three variables.

For this, primary data has been collected from the three cities (Lahore, Rawalpindi, and Multan) of Punjab, Pakistan. Latent variables has been developed for each three main variables. Statistical techniques such as EFA and CFA were used to endorse that the constructs do actually support the past theories and measure the underlying concepts. The study is an important contribution towards investigating the micro level effects of globalization on consumption patterns and culture.

Keywords: Globalization, Consumption, Culture, Exploratory Factor Analysis, Confirmatory Factor Analysis

1. INTRODUCTION

   Over the course of human history, people all over the world have developed progressively closer contacts. However, in the past few decades, some remarkable developments in the fields of information technology, transportation and communication have provided the process of globalization a new impetus. As a result of this increased global integration, the world has started experiencing its effects more intensely than ever. The extensive effects of globalization on different aspects of life have attracted a great deal of attention over the past three decades. Globalization has especially changed the way consumers behave, think, and more importantly, consume. In this regard, globalization is considered to have both direct and indirect impacts on culture as well as consumption patterns. The present study is designed to construct measurement variables for globalization, consumption patterns and culture, which can be used to investigate the nexus between these three variables.

   The term “global village” is the core of globalization. It encompasses the idea of bringing societies across the world close together. Trentmann (2009) argues that globalization not only involves financial flows and commodity trade but rather it involves human actors whose thoughts, identities and concerns can influence global exchanges. Therefore, this growing worldwide interconnectedness not only enables cultural differences to recede and influence how people think, act or behave, but it also involves the global flow of goods and services. For Jomo and Khoo (2003), “Globalization is understood as the trans-boundary movements of capital, people, goods, information and culture, burst into intellectual awareness in the late 1980s and the 1990s”.

   As countries, particularly the developing countries, have become more open in the recent years, the concern about globalization and its different effects on economic growth, poverty, inequality, environment, consumption patterns and cultural dominance have increased (Bhandari and Heshmati, 2005; Baldwin and Forslid, 2000). In most of the previous studies, trade to GDP ratio, Foreign Direct Investment (FDI) and foreign remittances were used as proxies for measuring globalization. These proxies for globalization were primarily used to determine the macroeconomic effects of globalization. With the deeper penetration of globalization, micro-level effects of globalization became also prominent. With this, the studies that aimed at investigating the effect of globalization also highlighted the role of Multinational Corporations (MNCs) and information technology in making this world a global village.

   While Rahman (2012) analyzed globalization in the form of MNCs, who according to him change the socio-economic conditions of the host countries, Shamsher and Abdullah (2012) considered internet technology as the main source for bringing changes in consumption patterns. The increasing convergence of world economies basically fosters the worldwide pervasion of information technologies (Nayyar, 2006). They, in turn, tend to stimulate societies for a greater exposure to the global world and global mass media. That is why, nowadays, there exists an opinion that these trends of globalization lead to universal homogenization (Ardalan, 2008; Levitt, 1983) of culture and consumption patterns. Therefore, it is immensely important to investigate the micro level effects of globalization on culture and consumption patterns. To comprehensively study these effects, there is a need to construct suitable measurement variable for measuring globalization, culture, and consumption patterns.

   These measures will help the researchers to better understand how consumers in Pakistan are responding to globalization and its inevitable effects. Some recommendations to design a public policy to benefit from this changing consumption pattern and culture can then be are provided on the basis of the analysis, in order to optimize growth potential and maximize the benefits that Pakistan can achieve from globalization.

   RESEARCH OBJECTIVES

   Globalization has especially changed the way consumers behave and think. This has greatly affected the choice of goods and services that people consume in their routine life. In this regard, globalization is considered to have both direct and indirect impacts on culture as well as consumption patterns. There is, therefore, a need to closely investigate the nexus that exists between globalization, consumption patterns and culture. For this, it is essential to have variables that comprehensively measure globalization, consumption patterns, and culture. Since none of the past studies have developed suitable indices that in true sense measure globalization, consumption patterns and culture, the present study is an effort to design appropriate constructs for these latent variables. The study focuses on the establishment of measurement models for measuring the three said variables.

   ORGANIZATION OF THE PAPER

   Following on from this introduction the organization of the rest of the paper is as follows: Section II presents literature review on the topic. Section III specifies the conceptual framework and section IV describes the methodology followed in the analysis. In section V, empirical results are discussed. Lastly, the conclusion is drawn in Section VI.

2. LITERATURE REVIEW

   Globalization, driven by the worldwide flow of media, migration, and technologies; is shaping people’s lives and modifying their behavior. Increasingly, people now live in a ‘global world’, which describes a process of cultural synchronization resulting in the emergence of a global consumer culture. In this regard, Sheth et al. (2009) stated that global consumer culture is affected by the global flow of characteristic cultural resources, capital, currency, financial instruments, global flows of informational and mechanical technologies, commercial media, ideologies of states and other movements that compete for popular legitimacy and authority.

   Media is undoubtedly affecting traditions of the people through its diverse platforms such as television and radio. According to Zadeh and Mozaffari (2014), technological advancement is influencing all fields of life, hence changing the social and cultural belief systems in Iran. According to Abdulraheem (2003), 70% of the entertainment programs being viewed by the people in developing countries are originated from the United States of America and they promote the American culture and the American way of life among the majority of the world’s population. The author is of the view that globalization has changed the culture of how people eat, drink and dress. Multinational companies such as McDonald's, Coca-Cola, and Denim jeans actually determine how people eat, drink and what they wear.

   Furthermore, Suntoo (2012), using both primary and secondary data, examined the impact of globalization on the culture of the people of Mauritius. The author highlighted that the saving rate has been reduced and Mauritius is becoming a more consumption oriented society where people are keen to fulfill their present needs rather than future needs. Irrespective of age and gender, people of Mauritius are under a great influence of western culture. It is fashionable for men of all ages to wear jeans and T-shirts. Imported goods are used in daily life and children are more interested in technological devices rather than traditional toys. The results also suggested that usage of homemade food has been reduced and replaced by the international fast food chains.

   A similar pattern of savings rate was also observed in America by Warren (2003) where people are now more intended to use branded goods and in Egypt by Amin (1999) where the goods which were considered as a luxury in 1970’s have become the need of every “poor”. Amin (1999) concluded that the saving rate in Egypt has become consistently lower (around 15%) due to increased economic integration, which has raised the import of consumer goods and has made Egypt a more consumption oriented society. The culture of private cars, western lifestyle, luxuries dwelling has become common in the society.

   Specifically, considering the case of Pakistan, the study conducted by Qamar et al. (2012) is of immense importance. This paper analyzed the influence of Indian culture on Pakistani norms and values. Taking a sample of 120 respondents from Faisalabad city, the authors pointed out that many aspects of...