Cultural aspects of the use of trade credit

Abstract

Purpose: This paper aims to (1) provide insight into the cultural issues of the use of trade credit, focusing on the links between trade credit and trust, religion, and national culture, and (2) suggest potential directions for future research in this area. Design/methodology/approach: A literature review was conducted to identify the key cultural issues addressed in previous studies on trade credit and to summarize the research on the use of trade credit in three focus areas: trust, religion, and national culture. Findings: A literature review confirms that cultural factors, such as trust, religion, and national culture, play crucial roles in the provision and receipt of trade credit. Therefore, future research on trade credit should adopt a more comprehensive approach that extends beyond a purely financial perspective. Research limitations/implications: This review does not address all potential cultural factors that may impact the use of trade credit. In addition, the review is constrained by the limited research conducted in this area and the heterogeneity of the studies analyzed. Practical implications: Given the significance of trade credit in business operations, a thorough understanding of its cultural underpinnings can prove vital for the parties involved in a trade credit agreement. Originality/value: Despite the crucial importance of trade credit for companies and the extensive research devoted to it, the cultural dimension of its use remains an underexplored field. This article addresses this issue by providing an overview of the current state of research on trade credit concerning three cultural aspects: trust, religion, and national culture. Furthermore, the article outlines several potential directions for future research in the subject of the study. The article’s subject matter falls within the expanding domain of culture and finance. Keywords: trade credit, trust, religion, national culture, ethics. Category of the paper: Literature review.