Summary:
Innovation is an extensively researched topic in the fields of economics and management. The relevant literature investigates the key factors affecting corporate innovation from the perspectives of intellectual property protection (Moser, 2005; Wu and Tang, 2016), government subsidies (Gorg and Strobl, 2007; Zhang et al., 2018), corporate governance (Manso, 2011; Shi and Wang, 2017), financing constraints (Brown et al., 2013; Zhang et al., 2017), and executive characteristics (Sunder et al., 2017). However, few studies have focused on the potential impact of implicit value norms, such as social culture, on the decision preferences of managers and their innovation strategy choices. Huntington and Harrison (2013) argue that culture is an important factor affecting society, politics, and the economy. The emerging literature on “culture and finance” shows that besides institutional and economic factors, informal institutional factors such as culture play a pivotal role in corporate decision-making (Li et al., 2013). Culture may play a critical role in shaping corporate decision-making in China in particular, as despite its less developed laws and institutions relative to those in developed countries, China has a long history and rich culture (Allen et al., 2005). In Chinese society, Confucian culture is the most extensive and far-reaching informal institutional factor. As the core of Chinese traditional culture, Confucianism is the moral norm and an action guide generally respected by individuals and organizations (Ip, 2009). Du (2003) believes that Confucian culture not only has shaped the spirit of Chinese enterprises but also served as a spiritual pillar in the process of modernization, influencing all aspects of the social economy. Fu and Tsui (2003) argue that Confucianism is pervasive in the values of Chinese entrepreneurs and is reflected in corporate decision-making. This raises an important question: what impact does Confucian culture have on innovation within contemporary enterprises？ Using a sample of Chinese listed firms during the period 2007 to 2016, this paper systematically investigates the impact of Confucian culture on corporate innovation. We find that Confucianism is significantly positively associated with a firm's patent output, implying that Confucian culture has a significant promoting effect on corporate innovation. Channel analysis shows that Confucianism affects corporate innovation mainly by alleviating the corporate agency conflict, improving the level of human capital investment, and reducing the risk of patent infringement. Further, the positive effect of Confucianism on corporate innovation is more prominent for private enterprises and firms in areas with weaker intellectual property protection. Meanwhile, foreign cultural influence weakens the positive effect of Confucianism on corporate innovation. We also document that Confucianism helps improve the efficiency of patent technology transformation and thus enhances the marginal contribution of technological innovation to firm performance. This paper contributes to the literature in several ways. First, our study breaks through the traditional institutional theoretical framework and investigates the impact of Confucian culture on corporate innovation from the perspective of informal institutions. This not only deepens understanding of the cultural soil on which innovation depends but also enriches the literature on corporate innovation. Second, the literature on Confucian ethical values mainly focuses on the fields of philosophy and sociology and adopts normative research methods. This paper uses an empirical method to reveal the positive role of Confucian culture in promoting contemporary enterprise innovation. This expands the research paradigm and deepens theoretical understanding of the economic consequences of Confucian culture at the firm level. Third, current research on “culture and finance” mostly focuses on Western culture and uses cross-national samples to compare the impact of national cultural characteristics on corporate behavior. We apply a sample of Chinese listed firms to examine the impact of Confucianism on corporate innovation. This approach ensures that institutional differences between countries do not interfere with the empirical results, and it also contributes empirical evidence from an Eastern culture to extend the international literature on culture and finance. Finally, our study is the first to theoretically explain and provide empirical evidence for Confucianism's positive effect on corporate innovation. This corrects the passive cognitive bias toward Confucianism while also providing a theoretical basis and policy reference for giving full play to the positive role of Chinese traditional culture in achieving innovation-driven strategies and high-quality development goals.
徐细雄, 李万利. 儒家传统与企业创新:文化的力量[J]. 金融研究, 2019, 471(9): 112-130.
XU Xixiong, LI Wanli. Confucian Tradition and Corporate Innovation: The Power of Culture. Journal of Financial Research, 2019, 471(9): 112-130.
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