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Culture, Institutions, and Firm Performance

Author

Listed:
  • Hasan A. Faruq

    (Xavier University)

  • Margaret L. Weidner

Abstract

We examine the relationship between institutions, cultural dimensions, and firm performance. Using firm-level data from 74 countries, we show that while institutions matter for firm performance, these institutions themselves are influenced by different cultural attributes. These results also vary with industry: while improvements in the overall quality of institutions benefit manufacturing and construction firms, better institutions do not seem to have similar impact in the service and agriculture sectors. Institutions also have different impacts in different geographical regions. These results provide additional support to the popular view that institutional reforms should be country-specific.

Suggested Citation

  • Hasan A. Faruq & Margaret L. Weidner, 2018. "Culture, Institutions, and Firm Performance," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 44(4), pages 519-534, September.
    • Handle: RePEc:pal:easeco:v:44:y:2018:i:4:d:10.1057_s41302-016-0087-5
    DOI: 10.1057/s41302-016-0087-5
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    Cited by:

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    2. Chang, Chong-Chuo, 2023. "The impact of quality of institutions on firm performance: A global analysis," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 694-716.
    3. Anton, Sorin Gabriel & Nucu, Anca Elena Afloarei, 2022. "On the role of institutional factors in shaping working capital management policies: Empirical evidence from European listed firms," Economic Systems, Elsevier, vol. 46(2).
    4. Zhang, Wenwen & Chiu, Yi-Bin & Hsiao, Cody Yu-Ling, 2022. "Effects of country risks and government subsidies on renewable energy firms’ performance: Evidence from China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 158(C).
    5. The Nguyen Huynh, 2022. "Spatial effects of institutional quality on firm performance: evidence from Vietnam," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 36(2), pages 89-105, November.
    6. Mehdi Rasouli Ghahroudi & Yasuo Hoshino & Ehsan Fakhraei, 2019. "Ownership Structure, Capital Structure, and Firm Survival," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(11), pages 1-19, November.

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