Embedding Culture and Finance: Divorce or a Fresh Start?

We provide a perspective on the contradiction provided by a rising culture-interest, and, the lack of a successful culture-paradigm in financial research. We emphasize how "culture-research" and financial research rest on strikingly different epistemological roots. Culture is concerned with conditionality, conceptuality, ends (values), qualitative evidence, limited diversity, fades, and it is guided by understanding. Culture largely evades precise definition and measurement. Finance is established on deductive and instrumental rationality, on modeling, on measurement, on a-temporality, on an appeal for marginal analysis and it is oriented by quantitative prediction. To overcome this tension we propose a conceptual tool to think about culture in financial research. Chiefly we distinguish between the types of actors being involved in financial phenomena and their expected behavioral and cognitive homogeneity. Then we recommend defining culture 'backward', from primo the mechanism relating it to the financial outcome, and segundo the homogeneity within the group regarding that mechanism. This conceptual framework can be of use to culture-scholars across disciplines. In management, it exemplifies how the view of culture as "toolkits", "layers" and "repertoires" can be intellectually powerful and empirically fruitful within a specific field of inquiry (finance). In finance, we contribute to the understanding of the tensions around "culture-research", and, outlining the epistemological roots to that tension, we exemplify one path that a re-foundation (Zingales, 2000) could engage into. Overall, we provide a grid to understand, and partly reconcile, the complementary foundations of culture research about financial issues within finance, or in sociology, economics, psychology... Eventually we reflect on how the culture-approach, unlike Behavioral Finance, can be compatible with a view of Finance as primarily, conditionally and deductively rational. In a way reminiscent of Simon (1945/1976) suggesting that complexity in Organizations brings limits to rationality, we suggest, here, that culture brings conditionality and temporality to the scientific analysis and quantitative modeling of financial phenomena (culture understood here as the grip exerted by collectives on individual cognitions, behaviors & the rules structuring their interactions).