Unveiling the bright side of rice-farming culture in shaping innovation: Evidence from Chinese listed firms

This study aims to unveil the bright side of rice-farming culture in driving firm innovation and discuss the possible underlying mechanisms. Using hand-collected city-level data on rice cultivation, we examine the impact of regional rice-farming culture on the innovation activities of Chinese listed companies. The results show that firms located in regions with stronger rice-farming culture intensity exhibit both higher innovation quantity and quality, as evidenced by an increased number of patent applications and citations. These findings persist across a variety of robustness tests. Mechanism tests indicate that rice-farming culture fosters institutional collectivism and facilitates innovation through two channels: reducing agency costs and enhancing collaborative innovation. The positive impact of rice-farming culture on firm innovation is more pronounced in regions with weaker legal environment, slower urbanization process, and limited exposure to foreign cultural influence. Additionally, firms located in rice-cultivating areas are more likely to appoint CEOs from these regions, which further correlates with higher innovation output. Moreover, rice-farming culture facilitates the translation of innovation into improved financial performance. Overall, this study sheds light on the role of informal institutions in shaping firm innovation, offering valuable insights into the cultural foundations of economic behavior.