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Does Confucian culture influence corporate R&D investment? Evidence from Chinese private firms

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  • Yan, Youliang
  • Xu, Xixiong
  • Lai, Jieji

Abstract

In this study, we examine how informal institution, namely Confucian culture, affects corporate R&D investment. Using a nationwide survey of Chinese private firms, we find that Confucian culture is significantly positively associated with corporate R&D investment. Moreover, the positive effect of Confucian culture is more pronounced for firms headquartered in regions with poor legal supervision and weak foreign culture shocks. The results are robust to alternative measures of Confucian culture and remain valid after controlling for potential endogeneity. Our findings provide insights for understanding the role of Confucian culture in firm's decision-making in emerging market.

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  • Yan, Youliang & Xu, Xixiong & Lai, Jieji, 2021. "Does Confucian culture influence corporate R&D investment? Evidence from Chinese private firms," Finance Research Letters, Elsevier, vol. 40(C).
    • Handle: RePEc:eee:finlet:v:40:y:2021:i:c:s1544612320304724
    DOI: 10.1016/j.frl.2020.101719
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    8. Lina Mao & Chongluan Lu & Guangfan Sun & Chunyan Zhang & Changwei Guo, 2024. "Regional culture and corporate finance: a literature review," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-12, December.
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    More about this item

    Keywords

    R&D investment; Confucian culture; Informal institution; China;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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