IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v103y2014icp93-112.html
   My bibliography  Save this article

Corporate culture and identity investment in an industry equilibrium

Author

Listed:
  • Hiller, Victor
  • Verdier, Thierry

Abstract

We explore the two-way relationship between corporate culture and market structure. We emphasize two market dimensions through which firms interact: the product market where goods are sold and the labor market where managers are hired. We model the firm's principal–agent relationship by assuming that managers may be socialized to a corporate identity that leads them to behave more in concert with the profit maximizing goals of the firm (i.e. a corporate culture). We first analyse the optimal incentive scheme and corporate culture investment at the firm level. Then we consider the industry equilibrium with free entry and market clearing for managerial labor. We discuss how industry characteristics (market size effects), global market integration or technological shocks affect the pattern of equilibrium corporate cultural choices across firms.

Suggested Citation

  • Hiller, Victor & Verdier, Thierry, 2014. "Corporate culture and identity investment in an industry equilibrium," Journal of Economic Behavior & Organization, Elsevier, vol. 103(C), pages 93-112.
  • Handle: RePEc:eee:jeborg:v:103:y:2014:i:c:p:93-112
    DOI: 10.1016/j.jebo.2014.04.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268114001115
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dalia Marin & Thierry Verdier, 2008. "Power Inside The Firm and The Market: A General Equilibrium Approach," Journal of the European Economic Association, MIT Press, vol. 6(4), pages 752-788, June.
    2. Marin, Dalia & Verdier, Thierry, 2012. "Globalization and the empowerment of talent," Journal of International Economics, Elsevier, vol. 86(2), pages 209-223.
    3. Francois, Patrick & Fujiwara, Thomas & van Ypersele, Tanguy, 2009. "Competition Builds Trust," Economics working papers patrick_francois-2009-65, Vancouver School of Economics, revised 02 Dec 2009.
    4. Sarah Brown & Jolian McHardy & Robert McNabb & Karl Taylor, 2011. "Workplace Performance, Worker Commitment, and Loyalty," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(3), pages 925-955, September.
    5. Timothy Besley & Maitreesh Ghatak, 2005. "Competition and Incentives with Motivated Agents," American Economic Review, American Economic Association, vol. 95(3), pages 616-636, June.
    6. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
    7. Cordes, Christian & Richerson, Peter J. & Schwesinger, Georg, 2010. "How corporate cultures coevolve with the business environment: The case of firm growth crises and industry evolution," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 465-480, December.
    8. Rafael Rob & Peter Zemsky, 2002. "Social Capital, Corporate Culture, and Incentive Intensity," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 243-257, Summer.
    9. Grossman, Gene M. & Helpman, Elhanan, 2004. "Managerial incentives and the international organization of production," Journal of International Economics, Elsevier, vol. 63(2), pages 237-262, July.
    10. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 715-753.
    11. Delfgaauw, Josse & Dur, Robert, 2007. "Signaling and screening of workers' motivation," Journal of Economic Behavior & Organization, Elsevier, vol. 62(4), pages 605-624, April.
    12. Pol Antras & Elhanan Helpman, 2004. "Global Sourcing," Journal of Political Economy, University of Chicago Press, vol. 112(3), pages 552-580, June.
    13. Eric Van den Steen, 2010. "Culture Clash: The Costs and Benefits of Homogeneity," Management Science, INFORMS, vol. 56(10), pages 1718-1738, October.
    14. George A. Akerlof & Rachel E. Kranton, 2005. "Identity and the Economics of Organizations," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 9-32, Winter.
    15. repec:hrv:faseco:4784029 is not listed on IDEAS
    16. Carrillo, Juan D. & Gromb, Denis, 1999. "On the strength of corporate cultures," European Economic Review, Elsevier, vol. 43(4-6), pages 1021-1037, April.
    17. Michael Kosfeld & Ferdinand A. von Siemens, 2011. "Competition, cooperation, and corporate culture," RAND Journal of Economics, RAND Corporation, vol. 42(1), pages 23-43, March.
    18. Donald C. Langevoort, 2006. "Opening the Black Box of "Corporate Culture" in Law and Economics," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 162(1), pages 80-96, March.
    19. Ramon Casadesus-Masanell, 2004. "Trust in Agency," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(3), pages 375-404, September.
    20. Abhijit Ramalingam & Michael T. Rauh, 2010. "The Firm as a Socialization Device," Management Science, INFORMS, vol. 56(12), pages 2191-2206, December.
    21. Eric Van den Steen, 2010. "On the origin of shared beliefs (and corporate culture)," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 617-648.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. When do firms invest in corporate culture?
      by nawmsayn in ZeeConomics on 2015-01-18 20:12:23

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Michael T. Rauh & Giulio Seccia, 2014. "Honesty and Trade," Working Papers 2014-06, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    2. Forquesato, Pedro, 2016. "Social norms of work ethic and incentives in organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 231-250.
    3. Fuhai HONG, 2014. "Ideals should not be too ideal: Identity and public good contribution," Economic Growth Centre Working Paper Series 1411, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.

    More about this item

    Keywords

    Corporate culture; Identity; Market competition;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • F15 - International Economics - - Trade - - - Economic Integration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:103:y:2014:i:c:p:93-112. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/jebo .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.