Culture counts: Exploring firm performance through machine-learning based corporate culture in Thailand

Motivated by the lack of empirical evidence on corporate culture in emerging markets, we are the first to construct a comprehensive Thai-specific corporate culture dictionary using word embedding machine learning techniques and explore the relationship between our text-based corporate culture and firm performance for all Thai listed firms over the period of 2000 to 2021. We provide evidence supporting a resource-based view (RBV) theory in non-Western context by documenting a positive effect of corporate culture on firm performance such that a one-standard deviation rise in corporate culture improves firm performance by 9 %. Results also demonstrate that all five elements of corporate culture significantly drive Thai firms' performance, however the effect is in the following order from highest to lowest: teamwork, respect, innovation, quality and integrity. Additional analyses also indicate that strong culture, except for innovation and integrity insulates Thai firms from the adverse effect of the 2008 Global Financial Crisis on firm performance. Our findings are robust to various tests to address endogeneity concerns, including instrumental variable approach, propensity score matching, entropy balancing and lagged regression analysis. We shed some light on business cultures unique to the Thai context, prioritizing a corporate culture centred on teamwork and respect, as opposed to Western culture, placing emphasis on innovation and integrity. Finally, our Thai culture-performance evidence can provide guidance on corporate governance reform in Association of Southeast Asian Nations (ASEAN) in building a unified governance code, emphasizing on cultural values relevant to ASEAN.