Corporate Culture: Evidence from the Field

John R. Graham, Campbell Harvey (), Jillian Popadak and Shivaram Rajgopal
Authors registered in the RePEc Author Service: Jillian Grennan

No 23255, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Does corporate culture matter? Can differences in corporate culture explain why similar firms diverge with one succeeding and the other failing? To answer these questions, we use a novel survey and interview-based analysis of 1,348 North American firms. Over half of senior executives believe that corporate culture is a top-three driver of firm value and 92% believe that improving their culture would increase their firm's value. Surprisingly, only 16% believe their culture is where it should be. Executives link culture to ethical choices (compliance, short-termism), innovation (creativity, taking appropriate risk), and value creation (productivity, acquisition premia). We assess these links within a framework that implies cultural effectiveness depends on interactions between cultural values, norms, and formal institutions. Our evidence suggests that cultural norms are as important as stated values in achieving success.

JEL-codes: D23 G3 G30 K22 M14 O16 Z1 (search for similar items in EconPapers)
Date: 2017-03
New Economics Papers: this item is included in nep-bec, nep-hrm and nep-soc
Note: CF IO POL
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

Published as John R. Graham & Jillian Grennan & Campbell R. Harvey & Shivaram Rajgopal, 2022. "Corporate culture: Evidence from the field," Journal of Financial Economics, vol 146(2), pages 552-593.

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