Corporate culture and identity investment in an industry equilibrium

Victor Hiller and Thierry Verdier

Journal of Economic Behavior & Organization, 2014, vol. 103, issue C, 93-112

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.

Keywords: Corporate culture; Identity; Market competition (search for similar items in EconPapers)
JEL-codes: D23 F15 L22 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Working Paper: Corporate culture and identity investment in an industry equilibrium (2014)
Working Paper: Corporate culture and identity investment in an industry equilibrium (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:103:y:2014:i:c:p:93-112

DOI: 10.1016/j.jebo.2014.04.006

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