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Traditional culture echoes? The impact of clan culture upon partner surname sharing: Evidence from Chinese supply chains
Abstract
In many emerging countries, firms face formal institutional voids that raise both the cost and the level of difficulty of business operations. In this study, we examine a unique culture-rooted mechanism that may address those voids, and this comes in the form of supply chain partner surname sharing based on the legacy of clan identification. Using a unique Chinese dataset that was manually collected and merged from multiple sources, we find that firms registered in the region with a stronger clan culture are more likely to cooperate with supply chain partners with the same surname. This positive effect of clan culture is negatively moderated further by the level of subnational marketization. Therefore, we shed new light on the supply chain-level implications of clan culture, an Asian cultural-specific topic that has received little attention in marketing and supply chain literature.
... Surname ties exist at the firm level can have a profound impact on firm decisions or economic outcomes (Huang et al. 2022;Li et al. 2021). Du (2019) finds that auditor-CEO surname ties increase the likelihood of corporate financial misstatement. ...
... Zhang et al. (2020) find that when there are surname ties between the CEO and board members, the board of directors will show favoritism to the CEO's self-service activity activities, which increases the agency costs. Li et al. (2021) found that entrepreneurs are more likely to cooperate with supply chain partners who share the same surnames in areas with a strong clan culture. Tan et al. (2021) find that board member surname ties reduce firm value. ...
... On the other hand, the values and codes of conduct shared by clan members of mutual help and cooperation have laid the psychological foundation and emotional support for group identity (Li et al. 2021). This value of mutual help is common in the ethical indoctrination of different clans and has become a common cultural psychological deposit and a code of conduct for groups with the same surname. ...
Comparability of accounting information (AIC) is the most basic feature to ensure the usefulness of accounting information. AIC can help users identify and understand the similarities and differences among enterprises and accurately judge the actual operating conditions of enterprises. However, academic and practical understanding of the factors affecting the AIC is far from comprehensive and adequate. Based on social identity theory and agency theory, we examine the effect of CEO-CFO surname ties on comparability of accounting information (AIC). We propose that CEO-CFO surname ties exacerbate the agency problem and subsequently reduce the AIC. In addition, we propose that corporate governance mechanisms moderate the above relationships. That is, the effect of CEO-CFO surname ties on AIC will be weakened in companies with multiple major shareholders or institutional investors’ site visits. The empirical test results obtained using a sample of Chinese-listed companies from 2007 to 2020 support most of our theoretical arguments. This study is the first to empirically test whether and when CEO-CFO surname ties affect AIC. The findings of this study bring important insights for shareholders to improve the quality of corporate governance and for policymakers to effectively improve the quality of information in capital markets.
... Promoting cooperation within a close-knit clan culture while maintaining the objectivity needed for a thorough and impartial audit is a challenging balancing act. Clan cultures, according to the Social Identity Theory, are characterized by strong group identities, which can lead to a sense of "us" and "them" when dealing with outside parties like auditors (Li et al., 2021;Rikhardsson et al., 2021). Auditors may be met with suspicion or suspicion about the intentions of members of a clan if they are seen as outsiders to their group. ...
... For auditors to establish effective communication channels and foster trust within the organizational setting of clan cultures, they must understand and manage this social identity dynamic (Alberti et al., 2022). Auditors may encounter in-group favoritism, cooperation, and other challenges as a result of the ways in which clan cultures shape the formation of strong group identities (Social Identity Theory) (Li et al., 2021). The interplay between this commonality and interactions with outside parties emphasizes the significance of auditors skillfully navigating the balance between fitting in with the group's culture and maintaining the independence and objectivity required for an exhaustive audit (Przybylska et al., 2021). ...
... When spending their time, they would rather work together within the company's more significant small circles (Xiong et al., 2021). According to the findings of research conducted by Li et al. (2021), if there is a strong culture of clans in the region, it is more likely that the suppliers of a company will share a surname with the actual shareholders of the company. The resources outside a company's inner circle are less critical when the inner circle is important (Li et al., 2021). ...
This research investigates the impact of clan cultures and special trust on audit fees within Chinese organizations, elucidating a unique cultural facet of financial oversight in the knowledge economy, innovation, and technology management. By integrating Social Identity Theory, Resource Dependency Theory, and Institutional Theory, the study examines how clan-based cultural dynamics influence auditor–client interactions and auditing practices, affecting audit fees independently of workload considerations. Utilizing quantitative data from 44,375 firms, our analysis reveals that clan cultures necessitate increased auditor effort and prolonged audit tenure, leading to inflated audit fees. This phenomenon underscores the importance of understanding cultural dimensions in the enhancement of audit quality and financial reporting integrity. The findings contribute to the knowledge economy by highlighting the interplay between cultural trust and organizational dynamics in financial oversight, proposing a need for culturally sensitive audit strategies that balance innovation and traditional values. This study not only enriches the literature on auditing and cultural studies but also offers practical insights for auditors, regulatory bodies, and organizations in culturally diverse contexts, advocating for the integration of entrepreneurship and knowledge management practices in auditing to navigate the complexities of clan cultures effectively.
... The clan culture is deeply rooted in China and cultivates a strong sense of identity among clan members (Cheng, et al., 2021;Li et al., 2021). Given that clan culture can elicit internal group identity (Li et al., 2021), it may interact with CEO locality to influence stock price crash risk. ...
... The clan culture is deeply rooted in China and cultivates a strong sense of identity among clan members (Cheng, et al., 2021;Li et al., 2021). Given that clan culture can elicit internal group identity (Li et al., 2021), it may interact with CEO locality to influence stock price crash risk. Clan members inherit a network-based sense of belonging and kinship with their clan group, and share a culture-based identity and preference (Cheng, et al., 2021). ...
... We follow extant literature (e.g., Cheng, et al., 2021;Li et al., 2021) to measure clan culture intensity (CLAN) as the number of local genealogies per 10,000 people in the log form for the city where the focal firm is listed. We collect the relevant data from the Chinese Research Data Services Platform. ...
Motivated by understanding of the under-studied issue of how non-cultural informal institutions influence stock price, our study examines whether CEOs working in their birthplaces reduce stock price crash risk in comparison with non-local CEOs. Our results based on a sample of Chinese listed firms during the period 2007-2019 show that local CEOs significantly lower firms’ stock price crash risk. Further analyses reveal that both clan culture and social trust strengthen the focal relationship. The study advances research on the role of non-cultural informal institutions in influencing stock price crash risk and offers valuable insights for both directors and investors.
... Since it is possible that Bloomberg has a limited overview of supplier data in China compared to a local service, we supplemented it with information from the QCC database. QCC is also widely used inside and outside the operations management literature (e.g., Guo et al., 2023;Li et al., 2021;N. Wang et al., 2023). ...
... From the history of ancient Chinese civilization to the history of the struggle for national independence and liberation to the exploration and construction of the socialist road, China's excellent traditional culture has provided rich materials for our cultural dissemination and exchanges, which are the foundation of the Chinese spirit, the Chinese system, and the theory and practice of China's social development, which have injected vitality and cohesion into the Chinese nation, and are the main source of cultural self-confidence for generations of Chinese [1][2][3][4]. China's excellent traditional culture is an outstanding advantage of the Chinese nation, and the long history of Chinese culture has demonstrated the wisdom of the Chinese nation at many levels and in different fields, which is not only an important reference for the construction of socialism with Chinese characteristics in the new era. ...
Based on the coupled communication of smart elderly care and traditional Chinese culture, this paper proposes four paths of coupled communication, including in-depth communication, innovative cultural forms of communication, precise communication, and promotion of coupled development. Two systematic index systems have been constructed to disseminate traditional Chinese culture and develop smart culture and pension. The data is standardized using principal component analysis to establish the correlation coefficient matrix. The coordination index between the two subsystems is calculated, and the coordination model of the two is created based on the concepts of coordination coefficient and coefficient of variation. The subject area, Province S, is in the third stage of the coupled coordinated development during 2010-2023, with traditional culture dissemination and smart elderly care services coming to a high level, and is in a good development level during 2016-2023, with a coupled coordination degree of 8 or more. Using the VAR model, the effect of coupling development on the quality of life of elderly individuals is analyzed. Impulse response analysis of LNCCD and LNQOE: after LNCCD receives a positive shock, LNQOE shows a sharp shock effect. At this time, the response value is 0.07021, which plays a large positive effect, and then enters into a smooth development. The traditional Chinese culture dissemination and the wisdom culture of old age are in the stage of coupled development.
... Li, H. et al. used the unique cultural root mechanism as an entry point to study the program of enterprise operation cost reduction. From a collected dataset of Chinese firms, it was found that family culture firms are prevalent, clan culture is unique to Asian corporate culture, and clan culture even has an impact on market regulation [10]. ...
China’s traditional cultural heritage is facing serious challenges under the impact of modern culture. The somatosensory interaction gestures for cultural relics are designed using the Kinect somatosensory interaction model in this paper. The appearance of virtual cultural relics can be designed and realized using a three-dimensional coordinate system. Combined with the method of digital projection, the interaction projection generated by the Kinect somatic interaction model is corrected by the geometric correction method, and the edge fusion algorithm is applied to correct and fuse the edges of the corrected virtual artifact appearance. Testing the effects of cultural inheritance and promotion in the 38 regions of the application is carried out through the application of the cultural relics interaction. According to the findings, the highest score for traditional culture inheritance among the 38 regions is 28.36, and four regions have inheritance scores above 20 points. In traditional culture promotion, the highest score region is close to 12 points, and the heritage interaction experience can make users feel the inherent culture of the heritage, which has a positive effect on traditional culture inheritance and promotion.
... From the perspective of cultural integration, digital media technology is flexibly utilized to highlight the openness and narrativity of folk culture, strengthen the people's experience of folk culture, and ensure the authenticity of their feelings [2][3]. To make them psychologically recognize the folk culture, and love and rely on the national culture, based on which they can give full play to their creativity and innovation, and realize the living conservation in the real sense [4]. However, digital technology in the specific use of the process more or less there will be certain defects and shortcomings, in the role of its value at the same time must be used to avoid the risk of practical strategies and means. ...
Digital media animation can better promote folk culture inheritance and innovation, and at the same time, folk culture also provides rich inspiration materials and cultural elements for the creation of digital media animation. In this paper, the mathematical structure of the threshold regression model is first sorted out, and the parameters of the model are estimated by using the search method and the smooth least squares method. Secondly, it analyzes the promotion effect of digital media animation on the dissemination of folk culture, takes the 2D animated short film “Red Bank” as a research example, and designs a questionnaire to obtain the research data. Finally, the benchmark regression model and threshold regression model were established with folk culture dissemination as the dependent variable, and benchmark regression, robustness test, and threshold effect verification were conducted. The results show that the audiovisual language, creation method, and display medium of digital media animation are significantly correlated with folk culture dissemination at 1% level, and its R2 fit value reaches 0.7439. The level of development of digital media technology has an obvious double-threshold effect on the dissemination of folk culture, and its double-threshold value is 1.028 and 2.251 respectively. Digital media animation can enhance the dissemination medium of folk culture, expand the dissemination medium, and improve the quality of folk culture. Communication media and enhance the influence of folk culture.
... As an important part of Chinese traditional culture, ancient Chinese literature is the essence of five thousand years of Chinese civilization and promotes Chinese traditional culture that cannot be ignored [7]- [8]. Ancient literature not only has a positive effect on students' oral expression but also spreads traditional culture through subtle learning, which increases students' literary literacy and respect for traditional culture [9]- [10]. Moreover, the teaching of ancient literature integrated with traditional culture is intellectual, aesthetic, and interesting, and with the correct and appropriate guidance of teachers, it can better stimulate students' enthusiasm for learning traditional culture [11]- [12]. ...
The research on the integration of traditional culture into the teaching of ancient literature courses in colleges and universities is to be able to inherit better and develop traditional Chinese culture. In this paper, the hyperparameters of the XGBoost algorithm are optimized using the sparrow search optimization algorithm in the context of big data, which leads to the SSA-XGBoost analysis model. The basic content, characteristics and contemporary values of traditional culture are analyzed in detail, and the SSA-XGBoost analysis model is used to analyze and demonstrate the teaching principles and methods of the traditional culture integration ancient literature course. From the viewpoint of teaching principles, the intuitive principle has the largest growth rate of 10.99%. In terms of teaching methods, the most popular teaching method was the activity-assisted method, with 41.8%. Thus, teaching traditional culture integrated with ancient literature courses needs to pay attention to the choice of teaching methods and principles to make it more acceptable to students and thus promote the development of traditional culture transmission.
... In recent years, a growing body of literature has shown that clan culture is closely related to business. Clan culture has been found to contribute significantly to companies' economic performance (Yazici, 2011), network stability (Huang et al., 2022), financing channel development (Pan et al., 2019), and supply chain cooperation (Li et al., 2021a(Li et al., , 2021b. Moreover, the cultural environment has been found to be an important factor promoting corporate information disclosure, including financial and sustainability information (García-Sánchez et al., 2020). ...
With the problems of climate warming and ecological destruction becoming more and more serious, natural risks have attracted more and more attention, and corporate natural resource disclosure has gradually become a focal topic in academia. Therefore, based on the institutional theory and the upper echelon theory, this study selects 348 Chinese natural resource-based listed companies in Shanghai and Shenzhen stock markets from 2014 to 2021 as samples to investigate the influence of clan culture on corporate natural resource disclosure and the moderating effect of natural resource endowment on the relationship between the two, and analyzes the heterogeneity from the two aspects of the workplace and growth experience of corporate executives. The results indicate that clan culture has a significant positive effect on corporate natural resource disclosure. Natural resource endowment can negatively moderate the effect of clan culture on corporate natural resource disclosure. The positive effect of clan culture on the quality of corporate natural resource disclosure is significant when executives work in their birthplace or are born before the Cultural Revolution, but it is not significant when executives do not work in their birthplace or are born after the Cultural Revolution. These findings help to extend the analysis of the influence of informal institutions on information disclosure, providing a reference for future research on natural resource disclosure and informal institutions in developing countries.
... Clan culture is frequently characterized as a particularly welcoming workplace (Xie et al., 2020;Li et al., 2021;Shaked, 2021;Huang et al., 2022). It resembles a large family. ...
This study investigates the impact of corporate social responsibility (CSR) on firm reputation and organizational citizenship behavior, along with the mediating inclusion of organic organizational cultures (Clan and Adhocracy) in the medium and large enterprises of Pakistan. To do the path analysis and to investigate the mediating role of organic organization culture, Smart PLS was used. For data collection, the convenience sampling technique was used and responses from 360 questionnaires were the main data source. The results displayed that CSR has a significant and optimistic effect on a firm reputation and employees’ organizational citizenship behavior (OCB). Secondly, the outcomes showed a positive and full mediation effect of organic organizational cultures between CSR and firm reputation but a partial mediation effect of organic organizational cultures between CSR and employees OCB. Further, the results demonstrated a positive and significant influence of employees’ OCB on a firm reputation. The extensive analysis of all factors of the study was autonomously examined to identify the insights that verify how the inclusion of organic organizational cultures can boost the firm reputation and employees’ OCB. Theoretical implications and future research direction are discussed.
Purpose
This study seeks to fill a gap in the literature by examining the role of family firm succession in shaping the firm's approach to financialisation, which has received limited attention in the previous research. In addition, the study explores the influence of factors such as clan culture, concentration of control and generational differences on the relationship between succession and financialisation.
Design/methodology/approach
Data were based on a sample of 7,023 firm-year observations, compiled from the listed family firms in China's A-share. Several tobit models are used for analysing the data and testing the hypotheses.
Findings
Family firm succession is negatively related to the level of financialisation, and this relationship is influenced by clan culture, concentration of control and the stage of succession. Specifically, a higher clan culture, a greater concentration of ultimate control by the controlling family member and the dominance of the first generation in management strengthens the negative relationship between family firm succession and financialisation.
Originality/value
This study offers new insights into the consequence of family firm succession on a new area of the firm's strategy, i.e. financialisation. The study further advances the understanding of family firm succession by considering the role of clan culture, the concentration of control and the stage of the succession process.
Research Question/Issue
Using data on Chinese listed state‐owned enterprises (SOEs), this study examines the impact of board surname sharing on firms' investment efficiency.
Research Findings/Insights
We find that surname sharing among a firm's board of directors is positively associated with its investment efficiency. The main result continues to hold when using alternative measures and accounting for endogeneity. Specifically, we show higher surname homogeneity mitigates agency costs and information asymmetry. Taken together, this evidence supports the view that board surname sharing is conducive to effective communications in the boardroom, thus enhancing board effectiveness and collective decision‐making among board members.
Theoretical/Academic Implications
With the theory of social identity, the literature presents two opposing views on the impact of group identity on corporate behaviors. One view focuses on the cost of favoritism bias and coalition while the other view illustrates the benefits of group coordination and communication. We shed light on this debate by documenting that the group identity of surname sharing might increase corporate investment efficiency. To our knowledge, this is the first study providing evidence that social identity benefits board decision‐making.
Practitioner/Policy Implications
Our findings have implications for formulating the “best practice” on executive selection and boosting board composition. In addition to structural factors and procedural rules, shareholders and policymakers may need to carefully consider creating the climate of a robust social system of the board to ensure a virtuous cycle of trust and outspokenness, especially when dealing with the problems of passive monitoring.
Teacher burnout is a psychological syndrome affecting many teachers across the globe. Therefore, numerous studies have investigated antecedents of teacher burnout in order to provide recommendations to alleviate it. Although the studies pay attention to either the role of environmental factors, such as school culture, or individual factors, such as gender, in contributing to teacher burnout, they less frequently examine how teacher burnout is concurrently influenced by both factors. Thus, this study aims to understand the relationship between clan culture and burnout by examining the mediation effect of emotional labor and the moderating effect of gender. A sample of 467 primary and secondary schoolteachers from China participated in this study. The result demonstrated the following: (1) clan culture was negatively related to teacher burnout; (2) deep acting mediated the relationship between clan culture and teacher burnout, while surface acting did not; (3) the mediating effect of deep acting was only significant in the female group of teachers, not the male group.
Building new space for institutional theory, we propose how the severity of formal and informal institutional voids shapes the productivity of entrepreneurial activities within society. Our theory makes the key assumptions that voids can exist in both formal and informal institutions and that they are capable of hindering entrepreneurial behavior that is favorable to development progress. We extend new theoretical domains by conceptualizing informal institutional voids and proposing how both formal and informal institutional voids and their interaction influence two qualitative outcomes within localities: (1) the unique forms of entrepreneurial activity, and (2) the objectives underlying this entrepreneurial activity.
This study examines the influence of auditor-CEO surname sharing (ACSS) on financial misstatement and further investigates whether the above effect depends on hometown relationship and the rarity of surnames, respectively. Using hand-collected data from China, the findings show that ACSS is significantly positively related to financial misstatement, suggesting that the auditor-CEO ancestry membership elicits the collusion and increases the likelihood of financial misstatement. Moreover, ACSS based upon hometown relationship leads to significantly higher likelihood of financial misstatement, compared with ACSS without hometown relationship. Furthermore, the positive relation between ACSS and financial misstatement is more pronounced for rare surnames than for common surnames. The above findings are robust to sensitivity tests on the basis of different measures of ACSS and financial misstatement, and my conclusions are still valid after using the propensity score matching approach to address the endogeneity concerns.
We provide an empirical and theoretical assessment of the value of information sharing in a two-stage supply chain. The value of downstream sales information to the upstream firm stems from improving upstream order fulfillment forecast accuracy. Such an improvement can lead to lower safety stock and better service. Based on the data collected from a consumer packaged goods company, we empirically show that, if the company includes the downstream sales data to forecast orders, the improvement in the mean squared forecast error ranges from 7.1% to 81.1% across all studied products. Theoretical models in the literature, however, suggest that the value of information sharing should be zero for over half of our studied products. To reconcile the gap between the literature and the empirical observations, we develop a new theoretical model. Whereas the literature assumes that the decision maker strictly adheres to a given inventory policy, our model allows him to deviate, accounting for private information held by the decision maker, yet unobservable to the econometrician. This turns out to reconcile our empirical findings with the literature. These “decision deviations” lead to information losses in the order process, resulting in a strictly positive value of downstream information sharing. Furthermore, we empirically quantify and show the significance of the value of operations knowledge—the value of knowing the downstream replenishment policy.
Homophily—individuals’ affinity for others like them—is a powerful principle that governs whose opinions people attend to. Using nearly 2,400 advisory meetings, we find that homophily has a significant positive impact on the likelihood of following financial advice. The increased likelihood of following stems from homophily on gender and age for male clients and from sameness on marital and parental status for female advisees. Moreover, the homophily effect is mitigated by reduced information asymmetry between client and advisor and a long-term relationship with the bank. Our results suggest that client-advisor matching increases individuals’ propensity to follow financial advice.
This study explores cultural influence on corporate behavior employing the case of merchant guild culture in China and further the moderating role of Marketization. Using hand-collected data on merchant guild culture, we find that merchant guild culture is significantly negatively associated with owner-manager agency costs, suggesting that merchant guild culture in ancient China still has its continuous and remarkable effects on managerial behavior in contemporary corporations. This finding also implies that merchant guild culture motivates managers to upgrade the efficiency of controlling operating costs, reduces agency conflicts between management and shareholders, and eventually mitigates owner-manager agency costs. Moreover, provincial Marketization level attenuates the negative association between merchant guild culture and owner-manager agency costs. Above results are robust to a variety of alternative measures of merchant guild culture and owner-manager agency costs. Furthermore, our findings are still valid after controlling for the potential endogeneity between merchant guild culture and owner-manager agency costs.
We integrate social exchange and social identity perspectives to propose and test the prediction that depending on their level of organizational identification, people may reciprocate the received organizational support using different “currencies of exchange” – reducing turnover intentions or, instead, engaging in extra-role behavior. Specifically, the relationship of perceived organizational support (POS) with turnover intentions is proposed to be stronger with lower identification, whereas POS is proposed to be more closely related to extra-role behavior with higher organizational identification. These predictions were supported in a cross-sectional survey of N = 1000 employees of a financial services firm. These results speak to the added value of integrating the social exchange perspective with its roots in applied psychology and the social identity perspective with its roots in social psychology in understanding the employee-organization relationship
Population density--the number of organizations of a particular type--has been used to study the effects of legitimation and conception on rates of organizational founding and failure. We investigate the influence of population density and relational density--the number of ties between organizations and their institutional environment--on founding and failure rates in a population of day care centers. Findings suggest that embeddedness in the institutional environment underlies the legitimating effects of initial population growth and the improved survival capabilities of a population of organizations in the long run.
Interview data from China are used to test an argument that executives develop personal connections in societies with underdeveloped legal support for private businesses. In China, such connections are called guanxi. An underdeveloped legal framework makes private-company executives more dependent on guanxi than executives in state-owned or collective-hybrid companies. Compared to the other executives, private-company executives considered business connections more important, depended more on connections for protection, had more government connections, gave more unreciprocated gifts, and trusted their connections more.
We develop a formal model to understand the selection and influence effects of social proximity (homophily) between business partners. Consistent with the model's predictions, we find that U.S. venture capitalists (VCs) are more likely to select start-ups with coethnic executives for investment, particularly when the probability of the start-up's success appears low. Ethnic proximity between VCs and the start-ups they invest in is positively related to performance, measured by the probability of the companies' successful exit through acquisitions and initial public offerings (IPOs) and net income after IPO. Two-stage regression estimates suggest that these positive performance outcomes are largely due to influence, that is, superior communication and coordination between coethnic VCs and start-up executives after the investment. To the extent that VCs expect to work better with coethnic start-ups, they invest in coethnic ventures that are of lower observable quality than noncoethnic ventures.
This paper was accepted by Lee Fleming, entrepreneurship and innovation.
This study of the procurement relationships of two major U.S. auto manufacturers examines the effects of two dimensions of organizational interdependence on the performance of those relationships for the manufacturer: dependence asymmetry, the difference in actors' dependencies on each other in a dyadic exchange relationship, and joint dependence, the sum of dependence between actors in the relationship. Rather than focusing solely on dependence advantage and the concomitant logic of power, we focus on joint dependence, which operates through a logic of embeddedness. We examine how the effect of joint dependence on performance is mediated by specific elements of embeddedness: joint action, trust, and the quality and scope of information exchange. Results show that joint dependence enhances the performance of procurement relationships for manufacturers and that this effect is partially mediated by the level of joint action and the quality of information exchange between the partners. Decomposing dependence asymmetry into the conditions of a manufacturer's and a supplier's dependence advantage, we also find that while the manufacturer's dependence advantage diminishes its performance, the supplier's dependence advantage has a null effect. We discuss the implications of these findings for studies of interorganizational interdependence.
China and Russia represent major economies in transition from command economies, yet their paths to the market have differed greatly. Their divergent approaches have helped create distinct institutional environments. This study focuses on a particularly important strategic decision firms face-alliance partner selection. The study's results suggest that China's more stable and supportive institutional environment has helped Chinese firms take a longer-term view of alliance partner selection, focusing more on the potential partner's intangible assets along with technological and managerial capabilities. In contrast, the less stable Russian institutional environment has influenced Russian managers to focus more on the short term, selecting partners that provide access to financial capital and complementary capabilities so as to enhance their firms' ability to weather that nation's turbulent environment. This study contributes to knowledge about the influence of the institutional environment on alliance partner selection decisions for firms domiciled in transition (and emerging) economies.
This paper theoretically refines and empirically extends the debate on the type of interplay between relational experience and contractual governance in an under-researched area: supply chain disputes. We define relational experience as either cooperative or competitive; distinguish between control and coordination functions of contractual governance; and assess their interplay on the negotiation strategy used in disputes. Using a unique data set of buyer-supplier disputes, we find, in particular, that increasing contractual control governance weakens the positive effect of cooperative relational experience on cooperative negotiation strategy. However, increasing contractual control governance for a buyer-supplier dyad with competitive relational experience will increase cooperative negotiation strategy. Contractual coordination governance reinforces the positive effect of cooperative relational experience. Through this study, we reach a better understanding of how and when contractual and relational governance dimensions interact; rather than whether they act as substitutes or complements as has been studied in prior research. We discuss the implications of these findings for the field of supply chain management.
This chapter aims at investigating whether CEO-director surname connectedness (CDSC) affects corporate misconduct, and further examines the moderating effect of the popularity of the CEO’s surname. The findings reveal that CEO-director surname connectedness is significantly negatively associated with the likelihood of corporate misconduct, suggesting that the shared surname between the CEO and directors strengthens the internal cohesion on corporate boards, reduces owner-manager agency conflicts, and eventually mitigates the risk of corporate misconduct. Moreover, the popularity of the CEO’s surname attenuates the negative association between CEO-director surname connectedness and corporate misconduct. Furthermore, above findings are robust to a variety of sensitivity tests using alternative measures of CEO-director surname connectedness and corporate misconduct, and above conclusions are still valid after addressing the endogeneity concern. Finally, subsample tests show that the mitigating effect of CEO-director surname connectedness on corporate misconduct only stands for firms in provinces with higher marketization indexes (higher institutional ownership) and non-state-owned enterprises.
Purpose
Online B2B markets offer buyers a new source of information provided by social media signals about suppliers. These signals have not yet received much attention in the supplier selection literature. This study advances our understanding of how buyers respond to social media signals in the supplier selection process.
Design/methodology/approach
We develop a choice-based conjoint experimental design to isolate and manipulate two signals from social media: volume (the number of ratings) and valence (average evaluation of the ratings). We test how these signals are interpreted in the context of varying deal sizes and price points.
Findings
Both volume and valence are positively correlated with supplier selection. However, (1) the signals exhibit diminishing returns and (2) the efficacy of valence is interpreted in the context of volume. We also find that (3) there is no influence of the deal size and that (4) the relationships between signals and supplier selection are negatively moderated by deviations from the reference price.
Research limitations/implications
Social media signals should be considered in supplier selection decisions as they convey valuable information to the buyer. However, signals go through a process of interpretation which has implications for buyers, suppliers, and owners of online B2B markets.
Originality/value
Our research opens new lines of inquiry in behavioural operations management research regarding the mechanisms by which buyers interpret social media signals and how these ultimately influence their choice.
In this study, we investigate how informal institutions, namely, chief executive officers' hometown connections with suppliers, impact firms' access to trade credit. Using unique data manually collected from China, we find that hometown connections significantly increase access to trade credit. The hometown effect is more pronounced for non-state-owned firms, firms in provinces with poorly developed financial institutions, and firms whose chief executive officers come from hometowns with a strong merchant guild culture or hold an important position in the hometown's chamber of commerce. We suggest two plausible channels for the hometown effect: information and social trust. Overall, this study contributes to the literature by documenting how hometown connections help firms to obtain external financing in emerging markets.
This paper examines the role of clans in China's unprecedented development of the private sector. Although with no well-developed financial and legal systems, China witnesses a boom of private sector, which has contributed to most of its economic growth during the past three decades. Using inter-census population survey and economic census data, I find that the clan is positively associated with the likelihood of entrepreneurship and the share of economy in the private sector. Exploring possible mechanisms, I find that the clan helps privately-owned enterprises overcome financing constraints and escape from local government's “grabbing hand”. In addition, the clan is significantly related to a set of individual values, which are arguably relevant for private business. Finally, I find that the support of clans for private business is limited as clans deter private businesses from growing into large firms. The results also suggest that the role of clans reduces as formal institutions develop.
Individual preferences for same-ethnic friends contribute to persistent segregation of adolescents’ friendship networks. Yet, we know surprisingly little about the mechanisms behind ethnic homophily. Prior research suggests that ethnic homophily is ubiquitous, but a social identity perspective indicates that strong ingroup identification drives ingroup favoritism. Combining a social identity perspective with a relational approach, we ask whether the presumed increased homophily of high identifiers extends to all ingroup members, or whether it is conditional on the strength of same-ethnics’ identification. We propose that the strength of ethnic identification affects not only how much individuals desire same-ethnic friends, but also how attractive they are as potential friends to others. Fitting stochastic actor-oriented models to German adolescent school-based network panel data, we find that ethnic homophily is driven by an interplay of peers’ ethnic identification: high identifiers befriend same-ethnic peers who share their strong ethnic identification, while excluding same-ethnic low identifiers. Low identifiers, in turn, tend to avoid befriending inter-ethnic high identifiers. Our relational approach reveals that ethnic homophily is hardly ubiquitous but requires strong identification of both parties of a (potential) friendship.
Despite significant interest in corporate culture, there is little empirical research on its role in influencing corporate misconduct. Using cultural background information on key company insiders, I construct a measure of corporate corruption culture, capturing a firm's general attitude toward opportunistic behavior. Firms with high corruption culture are more likely to engage in earnings management, accounting fraud, option backdating, and opportunistic insider trading. I further explore the inner workings of corruption culture and find evidence that it operates both as a selection mechanism and by having a direct influence on individual behavior.
We investigate how personal characteristics affect people's desire to collaborate and whether this attraction enhances or detracts from performance in venture capital. We find that venture capitalists who share the same ethnic, educational, or career background are more likely to syndicate with each other. This homophily reduces the probability of investment success, and the detrimental effect is most prominent for early-stage investments. A variety of tests show that the cost of affinity is most likely attributable to poor decision making by high-affinity syndicates after the investment is made. These results suggest that "birds-of-a-feather-flock-together" effects in collaboration can be costly.
We propose a new methodology for measuring intergenerational mobility in economic well-being. Our method is based on the joint distribution of surnames and economic outcomes. It circumvents the need for intergenerational panel data, a long-standing stumbling block for understanding mobility. It does so by using cross-sectional data alongside a calibrated structural model to recover the traditional intergenerational elasticity measures. Our main idea is simple. If “inheritance” is important for economic outcomes, then rare surnames should predict economic outcomes in the cross-section. This is because rare surnames are indicative of familial linkages. If the number of rare surnames is small this approach will not work. However, rare surnames are abundant in the highly skewed nature of surname distributions from most Western societies. We develop a model that articulates this idea and shows that the more important is inheritance, the more informative will be surnames. This result is robust to a variety of different assumptions about fertility and mating. We apply our method using the 2001 census from Catalonia, a large region of Spain. We use educational attainment as a proxy for overall economic well-being. A calibration exercise results in an estimate of the intergenerational correlation of educational attainment of 0.60. We also find evidence suggesting that mobility has decreased among the different generations of the 20th century. A complementary analysis based on sibling correlations confirms our results and provides a robustness check on our method. Our model and our data allow us to examine one possible explanation for the observed decrease in mobility. We find that the degree of assortative mating has increased over time. Overall, we argue that our method has promise because it can tap the vast mines of census data that are available in a heretofore unexploited manner.
Recent work in cognitive psychology and social cognition bears heavily on concerns of sociologists of culture. Cognitive research confirms views of culture as fragmented; clarifies the roles of institutions and agency; and illuminates supra-individual aspects of culture. Individuals experience culture as disparate bits of information and as schematic structures that organize that information. Culture carried by institutions, networks, and social movements diffuses, activates, and selects among available schemata. Implications for the study of identity, collective memory, social classification, and logics of action are developed.
This study of the international partner selection of firms from emerging (Mexico, Poland, and Romania) and developed (Canada, France, and the United States) markets supports resource-based and organizational learning explanations of such partner selection, a critical factor for success with international strategic alliances. Emerging market firms emphasized financial assets, technical capabilities, intangible assets, and willingness to share expertise in selection of partners more than developed market firms. In contrast, developed market firms tried to leverage their resources through partner selection. In particular, they emphasized unique competencies and local market knowledge and access in their partner selection more than emerging market firms.
Do informal institutions, rules and norms created and enforced by social groups, promote good local governance in environments of weak democratic or bureaucratic institutions? This question is difficult to answer because of challenges in defining and measuring informal institutions and identifying their causal effects. In the paper, we investigate the effect of lineage groups, one of the most important vehicles of informal institutions in rural China, on local public goods expenditure. Using a panel dataset of 220 Chinese villages from 1986 to 2005, we find that village leaders from the two largest family clans increased local public investment considerably. This association is stronger when the clans appeared to be more cohesive. We also find that clans helped local leaders overcome the collective action problem of financing public goods, but there is little evidence suggesting that they held local leaders accountable.
To explain the extremely long-term persistence (more than 500 years) of positive historical experiences of cooperation (Putnam 1993), we model the intergenerational transmission of priors about the trustworthiness of others. We show that this transmission tends to be biased toward excessively conservative priors. As a result, societies can be trapped in a low-trust equilibrium. In this context, a temporary shock to the return to trusting can have a permanent effect on the level of trust. We validate the model by testing its predictions on the World Values Survey data and the German Socio Economic Panel. We also present some anecdotal evidence that differences in priors across regions are reflected in the spirit of the novels that originate from those regions.
Over the last millennium, the clan and the corporation have been the loci of cooperation in China and Europe respectively. This paper examines – analytically and historically – the cultural and institutional co-evolution that led to this bifurcation. We highlight that groups with which individuals identify are basic units of cooperation. Such loyalty groups in ‡uence institutional development because intra-group moral commitment reduces enforcement cost implying a comparative advantage in pursuing collective actions. Loyalty groups perpetuate due to positive feedbacks between morality , institutions, and the implied pattern of cooperation. Xing for comments. We particularly bene…ted from the generosity of Ying Bai and James Kai-sing Kung who directed us to the data regarding China, and we are extremely grateful to to George Zhijian Qiao (Stanford University) and Prof. Hongzhong Yan (chair of the economic history department in Shanghai University of Finance and Economics) for valuable discussions and for the dataset on Chinese genealogies.
With emphasis on a venture’s institutional environment and its stage of development, the authors develop theory to explain how the quality of a nation’s legal system and the level of political hazards affect venture capital (VC) investment strategies in developing countries. The data set consists of 433 VC investment transaction rounds occurring in 13 Latin American countries over the period 1995 to 2003. Different from previous research on the likelihood of investment occurrence, the authors consider the size of an investment transaction as a dependent variable. The authors find a negative relationship between investment size and the political hazards risk and that larger investments are associated with ventures operating in lower quality legal systems. The authors also propose the moderating role of these institutional dimensions in the relationship between a venture’s stage of development and investment size. Findings indicate that in lower quality legal systems, conventional VC-staging strategies are not apparent, where middle and later stage ventures receive the largest investments, but with improvements to the legal system, increasingly larger investments go to early stage ventures. Regarding the stage interaction with political hazards, the authors find that the positive relationship between the venture’s stage of development and investment size weakens as the level of political hazards increases, and when political hazards are high, conventional VC-staging similarly does not occur. In uncovering the unique impact of these institutional dimensions with respect to developing country entrepreneurship, these findings shed light on the acute challenges faced by developing country ventures seeking VC funding at varying stages of development.
In China, Buddhism and Taoism are two major religions. Using a sample of 10,363 firm-year observations from the Chinese stock market for the period of 2001–2010, I provide strong and robust evidence that religion (i.e., Buddhism and Taoism on the whole) is significantly negatively associated with owner-manager agency costs. In particular, using firm-level religion data measured by the number of religious sites within a radius of certain distance around a listed firm’s registered address, I find that religion is significantly negatively (positively) associated with expense ratio (asset utilization ratio), the positive (reverse) proxy for owner-manager agency costs. This finding is consistent with the following view: religiosity has remarkable effects on the way how an individual thinks and behaves, and thereof can curb managers from unethical business practices. Moreover, my findings suggest that the negative association between religion and owner-manager agency costs is attenuated for firms with strong external monitoring mechanisms such as higher Marketization and high-quality auditors. Furthermore, after separating Buddhism from Taoism, my finding indicates that above conclusions are only available for Buddhism, suggesting that different religions may have asymmetric influence on owner-manager agency costs. Above results are robust to various measures of religiosity and a variety of robustness checks.
In this paper, we examine whether a firm’s relationship with its principal customers/suppliers affects its payout policies. A firm has customer-supplier relationships when its business depends on a small number of major customers/suppliers. The extant literature indicates two channels through which customer-supplier relationships might negatively affect a firm’s dividend payments: 1) the high financial distress costs associated with relationship-specific investments and 2) the information certification effect of the principle customer. Consistent with expectations, our study reveals a negative relationship between a firm’s dependence on customer-supplier relationships and its dividend payments. This result is robust to various model specifications and consistent with evidence regarding the time-series properties of dividends. Moreover, we find that high financial distress costs associated with relationship-specific investments are the key channel through which a firm’s customer-supplier relationship affects its dividend payments. Overall, our results suggest that a firm’s relationship with its non-financial stakeholders, such as principal customers/suppliers, is an important determinant of its shareholders’ income.
which the relationships are not exact, so that a set of ideal economic variables is assumed to be generated by a set of dynamic stochastic relationships, as in Koopmans [12], and the actual economic time series are assumed to differ from the ideal economic variables because of random disturbances or measurement errors. The asymptotic error variance matrix for the coefficients of one of the relationships is obtained in the case in which these relationships are estimated using instrumental variables. With this variance matrix we are able to discuss the problem of choice that arises when there are more instrumental variables available than the minimum number required to enable the method to be used. A method of estimation is derived which involves a characteristic equation already considered by Hotelling in defining the canonical correlation [10]. This method was previously suggested by Durbin [7]. The same estimates would be obtained by the maximum-likelihood limited
This study tests social identity theory and realistic conflict theory by examining intra- and intergroup relations in a team-based community-health care organization. The relationships between people’s patterns of identification (with their work group and with the organization) and their perceptions of intergroup competition for scarce resources are related to in-group favoritism. Questionnaire data gathered from 112 participants, who were members of 17 work groups within the organization, reveal that strong identification with the work group rather than the organization is related to high levels of in-group favoritism, thus supporting the relevance of social identity theory in an organizational setting. In-group identification did not predict between-group discrimination in resource distribution, although such discrimination was demonstrated. We suggest that in applied settings the factors influencing social behavior are more complex than in laboratory studies but that social identity theory has clear practical importance for understanding and influencing the effectiveness of team-based organizations.
Observes that strategic alliances continue to be an important research and business focus. Many firms struggle with how to link alliance theory with actual practice. In particular, managers question how long-term commitment between alliance partners is developed and achieved. Traditional business practice has relied primarily on formal written contracts, but informal social contracts or verbal agreements are also utilized. Examines the role of formal and informal contracts in positioning alliances for long-term success. Findings indicate that extremely successful alliances exhibited informal social contracts regardless of whether or not formal written contracts were included in the relationship. In other words, while a written contract may initially serve as an agreement to collaborate, the partners’ actions signify long-term commitment to the alliance. This has important managerial implications for how key contacts in the alliance develop co-operation, trust and loyalty which illustrates the strength of the informal contract.
This article presents a critical review of Social Identity Theory. Its major contributions to the study of intergroup relations are discussed, focusing on its powerful explanations of such phenomena as ingroup bias, responses of subordinate groups to their unequal status position, and intragroup homogeneity and stereotyping. In addition, its stimulative role for theoretical elaborations of the Contact Hypothesis as a strategy for improving intergroup attitudes is noted. Then five issues which have proved problematic for Social Identity Theory are identified: the relationship between group identification and ingroup bias; the self-esteem hypothesis; positive – negative asymmetry in intergroup discrimination; the effects of intergroup similarity; and the choice of identity strategies by low-status groups. In a third section a future research agenda for the theory is sketched out, with five lines of enquiry noted as being particularly promising: expanding the concept of social identity; predicting comparison choice in intergroup settings; incorporating affect into the theory; managing social identities in multicultural settings; and integrating implicit and explicit processes. The article concludes with some remarks on the potential applications of social identity principles. Copyright © 2000 John Wiley & Sons, Ltd.
Purpose
The purpose of this paper is to reveal how Chinese private entrepreneurs behaved in a transition economy with a weak institutional environment to obtain organizational legitimacy.
Design/methodology/approach
Drawing on five consecutive nation‐wide surveys from 1997 to 2006 in China, the study provides empirical evidence and theoretical explanation on private entrepreneurs' behaviors in obtaining organizational legitimacy in China's transition economy.
Findings
The paper finds that the institutional environment in China's transition economy for private firms was weak. Specifically, weak property protection and Three Payouts showed a high risk of property confiscation for private firms; an under‐developed (discriminatory) financial system and a weak credit system had been big obstacles for the development of private firms, which resulted in debt chain among firms, a substitution for the weak financial system. Under such a hostile institutional environment where firms have been facing a high risk of organizational legitimacy, private entrepreneurs have great willingness to connect with government officers, participate in PC or CPPCC which are likely be politically connected, employ isomorphism in organizational structure, apply government‐oriented corporate social responsibility behaviors, on which they depend to obtain organizational legitimacy in transitional economy.
Originality/value
The paper exhibits the institutional environment in the past ten years in China's transition economy, and proposes the likely ways in which private entrepreneurs choose to establish legitimacy under a weak institutional environment.
The paper reviews the literature on supply partner decision-making published between 2001 and 2011, a period that has seen a significant increase in work published in this field. The progress made in developing new models and methods that can be applied to this task is assessed in the context of the previous literature. Particular attention is given to those methods that are especially relevant for use in agile supply chains. The paper uses a classification framework that enables models intended for similar purposes to be compared and tracked over time. It is also used to identify a number of gaps in the literature. The findings highlight an on-going need to develop methods that are able to meet the combination of qualitative and quantitative objectives that are typically found in partner selection problems in practice.
This research draws insights from two theoretical traditions: one is new institutionalism, which emphasizes the role of institutions, both formal and informal, in economic growth; the other is social network analysis, which highlights the role of interpersonal relations in producing and enforcing informal norms. Integrating these two approaches yields the thesis that social networks affect economic growth via enforcing informal institutions. The article focuses on the economic payoff of kinship networks in the context of China's rural industrialization to argue that kin solidarity and kin trust played an important role in protecting the property rights of private entrepreneurs and reducing transaction costs during the early stages of market reform, when formal property rights laws were ineffective and market institutions underdeveloped. Data from 366 villages show that the strength of kinship networks has large positive effects on the count and workforce size of private rural enterprises and insignificant effects on collective enterprises.
We provide an empirical and theoretical assessment of the value of information sharing in a two-stage supply chain. The value of downstream sales information to the upstream firm stems from improving upstream order fulfillment forecast accuracy. Such an improvement can lead to lower safety stock and better service. Based on the data collected from a consumer packaged goods company, we empirically show that, if the company includes the downstream sales data to forecast orders, the improvement in the mean squared forecast error ranges from 7.1% to 81.1% across all studied products. Theoretical models in the literature, however, suggest that the value of information sharing should be zero for over half of our studied products. To reconcile the gap between the literature and the empirical observations, we develop a new theoretical model. Whereas the literature assumes that the decision maker strictly adheres to a given inventory policy, our model allows him to deviate, accounting for private information held by the decision maker, yet unobservable to the econometrician. This turns out to reconcile our empirical findings with the literature. These “decision deviations” lead to information losses in the order process, resulting in a strictly positive value of downstream information sharing. Furthermore, we empirically quantify and show the significance of the value of operations knowledge—the value of knowing the downstream replenishment policy.
This paper was accepted by Serguei Netessine, operations management.
World politics is entering a new phase, in which the great divisions among humankind and the dominating source of international conflict will be cultural. Civilizations - the highest cultural groupings of people - are differentiated from each other by religion, history, language and tradition. These divisions are deep and increasing in importance. From Yugoslavia to the Middle East to Central Asia, the fault lines of civilizations are the battle lines of the future. In this emerging era of cultural conflict the United States must forge alliances with similar cultures and spread its values wherever possible. With alien civilizations the West must be accommodating if possible, but confrontational if necessary. In the final analysis, however, all civilizations will have to learn to tolerate each other.
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