The Innovation Potential of Confucian Culture:Evidence from Chinese Family Firms
Enterprises,serving as the building blocks of the national economy and the organizational cells of society,play a pivotal role not only as key participants and drivers in the construction of an innovative nation but also as important inheritors and promoters of Chinese traditional culture.To effectively promote and empower Chinese enterprises in actively embracing and practicing these dual critical missions,it is essential to thoroughly explore and elucidate the intricate connection between Chinese traditional culture and business innovation on both theoretical and practical fronts.Existing literature indicates that corporate culture is a significant factor influencing innovation,capable of igniting a company's innovative initiatives.However,the cultural fabric of any organization inherently mirrors the essence of the national cultural traditions in which it is rooted.Particularly for Chinese enterprises steeped in Confucian principles,the ethos of"preserving tradition alongside pursuing innovation"stands as a fundamental spiritual compass that propels forward-thinking initiatives.Hence,it is imperative to methodically scrutinize and assess the influence of Confucian culture on business innovation.In response to this theoretical necessity,this paper endeavors to conduct an in-depth analysis and examination of the relationship between Confucian culture and business innovation within the context of Chinese family businesses.Through the validation of 7620 observational samples from listed companies on the A-share market in China,the findings reveal that Confucian culture significantly enhances the innovation input of family businesses.There exists a mutual substitution effect between formal systems and Confucian culture in promoting innovation input in family businesses.Foreign cultures tend to weaken the positive impact of Confucian culture on innovation input in family businesses.Moreover,the promoting effect of Confucian culture on innovation in family businesses is more pronounced in samples where the owning family has male offspring.Delving into the underlying mechanisms,the research identifies three pathways through which Confucian culture shapes innovation inputs in family businesses:restraining controlling families from pursuing restricted socioemotional wealth,promoting their pursuit of extended socioemotional wealth,and mitigating internal agency conflicts.This research makes three main theoretical contributions to the literature:Firstly,while prior studies have predominantly examined the impact of formal institutions like intellectual property protection and innovation subsidies on corporate innovation,this paper shifts the focus towards the influence of informal institutional factors,specifically cultural traditions deeply ingrained in the evolution and progress of enterprises.By employing an informal institutional approach,this study investigates how Confucian culture shapes innovation within Chinese family businesses,thereby enhancing our comprehension of the drivers of corporate innovation.Secondly,while limited literature has explored the nexus between Confucian culture and corporate innovation,conflicting views exist within the academic sphere regarding whether Confucian values foster or hinder innovation.The existing studies often overlook the nuanced reasons behind these divergent conclusions,stemming from variations in corporate characteristics and contexts.This paper addresses this gap by situating family businesses as the research setting,examining how Confucian culture dynamically influences innovation decision-making in response to diverse internal and external contextual factors,thereby complementing prior research efforts.Thirdly,this paper establishes a localized theoretical framework for studying innovation in family businesses.By integrating the socioemotional wealth framework and agency theory with Chinese Confucian principles,this study delves into the unique mechanisms through which Confucian culture shapes corporate innovation behavior,thereby broadening the horizons of the socioemotional wealth framework and agency theory while enriching the theoretical underpinnings of family businesses within China's specific context.
confucian culturefamily firminnovationsocioemotional wealthagency theory
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