Does Corporate Culture Matter? Evidence from Japan

39 Pages Posted: 9 Apr 2008

See all articles by Shinichi Hirota

Shinichi Hirota

Waseda University - Graduate School of Commerce

Katsuyuki Kubo

Waseda University

Hideaki Miyajima

Waseda University - Graduate School of Commerce; Research Institute of Economy, Trade and Industry (RIETI)

Date Written: April 2008

Abstract

Corporate culture does matter. Using data on mission statements of large Japanese firms, we show that corporate culture has a significant impact on corporate policies that determine employment, board, and financial structures. We provide evidence that strong-culture firms are more likely to retain incumbent employees, promote managers from within firms, and have less debt and a higher percentage of interlocking shareholdings than weak-culture firms. This evidence suggests that strong-culture firms consider their culture to be organizational capital and adopt policies to preserve it. We also confirm that culture and its embedding contribute to better corporate performance. We find these culture effects to be considerable in magnitude and at least as large as those of other factors, and assert that the role of culture must be taken into account in order to understand corporate policies and performance.

Keywords: corporate culture, corporate policies, organizational capital, corporate performance, mission statement

JEL Classification: G32, G34, J24, M14, M51

Suggested Citation

Hirota, Shinichi and Kubo, Katsuyuki and Miyajima, Hideaki, Does Corporate Culture Matter? Evidence from Japan (April 2008). Available at SSRN: https://ssrn.com/abstract=1118196 or http://dx.doi.org/10.2139/ssrn.1118196

Shinichi Hirota (Contact Author)

Waseda University - Graduate School of Commerce ( email )

1-6-1, Nishi-Waseda
Shinjuku-ku, Tokyo 169-8050
Japan
+81-3-5286-2088 (Phone)
+81-3203-7067 (Fax)

Katsuyuki Kubo

Waseda University ( email )

1-104 Totsukamachi, Shinjuku-ku
Shinjuku-ku, Tokyo 169-8050, 169-8050
Japan

Hideaki Miyajima

Waseda University - Graduate School of Commerce ( email )

1-6-1, Nishi-Waseda
Shinjuku-ku, Tokyo 169-8050
Japan
(81 3) 5286 2019 (Phone)
(81 3) 3203 7067 (Fax)

Research Institute of Economy, Trade and Industry (RIETI) ( email )

1-3-1 Kasumigaseki
Chiyoda-ku
Tokyo 100-8901
Japan

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