Do Management Career Preferences Influence Corporate Culture Building?
Posted: 6 Jan 2021
Date Written: October 10, 2020
An effective corporate culture takes a long time to build and requires considerable effort from top management. However, top management can only profit from their investment in building corporate culture if they remain in the same firm. We study how top management’s external and internal career preferences offer differential incentives to develop corporate culture. We use top management’s networks as a proxy for their career preferences and find that their external network (i.e., external career preference) is negatively associated with corporate culture building, whereas their internal network (i.e., internal career preference) is positively associated with corporate culture building. Additional analyses show that top management build corporate culture through developing effective formal internal controls and/or engaging in internal communication and information sharing. Our study highlights that top management’s career preferences can explain why some firms are not able to develop effective corporate cultures.
Keywords: Corporate culture, Career preference, Top management network
JEL Classification: M12, M14
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