Environment and Social Psychology

Dimensions of corporate culture and financial performance: Evidence from Chinese publicly listed companies

Shuhui Liang

International College for interdisciplinary Studies, Payap University

Xiang Gao

Research Center of Finance at Shanghai Business School

http://orcid.org/0000-0003-4914-557X

DOI: https://doi.org/10.54517/esp.v9i6.2445

Keywords: corporate culture, business performance, financial performance, influencing mechanism

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Abstract

Corporate culture is the soul of the enterprise and plays a vital role in creating corporate cohesion and improving business performance; in many cases, the role of corporate culture on business performance is not direct, but there are a series of intermediary influencing mechanisms. Most of the current academic circles have studied the influencing mechanism between corporate culture and business performance from the perspective of dynamic matching. Still, there is a lack of research results based on the theoretical perspective of Edgar H. Schein's corporate culture dimensions. Based on Edgar H. Schein's theoretical perspective of corporate culture dimensions, this study explores the influencing mechanism between corporate culture and the business performance of Chinese listed companies from the dimensions of corporate governance culture in the external environment and corporate governance culture in the internal environment. It conducts empirical research using the data of A-share listed companies in China's Shanghai Stock Exchange and Shenzhen Stock Exchange as samples. The results are twofold. First, the adaptability of the enterprise's external environment has a significant and positive effect on the Weighted average return on net assets in the financial dimension; it has a substantial and positive impact on customer satisfaction in the non-financial dimension. Second, internal corporate governance culture has a significant and positive effect on weighted average return on net assets, Debt-to-Equity Ratio, Earnings per share in financial dimensions, Percentage of highly educated employees, customer satisfaction survey, and non-financial dimensions. Percentage of highly educated employees, Customer Satisfaction, Customer retention rate, and R&D investment as a percentage of operating income in non-financial dimensions have significant positive effects. The findings of this study provide theoretical and practical guidance for Chinese listed companies to strengthen the construction of external environment adaptive culture and internal corporate governance culture.

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Author Biography

Xiang Gao, Research Center of Finance at Shanghai Business School

Xiang GAO is currently the Head of Research Center of Finance at Shanghai Business School, Shanghai, China. His research interests focus on international finance, financial markets, risk management and corporate governance. He has published in journals including the Economic Journal, Journal of Comparative Economics and Journal of Economic Dynamics and Control. He obtained his Ph.D. degree of economics from the Iowa State University at 2011, his master of science degree in economics from the Hong Kong University of Science and Technology at 2006, and his bachelor degree in international economics and trade from Shanghai Jiao Tong University at 2005. Dr. Gao has also assumed the role of China Chapter executive of the Chartered Alternative Investment Analyst Association since 2014.

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