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Corporate culture and identity investment in an industry equilibrium

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  • Hiller, Victor
  • Verdier, Thierry

Abstract

We explore the two-way relationship between corporate culture and market structure. We emphasize two market dimensions through which firms interact: the product market where goods are sold and the labor market where managers are hired. We model the firm's principal–agent relationship by assuming that managers may be socialized to a corporate identity that leads them to behave more in concert with the profit maximizing goals of the firm (i.e. a corporate culture). We first analyse the optimal incentive scheme and corporate culture investment at the firm level. Then we consider the industry equilibrium with free entry and market clearing for managerial labor. We discuss how industry characteristics (market size effects), global market integration or technological shocks affect the pattern of equilibrium corporate cultural choices across firms.

Suggested Citation

  • Hiller, Victor & Verdier, Thierry, 2014. "Corporate culture and identity investment in an industry equilibrium," Journal of Economic Behavior & Organization, Elsevier, vol. 103(C), pages 93-112.
    • Handle: RePEc:eee:jeborg:v:103:y:2014:i:c:p:93-112
    DOI: 10.1016/j.jebo.2014.04.006
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    1. When do firms invest in corporate culture?
      by nawmsayn in ZeeConomics on 2015-01-18 20:12:23

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    Cited by:

    1. Victor Hiller & Natacha Raffin, 2017. "Corporate social responsibility and workers’ motivation at the industry equilibrium," Post-Print hal-02366298, HAL.
    2. Sung Ook Park & Seung Uk Choi & Seong Tae Kim & Hyung Jong Na, 2021. "The Relationship between Corporate Culture and Value at Different Life Cycle Stages," Sustainability, MDPI, vol. 13(4), pages 1-19, February.
    3. Michael T. Rauh & Giulio Seccia, 2014. "Honesty and Trade," Working Papers 2014-06, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    4. Hiller, Victor & Raffin, Natacha, 2020. "Firms’ social responsibility and workers’ motivation at the industry equilibrium," Journal of Economic Behavior & Organization, Elsevier, vol. 174(C), pages 131-149.
    5. Alexey Vedev & Mikhail Khromov, 2015. "Methodology of Compiling Sectoral Financial Balances in the National Economy," Working Papers 120, Gaidar Institute for Economic Policy, revised 2015.
    6. Fuhai HONG, 2014. "Ideals should not be too ideal: Identity and public good contribution," Economic Growth Centre Working Paper Series 1411, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    7. Fuhai Hong & Larry Karp & Tat-How Teh, 2021. "Identity in public goods contribution," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(3), pages 617-664, October.
    8. Forquesato, Pedro, 2016. "Social norms of work ethic and incentives in organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 231-250.
    9. Liu, Guanchun & Hu, May & Cheng, Chen, 2021. "The information transfer effects of political connections on mitigating policy uncertainty: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 67(C).
    10. Paolo Polidori & D�sir�e Teobaldelli, 2013. "Prosocial behavior in the production of publicly provided goods and services: an overview," International Review of Applied Economics, Taylor & Francis Journals, vol. 27(2), pages 285-296, March.

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    More about this item

    Keywords

    Corporate culture; Identity; Market competition;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • F15 - International Economics - - Trade - - - Economic Integration

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