Business

Regional cultural inclusiveness and firm performance in China

L. Mao, G. Sun, et al.

This fascinating study delves into how regional cultural inclusiveness impacts firm performance in China, revealing that greater inclusiveness correlates positively with return on equity (ROE). Conducted by Lina Mao, Guangfan Sun, Yining He, Shanshan Zheng, and Changwei Guo, it identifies key mechanisms like reduced financial constraints driving this relationship, particularly for companies excelling in corporate social responsibility (CSR) and research and development (R&D).

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Abstract

This study explores the impact of regional cultural inclusiveness on firm performance in China using econometric methods and data from Chinese A-share listed firms. Findings reveal a positive relationship between cultural inclusiveness and firm performance, particularly return on equity (ROE), especially in regions with higher inclusiveness. Instrumental variable regression addresses endogeneity, and mechanism testing suggests that this impact is primarily driven by reduced financial constraints and optimized employee structures. The effect is more pronounced for firms with higher corporate social responsibility (CSR) performance and greater research and development (R&D) investment.

Publisher

HUMANITIES AND SOCIAL SCIENCES COMMUNICATIONS

Published On

Aug 05, 2024

Authors

Lina Mao, Guangfan Sun, Yining He, Shanshan Zheng, Changwei Guo