Open Journal Systems

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

Shuhui Liang, Xiang Gao

Article ID: 2445
Vol 9, Issue 6, 2024, Article identifier:

VIEWS - 90 (Abstract) 46 (PDF)

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.

Keywords

corporate culture; business performance; financial performance; influencing mechanism

Full Text:

PDF



References

1. Hou, Z., Xu, J., & Jing, R. (2018). Introduction to Corporate Culture. Liaoning University Press. [In Chinese].

2. Wei, X., & Iqbal, Q. (2022). Managerial networking and frugal innovation: situational leadership perspective. Frontiers in Psychology, 13, 948530. https://doi.org/10.3389/fpsyg.2022.948530

3. Iqbal, Q., Ahmad, N. H., Li, Z., & Li, Y. (2022). To walk in beauty: Sustainable leadership, frugal innovation and environmental performance. Managerial and Decision Economics, 43(3), 738-750. https://doi.org/10.1002/mde.3415

4. Iqbal, Q., & Piwowar-Sulej, K. (2023). Organizational citizenship behavior for the environment decoded: sustainable leaders, green organizational climate and person-organization fit. Baltic Journal of Management, 18(3), 300-316. https://doi.org/10.1108/BJM-09-2021-0347

5. Cherian, J., Gaikar, V., Paul, R., & Pech, R. (2021). Corporate culture and its impact on employees’ attitude, performance, productivity, and behavior: An investigative analysis from selected organizations of the United Arab Emirates (UAE). Journal of Open Innovation: Technology, Market, and Complexity, 7(1), 45. https://doi.org/10.3390/joitmc7010045

6. Iqbal, Q., Ahmad, N. H., & Li, Y. (2021). Sustainable leadership in frontier Asia region: Managerial discretion and environmental innovation. Sustainability, 13(9), 5002. https://doi.org/10.3390/su13095002

7. Wu, Q. (2020). The Influence of Enterprise Culture on Innovation Performance the Mediating Role of Dynamic Ability [Unpublished Master’s Thesis]. Inner Mongolia University of Finance and Economics. [In Chinese]. https://doi.org/10.27797/d.cnki.gnmgc.2020.000050

8. Pérez-Cornejo, C., de Quevedo-Puente, E., & Delgado-García, J.-B. (2021). The role of national culture as a lens for stakeholder evaluation of corporate social performance and its effect on corporate reputation. Business Research Quarterly, 26(4), 1-15. https://doi.org/10.1177/23409444211007487

9. Mushafig, M., Prusak, B., & Markiewicz, M. (2023). Corporate social responsibility and forward default risk mediated by financial performance and goodwill. Journal of Cleaner Production, 428, 139396. https://doi.org/10.1016/j.jclepro.2023.139396

10. Nureen, N., Liu, D., Irfan, M., & Işik, C. (2023). Nexus between corporate social responsibility and firm performance: a green innovation and environmental sustainability paradigm. Environmental Science and Pollution Research, 30(21), 59349-59365. https://springer.dosf.top/article/10.1007/s11356-023-26675-1

11. Li, H., Wen, S., & Jiao, R. (2022). Corporate environmental culture, corporate environmental management and financial performance: Do words meet actions and actions produce return?. Management Review, (9), 297-312. [In Chinese]. https://10.14120/j.cnki.cn11-5057/f.2022.09.024

12. Shi, X., Jiang, Z., Bai, D., Fahad, S., & Irfan, M. (2023). Assessing the impact of green tax reforms on corporate environmental performance and economic growth: do green reforms promote the environmental performance in heavily polluted enterprises?. Environmental Science and Pollution Research, 30(19), 56054-56072. https://doi.org/10.1007/s11356-023-26254-4

13. Yang, X. (2023). White Paper on High-quality Development of China’s Listed Companies (Report Year 2023). Securities Times. [In Chinese].

14. Ma, D. (2023). Discussion on the internal control environment of listed companies, China Small & Medium Enterprises, (04), 219-221. [in Chinese]. https://kns.cnki.net/kcms2/article/abstract?v=Fhes7GDiHN0FJwnWN5mXv_yy84BeggH5uWsF3i739ZBYpj2ITyt8Ak0-nDYCo5wIo-XXDXlPJ8hBFAIpQXar_EriInmPQcnpWJmQovKFVmp67JoeArAMXk_d2E2TRV_DSZsvBvsZy0Y=&uniplatform=NZKPT&flag=copy.

15. Schein, E. H., & Schein, P. A. (2019). The Corporate Culture Survival Guide (3rd Edition). Wiley. https://www.wiley.com/en-us/The+Corporate+Culture+Survival+Guide%2C+3rd+Edition-p-9781119212300

16. Schein, E. H., & Schein, P. A. (2016). Organizational Culture and Leadership (5th Edition). Wiley. https://www.wiley.com/en-us/Organizational+Culture+and+Leadership%2C+5th+Edition-p-9781119212041

17. Yin, M. (2019). The Research of Schein Organizational Culture [Unpublished Doctoral Dissertation]. Guangxi University. [in Chinese]. https://kns.cnki.net/KCMS/detail/detail.aspx?dbname=CMFD202001&filename=1019210455.nh

18. Fosu, E., Fosu, F., Akyina, N., & Asiedu, D. (2024). Do environmental CSR practices promote corporate social performance? The mediating role of green innovation and corporate image. Cleaner and Responsible Consumption, 12, 100155. https://doi.org/10.1016/j.clrc.2023.100155

19. Ortiz-Martinez, E., Marín-Hernández, S., & Santos-Jaén, J.-M. (2023). Sustainability, corporate social responsibility, non-financial reporting and company performance: Relationships and mediating effects in Spanish small and medium sized enterprises. Sustainable Production and Consumption. 35, 349-364. https://doi.org/10.1016/j.spc.2022.11.015

20. Li, B. (2022). Enterprise culture construction in enterprise management. Modern Enterprise Culture, (31), 16-18. [in Chinese]. https://oversea.cnki.net/kcms/detail/detail.aspx?dbcode=CJFD&filename=XDWS202231006&dbname=CJFDLAST2023

21. Cao, Y., Li, X., Hu, H., Wang, G., & Wang, S. (2023). How does digitalization drive the green transformation in manufacturing companies? An exploratory case study from the perspective of resource orchestration theory. Journal of Management World, 39(03): 96-112+126+113. [in Chinese]. https://doi.org/10.19744/j.cnki.11-1235/f.2023.0045

22. Ludwig, P., & Sassen, R. (2022). Which internal corporate governance mechanisms drive corporate sustainability? Journal of Environmental Management, 301, 113780. https://doi.org/10.1016/j.jenvman.2021.113780

23. Wang, W., & Guo, B. (2016). Research on the relationship between corporate culture and performance: Review and outlook. Journal of Henan University of Animal Husbandry and Economy, (4), 20-27. [in Chinese]. https://oversea.cnki.net/kcms/detail/detail.aspx?dbcode=CJFD&filename=HNSY201604005&dbname=CJFDLAST2017

24. Kaplan, R. S., & Norton, D. P. (1996). Balanced Scorecard: Turning Strategy into Action. Harvard Business Review Press.

25. Sun, Y. C. (2011). The Financial Performance Evaluation of Listed Companies and Research on Influencing Factors of the Performance [Unpublished Doctoral Dissertation]. Liaoning University. [in Chinese]. https://kns.cnki.net/KCMS/detail/detail.aspx?dbcode=CDFD&filename=1011208942.nh

26. UNEP. (2022). Year 2022: Turning on the Environmental Emergency Mode. United Nations Environment Programme. https://www.unep.org/zh-hans/xinwenyuziyuan/gushi/2022niankaiqihuanjingjinjimoshi

27. Guo, M., Wang, H., & Kuai, Y. (2023). Environmental regulation and green innovation: Evidence from heavily polluting firms in China. Finance Research Letters, 53, 103624. https://doi.org/10.1016/j.frl.2022.103624

28. Soana, M. G. (2024). Environmental strategies, environmental performance and board sustainability committees: Are financial and non-financial companies different?. Research in International Business and Finance, 69, 102208. https://doi.org/10.1016/j.ribaf.2023.102208.

29. Chapman, C. M., & Karau, S. J. (2023). Opportunity in uncertainty: small business response to COVID-19. Innovation & Management Review, 20(2), 162-178. https://10.1108/INMR-11-2021-0226

30. Jarne-Jarne, J. I., Callao-Gastón, S., Marco-Fondevila, M., and Llena-Macarulla, F. (2022). The Impact of organizational culture on the effectiveness of corporate governance to control earnings management. Journal of Risk and Financial Management, 15(9), 379. https://doi.org/10.3390/jrfm15090379

31. Cheng, F. (2022). Research the current situation and countermeasures of governance of listed companies in China. Tsinghua Management Review, (5), 30-36. [in Chinese].

32. Lv, J., Zhang, Y., & Wang, Y. (2023). The impact of internal governance of energy enterprises on investment efficiency. Technology and Innovation Management, (4), 456-460. [in Chinese]. https://10.14090/j.cnki.jscx.2023.0410

33. Hu, J., Yu, X., & Han, Y. (2023). Can ESG ratings promote green transformation? ——Verification based on multi-time point differential method. Journal of Quantitative & Technological Economics, 40(07), 90-111. [in Chinese]. https://doi.org/10.13653/j.cnki.jqte.20230517.002

34. Ma, Q., & Meng, Y. (2021). Corporate culture, environmental strategy and corporate competitiveness. Communication of Finance and Accounting, (12), 93-95+110. [in Chinese]. https://doi.org/10.16144/j.cnki.issn1002-8072.2021.12.020

35. Zhao, J. (2022). The impact of the external environment of enterprises on business operations. Marketing Management Review, (02), 150-152. [in Chinese]. https://doi.org/10.19921/j.cnki.1009-2994.2022-02-0150-050

36. Neralla, N. G. (2022). Can corporate governance structure effect on corporate performance: An empirical investigation from Indian companies. International Journal of Disclosure and Governance, 19, 282-300. https://link.springer.com/article/10.1057/s41310-021-00135-z

37. Gao, S., Meng, F., Wang, W., & Chen, W. (2023). Does ESG always improve corporate performance? Evidence from firm life cycle perspective. Frontiers in Environmental Science, 11, 1105077. https://doi.org/10.3389/fenvs.2023.1105077

38. Li, Z., Liu, X., & Zhang, Q. (2021). The dynamic evolution of the scale and performance of listed companies under the background of mixed ownership reform. Journal of Quantitative & Technological Economics, 38(05), 96-113. [in Chinese]. https://doi.org/10.13653/j.cnki.jqte.2021.05.007

39. Vos, J. F. J., and Boonstra, A. (2022). The influence of cultural values on Enterprise System adoption, towards a culture – Enterprise System alignment theory. International Journal of Information Management, 63, 102453. https://doi.org/10.1016/j.ijinfomgt.2021.102453

40. Zeng, Y. (2020). Firm Size, Age, and Total Factor Productivity——Empirical Research Based on Chinese Industrial Enterprises [Unpublished Master’s Thesis]. Southwestern University of Finance and Economics. [in Chinese]. https://kns.cnki.net/KCMS/detail/detail.aspx?dbname=CMFD202202&filename=1020371046.nh

41. Silwal, P. P. (2022). Corporate cultures and financial performance: The mediating role of firm innovation. Cogent Business & Management, 9, 2010480. https://doi.org/10.1080/23311975.2021.2010480

42. Wang, Y. (2022). Research on Performance Management Optimization of B Company Based on Balanced Scorecard [Unpublished Doctoral Dissertation]. Anhui University of Finance and Economics. [in Chinese]. https://doi.org/10.26916/d.cnki.gahcc.2022.000684

43. Li, M., & Zhang, T. (2022). Discussion on the application of enterprise balanced scorecard. Co-Operative Economy & Science, (22), 107-109. [in Chinese]. https://doi.org/10.13665/j.cnki.hzjjykj.2022.22.028

44. Zheng, D., Zhou, Q., & Yang, W. (2022). Technological innovation capability and export trade along the “Belt and Road”: Influence of market development capability and enterprise age. Management Review, 34(02), 154-165. [in Chinese]. https://doi.org/10.14120/j.cnki.cn11-5057/f.2022.02.008


DOI: https://doi.org/10.54517/esp.v9i6.2445
(90 Abstract Views, 46 PDF Downloads)

Refbacks

  • There are currently no refbacks.


Copyright (c) 2024 Shuhui Liang, Xiang Gao

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.