Does Confucianism Influence Business Strategy?

This study examines the effect of Confucianism, an influential cultural belief and ethical philosophy in East Asia, on business strategy. Employing a large-scale archival dataset of Chinese public firms covering 2007 to 2020, we provide evidence that Confucianism is positively associated with analytical-oriented strategies. Our empirical findings remain intact after accounting for alternative Confucianism measures, controlling formal institutions and religions, instrumental variable methods, and other approaches to addressing endogeneity and robustness issues. Cross-sectional analyses further reveal that the documented effect is more evident for non-state-owned firms, firms with executives lacking overseas experience, and those operating in higher economic policy uncertainty. Overall, our study sheds light on how traditional culture, an important dimension of informal institutions, shapes corporate strategic decisions in emerging markets.