CULTURAL DETERMINANTS OF ECONOMIC-PERFORMANCE

Business culture operates at both the national and corporate level. The paper considers the impact of national culture on both interfirm relations such as competition and cooperation and intrafirm relations such as organizational behavior. In its moral aspect, culture acts as an enforcement mechanism, replacing external supervision with internal self-supervision and external legal sanctions such as fines with internal emotional sanctions such as guilt and shame. Different cultures are appropriate to different environments. The paper identifies some of the geographical, industrial, and historical characteristics that affect the relative performance of different national cultures. It is argued that in a changing environment, internal diversity within a culture is necessary to sustain long-run competitiveness provided that there is also sufficient commonality of culture to prevent factionalism of the society. J. Comp. Econom., June 1993, 17(2), pp. 418-442. University of Reading, Reading, Berkshire RG6 2AA, United Kingdom. © 1993 Academic Press. All rights reserved.