Business Culture: The Role of Personal and Impersonal Business Relationships on Market Efficiency

Arbeitspapier

In this paper, we study the effects of business culture on market efficiency. We exogenously vary the type of business culture between business-is-business cultures, which consist on impersonal relationships where financial matters are paramount, and business-is-family cultures, which comprise of cohesive personal relationships where financial matters and personal attachments are intertwined. We use a laboratory experiment to assess the effect of business cultures in environments with different degrees of contract enforceability and competition. Our main results indicate that business-is-family cultures are more effective when contracts are unverifiable because they help market participants overcome problems of trust. On the other hand, we find that business-is-business cultures are more effective in competitive settings because they facilitate the severance of ties with unproductive partners.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 12398

Classification and Topics

• Classification: Wirtschaft ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Firm Organization and Market Structure ; Corporate Culture; Diversity; Social Responsibility
• Subject: trust ; contracts ; competition ; business culture ; communication ; social ties

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Muñoz-Herrera, Manuel ; Reuben, Ernesto
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/202744
• Last update: 10.03.2025, 11:43 AM CET