The Confucian constraint: does conservative culture inhibit strategic aggressiveness? Evidence from China

Abstract

Purpose Business strategy serves as the foundation of a firm's operations, shaping its management style and long-term trajectory. This study investigates how Confucian cultural influence affects the strategic aggressiveness of firms in emerging markets, highlighting the role of traditional norms in shaping corporate behavior. Design/methodology/approach The authors use the number of Confucian temples within 200 kilometers of the firm as a proxy variable for Confucian culture. Using a sample of Chinese listed firms, the study empirically examines the association between Confucian culture and strategic decision-making. Findings The empirical evidence suggests that firms with a stronger influence of Confucian culture exhibit lower levels of strategic aggressiveness. Specifically, such companies are more conservative in their approach to innovation, market expansion, and investment activities. Moreover, the authors find that this conservative tendency is moderated by exposure to foreign cultures and the presence of more developed formal institutional frameworks. Originality/value By integrating traditional cultural factors into the analysis of corporate strategy, this study contributes to the existing body of literature by underscoring the significant role of informal institutions in shaping business behavior. The findings enrich the understanding of how cultural norms influence corporate behavior in emerging markets, emphasizing the relevance of cultural considerations in understanding corporate strategy and decision-making.