There are hardware and software of managing resources including human as an actor in an organizational setting. Collective societies in high context environment take time to a resolution and red tapes and unnecessary bureaucracies have direct impact on organizational performance.....

Looking at the Hofstede Model of 5 variables of culture may help you to decide which one can play mediating variable and which can be classified as moderating variable (M.V.). Based on your question as if you already have I.V. and D.V. but looking forward M.V. In certain countries like the Philippines dominated by feminism the result in terms of firm performance would be moderated by gender variable.....

In a country with pluralistic society, the value system in the country, may be a cultural determinant of corporate governance. Corporate governance encompasses Economic, Legal, Social and Ethical governance. The value system of the country that percolates into the organizational culture, is likely to influence the organizational decision making pattern and behavioral pattern, thereby affecting corporate governance and performance.

In this regard, I assume that we can consider the country's legal system as a factor under the country's culture construct. Consequently, which laws/regulations do you recommend to be used as good factors?

Hi Ahmed,

I also suggest a glance on the cultural differences of various countries.

http://geert-hofstede.com/national-culture.html

In this case, it is assumed that the country's legal system as well as its culture could be used as one construct, under which different variables may be used? 

HI,

You may have a look to this paper:

X Liu, "Corruption culture and corporate misconduct", 2016 journal of Financial Economics, forthcoming.

Best regards

Hi,

I found another paper that may be of interest for you:

R Aggarwal, J Schloetzer, R Williamson, "Dio corporate governance mandates impact long-term firm value and governance culture?", Journal of Corporate Finance, 2016, Forthcoming.

Best regards.

Dear Ahmed,

Culture seems to be cruscial for corporatage governance and hence for performance monitoring. For example, the Western approach to corporate governance is only partly successful in Japan given a completely another culture (hierarchies / elites / entrenched networks / long-term horizons to mention just the few). However, in my opinion it could be difficult to trace performance back to culture, as there is evidence of high performing companies in entirely different cultural settings.

Paul

Thanks, Patrick, for the articles.

Also thank you, Paul, for the comment. Now, since there is evidence of high performance in different culture settings, don't you think it's worth the research. 

Dear Ahmed,

Indeed, I think it is worth the research. But to begin with, we probably should agree on a common definition of "high performance". Would you prefer financial accounting metrics (net profit / ROI and so on) or rather subtile performance indicators as established by the  Sustainability Reporting Guidelines of the Global Reporting Initiative (https://www.globalreporting.org/STANDARDS/G4/Pages/default.aspx)?

I assume that the major cultural infulences on performance can be figured out by non-financial metrics.

Paul

Hi Paul,

The financial/accounting metrics has been used for almost all performance measurements, especially by researchers who use quantitative methods. As regards the other performance indicators you referred to, would you please elaborate on their use if you experienced or read about it.

Hi,

Perhaps you should read this paper:

L Guiso, P Sapienza, L Zingales, "The value opf corporate culture", Journal of Financial Economics, 2015, 117, p 60 -76.

Best regards.

Dear Ahmed,

The non-financial performance indicators that I have in mind can be derived from Integrated Reporting (the six capitals: 1. financial, 2. manufactured, 3. intellectual, 4. human, 5. social and 6. natural, with the financial capital to be excluded for our purposes). They also can be derived from the triple bottom line reporting (1. people/social structure, 2. planet/natural capital and 3. profit, which, again, is to be excluded if we are looking for non-financial measures).

I think that culture has an impact on how the remaining 5 capitals or the remaining 2 bottom lines are regarded in a given country.

Also, I think that it is possible to extract key performance indicators from publicly available annual reports for a sample of companies in a country. Using key performance indicators it could be possible to assess the performance of the companies with regard to the 5 capitals or to the 2 bottom lines, respectively.

Of course, a researcher could regress these key performance indicators against financial performance of the respective company, too. 

The results could be compared for a sample of companies from two countries with different cultures, say Japan and UK. From this comparison the researcher could make conclusions about how culture shapes non-financial performance.

Just as an idea...

Paul

Now, is it fair to say that the country's laws that are related to CG are parts (variables) of the legal system, and therefore part of the country's culture?