Multimarket contact and firm performance: The moderating effect of Confucian culture

Guiyao Tang*, Ji LI, Xinran Wang

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

This paper examines the effect of Confucian cultural value on the relationship between multimarket contact and two dimensions of firm performance, i. e., firms' innovation and profitability. It is hypothesized that firms with a high level of multimarket contact are more likely to show mutual forbearance towards their competitors, which in turn influences their innovative behavior and financial performance. Taking into account the possible moderating effects of Confucian cultural value, we also hypothesize that the effect of multimarket contact is more pronounced among firms from the Confucian culture. In other words, it is argued that firms from the Confucian culture are more likely to innovate and obtain better financial performance. Empirical tests were conducted after the hypotheses, and the findings support the arguments on multimarket contacts and mutual forbearance hypotheses. Through facilitating tacit collusion, multimarket contact does seem to help create superior economic performance.

Original languageEnglish
Pages (from-to)45-62
Number of pages18
JournalFrontiers of Business Research in China
Volume5
Issue number1
DOIs
Publication statusPublished - Mar 2011

Scopus Subject Areas

  • Business, Management and Accounting(all)
  • Public Administration

User-Defined Keywords

  • Confucian culture
  • multimarket contact
  • mutual forbearance

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