National culture: The missing country-level determinant of corporate governance

Dale Griffin, Omrane Guedhami, Chuck C.Y. Kwok*, Kai Li, Liang SHAO

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

42 Citations (Scopus)


It is well known that firm-level corporate governance practices vary mainly between rather than within countries, but country-level factors such as legal and financial institutions explain less than 50% of this cross-country variation. In this article we show that two dimensions of national culture-individualism and uncertainty avoidance-capture about 90% of the country fixed effects and outperform the country-level explanatory variables used in prior literature. We argue that culture works through a tradeoff between managerial expertise and certainty of control, a tradeoff largely overlooked by prior literature, that captures a country's preference for the Anglo-Saxon approach versus the direct control approach for governance. Consistent with this argument, we find that the effect of culture on corporate governance varies across firms with different needs for managerial expertise and certainty of control. We also find that culture interacts with other factors to determine firm-level governance.

Original languageEnglish
Pages (from-to)740-762
Number of pages23
JournalJournal of International Business Studies
Issue number6
Publication statusPublished - 1 Aug 2017

Scopus Subject Areas

  • Business and International Management
  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Strategy and Management
  • Management of Technology and Innovation

User-Defined Keywords

  • agency theory
  • corporate governance
  • direct control
  • managerial expertise
  • national culture


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