Corporate culture: evidence from the field

Abstract

Ninety-two percent of the 1,348 North American executives we survey believe that improving corporate culture would increase firm value. A striking 84% believe their firm needs to improve its culture. But how can that be achieved? Our paper provides some guidance by documenting the following: executives’ views on what corporate culture is and how it operates, distinguishing between stated values and everyday norms; the extent to which culture influences value creation (productivity, mergers), ethical choices (compliance, short-termism), and innovation (creativity, risk-taking); and what works against a value-enhancing culture (incentive compensation, investors). Finally, we provide evidence that suggests that the executives’ survey responses are reliable and consistent with external data.