Grover M. Hermann Lecture Series: How Culture Shapes the Family Firm

Professor Sandra Dow, the Grover M. Hermann Foundation Chair in International Business Management, will give a talk on “How Culture Shapes the Family Firm”.

A growing body of research suggests the relevance of national culture in understanding business practices. At a most fundamental level, culture is a ‘background institution’ that underpins economic exchange and influences the ways in which issues and decisions are framed. For example, cultural context has been linked to the relative importance of financial markets and financial institutions as sources of capital. Scholars have also linked cross-national differences in shareholder and creditor rights to differences in religion and language.

My talk focuses on the publically traded family firm and how capital markets and culture mediate the performance/ownership relationship. Based on work with Jean McGuire (LSU), the analysis confronts a complex issue in that the role of the family and family firms is embedded in both cultural antecedents and capital market institutions. The greatest challenge for researchers, indeed, may lie in the unraveling of this relationship. As Guiso, Sapienza and Zingales (2006) point out “All work on culture and economics faces the problem that causality is likely to work both ways—from culture to economics and from economics to culture”.