Department of Management
Multimarket contact and firm performance: The moderating effect of Confucian culture
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. © 2011 Higher Education Press and Springer-Verlag Berlin Heidelberg.
Confucian culture, multimarket contact, mutual forbearance
Source Publication Title
Frontiers of Business Research in China
Brill Academic Publishers
Tang, Guiyao, Ji Li, and Xinran Wang. "Multimarket contact and firm performance: The moderating effect of Confucian culture." Frontiers of Business Research in China 5.1 (2011): 45-62.