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

Frontiers of Business Research in China volume 5, pages 45–62 (2011)Cite this article

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.

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Author information

Affiliations

  1. Department of Management, Hong Kong Baptist University, Hong Kong, China

    Guiyao Tang & Ji Li

  2. School of Management, Lanzhou University, Lanzhou, 730000, China

    Xinran Wang

Authors
  1. Guiyao Tang
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  2. Ji Li
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  3. Xinran Wang
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Correspondence to Guiyao Tang.

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Tang, G., Li, J. & Wang, X. Multimarket contact and firm performance: The moderating effect of Confucian culture. Front. Bus. Res. China 5, 45–62 (2011). https://doi.org/10.1007/s11782-011-0120-9

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Keywords

  • multimarket contact
  • mutual forbearance
  • Confucian culture