Does Confucian culture influence corporate R&D investment? Evidence from Chinese private firms

In this study, we examine how informal institution, namely Confucian culture, affects corporate R&D investment. Using a nationwide survey of Chinese private firms, we find that Confucian culture is significantly positively associated with corporate R&D investment. Moreover, the positive effect of Confucian culture is more pronounced for firms headquartered in regions with poor legal supervision and weak foreign culture shocks. The results are robust to alternative measures of Confucian culture and remain valid after controlling for potential endogeneity. Our findings provide insights for understanding the role of Confucian culture in firm's decision-making in emerging market.