Exploring the relation between cultural values and R&D investment under the behavioral theory of the firm


  • Nuno Soares Cef.UP and Faculdade de Engenharia, Universidade do Porto, R. Dr. Roberto Frias, 4200-465 Porto, Portugal
  • Marieta Valente NIPE and Escola de Economia e Gestão, Universidade do Minho, Campus de Gualtar, 4710-057 Braga, Portugal


This paper explores the role cultural factors play in firms’ decisions to invest in Research and Development (R&D), under the behavioural theory of the firm (Cyert & March, 1963). Based on a sample of non-financial firms from 23 countries for the period of 1990 to 2016 and two of the six Hofstede (1984) cultural dimensions, we observe that countries’ cultural values are statistically significant at explaining differences in firms’ R&D decisions. On one hand, there is a negative relation between firms’ R&D investment decisions and countries’ uncertainty avoidance. On the other hand, a positive relation is found between firms’ R&D investment decision and countries’ long-term orientation. Evidence is also found on the extent to which these cultural characteristics influence how firms’ aspirations in relation to performance discrepancies drive R&D investment.


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