Cultural Imprinting, Institutions, and the Organization of New Firms

Abstract

Do firm founders from nations with more predictable and transparent institutions allocate more autonomy to their employees? A cultural imprinting view suggests that institutions inculcate beliefs that operate beyond the environment in which those beliefs originate. We leverage data from a multiplayer online role-playing game, EVE Online, a setting where individuals can establish and run their own corporations. EVE players come from around the world, but all face the same institutional environment within the game. This setting allows us to disentangle, for the first time, cultural norms from the myriad other local factors that will influence organizational design choices across nations. Our main finding is that founders residing in nations with more predictable and transparent real world institutions delegate more authority within the virtual firms they create. Data and the online appendix are available at https://doi.org/10.1287/stsc.2018.0056 .

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