Cultural inclusion and corporate sustainability: evidence from food culture and corporate total factor productivity in China

Abstract

This article constructed a food taste deviation index using text analysis based on food culture as a measure of cultural inclusion. Cultural inclusion was related to corporate total factor productivity, aiming to investigate whether the cultural inclusion affects corporate sustainability. The findings showed uneven distribution of cultural inclusion in various areas of China, contributing to the unbalanced sustainable development of firms in different regions, as reflected by the higher total factor productivity of firms located in regions with higher cultural inclusion. A test using mountainous undulation as an instrumental variable verified the causal relationship between cultural inclusion and firm sustainability. Besides, a regression discontinuity design was employed to mitigate the impacts of the bidirectional causality. Moreover, a high level of cultural inclusion in top managers' hometown significantly improved corporate sustainability, suggesting that executives can transmit cultural inclusion in society. In addition, firms in more inclusive regions are more motivated to increase their social responsibility to staff as a way to promote their total factor productivity, suggesting that cultural inclusion promotes firm sustainability by increasing firms' care for staff. This article also found that cultural inclusion has heterogeneous effects across firms of different levels of industry competition, and different levels of analyst attention. The research reveals the impact of cultural inclusion on the real economy and help academics dissect the informal institutional reasons behind the sustainable development of firms in different geographies from a new perspective, contributing to the promotion of economic sustainability at the regional level and related policy formulation.

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