Regional Dialect Diversity and Corporate Strategic Aggressiveness

Abstract

As an important role of the regional culture, dialects have a significant influence on the corporate strategy. Diversity of dialects appears to move firms towards strategic radicalization by weakening the "hometown effect", enhancing innovation awareness, and increasing the diversification of business. Using A-share listed companies from 2006 to 2018 as sample, based on information from the annual financial statements, this paper argues that higher dialect diversity in the city where enterprise is located leads the corporate strategy to be more aggressive; and the mismatch between strategy and dialectal environment will have a negative effect on corporate performance. After a series of robustness tests and using instrumental variables to solve endogenous problems, the conclusions remain consistent. Further study indicates that the influence of dialect diversity on strategy is enhanced as managers' awareness of the dialectal environment increases, but is weaken if the enterprise is a state-owned enterprise or has larger scale. This research reveals the connection between dialect culture and corporate behavior form a strategic level, provides empirical evidence and enriches the literature for the traditional view of "culture influences strategy", and has significance on promoting the corporate strategic management practices.