Does merchant guild culture boost corporate outward foreign direct investment? An institutional support perspective

In this paper, we seek to explore whether merchant guild culture could be a driving force of corporate outward foreign direct investment (OFDI). Based on the institutional support perspective, we argue that firms could effectively leverage the institutional advantages stemming from merchant guild culture to actively participate in OFDI. Moreover, the promotion effects of merchant guild culture on corporate OFDI can work through three mechanisms: facilitating access to financial resources, promoting cooperation, and enhancing productivity. Empirical analyses based on data from Chinese publicly listed firms spanning 2007 to 2021 strongly support these arguments. In addition, we confirm that the promotion effect is more pronounced for firms in regions with lower levels of financial development, in highly competitive industries, and where clan power significantly influences merchant guild culture. Our study contributes to the literature on informal institutions, OFDI, and merchant guild culture.