Informal institutions and organizational resilience: evidence from clan culture in China

This paper investigates the impact of regional clan culture on organizational resilience. Using a sample of Chinese A-share listed enterprises from 2012 to 2024, we operationalize clan culture using regional genealogy density and measure organizational resilience through financial stability and flexibility. Employing an ordinary least squares (OLS) model with firm, year, and industry-year fixed effects, we find that clan culture is positively and significantly associated with organizational resilience. To mitigate endogeneity concerns, we implement a two-stage least squares (2SLS) instrumental variable approach, which strongly supports our baseline findings. Mechanism tests reveal that clan culture enhances resilience primarily by reducing agency costs and alleviating financing constraints. Overall, this paper expands the literature on informal institutions by demonstrating how traditional cultural norms and trust networks act as substitutes for weak formal institutions.