Corporate governance and national culture: A multi-country study

Purpose - The purpose of this paper is to show that corporate governance structures differ significantly across countries. Using agency theory and institutional theory, it examines how ownership structure and national culture influence the size and leadership structure of the corporate boards of multinational firms based in industrial countries. Design/methodology/approach - The hypotheses are tested with data on 399 multinational manufacturing firms based in 15 industrial countries. The authors use ownership concentration, bank control, and state ownership to represent ownership structure. They view institutional structural norms as components of national culture and infer the nature of these norms for governance structure from Hofstede's national culture dimensions. Findings - The findings show that national culture has a dominant influence on corporate governance structure, and its emphasis is recommended in future cross-national organizational research. Research limitations/implications - Although the models were successful in explaining MNC board structure, the authors addressed only the effects of ownership structure and national culture. It is expected that these models could be improved by including national political and legal differences and additional national economic variables. Practical implications - The findings demonstrate that national cultures of the home countries of MNCs have powerful influences on their governance structures. Originality/value - This paper links national culture with governance structure.