Ernst Fehr is Professor of Economics at the University of Zurich. This post is based on a recent paper by Professor Fehr.
Talking about corporate culture has become quite popular in the business world. But why should companies care about corporate culture at all? Why do “soft” concepts like culture matter? Can’t companies simply rely on “hard” economic forces—the value of clear and efficient institutional rules and their associated financial incentives?
Corporate culture is important because human behavior is always co-determined by the set of social norms that prevail in a company and are the core of its culture. It is in the company’s interest to shape these norms through a cooperative culture that mobilizes employees’ voluntary cooperation in the pursuit of the firm’s overall goals. Our research provides behavioral foundations for cooperative culture, based on important scientific insights from experimental and behavioral economics as well as from contract economics.