Set in Stone: The Persistence and Origins of Corporate Culture

Using one of the largest panel datasets on corporate culture, we examine its evolution and origins, distinguishing between firm-level values and norms and corporate insiders’ preferences. We find that corporate culture is highly persistent: firms with strong (or weak) cultures tend to remain so over the subsequent decade. The majority of the variation in culture is explained by firm fixed effects, reflecting initial cultural imprints around founding. Leveraging rich data on founder characteristics, we show that initial culture is shaped by founders’ cultural heritage, the racial diversity of their birthplace, and the business environment at the start of their careers. We also provide suggestive evidence that firm-CEO (firm-employee) matching on values, as well as the influence of culture on CEOs, contribute to culture persistence. Overall, our findings suggest that a firm’s founding imprint—reinforced through CEO/employee selection, attrition, and workplace norms—helps explain the enduring nature of corporate culture.