The Merchant Guild's Business Philosophy and Corporate Innovation

The business philosophy of merchant guilds represents a unique business-related culture that developed gradually through long-term commercial practices. This study investigates how distinctive business philosophies of Chinese merchant guilds affect contemporary corporate innovation. Employing a binary classification of adventurous and conservative business philosophies, we find that firms led by chairpersons with an adventurous guild culture are more likely to engage in innovation activities compared with those led by chairpersons with a conservative guild culture. Further analysis reveals that the influence of these business philosophies on corporate innovation is more pronounced for firms operating in regions with lower marketization, in industries facing greater environmental uncertainty, and when the chairpersons possess greater discretionary power. Our channel tests demonstrate that an adventurous business philosophy fosters innovation by enhancing chairpersons' willingness to take risks. These findings highlight the enduring influence of merchant guild culture and the significant role of chairpersons' inherited business philosophy in shaping contemporary business practices.