Confucian Culture and the Professional Division of Labor : Evidence from China

In this study, we use the data of listed firms in China to investigate the influence of informal institution, namely Confucian culture, on the firms’ participation in the professional division of labor. We find that the stronger the firms are influenced by Confucian culture, firms are more inclined to participate in the professional division of labor. The mechanism tests indicate that Confucian culture can promote firms to participate in the professional division of labor by reducing searching and contract costs. Further research shows that Confucian culture can improve total factor productivity by promoting the firms’ participation in the professional division of labor. This study not only enriches the literature on the factors influencing the professional division of labor, but also deepens the cognition of the influence of Confucian culture on business decision-making behavior, and provides a cultural explanation for understanding of China's rapid economic development in recent decades