Does Dialect Diversity Benefit Corporate Performance? The Moderating Effect of “Moralism” and “Utilitarianism”

Abstract

This paper studies how dialect diversity affects corporate performance, and the moderating effects of philanthropic giving, marketing expense and marketization on this relationship. We constructed theoretical models and hypotheses and conduct empirical test on them by using 2003 to 2018 Chinese listed firms’ data through panel data fixed effect regression. The results show that: (1) dialect diversity has a significant positive impact on firm performance; (2) Both philanthropic giving based on the goal of "doing good" and marketing expense based on the purpose of "utility" can proactively enhance the positive influence of dialect diversity on firm performance, furthermore the latter one is more effective. Based on the theories of "new institutional economics" and "dialectology", this paper explains the interaction relationship between variables. The research finds that: (1) sub-cultural experience transmits among dialects through “penetration effect”, thus enable dialect diversity creating values and providing firms with rich opportunities of potential markets and improving their own management capabilities and helping them to improve their performance in dialects` original markets. (2) Through the strategy of philanthropic giving, firms established and strengthen contacts with stakeholders from sub-cultures to gain trust and reputation, to set up legitimacy and voice. Different from donation, firms increase marketing expenses and adopt the "language mixing and innovation" mechanism to design and carry out marketing strategies, actively enhance the identity and trust among organizations and heterogeneous markets, to obtain more opportunities of socially and economically exchange, thus gain more market proportion. Finally, this paper analyzes the managerial implications for practice from research conclusions and summarizes the inadequateness of research and the prospects for future research.