Introduction

Most economists probably pay lip service to Weber's thesis in Protestantism and the Spirit of Capitalism and so acknowledge that culture plays some general role in economic performance. However, few economists take the point on board in their own work (Casson, 1991 is a recent rare exception). There may be bar-talk which allows for what has not been explained about say, poor British competitiveness to turn on the British stereotypical ‘bloody-mindedness’. But culture is conspicuous through its absence when it comes to the more serious business of journal-talk. The contrast with management and business studies, where corporate cultures are increasingly included among the prime determinants of business success, could not be more marked (see, for instance, Peters and Waterman, 1982).

This chapter argues that economics needs to follow management and business studies: it needs to recover the intuitions licensed in the bar and grant culture an important role in explaining economic performance. In particular, it will be argued that culture influences performance in a way that affects both the short and long run competitiveness of an economy.

To suggest to economists that they should ‘follow business and management studies’ is, perhaps, not the best way to start the argument. Economists tend to jibe that management and business studies ‘lack a robust theoretical backbone: they are too descriptive’. (Of course, the taunt is typically reciprocated by management and business studies: for them, economics is excessively driven by ‘unrealistic’ theory.)