Informal institutions and corporate innovation: A Perspective from Red Culture

Since the 20th century, Red Culture has served as a significant informal institution guiding revolutionary trajectory and developmental course. However, integrating Red Culture into contemporary corporate management and leveraging its constructive influence within today's market-driven economy necessitates comprehensive exploration and thoughtful consideration. This study aims to explore the potential influence of Red Culture on contemporary innovation. Empirical findings reveal substantial and affirmative effects of Red Culture on corporate innovation. Specifically, a heightened Red Culture ambiance correlates with a marked increase in both innovation input and output within corporate. Further investigation underscores Red Culture's pivotal governance role in mitigating strategic manipulation of innovation and research and development practices, especially within the overarching framework of innovation-driven strategies. Moreover, Red Culture synergizes with formal innovation incentive mechanisms, jointly fostering corporate innovation. This study provides micro-level empirical evidence that elucidates the impact of Red Culture on corporate innovation. Additionally, it furnishes valuable policy insights for the practical implementation and enhancement of pertinent Red Culture initiative.