ABSTRACT
This chapter introduces culture into a behavioral model of the firm as a causal variable in the growth and development process and, more specifically, as a determinant of labor productivity and thereby of the level of gross national product. In a behavioral model of the firm, inappropriate cultures can be a cause of economic inefficiency and appropriate cultural precepts become necessary but not sufficient conditions for economic efficiency. This raises the issue of how economic entities imbued with inefficient cultures and therefore themselves inefficient can survive in the long run. For Max Weber, rational capitalist behavior requires that individuals pursue the maximization of income or wealth as a “calling” in and of itself. In effect, individuals are instilled with a particular work ethic. Therefore, they contribute toward maximizing labor productivity and material welfare. In a behavioral model of the firm, economic agents are assumed to be rational utility maximizers from the perspective of the conventional wisdom.
