Cultural Dynamics and "Sharing the Cake": Cultural Inclusion or Cultural Superiority

Available online at www.rajournals.in International Journal of Management and Economics Invention ISSN: 2395-7220 DOI: 10.47191/ijmei/v11i10.02 Volume: 11 Issue: 10 October 2025 International Open Access Impact Factor: 8.518 (SJIF) Page no. 4706-4720 4706 Xinyun Zhang, IJMEI Volume 11 Issue 10 October 2025 Cultural Dynamics and "Sharing the Cake": Cultural Inclusion or Cultural Superiority Xinyun Zhang Publicity Department, University of International Business and Economics (UIBE), Beijing 100029, China ARTICLE INFO ABSTRACT Published Online: 08 October 2025 Corresponding Author: Xinyun Zhang The current trend of cultural globalization has prompted society to consider two cultural dynamics: cultural inclusion and cultural superiority, which can contribute to a more rational distribution of the "cake" in the common wealth? To this end, this paper constructs two variables, cultural inclusion and cultural superiority, based on the number of temples of Confucianism, Buddhism, Taoism, Christianity, and Islam, and draws the following conclusions: First, cultural inclusion can increase the share of labor income and reduce the gap in labor distribution, thus promoting the "good distribution of the cake", while cultural superiority can promote the "good distribution of the cake". Second, when executives do not have overseas experience, the positive effect of cultural inclusion on " good distribution of the cake " is more pronounced, while the opposite is true for cultural superiority; Third, cultural inclusion may be able to share the cake well by improving corporate information transparency and poorly by increasing the first category of agency costs, while the opposite is true for cultural superiority. The research in this paper provides important cultural insights into the "good distribution of the cake" component of promoting shared prosperity. KEYWORDS: cultural inclusion; cultural superiority; sharing the cake; common wealth. 1. INTRODUCTION Against the backdrop of the changing world situation and the increasing trend of economic and cultural globalization, people of all countries are standing at the crossroads of their own civilizations, witnessing, caring and thinking about the clash of civilizations and their future development. Will the development of diverse human civilizations be mutually inclusive and blossoming or will the most advantageous civilizations be deposed? On March 15, 2023, Xi Jinping pointed out at the High-level Dialogue between the Communist Party of China and the World's Political Parties that we should jointly advocate respect for the diversity of world civilizations and the superiority of civilizational exchange, mutual appreciation and civilizational tolerance over civilizational divisions, clashes and superiority[1] . Considering that the concept of civilization is too broad and difficult to measure, and culture is the main source of civilizational differences, based on Williams' definition of culture and civilizational convergence[2] , the following will replace civilization with culture for further analysis. As China enters a moderately prosperous society by 2020, the focus of modernization will gradually shift to common prosperity[3] . However, although the polarization of income distribution has been effectively alleviated after more than 40 years of reform and opening up, there is still a large gap between citizens' incomes and a long way to go to achieve the "olive-shaped" goal.[4] China still has a long way to go to “Cultural Dynamics and "Sharing the Cake": Cultural Inclusion or Cultural Superiority” 4707 Xinyun Zhang, IJMEI Volume 11 Issue 10 October 2025 achieve the goal of common prosperity. The Central Economic Conference in 2021 pointed out that the goal of common prosperity cannot be achieved without improving the income distribution system on the basis of higher incomes.[5] . How to improve the distribution system, narrow the income gap and share the affluent cake is the key point to be solved on the way to achieve common prosperity in China. From a cultural perspective, a culturally inclusive society and a culturally superior society have different ideas about "distributing the cake". A culturally inclusive society aims at cultural symbiosis, a pluralistic and egalitarian value built on the principle of common subjectivity[6] , while a culturally superior society always follows the special principle of pursuing private interests[7] . However, contemporary society tends to pursue cultural diversity and promote cultural inclusion, while some people advocate cultural cohesion, bringing to life the excellent traditional Chinese culture such as Confucianism, further enhancing cultural confidence, and making the excellent traditional culture superior to the influence of other cultures to achieve cultural superiority. Such two cultural dynamics are bound to influence the thinking of the management of the enterprise, which in turn can directly influence the distribution of the "cake", so the cultural dynamics will have an important impact on the "good distribution of the cake". So, which is more beneficial to the common wealth, cultural inclusion or cultural superiority? This paper is based on these questions. It is well documented that informal cultures such as Confucianism can significantly influence corporate behavior and effects on shared prosperity, for example, Confucianism can promote corporate social responsibility[8] and charitable giving[9] to promote the goal of shared prosperity, but it can also inhibit shared prosperity by increasing the pay gap between executives and employees through "hierarchical perceptions". [10]The impact of foreign culture can weaken the influence of Confucianism[11] . Based on the complementarity of strengths and weaknesses, the extent to which traditional cultures, such as Confucianism, can reduce the impact of their inhibiting mechanisms on shared prosperity through inclusion with other cultures is considered. Specifically, does cultural inclusion have a facilitating effect on the sharing of the cake? Does cultural superiority have a negative or negative effect on the sharing of the cake? This paper constructs cultural inclusion and cultural superiority indicators based on the number of Confucianism, Buddhism, Taoism, Christianity, and Islam temples in each prefecture-level city in China to investigate their effects on common wealth and the mechanisms of their effects. It is found that cultural inclusion promotes better "cake distribution", while cultural superiority reduces the performance of companies in "sharing the cake". The study further finds that the positive effect of cultural inclusion on "distributing the cake" is more pronounced in companies whose executives do not have overseas experience, while the negative effect of cultural superiority on "distributing the cake" is more pronounced in companies whose executives do not have overseas experience. The mechanism study finds that cultural inclusion and cultural superiority affect the distribution of the common wealth "cake" by affecting corporate information transparency and first-class agency costs. Specifically, cultural inclusion positively affects the distribution of the "cake" by increasing information transparency, while cultural superiority negatively affects the distribution of the "cake" by decreasing information transparency; cultural inclusion increases the first type of agency costs, while cultural superiority decreases the first type of agency costs. Cultural inclusion increases the first type of agency costs, while cultural superiority decreases the first type of agency costs, which in turn affects the distribution of the "cake". Compared with existing studies, the possible contributions of this paper are mainly in the following aspects. First, it opens up a new field of research on shared prosperity from the perspective of cultural dynamics and provides a new perspective and method for exploring the impact of cultural cross-fertilization on economic and social development. Secondly, we use empirical analysis to clarify the influence of cultural inclusion and cultural superiority on "sharing the cake", and reveal that cultural inclusion is the cultural posture that can really "share the cake", while cultural superiority, which is a competitive ideology, is incompatible with the goal of "common wealth" in China. The cultural superiority is incompatible with the goal of "common prosperity" in China, and provides a strong support for China to take the road of peaceful development. Third, from the perspective of mechanism, it reveals the key role of information transparency and the first type of agency costs in this process, which provides useful insights for improving the income distribution system, narrowing the income gap and promoting common prosperity. “Cultural Dynamics and "Sharing the Cake": Cultural Inclusion or Cultural Superiority” 4708 Xinyun Zhang, IJMEI Volume 11 Issue 10 October 2025 2. LITERATURE REVIEW AND RESEARCH HYPOTHESIS 2.1 Literature Review In recent years, cultural studies have rapidly emerged in the fields of finance and management, and people have begun to pay attention to the consequences of the influence of culture on economy and society. Foreign cultural studies mainly focus on the influence of Western religious culture[12] , while in China, the excellent traditional culture - Confucianism culture, because of its world influence and non-superstition and other characteristics, leading to most domestic cultural studies based on the Confucian cultural perspective, it has been found that Confucian culture can improve internal control governance[13] , enhance risk-taking capacity[14] and Confucian culture has been found to enhance corporate capabilities such as internal control governance[17] , risk-taking capacity[15] , and innovation capacity , as well as promote corporate social responsibility by curbing irregularities of major shareholders[16] and increasing investment in environmental protection . However, most of the existing articles studying the impact of culture on economy and society are based on individual cultures, and there are no relevant studies based on cross-cutting aspects of traditional cultures. In terms of shared prosperity, there is a general consensus to "share the pie well" while "making the pie bigger", as more and more studies have confirmed that the overall gap between the rich and the poor has widened over the past three centuries or so[18-20] . For companies, "sharing the pie" is mainly reflected in the increase of the share of labor income and the reduction of the average compensation gap between management and employees[21-22] . There are many factors that influence the share of income and the internal pay gap, such as the inability to achieve optimal pay based on information misalignment[23] , which leads to more "noise" in executive pay that is not related to effort[24] , including surplus management to whitewash performance[25] , and agency-based theory, where management power can enable management to influence pay design and [26] and even collusion with the board of directors[27] , while few studies based on Confucian cultural perspectives on the impact of "sharing the cake" are controversial, with both negative and positive effects[28] and[29] , the possible reasons for such conclusions being different measures of Confucian culture. However, culture is a broad factor, and its measurement is a "black box" that cannot be opened. Based on this situation, this paper attempts to study the composition ratio of different local cultures based on the Confucian culture measurement method, and then to identify the cultural factors that contribute to "sharing the cake" from the perspective of cultural dynamics. The advantage of this is that the composition of different cultures can, to some extent, eliminate the measurement error of a single culture and mitigate the influence of other common factors on different cultures. 2.2 Research hypothesis Civilizational superiority, as the spiritual core of Western centrism, manifests itself as "superiority" through racial consciousness, cultural values and other dimensions, which manifests itself at the cultural level as cultural superiority, i.e. as a cultural preference that resists the development of other cultures around it, especially those that are threatening to it. An extreme example of this is "American cultural centrism", the belief that world culture should be highly homogenized and integrated, a form of cultural hegemony that is itself another form of capitalism[6] . Cultural inclusion is the core of cultural relativism and cultural pluralism, which rejects absolute and centralized cultural forms and advocates cultural interaction and cultural inclusion. Although the edifice of Western capitalism today is built on the apex of human society, this does not mean that capitalism is all-just, much less that cultural superiority is alljust. The unjust side of cultural superiority is manifested in the alienation of human relations caused by it, and the constant pursuit of material interests and personal selfishness erodes the territory of value rationality. The ironic image of "man-eating man" is always under the curtain[30] . It is worth noting that this cultural form pursues not the wealth of society, but the insignificant wealth of individuals[31] , which is destined to lead regions and enterprises that favor cultural superiority to pursue more selfish satisfaction, thus gradually ignoring the common wealth, the lifelong goal of communists. Cultural tolerance, the cultural expression of the concept of civilizational coexistence, may be the solution to the dilemma of selfishness brought about by cultural superiority, because an equal, harmonious and coexistent civilization cannot be based on special interests, but must be based on the common interests and common values of mankind, and thus can solve the contradiction between the particularity and universality brought about by the mentality of cultural superiority of capitalism, and thus promote The common prosperity, “Cultural Dynamics and "Sharing the Cake": Cultural Inclusion or Cultural Superiority” 4709 Xinyun Zhang, IJMEI Volume 11 Issue 10 October 2025 especially in terms of "sharing the cake", can be achieved. Secondly, cultural inclusion, as opposed to cultural superiority, enables companies and regions to have a global rather than a local perspective, which leads to a change in the way they think about the "distribution of the cake" and a real understanding of the positive meaning of common prosperity for society and themselves. At the enterprise level, "sharing the cake" can be considered from two perspectives: income distribution gap and labor income share. From the perspective of income distribution gap, companies that advocate cultural inclusion have less selfishness than companies with superior culture due to the mentality of inclusion, and they will pursue harmonious relationships with their superiors and subordinates. Based on the above considerations, cultural inclusion can make management actively or passively reduce the gap between their pay and that of the general employees considering harmonious relationships[32-33] , while cultural superiority may make management actively or passively use non-positive means to increase their own pay, thus increasing the gap between their pay and that of the general employees. Based on the above analysis, this paper proposes the following hypotheses: Hypothesis H1: Cultural inclusion will reduce the income gap between management and general employees. Hypothesis H2: Cultural superiority will increase the income gap between management and general employees. From a labor income share perspective, information asymmetry is a key factor in not achieving an optimal compensation system.[23] Even company CEOs receive only 0.5% of the value they create due to the employer's difficulty in determining the individual's contribution to value creation.[34] The reduction in the psychological distance between owners and employees brought about by cultural inclusion can reduce the degree of employees' concealment of private information, which, despite the potential benefits to employees, may also contribute to the inability of compensation makers to understand the full range of corporate and employee information and thus to set compensation incorrectly, and thus the release of such information may reduce the degree of compensation asymmetry by increasing the transparency of corporate information. The release of such information may reduce information asymmetry by increasing the transparency of corporate information, thus optimizing compensation and increasing the share of labor income. The opposite is true for the cultural advantage, as the employees' pursuit of selfinterest may make them care more about short-term interests and conceal the few information that they only know, so that they can obtain private gains in some way, which leads to the decrease of corporate information transparency and the increase of information asymmetry and may reduce the labor income share. Based on the above analysis, this paper proposes the following hypotheses: Hypothesis H3: Cultural inclusion will increase the labor income share. Hypothesis H4: Cultural superiority reduces the labor income share. 3. STUDY DESIGN 3.1 Sample selection This paper takes the listed companies in Shanghai and Shenzhen A-shares from 2011 to 2020 as the research sample and screens them by the following criteria: first, excluding financial and insurance companies; second, excluding ST and *ST listed companies; third, excluding companies with missing required data. A total of 12,271 sample values were obtained after screening. To exclude the effect of extreme values, this paper Winsorize all continuous variables at the upper and lower 1%. The required corporate financial and governance data for this paper were obtained from CSMAR and CNRDS databases. The data processing software is Python and Stata 15.0. 3.2 Model construction and variable definition 3.2.1. Model construction In order to test the influence of cultural tolerance and cultural superiority on "sharing the cake", models (1) and (2) are constructed in this paper. Incomei,t = α0 + α1 CTOi,t + α2 Controlsi,t + Industry + Year + ξi,t (1) Incomei,t = α0 + α1 CTRi,t + α2 Controlsi,t + Industry + Year + ξi,t (2) The explanatory variables Income denote the two key components of "sharing the cake", i.e., labor income share and income disparity, CTO denotes cultural inclusion, and CTR denotes cultural superiority, as defined below. controls denote control variables, including return on equity (ROE), firm size (Size), capital structure (Lev), growth, number of directors (Board), independent directors (Indep), top shareholder (Top1), and equity balance (Lev). Size), capital structure (Lev), firm growth (Growth), number of directors “Cultural Dynamics and "Sharing the Cake": Cultural Inclusion or Cultural Superiority” 4710 Xinyun Zhang, IJMEI Volume 11 Issue 10 October 2025 (Board), proportion of independent directors (Indep), proportion of shares held by the largest shareholder (Top1), equity checks and balances (Balance), degree of separation of powers (LQFLD), proportion of female directors (NXDS), and ownership structure (SOE). In this paper, we control for the effects of year fixed effects and industry fixed effects, and cluster-adjusted standard errors at the firm level. 3.2.2. Key variable definition 3.2.2.1 Explanatory variable: share of labor income (distribution). The share of labor income is calculated by using "cash paid to and for employees" as a proportion of total operating income.[35] , which is denoted as contribution_1. To enhance the reliability of the conclusion, we refer to the practice of Wang Xiongyuan and Huang Yujing, and use "cash paid to and for employees" as a proportion of total operating income. In order to enhance the reliability of the findings, the share of labor income is measured by using "cash paid to employees and cash paid for employees" plus the payroll payable at the end of the period minus the payroll payable at the beginning of the period and dividing it by the total operating income[36] , denoted as distribution_2, as a proxy variable for the share of labor income. 3.2.2.2 The explanatory variable income gap (gap). The variable of income gap is gap_rat. Referring to K. Zhang et al. the ratio measure of the average management compensation to the average employee compensation is used[37] . To enhance the robustness of the article, the ratio of the average compensation of the top three executives to the average compensation of the remaining employees (threegap)[38] and the natural logarithm of the difference between the average compensation of management and the average compensation of employees (gap_abs)[26] are selected as the remaining two measures of pay gap for robustness testing by referring to Jiang et al. and Liang-Yin Chen et al. 3.2.2.3 Explanatory variable cultural inclusion (CTO). Since China is most influenced by Confucianism, Buddhism, Islam and Christianity are the most influential religions in the world and still have some influence in China, this paper measures cultural tolerance and cultural superiority based on five religions: Confucianism, Buddhism, Islam and Christianity. At present, the number of Confucian schools, the number of temples[39] or the distance between enterprises and 1 Note: For the convenience of analysis, the religion with the largest number of clan temples in the prefecture-level city is referred to as the main their cultural origins[40] are commonly used to measure traditional cultures such as Confucianism and merchant culture. Considering the availability of data, this paper uses the number of temples of each religion within the prefecturelevel city where the enterprise is registered to construct the cultural inclusion and cultural superiority indicators. The data is processed by obtaining the geographical locations of the clan temples of five religions based on the CNRDS database and matching them with all prefecture-level cities to obtain the number of temples of each religion in each prefecturelevel city 1 . Considering that for the subject religion, except for the largest object religion which is the most threatening, all other religions hardly pose a threat to the subject religion, this paper takes the number of temples of the largest object religion divided by the number of temples of the subject religion to measure the degree of tolerance of the subject religion to the object religion, especially the religion which poses a threat to it, which is recorded as cultural tolerance (CTO_1), and secondly, to measure the percentage of the largest object religion to of the total number of all religious temples, which also reflects the power of the object religion within the prefecture, and thus the degree of tolerance of the subject religion towards the most threatening object religion, noted as cultural tolerance (CTO_2). The specific calculations are shown in models (3) and (4): CTO_1 = X2/X1 (3) CTO_2 = X2/(X1+X2+X3+X4+X5) (4) Among them, X1 to X5 denote the five religions of Confucianism, Buddhism, Taoism, Islam and Christianity in descending order of the number of temples, i.e., X1 denotes the number of temples of the religion with the largest number of temples in a given prefecture-level city, X2 denotes the number of temples of the religion with the second largest number of temples in a given prefecture-level city, and so on. 3.2.2.4 Explanatory variable cultural superiority (CTR). Drawing on cultural inclusion, cultural superiority is measured based on the number of clan temples of Confucianism, Buddhism, Taoism, Islam and Christianity. Specifically, the larger the difference between the number of temples of the subject religion and the largest object religion, the higher the status of the subject religion. Considering that there is a difference in the absolute value of the number of religion in this paper, and the remaining four clan temples become the guest clan temples. “Cultural Dynamics and "Sharing the Cake": Cultural Inclusion or Cultural Superiority” 4711 Xinyun Zhang, IJMEI Volume 11 Issue 10 October 2025 religious temples in each prefecture-level city, this paper adopts a proportional approach to eliminate the difference in the total number of religious temples within the prefecturelevel city, specifically by using the number of temples of the subject religion minus the number of temples of the largest object religion, and then dividing the difference by the number of religious temples as a measure of cultural superiority (CTR). To improve the robustness of the findings, this paper uses the CEO's place of birth instead of the place of business registration to re-measure the cultural inclusion and cultural transcendence variables in the robustness test section. The specific calculations are shown in model (5): CTR = (X1-X2) / (X1+X2+X3+X4+X5) (5) 3.3 Descriptive statistics Table 1 presents the results of descriptive statistics for the key variables. Among them, the standard deviations of cultural inclusion CTO_1 and CTO_2 are 0.232 and 0.113, respectively, and the standard deviation of cultural superiority CTR is 0.258, both of which are greater than 0.05, indicating that the data have a large dispersion, i.e., the cultural dynamics of each prefecture-level city has a large difference. Table 1 Descriptive statistical analysis of key variables Variables Number of samples Average value Standard deviation Minimum value Median Maximum value distribution_1 12,271 0.126 0.083 0.012 0.109 0.454 gap _COPYrat 12,271 1.529 0.605 0.251 1.481 3.268 CTO_1 12,271 0.283 0.232 0.011 0.179 0.959 CTO_2 12,271 0.178 0.113 0.005 0.143 0.468 CTR 12,271 0.567 0.258 0.000 0.630 0.985 ROE 12,271 0.062 0.124 -0.565 0.065 0.359 Size 12,271 22.36 1.176 19.96 22.24 25.73 Lev 12,271 0.453 0.200 0.069 0.447 0.908 Growth 12,271 0.157 0.421 -0.529 0.895 2.795 Board 12,271 8.672 1.674 5.000 9.000 15.00 Indep 12,271 0.373 0.052 0.333 0.333 0.571 Top1 12,271 0.330 0.143 0.087 0.306 0.716 Balance 12,271 0.698 0.591 0.028 0.531 2.706 LQFLD 12,271 5.401 7.807 0.000 0.000 28.83 NXDS 12,271 0.142 0.123 0.000 0.111 0.500 SOE 12,271 0.427 0.495 0.000 0.000 1.000 4. ANALYSIS OF EMPIRICAL RESULTS 4.1 Cultural dynamics and sharing the cake: a test of cultural inclusion Table 2 presents the regression results of cultural inclusion (CTO_1, CTO_2) on labor income share (distribution_1) and income gap (gap_rat). In columns (1) and (3), both cultural inclusion and labor income share are significantly positive at the 1% level, indicating that cultural inclusion can expand the labor income share of firms. In columns (2) and (4), cultural inclusion and income gap are both significantly negative at the 1% level, indicating that cultural inclusion can reduce the income gap within the firm. The above results indicate that cultural inclusion can enhance the performance of enterprises in "sharing the cake well". “Cultural Dynamics and "Sharing the Cake": Cultural Inclusion or Cultural Superiority” 4712 Xinyun Zhang, IJMEI Volume 11 Issue 10 October 2025 Table 2 Regression results of cultural inclusion and sharing the cake well distribution_1 gap_rat distribution_1 gap_rat (1) (2) (3) (4) CTO_1 0.011*** -0.097*** (0.0026) (0.0211) CTO_2 0.028*** -0.140*** (0.0053) (0.0430) ROE -0.072*** 0.764*** -0.072*** 0.764*** (0.0053) (0.0428) (0.0053) (0.0428) Size -0.017*** 0.187*** -0.017*** 0.187*** (0.0007) (0.0055) (0.0007) (0.0055) Lev -0.052*** -0.110*** -0.052*** -0.109*** (0.0039) (0.0312) (0.0039) (0.0312) Growth -0.018*** -0.059*** -0.018*** -0.059*** (0.0015) (0.0119) (0.0015) (0.0119) Board 0.003*** 0.002 0.003*** 0.002 (0.0004) (0.0036) (0.0004) (0.0036) Indep 0.030** -0.398*** 0.030** -0.388*** (0.0132) (0.1070) (0.0132) (0.1070) Top1 0.017*** -0.283*** 0.017*** -0.279*** (0.0062) (0.0502) (0.0062) (0.0502) Balance 0.005*** 0.043*** 0.005*** 0.044*** (0.0014) (0.0116) (0.0014) (0.0116) LQFLD 4.96e-05 0.001** 5.35e-05 0.001** (7.95e-05) (0.0006) (7.94e-05) (0.0006) NXDS -0.004 -0.170*** -0.004 -0.169*** (0.0050) (0.0407) (0.0050) (0.0407) SOE 0.008*** 0.764*** 0.008*** 0.764*** (0.0015) (0.0428) (0.0014) (0.0428) Constant 0.430*** -1.847*** 0.428*** -1.864*** (0.0170) (0.1370) (0.0170) (0.1380) Year & Ind Y Y Y Y N 12,271 12,271 12,271 12,271 R2 -adj 0.399 0.254 0.399 0.254 Note: *, ** and *** indicate significant at the 10%, 5% and 1% levels, respectively, with standard errors in parentheses. Same below. 4.2 Cultural dynamics and sharing the cake: the cultural superiority test Table 3 presents the regression results of cultural superiority (CTR) on labor income share (distribution_1) and income gap (gap_abs). In column (1), cultural superiority is significantly negative with labor income share at the 1% level, indicating that cultural superiority can reduce the labor income share of firms. In column (2), cultural inclusion and income gap are significantly positive at the 1% level, indicating that cultural superiority can widen the pay gap within the firm. The above results suggest that cultural superiority can reduce the performance of companies in "sharing the cake". “Cultural Dynamics and "Sharing the Cake": Cultural Inclusion or Cultural Superiority” 4713 Xinyun Zhang, IJMEI Volume 11 Issue 10 October 2025 Table 3 Regression results of cultural superiority and sharing the cake well distribution_1 gap_abs (1) (2) CTR -0.008*** 0.102*** (0.0023) (0.0189) ROE -0.072*** 0.764*** (0.0053) (0.0428) Size -0.017*** 0.187*** (0.0007) (0.0055) Lev -0.052*** -0.110*** (0.0039) (0.0312) Growth -0.018*** -0.059*** (0.0015) (0.0119) Board 0.003*** 0.002 (0.0004) (0.0036) Indep 0.029** -0.396*** (0.0132) (0.1070) Top1 0.017*** -0.284*** (0.0062) (0.0502) Balance 0.005*** 0.043*** (0.0014) (0.0116) LQFLD 5.36e-05 0.001** (7.95e-05) (0.0006) NXDS -0.004 -0.169*** (0.0050) (0.0406) SOE 0.008*** -0.108*** (0.0015) (0.0117) Constant 0.441*** -1.937*** (0.0169) (0.1360) Year & Ind Y Y N 12,271 12,271 R2 -adj 0.398 0.255 4.3 Robustness test 4.3.1 proxy variables for labor income share Following the idea in the variable definition section above, the share of labor income (contribution_2) is measured as a proxy for the share of labor income by using "cash paid to and for employees" plus the payroll payable at the end of the period minus the payroll payable at the beginning of the period, divided by the total operating income of the firm. As shown in Table 4, in columns (1) and (2), cultural inclusion (CTO_1, CTO_2) and labor income share (distribution_2) are both significantly positive at the 1% level. In columns (3) and (3), cultural superiority (CTR) and labor income share (distribution_2) are significantly negative at the 1% level, indicating that the findings of this paper are robust. “Cultural Dynamics and "Sharing the Cake": Cultural Inclusion or Cultural Superiority” 4714 Xinyun Zhang, IJMEI Volume 11 Issue 10 October 2025 Table 4 Tests of labor income proxy variables distribution_2 distribution_2 distribution_2 (1) (2) (3) CTO_1 0.011*** (0.0027) CTO_2 0.028*** (0.0054) CTR -0.008*** (0.0024) Controls Y Y Y Year & Ind Y Y Y N 12,271 12,271 12,271 R2 -adj 0.394 0.394 0.393 4.3.2 proxy variables for income disparity Following the idea in the variable definition section above, the ratio of the average compensation of the top three executives to the compensation of the remaining employees (threegap) and the natural logarithm of the difference between the average compensation of management and the average compensation of employees (gap_abs) are used as proxy variables for the pay gap. As shown in Table 5, in columns (1), (2), (4), and (5), cultural inclusion (CTO_1, CTO_2) and income gap (threegap, gap_abs) are significantly negative. In columns (3) and (6), cultural superiority (CTR) and income disparity (threegap, gap_abs) are both significantly positive at the 1% level, indicating that the findings of this paper are robust. Table 5 Tests of income gap proxy variables threegap threegap threegap gap_abs gap_abs gap_abs (1) (2) (3) (4) (5) (6) CTO_1 -0.862*** -0.234*** (0.2300) (0.0267) CTO_2 -1.049** -0.382*** (0.4700) (0.0546) CTR 0.751*** 0.209*** (0.2060) (0.0240) Controls Y Y Y Y Y Y Year & Ind Y Y Y Y Y Y N 12,271 12,271 12,271 12,271 12,271 12,271 R2 -adj 0.276 0.275 0.276 0.365 0.363 0.365 4.3.3 Alternative variables of cultural inclusion and cultural superiority The cultural inclusion and cultural superiority variables in the benchmark model are calculated based on the number of five religious temples in the prefecture where the firm is registered, but the CEO, as the central figure in determining the firm's business strategy[26] , has a personal style that largely determines how the firm is influenced by the cultural dynamics. Therefore, this paper calculates cultural inclusion (CTO_1_CEO, CTO_2_CEO) and cultural superiority (CTR_CEO) by the number of five religious temples based on the CEO's birthplace as a proxy variable for cultural inclusion and cultural superiority in the benchmark regression for robustness testing. Since the disclosure of CEO birthplace data of listed companies is not comprehensive, in order to keep the amount of data not too much missing, this paper does not exclude the missing data of CEO birthplace data. The results are shown in Table 6, and the conclusions of this paper remain robust.