Culture, Economic creativity, Innovation, Entrepreneurship, National prosperity, Structural equation modeling, O31, C12, C31, L26,

PurposeThis paper seeks to propose a framework that describes how culture evolves and how certain external shocks may or may not cause it to change.Design/methodology/approachThe central point is that culture, like firms and markets, is a type of institution and is, therefore, susceptible to the same sort of analysis applied to other institutional forms. In this study, culture is examined from the game‐equilibrium view of institutions that suggests that norms of behavior are endogenously generated and become self‐enforcing through the repeated interaction of individuals. Two historical examples are offered to assess the proposed framework: the experience of ethnic Malays in Malaysia following independence from Britain, and Brazil's agricultural workers during the early part of the twentieth century.FindingsConceptualizing culture in institutional terms challenges conventional wisdom, which regards culture as exogenously given. The institutional view of culture permits an evaluation of environmental changes as to the likelihood that they will change generally held beliefs.Research limitations/implicationsTo the extent that culture explains, in part, the economic performance of societies, the implication for policy makers is that they do not have to wait patiently for slow cultural change or rely on serendipity to achieve a more productive culture paradigm.Originality/valueThis paper applies concepts from institutional economics to the study of culture evolution and change.