  What role does culture play in determining institutions in a country? This
paper argues that the establishment of institutions is a process originating
predominantly in a nation's culture and tries to discern the role of a cultural
background in the governance of countries. We use the six Hofstede's Cultural
Dimensions and the six Worldwide Governance Indicators to test the strength of
the relationship on 94 countries between 1996 and 2019. We find that the
strongest cultural characteristics are Power Distance with negative effect on
governance and Long-Term Orientation with positive effect. We also determine
how well countries transform their cultural characteristics into institutions
using stochastic frontier analysis.
