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Journal Article
The Strength of Corporate Culture and the Reliability of Firm Performance
Jesper B. Sørensen
Administrative Science Quarterly
Vol. 47, No. 1 (Mar., 2002), pp. 70-91
Published
by: Sage Publications, Inc. on behalf of the Johnson Graduate School of Management, Cornell University
DOI: 10.2307/3094891
https://www.jstor.org/stable/3094891
Page Count: 22
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Topics: Corporate culture, Business entities, Organizational culture, Operating cash flow, Industrial market, Statistical variance, Return on investment, Environmental disorders, Cultural industries
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Abstract
Prevailing research claims that strong corporate cultures improve firm performance by facilitating internal behavioral consistency. This paper addresses an unexamined implication of this argument by analyzing the effect of strong corporate cultures on the variability of firm performance. This relationship depends on how strong cultures affect organizational learning in response to internal and external change. I hypothesize that strong-culture firms excel at incremental change but encounter difficulties in more volatile environments. Results of analyses of a sample of firms from a broad variety of industries show that in relatively stable environments, strong-culture firms have more reliable (less variable) performance. In volatile environments, however, the reliability benefits of strong cultures disappear.
Administrative Science Quarterly
© 2002 Johnson Graduate School of Management, Cornell University