The Strength of Corporate Culture and the Reliability of Firm Performance
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.
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Overall change can only be achieved by higher-level learning, which results in the development of new norms, values, and practices.
“Overall change can only be achieved by higher-level learning (e.g., Fiol and Lyles 1985)-also called second-order learning (e.g., Sørensen 2002) or deutero learning (e.g., Visser 2007)-which results in the development of new norms, values, and practices.”
From Organizational resilience: a capability-based conceptualization (2020) · cites this paper as Sørensen 2002
Cites
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Anderson, N., Potočnik, K., & Zhou, J. (2014) · Journal of Management · doi:10.1177/0149206314527128 · Cited by 3,103 · see citing works
Corporate reputation and sustained superior financial performance
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“Organizational change Overall change can only be achieved by higher-level learning (e.g., Fiol and Lyles 1985)—also called second-order learning (e.g., Sørensen 2002) or deutero learning (e.g., Visser 2007)—which results in the development of new norms, values, and practices.”
BackgroundCommitment to social good and insider trading
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The Culture for Open Innovation Dynamics
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- Authors
- Sørensen, J. B.
- Affiliations
- Massachusetts Institute of Technology (US)
- Corresponding author
- Sørensen, Jesper B.
- ORCID
- Sørensen, Jesper B.
- Venue
- Administrative Science Quarterly
- Publisher
- JSTOR
- Published
- 2002-03
- Volume
- 47
- Issue
- 1
- Pages
- 70-91
- ISSN
- 0001-8392 (ISSN-L)
- 1930-3815
- OpenAlex
- W2022478588
- Cited by
- 1,004
- References
- 4
- Citations by year
- 2026: 32 · 2025: 37 · 2024: 67 · 2023: 60 · 2022: 50 · 2021: 40 · 2020: 50 · 2019: 48 · 2018: 47 · 2017: 52 · 2016: 54 · 2015: 51 · 2014: 64 · 2013: 42 · 2012: 71
- FWCI
- 57.02
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Administrative Science Quarterly (publishedVersion)
- Topics
- Social Sciences › Business, Management and Accounting › Strategy and Management › Management and Organizational Practices
- Social Sciences › Business, Management and Accounting › Strategy and Management › Leadership and Management in Organizations
- Social Sciences › Business, Management and Accounting › Organizational Behavior and Human Resource Management › Organizational Strategy and Culture
- Keywords
- organizational culture, firm performance, performance variability, organizational learning, environmental volatility, incremental change, behavioral consistency, organizational change
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