Weakening Cultural Strength: Firm Performance Uncertainty and Norm Consensus

• In Event: 1184 - Section on Organizations, Occupations, and Work Refereed Roundtable Session
  In Refereed Roundtable 100min: Table 08. Management and Performance

Abstract

Seminal work posits that culture develops to help organizations achieve internal coordination, but is also shaped by organizations' efforts to adapt to the external environment. However, research on cultural strength focuses on the former by examining how strong culture enhances firm performance, while largely ignoring the latter. Consequently, the possibility that cultural strength and performance are mutually constitutive constructs has been overlooked - while cultural strength might enhance some aspects of performance, performance feedback from the external environment could also influence the development of widely shared and strongly held norms, values, and beliefs. This article asks: how does firm performance uncertainty impact cultural norm consensus, a fundamental component of cultural strength? While performance uncertainty may inhibit members from reaching consensus about core norms, values, and beliefs, culture's influence and salience is also thought to be heightened amidst uncertainty. I theorize that firm performance uncertainty ultimately reduces cultural norm consensus by inhibiting the behavioral consistency required to foster shared perceptions of dominant norms. Support for the argument is found using a novel, time-varying measure of norm consensus derived from employee reviews of nearly 500 publicly traded firms on the website Glassdoor.com. The results have important implications for understanding the complex relationship between corporate culture and performance, and highlight the need for more research investigating the broader dynamics of how corporate culture develops, changes, evolves, or persists over time.

Author

• Matthew Corritore, Stanford University