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Organizational Culture and Sustained Competitive Advantage
Organizational culture is a defining feature of every organization. The unique culture that every organization displays has an affect on its ability to remain profitable. Culture can have either positive or negative affect on the ability of the organization to remain competitive. Much academic research up to this point has focused on theory and defining what is meant by culture and sustainable competitive advantage. This research expands theory by providing tools that can help companies manage organizational culture in such a way that it results in a greater competitive advantage. This research translates theory into practical applications that can be used by a number of organizations in various industries. The most important finding of this research is that companies can take measures to increase their competitive advantage by managing their organizational culture.
Organizational Culture and Sustained Competitive Advantage
Chapter 1: Introduction
Organizational culture is defined as a group that is separated by characteristics and features that set them apart from other groups. The characteristics of a culture can include beliefs, expectations, and norms the shape behavior (Hoecklin, 1995, p. 28). Organizational culture has a long history of being associated with competitive advantage. Bratton et al. (2010) if considered culture to be a deciding factor in the ability of the Japanese to gain a competitive advantage over their American rivals during the 1980s. Since then, organizational culture and its association with competitive advantage has been a key topic of interest among academic researchers.
Interest in the connection between culture and competitive advantage has developed into several different theoretical categories. Some of the more popular theoretical concepts in this area of study are the cognitive perspective, symbolic perspective, the structural and psychodynamic perspective. Defining culture has been a difficult task for researchers. Although there are now different camps of thought on the definition of culture, there is little disagreement that organizational culture has a significant impact on the success of the business. A literature review revealed that researchers are largely in agreement that organizational culture has a significant impact on competitive advantage. However, as with the basic definition of organizational culture itself, defining the impact of culture on competitive advantage has proven difficult.
This research will help to better define the connection between organizational culture and competitive advantage. It will explore both the tangible and intangible benefits and how organizational culture affects competitive advantage within the organization. This will provide a tool that organizations can use to help better manage organizational culture so that it results in the maximum benefits for the company. The purpose of this research will be to build consensus as to the effects of organizational culture on organizations. It will play an important role in assisting companies to leverage their organizational culture to achieve the greatest desired effect. This study will examine the cultural norms and standards within organizations using several general criteria developed through the literature review. It will then examine how managers interpret the effect of their own organizational culture on the competitiveness of their firm. It will use a combination of survey data and interviews to achieve this end.
The purpose of this study is to provide organizations within means to consciously manage their organizational culture so that their unique culture can be leveraged to achieve the greatest sustainable competitive advantage possible. It will provide organizations with a tool that they can use to assess the components of their corporate cultural that will best serve them in achieving competitive advantage over their competition. This project will give organizations a means to turn theory into practice in terms of how their organizational culture relates to their future success as an organization.
The aim of this study is to provide organizations with a new tool that they can utilize to improve their performance in a world that is characterized by increasing competition. This study will help organizations utilize the plethora of information that has developed on the topic of organizational culture and its relationship to sustainable competitive advantage.
Researchers divide culture into several components. Artifacts are the visible part of culture that includes tangible elements of the culture. In the business setting, this includes the decoration and design of the office building, as well as how the employees dress. Language and social behavior in different settings is also a part of cultural artifacts. Cultural artifacts are tangible and easy to describe for those both inside of the work setting and for outsiders. Many of these cultural artifacts are a part of company policy or formal rules within the organization. Casual Friday is one example of a cultural artifact within organizations.
Other components of the organizational culture are not so easy to define in a tangible way. One example of these types of cultural artifacts is values. Hofstede (1980) defines values as a preference for certain traits over other traits. The values are shared by those within the organization. These values may be a part of coherent corporate strategy as defined by the value statement of the organization. However, many times organizational values are more difficult to define in concrete terms. Values may develop organically or through a systematic strategic development plan.
Basic assumptions are another example of organizational cultural components that cannot be easily defined in concrete terms. Basic assumptions are often subconscious and are difficult to change for many people. Basic assumptions define every individual's emotions, thoughts, and reactions to their environment (Bratton Et Al, 2010).
Developing consensus among researchers on a singular definition of culture has presented a roadblock in the advancement of research on how cultural traits lead to competitive advantage for organizations. Despite efforts over 30 years of research, theorists continue to find difficulty arriving at an agreement as to a unified definition of culture. Instead, their efforts have resulted in the recognition of any different facets of culture. A lack of unified definition of culture has presented difficulty for researchers and the development of theories surrounding this topic. At present, researchers seem to choose their favorite definition, and perhaps add their own embellishment for use in their research studies. Therefore, when considering research on organizational culture one must first develop an understanding of what the author meant when they defined the term "culture" in their study.
Finding a unified definition of culture has proved difficult for researchers in this area of interest. However, this situation is further complicated by the inability to define the terms competition in competitive advantage. It is difficult to determine how to obtain a competitive advantage and how to sustain it without first achieving a unified definition of the term. This is been an issue that is plagued businesses and one which is not yet been successfully resolved.
Chandler (1962) found that a company's ability to attain a competitive advantage was closely tied to its overall strategy and approach and response to competition. Barney (1997) defined strategy as the organization's theory about how to compete successfully. This is an important definition, as it highlights the lack of concrete definition that permeates this area of research.
Barney (1986) found that if a firm wishes to become successfully competitive then it has to determine its strategy according to the structure of the industry and the nature of competition within the market. Both of these factors allow that organization to analyze its opportunities and threats in a meaningful way. The external environment determines the approach to strategy used by organizations. This highlights the principle that organizations do not exist in a vacuum, but as interactive members of a market segment.
The external environment of the organization must be considered in the determination of the type a strategy that will be utilized. The market is an external factor, while value creating resources and core competencies of the organization are considered internal factors. Resources that are less valuable are a source of internal weakness that should be eliminated or reinforced to ensure greater success of the firm, according to Barney (1991). The ability to exploit opportunities and eliminate weaknesses is the key to taking advantage of market opportunities and avoiding threats to their existence (Barney, 1997). Barney's work in this area highlights the importance of performing SWOT analysis in the development of organizational strategy.
The inability to achieve consensus as to a single definition of competition or competitive advantage places academic research in this area at a disadvantage. However, this does not appear to be a problem that can be resolved. The reason for this difficulty in attaining a resolution is that every industry in every firm has different structures, strengths, and weaknesses. What represents a competitive advantage for one firm may represent a weakness for another. Inconsistency across different industries creates inconsistencies in competitive advantage theory.
The inability to form consensus in this area is a key reason for the importance of this academic study. In order to be able to apply the theories developed in the area of organizational culture and its relationship to competitive advantage, companies must find concrete ways to…[continue]
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