How corporate structure and culture sustain competitive advantage

How Corporate Structure and Culture Help Achieve and Sustain a Competitive Advantage Today, the marketplace is becoming increasingly interconnected and globalized, forcing companies of all sizes and types to identify effective strategies for achieving and sustaining a competitive advantage. As a result, there has been growing interest in developing timely and relevant strategies to achieve this outcome. In this regard, the purpose of this paper is to provide a review of the relevant literature to determine in what ways a corporation's structure and culture can be internal strengths or weaknesses and how these strengths or weaknesses affect companies' competitiveness in the global marketplace today. Finally, a summary of the results from the literature review and key findings concerning the above issues are presented in the paper’s conclusion.

Review and Discussion A corporation’s internal structure and culture represent a dual-edged sword for all types of organizations. For example, to the extent that the internal structure and culture produce the results that are needed to guide an organization In achieving its objectives will likely be the extent to which they are regarded as strengths. Conversely, if a corporation’s structure and culture adversely affect its ability to achieve its objectives, it is likewise likely that they will regarded as weaknesses. For instance, according to Flatt and Kowalczyk (2018), “Corporate culture [is an] intangible asset firms use to create a competitive strategic advantage to differentiate themselves from other firms to enhance firm performance” (p. 14).
Unfortunately, some corporate leaders may fail to fully recognize and appreciate the positive or negative effects of internal structure and culture on firm performance, and will look for other factors that might be responsible. This tendency may be especially true if the existing corporate structure and culture have worked well in the past. Indeed, it is axiomatic to many business leaders that “if it isn’t broke, don’t fix it,” but by the time they realize that their existing culture and structure are not working, it may be too late.
Fortunately, there are some significant signs that increasing numbers of corporations are recognizing the importance of the type of culture they have in place in helping them achieve and sustain a competitive advantage. Indeed, although Bevacqua (2018) reports that it is possible to achieve a competitive advantage through strategies such as differential pricing, these approaches typically fail to produce the long-term competitiveness that is needed in a dynamic globalized marketplace. In this regard, Bevacqua (2018) emphasizes that, “One competitive advantage you can leverage consistently—a differentiator that can’t duplicated—is your company culture. Your culture is unique to your organization, helping to shape your company’s brand identity, improve employee retention, and inspire and motivate your people” (para. 3).
In this context, the type of corporate culture that is in place can enhance brand image and recognition in ways that represent a definite strength, but this strength is conditioned on the ability of corporations to communicate these attributes to all of their stakeholders, including their internal and external customers. For example, according to Otubanjo (2018):
Branding must be vested along the traditional lines of corporate brand development process involving the articulation of corporate identity, corporate culture and corporate behavior through the channels of corporate communications for stakeholders who decode these signals to create a corporate image or reputation in their minds. (p. 15)
This guidance underscores the need for continuous evaluation of the type of corporate culture that is being inculcated by top management in order to ensure that it is relevant and appropriate for corporations’ current circumstances.
Because an increasing number of corporations are recognizing the importance of their culture in forging and sustaining a competitive advantage (Bevacqua, 2018), it is therefore essential to operationalize the concept. According to a study by Guiso, Saienza and Zingales (2013), corporate culture can be conceptualized in a number of ways, but one of the most common definitions is “a set of norms and values that are widely shared and strongly held throughout the organization” (p. 4). This definition suggests that corporate culture establishes the acceptable manner in which corporate executives and employees view and treat each other as well as their end customers as well as what values will be prioritized in the process of achieving its goals. Consequently, the type of culture that is in place will invariably have a significant effect on the performance of a corporation since it serves as the overarching framework in which corporate objectives are pursued.
There are some other ways that corporate culture can help corporations achieve and sustain a competitive advantage. For instance, corporations that are effective in responding to changes in consumer preferences with high quality products and services that are competitively priced will earn a strong brand reputation that translates into a competitive advantage. In addition, a strong brand reputation based on how well corporations they treat their employees will typically contribute to achieving and sustaining a significant competitive advantage (Otubanjo, 2018).
Likewise, the type of structure that is in place will also have a profound impact on the performance of corporations and their ability to achieve and sustain a competitive advantage. In this context, structure simply refers to “the organization of different departments or business units within a company” (What is corporate structure, 2020, para. 2). There are a number of different types of corporate structure, including the following: Functional Structure: This structure is characterized by grouping employees into the same divisions using the similarity in skill sets and tasks, as well as their respective accountabilities. The functional structure facilities inter-departmental communications and, by extension, the decision-making process. Some salient examples of corporations with a functional structure include those with accounting or information technology departments. Divisional Structure: The defining characteristic of this type of corporate structure is the manner in which business activities are organized. For example, a divisional corporate structure places business activities in specific “divisions” such as products, services, the targeted market, or groups of consumers based on discrete demographic factors with the expectation that this strategy will enhance customer service and competitiveness by extension. Matrix Structure: As the term connotes, the matrix structure combines divisional and functional structures to provide a decentralized framework for the decision making process; in addition, the matrix structure facilitates inter-departmental collaboration and affords enhanced autonomy in ways that promote innovation and productivity. Notwithstanding these valuable results, however, the matrix structure is more costly and may cause conflicts among departments that must compete for scarce resources. Hybrid Structure: Similar to the matrix structure, the hybrid structure is also a combination of the division and functional corporate structure, but it can group business activities into divisional or functional structures which promotes the leveraging of tacit knowledge and expertise in ways that improve performance, productivity and profitability. It is therefore not surprising that many larger corporations use a hybrid structure (What is corporate structure, 2020). While some corporate leaders may boast that their corporate culture is positive and strong and their organizations are already “structured for success,” there is a growing body of scholarship that indicates corporate culture and structure are inextricably interrelated and each corporation’s needs and situation demand a unique response to changing conditions in the marketplace. For instance, the consultants at the Corporate Finance Institute (2020) point out that, “Depending on a company’s goals and the industry in which it operates, corporate structure can differ significantly between companies [because] each of the departments usually performs a specialized function while constantly collaborating with each other to achieve corporate goals and values” (What is corporate structure?, 2020, para. 3).
Although corporate culture and structure are not immutable, they are both resistant to rapid change. Indeed, it would be foolhardy and misguided to believe that it is possible to change a corporate culture overnight or even or the course of a few weeks or months. For example, few people would likely expect a CEO announcing that, “From now on, we are going to be an ethical company that places a high priority on environmental responsibility and customer service” if the existing corporate culture does not exemplify any of these values. In fact, top management runs the very real risk of being perceived as hypocritical if they attempt to reinvent their culture overnight, and it is reasonable to posit that the only truly effective appropriate is applying incremental and gradual changes to reflect the desired outcomes (Harris, 2017).
Likewise, although corporate structures can be changed, the process requires time in order to work out the bugs and develop its full potential in helping corporations achieve their respective goals. This constraint is especially true of larger organizations that are characterized by rigid hierarchical levels that encourage turf wars over scarce resources and information. Moreover, structural change not only requires significant amounts of time and effort on the part of executives and employees alike, it also involves the investment of organizational resources that are by definition scare. Consequently, making substantive changes to corporate structure demands a thoughtful and informed approach in order to achieve and sustain a competitive advantage. Conclusion The research showed that corporate culture is, in essence, a description of “how things are done around here” and corporate structure refers to the manner in which corporations are organized internally to maximize the talent and resources they have available. On the one hand, the research also showed that a corporation's structure and unique culture can be internal strengths when they are closely aligned with its goals. Indeed, the research was consistent in showing that corporate culture and structure are two of the most important pillars of achieving and sustaining a competitive advantage in an increasingly globalized marketplace. On the other hand though, a corporation’s structure and culture though, can also represent weaknesses to the extent that they fail to instill a sense of loyalty and commitment among employees as well as trust among end consumers. In the final analysis, corporate culture and structure are two things that are within the ability of top leaders to change in substantive ways to achieve and sustain a competitive advantage. The process, though, is dynamic and requires continuous monitoring by top management in order to ensure that the type of corporate culture and structure that are in place reflect the prevailing corporate values and mission.

References Bevacqua, J. (2018, May 24). The competitive advantages of company culture. Rise. Retrieved from https://risepeople.com/. Flatt, S. J. & Kowalczyk, S. J. (2018, Annual). Creating competitive advantage through intangible assets: The direct and indirect effects of corporate culture and reputation. Advances in Competitiveness Research, 16(1-2), 13-17. Guiso, L., Saienza, P. & Zingales, L. (2013, October). The value of corporate culture. NBER Working Paper Series, 1-15. Harris, P. (2017, October). The relentless pursuit of better: Helping instill a bold, new corporate culture is a challenge for any learning organization. Talent Development, 71(10), 28-31. Otubanjo, O. (2018, March). Building a powerful entrepreneurial brand: The role of critical success factors and their impact on competitive advantage. IUP Journal of Brand Management, 15(1), 15. What is corporate structure? (2020). Corporate Finance Institute. Retrieved from https:// corporatefinanceinstitute.com/resources/knowledge/finance/corporate-structure/.