CONTINGENT ORGANIZATION AS A NETWORK THEORY - THE CULTURE-PERFORMANCE CONTINGENCY FUNCTION

Network models of market competition are used to advance from two significant research efforts; Lawrence gi Lorsch's (1967) demonstration that the optimum form of organization varies between markets, and Kotter and Heskett's (1992) study of corporate culture and performance. We compare firms in terms of their economic performance, the extent to which they have a strong corporate culture, and the network structure of their market. The value of a strong corporate culture varies between markets; nothing in one market, an asset in more competitive markets. From the variation between markets, we build a culture-performance contingency function that uses the network structure of a firm's market to predict the extent to which a strong corporate culture can be expected to enhance the firm's performance. With the contingency function, and market census data, we infer that the correlation between culture and performance is strong in the American economy, especially in manufacturing. We also use the function to identify reasonable samples of organizations in which the correlation will be weak, The contingency function is an interesting substantive phenomenon in its own right and a valuable analytical tool for generalizing results on sample firms to population conditions.