An Exploratory Analysis of the Relationship between Organizational Culture, Regional Culture, Causal Ambiguity and Competitive Advantage in an International Setting

Article excerpt

ABSTRACT

It is important for managers to understand the dynamics of competitive advantage in the global environment. Today, companies find more difficulties in distinguishing their core competencies and achieving a competitive advantage. The current global environment is changing and some competitive advantages may be losing their sustainability as new firms entering an industry imitate distinctive competencies of incumbent firms. This research is a preliminary exploratory analysis of the relationship between the social complexity of the firm, causal ambiguity and susceptibility to imitation as affected by regional/national and organizational culture. The research is important since it has been shown that causal ambiguity limits imitation and increases the sustainability of competitive advantage. Our results confirm the relationship between organizational culture, national/regional culture, imitation and causal ambiguity through a survey and factor analysis. Thus, firms should take advantage of the unique complexity of their corporate culture to limit imitation and increase competitive advantage.

INTRODUCTION

The evolution of economic organizations throughout the world is influencing the nature of competition due to technological advances, changes in the operating environment, and managerial developments. The number of players in the world economy is increasing significantly and competition beyond national borders is creating a complicated business environment (Threlkel, 1999). Due to this ever growing pool of competitors companies find more difficulties in distinguishing their core competencies and achieving a competitive advantage. Market boundaries are changing quickly and strategies to develop competitive advantage are becoming less sustainable. But, for many firms constant changes in the world economy are providing more opportunities.

For example, automobile manufacturers in the United States are finding difficulties in differentiating their products from their competitors. They have also had problems with improving quality, reducing inventory costs and improving efficiency. One of the main international competitors, Toyota, has become the largest car manufacturer in the world in recent years. Toyota has been able to accomplish this by being the low-cost leader in product and the differentiator in quality, styling and customer service.

It is probable that firms, such as GM (General Motors), Ford and Chrysler are continuously attempting to duplicate/copy the capabilities and resources of the new industry leader, Toyota. Particular resources and capabilities of Toyota such as the kanban inventory system, quality teams and supplier management systems should be relatively easy for these companies to imitate. Yet, these capabilities are the competencies that allow Toyota to sustain its competitive advantage. In trying to explain the seeming inability of U.S. auto makers to fully imitate and utilize these capabilities there are several unexplainable factors that create a barrier to imitation. So we know that Toyota's competitive advantage clearly does not lie in just the visible resources and capabilities listed above.

The objective of this research is a preliminary exploratory analysis of the relationship between the social complexity of the firm, causal ambiguity and susceptibility to imitation as affected by national, regional and organizational culture. We feel that these are the hidden factors that make imitation difficult and deserve further research in order to explain their contribution to sustainable competitive advantage in the global marketplace.

CONCEPTUAL DEVELOPMENT AND DEFINITIONS

Global competition, especially in established markets, is leading companies to realize that traditional strategies have become inadequate. Prahalad and Hamel (1990) observed that only a few companies are able to adapt themselves to inventing new markets, quickly entering new markets, and/or shifting patterns of customer choice. …