A Dynamic Simulation Model of Organizational Culture and Business Strategy Effects on Performance

In the past two decades, organizational culture literature has gained tremendous interest for both academic and practitioners. This is based not only on the suggestion that culture is related to performance, but also on the view that it is subject of direct managerial control and manipulation to the desired direction. In the present paper, we adopt Competing Values Framework (CVF) to operationalise organizational culture and Porter's typology to conceptualize business strategy (cost leadership, innovative and marketing differentiation, and focus). Although simulation of social events is a quite difficult task, since there are so many considerations (not all well understood) involved, in the present study we developed a dynamic model to simulate the organizational culture and strategy effects on financial performance. Data obtained from a six‐year survey in the banking sector of a European developing economy was used for the proposed dynamic model development.