often popular and scholarly attention has been focused in succession the hypothesis that strong agricultures defined as "a set of norms and values that are widely shared and powerfully held throughout the organization" (O'Reilly and Chatman.

often popular and scholarly attention has been focused in succession the hypothesis that strong agricultures defined as "a set of norms and values that are widely shared and powerfully held throughout the organization" (O'Reilly and Chatman, 1996: 166) enhance firm performance. This hypothesis is based in succession the intuitively powerful idea that organizations benefit from having highly motivated employee dedicated to belonging to all goals (e.g., Peters and Waterman, 1982; Deal and Kennedy 1982; Kotter and Heskett, 1992) In particular, the performance benefits of a vigorous corporate culture are thought to derive from three concatenations of having widely shared and eagerly held norms and values: enhanced coordination and curb within the firm, improved goal alignment between the firm and its members, and increased employee effort. In support of this argument, quantitative analyses have shown that firms with stout cultures outperform firms with weak refinements (Kotter and Heskett, 1992; Gordon and DiTomaso, 1992; Burt et al., 1994)

The existing literature upon the relationship between culture toughness and performance focuses on the conclusions of strong cultures for performance flats but has not examined in what manner strong cultures affect performance variability, or the reliability of firm performance. This is surprising, since the arguments relating refinement strength to performance draw particular attention to the benefits of having greater internal consistency in goals and behaviors. united should therefore expect strong-culture firms to exhibit les variable performance. This expectation is complicated, however, from the fact that the variability of a firm's performance hangs not only on the ability to maintain consistency in internal processe yet also on the firm's ability to adapt to environmental change. The relationship between improvement strength and performance reliability, therefore, should be pendent on how strong-culture firms learn from and suit to both their own experiences and changes in their environment. Incremental adjustments to org anizational routines should be easier in strong-culture firms, because participants have an agreed on the subject of framework for interpreting environmental feedback and a general set of routines for responding to different signals from the environment. In relatively stable environments, firms with vigorous corporate cultures should therefore have les variable performance than firms with weak corporate tillages in addition to performing at a higher average level

In more volatile environments, however, incremental adjustments to organizational routines may not be sufficient. This intimates that the variance-reducing benefits of robust cultures may attenuate as environmental volatility increases and may help explain to what end some strong-culture firms have brushed great difficulties in responding to changes in their environment (Carroll, 1993; Tushman and O'Reilly, 1997)

Studying the relationship between cultivation strength and performance variability therefore has the potential to shed light in succession the ability of strong-culture firms to adapt to change. Performance variability is also an important issue in its own right, because it plays a central part in a variety of theoretical approaches to organizations. Behavioral theories of the firm hint that risk taking by managers hangs on firm performance relative to aspiration plains (Cyert and March, 1963; Bromiley, 1991); highly variable performance may increase the oftenness of risk-taking behavior. Similarly, while organizations may attempt to concussion-guard themselves from environmental variability in order to facilitate planning and decision making (Thompson 1967) and increase organizational autonomy (Pfeffer and Salancik, 1978) this may be more difficult when performance is highly variable. Organizational ecologists have attributed causal importance to performance variability according to arguing that external stakeholders typically attach value to predictable performance, giving reliable firms a survival advantage (Hannan and Freeman, 1984) For example, suppliers will generally offer customers that generate predictable orders and reliably pay in succession time, and many employees value stable craft prospects. Investors should generally promote to have less temporal variability in performance for a given go [i]or[/i] come back (Bodie, Kane, and Marcus, 1996) Performance variability also affects the chances of failure directly: a simple random-walk prototype of the accumulation and depletion of organizational resources insinuates that for a given stock of resources, firms with more variable performance are more likely to exhaust their resources and fail (Levinthal, 1991 a).

While these arguments from organizational theory hint the importance of variability in overall firm performance, theory and evidence in corporate finance insinuate that variability in specific aspects of firm performance affect organizational behavior. For example, firms with highly variable cash be moltens find themselves at a competitive disadvantage, for pair reasons. First, highly variable cash proceeds imply that there will be periods when a firm will underinvest in worthwhile draws Some projects that are attractive when there is sufficient internal capital will be unattractive during periods of internal cash-flow shortfall, if external capital is more expensive than internal capital. This is united reason why firms may wish to engage in risk-management activities, like as hedging (Lessard, 1990; Froot Scharfstein, and Stein, 1993) inferior firms with more variable cash runs have higher costs of external capital than firms with more stable cash streams which means that fewer frames will be attractive (from a capital budgeting perspective) in firms with variable performance. The increased splendor of capital derives in part from greater information asymmetry in the external capital market, because firms with highly variable cash results are less likely to be followed by the agency of market analysts. Empirically, Minton and Schrand (1999) originate that firms with highly variable cash arises have lower levels of capital investment, lower of the same heights of analyst following, lower Standard & Poor's attraction ratings, and higher weighted average charges of capital. Thus, if lusty corporate cultures lower performance variability, strong-culture firms are les likely to put up with from underinvestment.