On the one hand, if the industry's market is like a commodity and the company already has a strong corporate culture, take care because the company's performance is in some part due to its culture. On the other hand, if the company operates in a complex, dynamic market, it can be freely integrated because culture is irrelevant to performance in such markets. Only when there is effective market competition does the impact of a strong corporate culture on a company's performance increase. Market competition is derived from the network effect on profit margins of buying and selling between suppliers and customers-the effective level of competition in an industry. For example, the largest real estate firms account for only a small proportion of all U.S. real estate transactions.
Market concentration is close to zero.
To obtain high profits observed in real estate, producers must be coordinated in ways not apparent from concentration. In fact, real estate markets are locally organized by interpersonal referrals and dominant local brokerages, with city and state regulations playing an important role in who gets to sell what. Business services are another example. Personal ties with clients are critical to success, and such ties are invisible. The strength of an organization's culture can and does affect a company's bottom line.