Which comes first, organizational culture or performance? A longitudinal study of causal priority with automobile dealerships

Summary Prior research supports a link between organizational culture and performance but generally falls short of establishing causality or determining the direction of a culture–performance (C‐P) relationship. Using data collected from 95 franchise automobile dealerships over 6 years, we studied longitudinal culture–performance relationships to determine whether culture or performance has causal priority, or alternatively, whether a reciprocal relationship exists. Results from cross‐lagged panel analyses indicate that culture “comes first,” consistently predicting subsequent ratings of customer satisfaction and vehicle sales. Furthermore, the positive effect of culture on vehicle sales is fully mediated by customer satisfaction ratings.