  This paper proposes an addition to the firm-based perspective on
intra-industry profitability differentials by modelling a business organisation
as a complex adaptive system. The presented agent-based model introduces an
endogenous similarity-based social network and employees' reactions to dynamic
management strategies informed by key company benchmarks. The value-based
decision-making of employees shapes the behaviour of others through their
perception of social norms from which a corporate culture emerges. These
elements induce intertwined feedback mechanisms which lead to unforeseen
profitability outcomes. The simulations reveal that variants of extreme
adaptation of management style yield higher profitability in the long run than
the more moderate alternatives. Furthermore, we observe convergence towards a
dominant management strategy with low intensity in monitoring efforts as well
as high monetary incentivisation of cooperative behaviour. The results suggest
that measures increasing the connectedness of the workforce across all four
value groups might be advisable to escape potential lock-in situation and thus
raise profitability. A further positive impact on profitability can be achieved
through knowledge about the distribution of personal values among a firm's
employees. Choosing appropriate and enabling management strategies, and
sticking to them in the long run, can support the realisation of the inherent
self-organisational capacities of the workforce, ultimately leading to higher
profitability through cultural stability.
