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Corporate culture is described and defined as an extension of the general concept of culture. Culture is both a state or property of a group and a perpetual process of reenactment among the members of the group. Corporate culture can be defined as the learned outcome of a group’s solving its problems of external survival and internal integration. A model of culture is described and a number of approaches to describing the content of cultures are reviewed and illustrated. The degree to which corporate culture relates to economic performance is briefly reviewed and the concept of culture creation and change is discussed.
- How to Think about and Define ‘Culture’
- Implications for ‘Organizational’ Culture Analysis
- A Formal Definition of Culture
- A Conceptual Model for Analyzing Culture
- How to Describe Cultures
- Does Corporate Culture Matter?
- Can Culture Be Created or Changed?
How to Think about and Define ‘Culture’
To understand corporate culture one must first understand the concept of culture. A chronic issue in conceptualizing culture is whether to think of culture as a static property of a given organization – its shared customs, beliefs, norms, values, and tacit assumptions – or as a dynamic human process of constructing shared meaning (Frost et al., 1985). Culture creation is one of the unique characteristics of humans, being based on our capacity to be self-conscious and able to see ourselves and others from each others’ points of view. It is this reflexive capacity of humans that makes culture possible. At the same time, it is the human need for finding meaning that creates the motivation for culture stabilization. Without some predictability, social intercourse becomes too anxiety provoking. Developing shared meanings of how to perceive, categorize, and think about what goes on around us is necessary to avoid the catastrophic anxiety that would result from reacting to everything as if it were a new phenomenon (Weick, 1995; Weick and Sutcliffe, 2007).
Given these human characteristics, it then becomes clear that culture is both a process and a state (Schein, 2010). In new situations, shared meanings must be constructed through a social learning process. As these meanings help the participants to make sense of their world they become stabilized and can be viewed as ‘states.’ At the same time, as the members of a group interact, they not only recreate and ratify prior meanings but also construct new meanings as new situations arise.
A useful way to think about this issue is to take a cue from the anthropologist Marshall Sahlins (1985) who argues that one cannot really understand certain social phenomena without understanding both the historical events and the cultural meanings attributed by the actors to those events. While it is undeniably true that we produce and reinforce culture through perpetual enactment and sense making, it is equally true that the actors in those same social events bring to them some prior meanings, stereotypes, and expectations that can only be understood in a historical context. Culture production in the enactment sense, then, is either the perpetuation of or a change of some prior state, but that prior state can be thought of as ‘the culture’ up to that point. One can then describe that culture as if it were a ‘state’ of the existing system, even though one knows that the system is dynamic and perpetually evolving. The direction of that evolution will be a product of several forces: (1) technological and physical changes in the external environment; (2) changes in the internal dynamics of the social system; and (3) historical circumstances that are fortuitous or serendipitous.
A good example is Sahlins’ analysis of the death of Captain Cook at the hand of the Hawaiians. Because Captain Cook was viewed as a God (as predicted in the Hawaiian mythology), the sexual favors offered to his sailors by the Hawaiian women were viewed as gifts and as opportunities to relate to the divine. The sailors’ cultural background defined this as a version of prostitution, however, for which they felt they should pay. When they offered the women something in exchange for the sex, the women asked for something that was scarce in the society, namely metal. Once the loose metal on board the ships had been used up, the sailors began to pull nails from the ship itself, weakening it structurally. Hence, when Captain Cook set sail he discovered that the ships needed repair and ordered a return to harbor. In Hawaiian mythology, a God returning under these circumstances had to be ritually killed. At the same time, Hawaiian social structure was undergoing change and became permanently altered because the subordinate role of women in the society was altered by their ability to acquire metal, a scarce resource that gave them social power.
Clearly, there was a culture in Hawaii and a different culture on board the British ship, and clearly the interaction of these two cultures produced events that changed both of these cultures. Culture in this sense evolves in all social systems that have any kind of stability of membership and a history of experiences. Thus, nations, religious groups, and occupational groups based on professional education and shared experience all have cultures and increasingly bring those cultures into organizations.
Implications for ‘Organizational’ Culture Analysis
The major lesson of Sahlins’ analysis is that when we have access to historical data we should use it. Organizations have defined histories. Therefore, if we want to analyze organizational cultures, we should reconstruct their histories, find out about the values of their founders and early leaders, look for the critical defining events in their evolution as organizations, and be confident that when we have done this we can indeed describe sets of shared assumptions that derive from common experiences of success and/or shared traumas. We can then legitimately think of these sets of assumptions as ‘the corporate culture’ at a given time. But the organization will also include subcultures based on occupational units or shared experiences. Some of these may be in conflict with each other and there may be subunits that have not yet had enough shared experience to have formed shared common assumptions (Martin, 2002).
We can also study the day-to-day interactions of the members of an organization with each other and with members of other organizations to determine how given cultural assumptions are reinforced and confirmed, or challenged and disconfirmed (Kunda, 2002). We can analyze the impact of these perceptual interactive events in order to understand how cultures evolve and change. This process could be especially productive in mergers, acquisitions, and joint ventures of various sorts. Whether one chooses to focus one’s cultural research on building typologies of cultural ‘states,’ categories that freeze a given organization at a given point in time, or on analyzing the moment-to-moment interactions in which members of a given social system attempt to make sense of their experience and, in that process, reinforce and evolve cultural elements, becomes a matter of choice. Both are valid methodologies and in practice they should probably be combined.
A Formal Definition of Culture
Culture can now be defined as:
A pattern of shared basic assumptions that the group has learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems (Schein, 2010).
Once these patterns have been learned, they function to reduce anxiety and provide moment-to-moment meaning and predictability to daily events. Or, as Trice and Beyer (1993) put it: “Human cultures emerge from people’s struggles to manage uncertainties and create some degree of order in social life” (p. 1). Note that patterns of overt behavior are not part of the formal definition because such patterns can be elicited by other causes such as common instinctive patterns (e.g., ducking when we hear a loud noise) or by common reactions to a common stimulus (e.g., everyone running in the same direction to avoid some threat). If one understands the shared tacit assumptions, one can determine which regularities of behavior are ‘cultural’ and which ones are not. One cannot, however, infer the assumptions just by observing behavior.
Culture defined in this way can apply to an entire organization, group, or occupational unit provided there is a common history and member stability. If a group has no history or its members change all the time, it does not develop a culture.
The main problem in defining ‘corporate culture’ derives from the fact that any organization in today’s multicultural world is a conglomerate of cultures and subcultures and is therefore also influenced by the deeper assumptions of nations, ethnic groups, and occupational units.
A Conceptual Model for Analyzing Culture
Whether one chooses to analyze culture as a state or as a process, it is helpful to differentiate the levels at which culture as a shared phenomenon manifests itself. Any group, organization, or larger social system can be analyzed in terms of (1) its visible and feelable ‘artifacts,’ (2) its espoused beliefs and values, and/or (3) its less visible, taken for granted shared tacit assumptions (see Figure 1).
Figure 1. The levels of culture.
This model is useful in two ways: (1) It helps a novice observer of organizational culture to differentiate the superficial manifestations and espoused values that most organizations display from the cultural substrate or essence, the tacit, shared assumptions that drive the day-to-day behavior that one observes; and (2) The differentiation of levels is a necessary conceptual tool in helping an organization to decipher its own corporate culture and subcultures.
To further understand these distinctions, especially the distinction between espoused values and shared tacit assumptions, it is necessary to take a historical evolutionary point of view toward culture formation. If we take a typical business organization, the process starts with one or more entrepreneurs who found a company based on some personal beliefs and values. As they hire others to work with them, they will either choose those others on the basis of their compatibility or will socialize newcomers to the beliefs and values that they regard as core to running the new business. The founders’ beliefs and values will cause the organization to make decisions in its environment and, if those decisions are successful, the newcomers will begin to entertain collectively the idea that the founder’s beliefs and values must be ‘correct.’ If the environment continues to reinforce the behavior of the organization, what was originally the founder’s personal beliefs and values gradually come to be shared and imposed on new members as the organization grows. If this success cycle continues, these shared beliefs and values gradually come to be taken for granted, drop out of awareness, and can, therefore, be thought of as ‘taken for granted assumptions’ that become increasingly nonnegotiable.
This process of culture formation will occur not only in reference to the organization’s primary task in its various external environments but also with respect to its internal organization as well. Those founder beliefs and values, which provide meaning, make life livable and reduce interpersonal anxiety, will gradually come to be taken for granted and come to be tacit assumptions about the ‘correct’ way to organize. But in both domains, the driving force is what actually works. Culture is the result of successful action. If things do not work out, the group and, therefore, the culture as a culture will disappear but its assumptions may be carried on in individual survivors of the organization as was the case with Digital Equipment Corporation (Schein, 2003).
A basic need in human groups is to justify what they do. Paradoxically, the justifications often are not the same as the tacit assumptions that actually determine the behavioral regularities. Thus groups create ideologies, aspirations, visions, and various other kinds of ‘espoused values,’ which may or may not correspond isomorphically with the tacit assumptions. The most difficult aspect of deciphering organizational cultures, then, is to determine to what extent the claimed espoused values actually correspond to the behavioral regularities observed and, if not, to determine what the shared tacit assumptions are.
How to Describe Cultures
There are three approaches to describing cultures: (1) profiling them on various preselected dimensions; (2) creating conceptual typologies into which to fit given cultures; and/or (3) clinical or ethnographic descriptions that highlight unique aspects of a given culture.
Among the profiling approaches, one of the most widely used is Hofstede’s four dimensions based on factor analyzing questionnaire responses: individualism (vs groupism), masculinity (the perceived gap between male and female roles), tolerance for ambiguity, and power distance (the perceived distance between the most and least powerful in the society). These dimensions were originally used to describe national cultures but have also been extended to descriptions of organizational cultures (Hofstede, 2001).
A different approach has been to use sociological dimensions developed by Parson (1951) and elaborated by Kluckhohn and Strodtbeck (1961) as a way of creating profiles of a given organization and identifying critical value issues – universalism vs particularism, individualism vs collectivism, affectively charged vs neutral, specific vs diffuse, time orientation, and degree of control over nature (Hampden- Turner and Trompenars, 1993; Trompenars and Hampden- Turner, 2011). A third version of this approach is to take one or two dimensions, consider them to be conceptually central, and create a typology based on a two-by-two table with those dimensions. Cameron and Quinn (2011) use flexibility vs stability and control and internal integration vs external differentiation to create four types of cultures: clan, adhocracy, hierarchy, and market. Goffee and Jones (1998) use the dimensions of degree of solidarity and degree of sociability to create four types: networked, communal, fragmented, and mercenary. Among the typologies we have Likert’s Systems 1 to 4, Harrison and later Handy’s ‘Gods of Management,’ McGregor’s Theory X and Theory Y, Ouchi’s Theory Z, and the more popular distinctions between ‘command and control’ vs ‘committed and empowered’ (Likert, 1967; Handy, 1978; McGregor, 1960; Ouchi, 1981).
The clinical or ethnographic approach attempts to deal with any given culture as a unique pattern of shared assumptions around issues that are not known before the clinician/ researcher is on the scene as an observer and active inquirer (Schein, 1987). The prime objection to questionnaires as research tools for the study of culture is that they force us to cast the theoretical net too narrowly. The advantage of the ethnographic or clinical research method is that we can consciously train ourselves to minimize the impact of our own models and to maximize staying open to new experiences and concepts we may encounter. In the end, we may well sort those experiences into the existing categories we already hold. But at least we will have given ourselves the opportunity to discover new dimensions and, more importantly, will have a better sense of the relative salience and importance of certain dimensions within the culture we are studying. The issue of salience is very important because not all the elements of a culture are equally potent in the degree to which they determine behavior. The more open group–oriented inquiry not only reveals how the group views the elements of the culture, but, more importantly, also tells us immediately which things are more salient and, therefore, more important as determinants (Schein, 1996, 2003).
As to general dimensions that would be useful for studying any organization, I have found it empirically useful to start with a broad list of (1) ‘survival functions’ (what any group must do to survive in its various environments and fulfill its primary task) and (2) ‘internal integration functions’ (what any group must do to maintain itself as a functioning system). This distinction draws on a long tradition of empirical research in group dynamics that always turns up two critical factors in what groups do: (1) task functions and (2) group building and maintenance functions. Ancona (1988) pointed out that we must add a third set to these two, boundary maintenance functions. Task and boundary maintenance functions are external survival issues, and group building and maintenance functions are internal integration issues. We may then construct different lists of what specific dimensions of behavior, attitude, and belief, we will look for in each domain but at least we have a model that forces us to cast the net widely, and a reminder that culture is for the group the learned solution to all of its external and internal problems.
To the extent that national and occupational cultures increasingly influence organizations one must also consider the influence of deeper assumptions about time and space, the human nature and human relationships, how the self is defined in relation to the collective, how the group views itself in relation to nature, and the nature of reality itself and how one arrives at truth (Schein, 2009, 2010).
Does Corporate Culture Matter?
Several claims based on various different kinds of research have tried to show a connection between the strength and/or type of culture and economic performance (Davis, 1984; Deal and Kennedy, 1982; Denison et al., 2012; Kotter and Heskett, 1992; Collins and Porras, 1994). The problem is that different kinds of cultural dimensions relate to different kinds of environments in ways that are not entirely predictable. The best way to summarize, then, is to say that culture certainly influences economic performance, but the manner in which this occurs remains highly variable. A culture that can be very functional in one environment or at one stage in a company’s evolution can become dysfunctional and cause that same company to fail. Culture needs to be analyzed and understood but until much more research has been done, one cannot make generalizations about its impact.
Can Culture Be Created or Changed?
As indicated earlier, culture is created when a group is created by its founders. It then evolves as a function of actual experience. That evolution can be influenced by leaders setting new examples and mandating new kinds of behavior, but the culture will not change until the new behavior produces more desirable results and, thereby, comes to be accepted and eventually taken for granted. This is usually a slow process that can take many years (Schein, 2009, 2010).
In most mature organizations in today’s more complex multinational world, one sees cultural evolution occurring in many different ways in the subunits of the organization. The question of ‘culture change’ then becomes the more difficult question of which elements of the culture are to be changed and, most importantly, why? When organizations face these questions it is best to focus on why the organization needs any change at all. Once a case is made for change in relation to organizational performance, one should then specify how that change would look behaviorally in the future, and only then consider how various elements of the culture or various subcultures would aid or hinder the proposed change (Schein, 2010).
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