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Culture explains why an organization does what it does. It is the sum total of shared ideas, beliefs, customs, values, and knowledge which are then manifested in the behavior of the organization members. The members of the organization both create their culture and the culture ""creates"" the members. The culture is the most powerful emergent characteristic of an organization. It consists of the behaviors and practices of the organization which are ingrained into the very being of the organization. Culture effects and influences are largely unconscious. Cultural factors tend to influence behavior whether the behavior is leading to an organization's demise or causing it to thrive.

Culture characteristics -

  • Management behavior, customs, community role, etc.
  • Culture serves as a default decision maker.
  • Culture is the DNA of the organization, and, without intervention, the organization reproduces itself.
  • Culture is the firm's autopilot...the ""second order machine"" which locks the system into its existing pattern.
  • Culture is not a single business model element because, like strategic focus, it is the result of several elements' interactions.
  • Culture eats strategy for breakfast.

Culture emergence -
Culture is a collective behavior which emerges from four of the five basic processes of the business organization (see social system). These processes are the fundamental activities of the organization, which contain the fundamental behaviors and embody the beliefs of the organization. The culture derives from how the organization --

  • Generates truth - generation and dissemination of information, knowledge, and understanding
  • Effects choices - make choices; create power-to-do; development and duplication of power, authority, & responsibly - provide governance
  • Creates commitment - provide meaningfulness and excitement for what is done
  • Institutionalizes values- form and institutionalize values for regulation of behaviors & decisions

Cultural norms contributing to company's success (Beinhocker, 2006, pg 371) -

  • performance orientation
  • honesty
  • meritocracy
  • mutual trust
  • reciprocity
  • shared purpose
  • nonhierarchical
  • openness
  • fact-based
  • challenge - competitive urgency

Culture of discipline --
See culture of discipline for the role of discipline as an essential factor, embedded in the organization's culture, in the ongoing success of a business organization.

Culture inquiry --
See culture inquiry and the related inquiry processes for a guide as to how to both understand culture and get a handle on what it might take to change the culture.

Culture and performance (Barney, 1986a) --
Organizational culture typically is defined as a complex set of values, beliefs, assumptions, and symbols that define the way in which a firm conducts its business. In this sense, culture has pervasive effects on a firm because a firm's culture not only defines who its relevant employees, customers, suppliers, and competitors are, but it also defines how a firm will interact with these key actors (Louis, 1983). This conception of organizational culture blurs classical distinctions between an organization's culture and its structure and strategy (Tichy, 1983) because these attributes of a firm are direct manifestations of cultural assumptions about what business a firm is in and how it conducts business. For a similar view, see cultural web.

Imitability -- There is significant evidence which suggests that valuable and rare organizational cultures often may be very difficult, if not impossible to imitate.

Path dependence -- The constellation of persistent symbols, beliefs, and values that characterize a firm's culture at least partially reflect the unique early history of the firm, including the pattern-setting influence of company founders.

Culture and sustained superior financial performance --
In order for a firm's culture to provide sustained competitive advantages, and thus, by implication, be a source of sustained superior financial performance, three conditions must be met (Barney, 1985a).

  • First, the culture must be valuable; it must enable a firm to do things and behave in ways that lead to high sales, low costs, high margins, or in other ways add financial value to the firm. Because superior financial performance is an economic concept, culture, to generate such performance, must have positive economic consequences.
  • Second, the culture must be rare; it must have attributes and characteristics that are not common to the cultures of a large number of other firms.
  • Third, such a culture must be imperfectly imitable; firms without these cultures cannot engage in activities that will change their cultures to include the required characteristics, they will be at some disadvantage (reputational, experience, etc.) compared to the firm they are trying to imitate.

Contrasting cultures --
For an example of two contrasting cultures, see police culture for a contrast between police and intelligence culture. A similar type of antithetical cultural difference exists between exploration and exploitation.

See institutions for the organizational ecology view of structure in the organization related to culture.