Joe,
I am updating a course web page. I was wondering if you would mind if I used your essay on Corporate Culture and Performance on it. The URL for it is
http://131.118.39.203/master/rescultu.htm. Your essay is at the bottom of the page.
Please let me know if I have your permission to use it.
Thanks,
Frank Shipper
Prof. of Management
Salisbury State University
>>> "Joseph E. Champoux (Joe)" <
champoux@UNM.EDU> 03/30 6:30 PM >>>
Here is my understanding of the research literature on the
culture-performance link.
Joe Champoux
ORGANIZATIONAL CULTURE AND ORGANIZATION PERFORMANCE
Several lines of theoretical and empirical research point to a
relationship between characteristics of an organization's culture
and organization performance. The theories vary in their
explanations but all point to a link between culture and
performance.
One theory says organizations gain a competitive advantage
when their culture is valuable, rare, and not easily imitated.1
The value of an organization's culture derives from the guidance
it gives to direct people's behavior toward higher performance.
Rarity refers to the features of a culture that are not common
among competing organizations. Such rarity can come from the
unique personalities of the organization's founders and the
unique history underlying the culture. Cultures that are not
easily imitated make it hard for competitors to change their
cultures to get the same advantages. Difficulty of imitation
follows partly from the rare features of some cultures and the
basic difficulties confronting managers when trying to change a
culture. Yahoo!'s culture has many of these characteristics.
A second theoretical view focuses on environment-culture
congruence.2 Organizations facing high complexity and high
ambiguity will require a cohesive culture for effective
performance. They feature widely shared values and basic
assumptions that guide people's behavior. For organizations
facing low uncertainty and low complexity, building a cohesive
culture could be costly. Those organizations will reach high
performance with more formal control processes such as
organization policies, rules, and procedures.
A third theory describes organizational cultures as having
four distinct traits: involvement, consistency, adaptability,
and mission.3 Involvement refers to the degree of participation
of employees in organizational decisions. The increased
participation can increase employees' feelings of ownership in
the organization. Consistency is the degree of agreement among
organization members about the important values and basic
assumptions in an organization's culture. Adaptability is the
ability of the organization to respond to external changes with
internal changes. Mission describes the core purposes of the
organization that keep members focused on what is important to
the organization. Empirical research found that involvement and
adaptability were related to organizational growth. The
consistency and mission traits were related to profitability.
Several empirical studies allow some other observations
about the culture-performance link. The following points
summarize this research.
1. Organizations with cultures featuring well-dispersed
participatory decision-making practices had higher
returns on investment and sales than those not as well
dispersed. The differences in financial performance
became even greater over time.4
2. Organizations with cultures that had well-organized and
adaptable work procedures and presented clear goals to
employees out performed organizations that did not.
These cultural characteristics were stronger predictors
of long-term financial performance than short-term
performance.5
3. A strong, widely dispersed culture helps high risk
organizations such as nuclear submarines and nuclear
aircraft carriers maintain high reliability.6 People
in these cultures perform with a "collective mind," a
cognitive interdependence that helps them know how to
act and know how others will act.7
4. Organizations with social responsibility as an espoused
value were higher on a composite index of financial
performance than organizations emphasizing the state of
the economy.8
5. Within accounting organizations with cultures
emphasizing accuracy of work, predictability, and risk
taking, poorly performing employees quit at a higher
rate than higher performing employees.9 There was no
difference in the rate of quitting in organizations
with cultures valuing collaboration and teamwork.
Although the researcher did not directly assess
organization performance, these results imply
potentially higher performance for low turnover than
high turnover organizations.
6. Culture characteristics of widely shared values and a
value of adaptability correlated well with performance
in later years in eleven life insurance companies.10
Empirical research is beginning to show a clear
culture-performance link, though there are different theoretical
explanations.
1J. B. Barney, "Organizational Culture: Can It Be a Source of
Sustained Competitive Advantage?" Academy of Management Review
11 (1986): 656-65.
2A. L. Wilkins and W. G. Ouchi, "Efficient Cultures: Exploring
the Relationship between Culture and Organizational
Performance," Administrative Science Quarterly 28 (1983): 468-
81.
3D. R. Denison, Corporate Culture and Organizational
Effectiveness (New York: John Wiley & Sons, 1990); D. Denison
and A. Mishra, "Toward a Theory of Organizational Culture and
Effectiveness," Organization Science 6 (1995): 203-23.
4Denison, Corporate Culture, Ch. 4.
5Ibid.
6P. E. Bierly, III and J. C. Spender, "Culture and High
Reliability Organizations: The Case of the Nuclear Submarine,"
Journal of Management 21 (1995): 639-56.
7K. Weick and K. Roberts, "Collective Mind in Organizations:
Heedful Interrelating on Flight Decks," Administrative Science
Quarterly 38 (1993): 357-81.
8C. Siehl and J. Martin, "Organizational Culture: A Key to
Financial Performance?" in B. Schneider, ed., Organizational
Climate and Culture (San Francisco: Jossey-Bass, 1990) pp.
241-81.
9J. E. Sheriden, "Organizational Culture and Employee Retention,"
Academy of Management Journal 35 (1992): 1036-56.
10G. G. Gordon and N. DiTomaso, "Predicting Corporate Performance
from Organizational Culture," Journal of Management Studies 29
(1992): 783-98.
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Joseph E. Champoux, Ph.D.
Professor of Management
The Robert O. Anderson Schools of Management
The University of New Mexico
Albuquerque, New Mexico 87131
USA
505.277.3237; 505.277.7108 (FAX)
Home office and voice mail: 505.856.6253
E-mail:
champoux@unm.edu