Getting clear on corporate culture

The construct of organisational or corporate culture is elusive and so there is disagreement and confusion as to its precise definition, importance and measurement.

This paper reviews more than 70 articles on corporate culture, drawing on work from the disciplines of business ethics, management studies, psychology, anthropology and economics, as well as interviews with 24 business leaders, to offer an integrative and holistic review of corporate culture.

It explores notions of culture and the frameworks most often used to measure it. The authors set out different views on how culture can be operationalised and moulded within an organisation and consider the relationship between corporate culture and corporate purpose.

Organisational culture research emerged in the 1970s from anthropology and sociology, which used qualitative methodologies to focus on how values develop and are transmitted within groups. That research had its roots even further back in the Gestalt psychology of the 1930s, which introduced the idea of ‘social climate’.

The paper considers the constructs of ‘culture’ and ‘social climate’ as largely congruent. It surveys a large variety of different definitions and captures their commonalities: organisational culture is a multi-layered, scalar, social phenomenon, concerned with values and related to actions.

Culture is often seen as the ‘soft’ side of business, but the literature shows it is critical for the successful implementation of strategy, for business performance and how the corporation operates in a socio-political context. When aligned with personal values, drives and needs, culture can unleash tremendous amounts of energy. On the other hand, a ‘false’ culture, misaligned with corporate strategy and purpose, can inhibit changes.

Culture is also important in relation to politics. Governments can manipulate corporate culture to further their own agenda or consolidate their grip on power. What is not yet clear is whether there is a correlation, and the direction of influence between politics and corporate culture.

Measurement frameworks of organisational culture may use quantitative or qualitative measures, or a combination of both. Examples of some of these frameworks, their commonalities and differences, are given. However, the authors note there is little consistency amongst different methodologies, and no pre-eminent approach.

To be more than empty words, culture needs to be embedded in any organisation’s practices. There are many ways of doing this, including ‘innovation parenting’ to encourage employees to internalise the values of the company. Most approaches rely on the organisation’s leaders to live the core values and strategic priorities of the culture, ensuring flat hierarchies and avoiding micromanagement.

The paper identifies how culture affects individual behaviour both within and outside the workplace, how it can help or hinder corporate innovation, and how it can be affected by location, office design and staff diversity, with examples from other industries, including technology, engineering and consumer goods.

The authors conclude that culture is only one ingredient in the recipe that leads to a (good) corporation of the future. It is connected to many other areas, most importantly the question of a corporation’s purpose, where there is a significant gap in understanding the connection between social purpose and culture.

For further information please contact the Project Manager on [email protected].

Sign up to the Future of the Corporation mailing list.