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Economics and Organisations
Week 9
Organisational Culture – and the
Effects of National Culture
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What is Organisational Culture?
Basic Definition – Gareth Jones
“A set of shared values and norms that controls
organisation members’ interaction with each
other, and with suppliers, customers and others
outside the organisation”
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Alternative Definitions
• “Culture is a system of publicly and collectively accepted
meanings operating for a given group at a given time. This system
of terms, forms, categories and images interprets a people’s own
situation to themselves” – Pettigrew, 1979
• “…organisational culture can be thought of as the glue that holds
an organisation together through a sharing of patterns of meaning.
The culture focuses on the values, beliefs, and expectations that
members come to share” - Siehl and Martin, 1984
• “The pattern of basic assumptions that a given group has invented,
discovered or developed in learning to cope with its problems of
external adaptation, and internal integration, and that have 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 these problems” - Edwin Schein, 1985
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Examples of Contrasting Cultures
• Hewlett Packard v ITT
HP has history of collaboration, invention and teamwork
since 1940s – Never ‘hire and fire’ – cut hours not cut
staff – Trust and cooperation; ‘locked door’ example
ITT led by Harold Geneen – considerable success under
ruthless management – intensely competetive, every
action challenged, management based on ‘unshakable
facts’
• Coca-Cola vv Pepsi Cola
Apparently identical products, markets and everything!
BUT Coke has long tradition of highly participative
management, whereas,
Pepsi is highly authoritarian management
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Functionalist Approach to Organisation Culture
Organisational
Values
Terminal Values
Desired end
states or
outcomes
Instrumental
Values
Desired modes of
behaviour
Specific norms, rules and
SOPs
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Factors that determine Organisation Culture
Property
Rights System
Characteristics
of people
Organisational
Culture
Organisational
Ethics
Organisational
Structure
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Characteristics of People
• Different cultures attract different sorts of
people – Cultures are different because people
are different
• Organisations select staff with matching
personality characteristics
• Staff in any organisation become more similar
over time
• This is one of major problems for organisation
change
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Organisational Ethics
• ‘Organisational ethics are moral values and
rules that establish the appropriate way for
organisational stakeholders to deal with one
another and with the organisations
environment’
• Organisational ethics are composed of:
– Societal ethics – from society at large
– Professional ethics – very strong in some
professions
– Individual ethics – some people would never take a
pencil whereas others fiddle their expenses all the
time!!
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Property Rights System
• “The rights that an organisation gives its
members over the resources of the
organisation”
• Property rights include:
– Managers – ‘golden parachutes’, stock options
– Employees – Lifetime employment, generous
severance payments, pensions and benefits
– Shareholders – secure dividends, increase in value
• Property rights can be a restraint on change
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Organisational Structure
• Different structures are associated with
different cultures - cause or effect?
• Mechanistic v Organic
• Machine Bureaucracy v Adhocracy
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Other Theories of Organisational
Culture
• More recent theories tend to be from outside
the Functionalist paradigm
• Schein’s Theory
• Symbolic-Interpretive
• Post-Modern
• Modernist
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Schein’s Model of Organisational Culture
Beliefs and Assumptions
Artifacts
Visible but often
undecipherable
Values
Greater level of
awareness
Assumptions
Taken for granted
assumptions
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Assumptions - Examples
• With regard to its environment does the
organisation perceive itself to be:
– Dominant, Submissive, Harmonising, Searching a
niche
• How do we define what is ultimately true:
– By pragmatic test, By reliance on wisdom, By social
consensus
• Is the best way to organise society on the basis
of individuals or groups
• Is the best system of authority:
autocratic/paternalistic or collegial/participative
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Norms and values
“Values are social principles, goals and standards
held within a society to have intrinsic worth”e.g. freedom, loyalty honesty, democracy etc
“Norms are closely associated with values. They
are the unwritten rules that allow members of a
culture to know what is expected of them in a
wide variety of situations” – clothes you wear;
how you address your boss; when to seek help
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Artifacts
“..are the remains of the culture left strewn about
on the surface of a culture….”
Examples:
• Company logo, layout of office
• Clothes worn
• Traditions, customs and rituals
• Stories, myths and traditions
• Jargon
• Well known jokes and anecdotes
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How Culture Works in Schein’s Model
• Assumptions
Values
Artifacts
• Logic is inside moving outwards
• New members are selected, attracted because
they share the values
• Reverse is also true
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Symbolic-Interpretive Theory of
Organisation Culture
• Clifford Geertz
• Culture is a socially constructed reality – “webs
of significance that man himself has spun”
• How are these realities constructed?
• People make use of and interpret symbols and
this constructs a culture
• Culture is thus understood by the observation
of symbol construction – e.g. ethnography
• Culture is found through the perspective of
many members of a culture, not an individual
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Organisation as a set of sub-cultures
Societal culture
Organisational
culture
Organisational subcultures
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Types of Sub-Culture - 2 approaches
• Relation to dominant culture
– Enhancing sub-cultures – Support the dominant
cultures values
– Countercultures – oppose the dominant cultural
values
– Orthogonal sub-cultures – maintain their own values
alongside the dominant culture
• Occupational or functional sub-cultures
– Engineers v Accountants v Marketing v etc
– Professional managers (MBAs) v worked-way-up
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Post-modern and Modern Approches
• Post modern approach focuses on ways in
which cultures are inconsistent, ambiguous,
multiplicititous, in a constant state of flux
• Often described as ‘Fragmentation Perspective’
• In contrast, Modernists view culture as a tool
for management, the culture as a variable to be
manipulated as a means to gain the desired
performance or behaviour
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Analysis of National Culture
• Geert Hofstede devloped this analysis in late
1970s, based on a study of IBM worldwide;
widely used since then.
• Four measurable dimensions:
–
–
–
–
Power Distance
Uncertainty Avoidance
Individualism
Masculinity
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• Power Distance – extent to which members of a
nation are prepared to accept unequal
distribution of power, wealth, prestige
Low power distance = more equality e.g.
Denmark
• Uncertainty Avoidance – ways in which society
has developed methods to deal with
uncertainty. E.g. using technology to defend
against earthquakes.
Uncertainty avoidance high in Greece, Portugal
and Japan
Low in Singapore, Hong Kong
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• Individualism – involves the degree to which
individuals in a culture are expected to act
independently of other members of the society
Individualism v Collectivism
In US individualism seen as source of well-being
In China and Mexico it seen as undesirable or
alienating
• Masculinity – refers to clear separation of gender
roles
Highly masculine cultures, men are expected to be
more assertive and women nurturing
Low masculinity favours work goals concerning
interpersonal relations, service and physical
environment
Power-distance v Individualism
I
n
d
i
v
d
u
a
l
i
s
m
Power Distance
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Masculinity v Uncertainty avoidance
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An Example of National and
Organisation Culture
• Murray Sayle
• Observed features of Japanese organisation
culture include:
–
–
–
–
–
Collectivity – belonging not just working
Collaboration – like a village or commune
Interdependence shared concerns, mutual support
Life-long commitments – in famous large companies
Authoritarian/paternalistic – traditional and
deferential
– Strong links between welfare of individual,
corporation and state
Sayle’s Explanation
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• Two sets of values are melded into a corporate
culture, based on national values of: ‘rice field’
and ‘samurai’
• Rice field:
– Work is precarious virtually impossible
– Work is therefore cooperative
– Product of work is shared with protectors
• Samurai:
–
–
–
–
‘men of service’ leaders in bureaucratic society
Parallel to modern clans and elites
Close cooperation between powerful groups
Deferential and submissive to Samurai
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Comment
• Sayle’s explanation fits post war advance of
Japan, but does not deal so well with problems
of 1990s
• Also contrast UK social culture – class conflict
etc, with the corporate cultures
Good Reading
• ‘Images of Organisation’, Gareth Morgan, chpts
5 and 6 plus chpt 10 case study
• Gareth Jones
• M J Hatch