Culture and Innovation in Organizations

Abstract:

This essay provided a critical review of the theories of organizational culture. The review section began by analyzing and comparing key definitions of organizational culture. The assignment gave a brief description of different organizational culture theories and models by various scholars. The theories validity was tested and a comparison was made between different theories where applicable. The assignment, then, made the connection between organizational culture and innovation. I argued that innovation is strongly impacted by the type of organizational culture. In this section, the organizational culture models that encourage innovation were highlighted and explained. The literature review section was concluded by examining the leadership role in shaping and changing culture. While focusing on not-for-profit organizations, corporate cultures were also examined and examples from for-profit companies were highlighted.

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The assignment then examined how culture influenced behaviors related to innovation and change in an organization that I worked for. This case study made the connections between different stages of the organization lifecycles and some of the theories. The case study gave a clear example of the culture impact on employees’ behavior. And how the innovative organization was change as a result of culture change. The essay concluded by recommending a strategy and action plan for the leader in the case study on how to enhance the organization culture.

1. A Critical Literature Review: Organizational Culture Theories, it’s impact on Innovation and How it is affected by the Organization Leadership:                                                                                                   

Background:

The organizational culture concept is relatively new. It was introduced by Andrew Pettigrew in the late 1970s through his article “On Studying Organizational Culture”. Pettigrew associates the creation of an organization culture with the vision of the founder and links the culture of an organization with its birth. Pettigrew describes organizational culture as the publicly and widely accepted meaning of systems. Pettigrew (1979). The concept of organizational culture thereafter attracted significant attention by scholars and practitioners alike. Organizations were given an additional aspect or character. That is organizational culture. It has been described by some researchers as shared values, norms or beliefs. During the early years of shaping the concept, scholars suggested that organizational culture is something that is unknown or neglected by managers. They further argued that organizational culture has direct impact on the success of an organization. Hence, organization leaders need to pay more attention to this concept. Following Pettigrew, Hofstede examined the applicability of American corporate culture abroad. Deal and Kennedy, Charles Handy, Schein, Cameron and Quinn and other scholars added significant contribution to the concept in the following years.

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This section will examine the difference between various definitions of organizational culture. It will then review, compare and criticize the organizational culture theories introduced by the scholars mentioned.  The section will subsequently, study the connections between organizational culture and innovation. Finally, the organization leadership impact on the culture will be tested.

Organizational Culture Definitions:

Notwithstanding its direct connection to success, organizational culture has no one definition. On his paper, Defining “Culture” and “Organizational Culture”: From Anthropology to the Office, Bruce Tharp writes “Definitions of “organizational culture” are almost as numerous as those of “culture”— a 1998 study identified 54 different definitions within the academic literature between 1960 and 1993”. Tharp (2009).

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Tharp elaborates on the variation of organizational culture “For some, culture is considered the “glue” that holds an organization together and for others, the “compass” that provides directions” Tharp (2009). In my view, both the “glue” and the “compass” should be combined for a better understanding of organizational culture. When combined, it reflects that organizational culture bring employees together and direct them jointly toward the common goal.

The shortest, most popular and often cited definition was coined by Marvin Bower; a legendary business figure who served as McKinsey and Company’s managing director for many years; and barrowed by Deal and Kennedy. The definition states that organizational culture is “The way we do things around here” Bower (1966). This definition is simple and precise. Perhaps It’s popular because organizational culture is a complex concept, it is hard to describe and impossible to measure. Some of the ‘things’ done in a workplace include how people express their feelings, how they dress, nonverbal communications, etc. Bower definition is useful, popular and it gives a broad understanding of organizational culture. Though, it doesn’t go deep into explaining how “the way things are done” in a workplace came about, why it is common an accepted by the members of the organization or what the “things” are.

As organizational culture definitions evolved over time with no commonly agreed definition in the field, the ingredients of organizational culture also varied. Handy attempts to outline the aspects that represents organizational culture. “In organisations there are deep-set beliefs about the way work should be organised, the way authority should be exercised, people rewarded, people controlled….. These are all part of the culture of an organisation” Handy (1993: 81-182).

The key aspects that compose organizational culture according to Handy are: set of beliefs, exercise of authority, and controlling and rewarding employees. When we analyse Handy’s definition, we find that there is emphasis on the leadership role on setting organizational culture. Which was missing in other definitions. That is apparent in the key words and phrases Handy used; organizing work, authority, control and rewards. These are all among the leadership role.

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Edgar Schein is regarded by many scholars in the field as the most influential authority on organizational culture. He suggests that culture belongs to a group. As for organizational culture, he defines it as “a pattern of shared basic assumptions that the group 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: 18). Schein definition is thoughtful though general. He proposes that organizational culture comes from the employee’s collective experience. Accordingly, it is a trial and error. Until the right way of doing things emerges, the organizational culture wouldn’t mature. Schein’s definition also missed explicitly highlighting the founder and the organization leadership influence in shaping the organizational culture. However, he included these aspects on the three sources that he believes to be the foundation of an organization’s culture:

1. the beliefs and values of the founders of the organization
2. the learning experiences of group members as the organization evolves
3. new beliefs, values and assumptions brought in by new members and leaders

Schein (2004: 211).

Schein focuses his definition on solutions to external adaptation and internal integration problems. While the internal integration part is easy to understand, the external adaptation is unclear. Some organizations make the market or the end user adapt to their products. Many others adapt to the needs of the market.

Critical Review of the Organizational Culture Theories:

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Hofstede Model analyzed, criticized and compared:

Professor Geert Hofstede defines culture as “the collective programming of the mind distinguishing the members of one group or category of people from others” Hofstede (199: 5). Along with his team of researchers, Hofstede conducted one of the most intensive research on national cultures. The research covered more than 160,000 IBM employees in more than 50 countries.  Looking for aspects that might influence business progress overseas, Hofstede originally identified four dimensions of national culture (he later refined his work and added two additional dimensions) that influence organizational behavior. These are:

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1.Power distance

2.Collectivism vs individualism

3.Femininity vs masculinity

4.Uncertainty avoidance

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5.Long term orientation vs short term orientation

6. Indulgence versus self-restraint.

Hofstede created his model of national culture using these six dimensions.

In a similar research-based work, Trompenaars and Hampden-Turner came up with seven dimensions of culture. They created a management and communication model named the Trompenaars Cultural Dimensions.

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The obvious similarity between Hofstede and Trompenaars models is between collectivism vs. individualism of Hofstede and communitarianism vs. individualism of Trompenaars. One can argue that they are almost identical. Looking deeper for similarities, and to a lesser extent, Hofstede’s power distance index and Tromperaans achievement vs ascription are partially similar. On the latter, people in the ascription culture value and respect hierarchy. Despite the fact that the person position might be based on their ethnicity, age or gender. This is similar to the attitude of people whom their culture scores high on the power distance.

Hofstede is being criticized for describing the connections between national cultures and individual personalities as statistical. “There are connections between national cultures and individual personalities, but these are statistical, not absolute: we cannot use national culture measurements to stereotype individuals from these nations” Hofstede et al (2010: 40)

While it’s understandable that stereotyping should be avoided, the evolution of culture through change on people behavior overtime is missing from Hofstede work. One can argue that Hofstede model is outdated now. As many of the countries studied and ranked in his model has changed.  Political, economical and developmental changes do impact behavioral change. Hence, the social behavior studied few decades ago has either partially or totally changed.

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My additional observation of Hofstede model is that the research sample might be narrow as it targets people who have many similarities. Notwithstanding, Hofstede covered more than 160,000 IBM employees in so many different countries, I believe that there will be many similarities between the people IBM hires. Regardless of the impact of their national culture, people targeted by IBM will have many things in common. It is possible that many among IBM employees in the various countries, or those the company might target, who were interviewed by Hofstede are familiar with the U.S. market and culture. Some may have lived or studied in the U.S.

For instance, and based on my experience, U.S. corporations and NGOs prefer to hire people overseas who are fluent in English, familiar with American way of conducting business, and often U.S. cultural knowledge is a plus. This is likely the case with IBM as well. I am not sure how much impact; such possible similarity among IBM employees might have had on Hofstede findings.

Deal and Kennedy Corporate Culture:

In 1982, Deal and Kennedy developed the Corporate Culture Model. They argued that companies’ success and culture heavily depend on the environment in which they operate. Deal and Kennedy put organizations into four categories depending on the level of risk they take and how quick feedback is given to employees. The risk factor has a high and a low dimension and the feedback factor has a quick and a slow dimension. The four dimensions collectively produce the four types of cultures suggested by Deal and Kennedy as shown in figure 1 below.

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Risk

Low                               High

Figure 1: Deal and Kennedy Culture Model

Quick

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Feedback/

Reward

Slow

A summary explanation by Deal and Kennedy of each culture is organized in table 1 below

Table 1

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Source: Deal and Kennedy (1982: 107-108)

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Deal and Kennedy suggest that their model can be a starting point for looking at organizational culture. They admit that the model is simplistic and it’s hard to find an organization that exactly resemble one type of the proposed four cultures. Their recommendation for strong culture organizations is to take the best elements of each type as they fit. But that defeat their main idea of having four distinct type of culture.

Unlike other authors, Deal and Kennedy emphasize the external factors on shaping the organizational culture over the internal factors. Perhaps their argument is that companies attract certain type of employees based on the level of risk taking required and speed in which feedback is given. These two factors are determined by the external environment. In other words, the market decides on type, quality and quantity of the product needed and the company respond accordingly. The emphasize on the external factor could also be related to the location of the company. Here we can draw a similarity with Hofstede national culture impact.

The less emphasis on the internal factors’ impact on the organizational culture as well as the heavy focus on business oriented entities are the main concerns I have when reviewing Deal and Kennedy’s model.

Charles Handy’s Model:

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Charles Handy, following the work of Harrison, introduced four different types of organizational culture. The power culture, the role culture, the task culture and the person culture. Handy’s model gives description of the organization where each of the four types of culture fits. He outlines the structure, type of employees and decision-making process for each organization described. When studying Handy’s module, one might get confused as whether Handy is focusing on the organizational culture or the structure of the organization.

The power culture is described as a spider web, the role culture is described by a building standing on columns, the task culture is described as a net and the person culture is a loose cluster. The visual description of each culture type makes it easier to understand. It also makes it easier to analyze and criticize.

In table 2 below, we find a summary of each of the four culture types Handy outlines.

Table 2

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