This chapter explains what organizational culture is and analyzes its importance for the management of any company. Organizational culture must not be ignored during the decision-making process and managers must understand the existing culture of their organization in order to achieve their targets and to meet their goals. This chapter presents the theoretical link between organizational culture and a variety of variables, which affect organizational performance and efficiency, directly and indirectly. Such variables are knowledge management, organizational climate, leadership, quality, innovation and entrepreneurship, human resource management, and employee behavior. This chapter creates the starting point to study the link between culture and organizational strategy, enterprising practices and change management.
2.0 The Meaning Of Organizational Culture
Researchers with different academic and business backgrounds have come up with a lot of different theories about what organizational culture really is and how it has been formed over time. The variety of definitions is partly the result of the efforts of different researchers to explain organizational culture through their personal experience. So, they have used different data from different nations, societies, geographic locations and industries, aiming to explain organizational culture from their point of view. Also, many have been influenced by their personal and corporate history, the personalities of their employees, and their patterns of interaction.
The procedure of collecting data from different environments in order to describe and define a widely used term, like organizational culture, is acceptable. That is due to the fact that organizational culture is part of a whole system of cultures that affect the way the organization performs. It is part of what Straub et al. (2002) call “virtual onion”.
This is not the only model trying to present the complex environment in which organizational culture is cultivated but is one of the most representative examples. The onion has seven layers and each one affects the employer through his everyday working process. The closer a layer is to the onion’s core, the more it affects people and organizational culture is third in the row. Internal or external factors, such as the type of industry, the organizational structures, the national environment, are determining the influence that each layer has on the individuals of an organization. Virtual onion has been analytically presented by Karahanna et al. (2005).
Key Terms in this Chapter
Entrepreneurship: The practice of starting a new organization, or starting a new enterprising activity in response to indentified opportunities.
Leadership: The ability to affect human behavior so as to accomplish a mission designated by the leader.
Organizational learning: A theory about the way an organization learns through its everyday procedures.
Organizational Culture: The “personality” of an organization and is composed of the assumptions, values, norms, artifacts and behaviors of the members of the organization.
Efficiency: The degree of how well a system or organization functions.
Knowledge Management: The way that an organization manages the information in order to create useful knowledge and that is distributed to the organizational members.
Innovation: The introduction of new idea, method or device and its successful exploitation so that the organization increases its performance.
Human resource management: The strategic management of employees so that the organizational objectives to be achieved.