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Evolution of corporate culture: how important is it in today’s world?

There are many different and competing definitions of “corporate culture” in the organizational theory literature. On one end of the spectrum culture is simply defined as the patterns of behavior within the organization (Smircich, 1983). On the other end, some theorists have defined organizational culture as a system of shared cognitions and the human mind generates the culture by means of a finite number of rules (Fiol, 1991). Although all the theorists believe in the importance of the culture in the organizational studies but still there is a lack of consensus over its precise definition (, 2006). Theorists have accepted this fact and approached the concept of culture from the most widely used definition of culture, as defined by Lismen et al (2004) “a complex set of values, beliefs, assumptions, and symbols that define the way in which a firm conducts its business”.

The evolution of corporate culture within an organization has been the center of discussion for many years. Practitioners have called it the ‘way we do things around here’ (Hampden-Turner, 1990) and the theorists have called it as the ‘collective programming of the mind’ (Siew & Kelvin, 2004) which distinguishes one group from another. Culture reflects the identifiable components of practices, customs, beliefs and values:

Practices: These represents the surface level of a culture i.e. the visible elements such as language, etiquette, form of greeting, clothing, and also include the artifacts of the business i.e. the physical layout. These practices do have relevance as it greases the functionality of the organization. Such practices keep the employees motivated, concerned and even transform everyone to follow the similar path as everyone in order to achieve the common corporate objective.

Customs: These are the accepted modes or norms of behavior within the organization, reflecting the values and beliefs, which provide guidelines for the way people and groups, are expected to behave towards each other. These often shape aspects of the physical appearance of the organization, also called the artifacts.

Beliefs: The assumptions that members hold about the organization and the situation within it- about what practices work well in this business, for example how people make decisions, how teams work together and styles of problem solving.

Values: Deeply held ideas of members regarding what constitute right or wrong, fair or unfair, thus anything that has personal worth or meaning. These values are expressed in operating beliefs and norms of behavior.

The corporate culture develops as people come to share a set of beliefs and then they use these to establish norms about the way they should behave towards each other and to outsiders (, 2006). If the outcomes are positive this reinforces their shared belief in the values underlying their behavior. In this way, the organizations develop deep seated values and beliefs about the way that staff should run things. However, it looks simple and straight forward case in theory, but when it is referred in the practical life then it is a big task to let it be a success story. It can be concluded by drawing upon Barney (1986) that a valuable, rare and inimitable corporate culture can be a source of sustained competitive advantage for a company.


Barney, J. (1986) “Organizational Culture: Can It Be a Source of Sustained Competitive Advantage?” Academy of Management Review, Vol. 11, No. 3, pp. 656-665

Fiol, C. (1991) “Managing Cultures as a Competitive Resource: An Identity-Based View of Sustainable Competitive Advantage,” Journal of Management, Vol. 17 No. 1, pp. 191-211

Hampden-Turner, C (1990), “Corporate Culture- From Vicious to Virtuous circles”, The Economist books, pg 21-22

Lismen, C.; Margaret, S. and Ed Snape (2004) “In Search of Sustained Competitive Advantage: The Impact of Organizational Culture, Competitive Strategy and Human Resource Management Practices on Firm Performance,” International Journal of Human Resource Management, Vol. 15:1, pp. 17-35

Papers For You (2006) "E/B/49. Review of theories on organizational culture", Available from [22/06/2006]

Papers For You (2006) "P/B/309. Why is corporate culture important?", Available from [21/06/2006]

Siew Kim Jean Lee, Kelvin Yu (2004), “Corporate culture and organizational performance”, Journal of Managerial Psychology; Volume: 19 Issue: 4; 2004 Research paper

Smircich, L. (1983) “Concepts of Culture and Organizational Analysis,” Administrative Science Quarterly, Vol. 28, pp. 339-358

About the Author: Copyright © 2006 Verena Veneeva. Professional Writer working for

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