Organizational Culture

Brief Summary

Organizational culture is defined as “A pattern of shared basic assumptions invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration" 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 those problems” (Schein, 1992).

Culture forms at various levels of depth. At the highest level are the visible artifacts. The next level are the group norms that help to govern how the group functions. Next are the shared values that are commonly held. At the deepest level are the assumptions that are shared by the group that are so deeply held that they are mostly invisible to the group itself.

Multiple cultures can be at work in large organizations. These smaller cultural groupings are called sub-cultures and can form between various groups in organizations.

The 'stronger' the culture the more that the group shares the same cultural attributes at most of the levels.

One commonly used framework to express and measure organizational culture was developed by Hofstede & Neuijen (1990). The six practice dimensions of organizational culture operate at the two higher levels of culture through norms and artifacts. These six dimensions are called the practice dimensions of organizational culture and each dimension represents a continuum between two end points. The six practice dimensions of organizational culture are:

  • process-results orientation
  • employee-job orientation
  • parochial-professional orientation
  • open-closed communication
  • loose-tight control
  • normative-pragmatic orientation

Complete Literature Review (Knapp, 2006)

NOTE: The following literature review is taken from the dissertation of Dr. Karl Knapp and is reprinted with permission of the author). Knapp, K. (2006). The Effect of Enterprise Resource Planning (EPR) Systems on Organizational Culture: A Quantitative Analysis. Unpublished dissertation.

Table of Contents

  • Climate & Culture
  • Levels of Culture
  • Sub-Cultures
  • Strength of Culture
  • Dimensions of Organizational Culture
  • Culture Formation
  • Factors that Affect Culture
  • Culture Change
  • References

Introduction

This chapter will review the dual concepts of organizational climate and organizational culture and summarize the evolution of the literature toward the conclusion that they are the same concept viewed from different perspectives and research approaches (Denison, 1996). Organizational culture operates at multiple levels, with some levels more susceptible to change than others (Kilmann et al., 1985b; Litwin & Stringer, 1968). Firms usually have multiple cultures, given that unique cultures can also form within sub-groupings in the organization (Schein, 1992). Although initially formed by the founder of the firm, culture may change through several mechanisms (Ashforth, 1985; Schein, 1983). Technology and the changes caused by technology are one of the mechanisms that can have a major impact on culture (James & Jones, 1976). This research is important due to the major impact that culture has on organizational strategy, performance and operation (Schwartz & Davis, 1981).

Climate and Culture

In the field of anthropology the concept of culture has generated more than 100 definitions (Kroeber & Kluckhohn, 1952). These anthropological definitions can be divided into two general classifications: 1) the phenomenal perspective that is focused on observable behaviors and artifacts; and 2) the ideational perspective, focused on shared meanings, symbols, and values (Swartz & Jordan, 1980). The concept of organizational culture has followed a similar definitional split with the concepts of organizational climate and organizational culture (Kopelman et al., 1990). Over time these two concepts have merged. It is important to trace the evolution of these two concepts to understand their relationship.

Organizational Climate

The concept of organizational climate is based on the study of perceptions of individuals and the theories of psychology (Joyce & Slocum, 1990) and derives from the work of Kurt Lewin (Lewin, 1951; Reichers & Schneider, 1990). Lewinian field theory proposes that managers of an organization could affect the firm through their actions and that managers are considered as separate from the firm (Lewin, 1951). Lewin’s construct is based on the theory that behavior is a function of both the person (including motivation, perception, attitudes, expectancies, and personality characteristics) and the environment. Skinner (1953) expressed this concept with the function B = f(P,E) (Davis & Luthans, 1980).

The theory of organizational climate is based on individuals and their shared perceptions. Because of this basis, climate can be described as the shared perceptions of organizational policies, practices, and procedures, both formal and informal that is indicative of the organization's goals and appropriate means to goal attainment (Reichers & Schneider, 1990).

Climate is typically studied from an external objective (etic) perspective looking at ‘snapshots’ of organizations using predominantly quantitative methods (Reichers & Schneider, 1990). Organizational climate in the generic sense refers to aggregates of psychological climate scores whatever the level of aggregation. Organizational climate can be understood as the perceptual measurement of organizational attributes, which may include more objective organizational measurements (Hellriegel & Slocum, 1974). The orientation rests on personal, value-based schemas, where the basic frame of reference is always the individual (James et al., 1990). Schemas give meaning to cognitions, interpretations, or ways of understanding events (Bartunek & Moch, 1987). The concept of climate is based on the psychology and perceptions of the individual.

Organizational Culture

The concept of organizational culture is based on the field of cultural anthropology where description without value judgment is the focus (Reichers & Schneider, 1990). The concept of culture that has been ‘displaced’ from anthropology holds that culture is learned, shared by people as members of social groups, is transgenerational and cumulative in its development, and that culture is patterned, organized, integrated and adaptive (Morey & Luthans, 1985). The anthropological conceptualization of culture indicates that it is an attribute of groups, and is studied at this level of analysis (Morey & Luthans, 1985). As would be expected by any ‘displaced’ concept, there are some areas where the anthropological concept of culture differs from the organizational concept of culture (Morey & Luthans, 1985). The organizational concept of culture is an adaptation of the anthropological concept.

Based on its anthropological and sociological roots, deep understanding using ethnographic approaches is a key element of the culture research perspective (Denison, 1996). Culture is studied from an internal subjective (emic) perspective (Gregory, 1983) focused on the evolution of social systems (Schein, 1992) using predominantly qualitative methods (Reichers & Schneider, 1990; Rousseau, 1990). The culture literature, especially the symbolic interaction (Mead, 1934) and social construction (Berger & Luckmann, 1966) perspectives, take Lewin’s theories one-step further by recognizing the recursive dynamics between the individual and the system (Denison, 1996). The rationale for the use of qualitative methods in the traditional cultural research perspective is predicated on the presumed inaccessibility, depth, or unconscious quality of culture (Rousseau, 1990; Schein, 1978, 1992).

Climate and Culture

The personal orientation and frame of reference for psychological climate, which carries over into organizational climate partially separates climate from culture. It is the frame of reference, personal versus group, that is a key to differentiating between climate and culture (James et al., 1990). The perspective taken by the researchers is also a difference between these concepts. Culture researchers are usually more concerned with the evolution of social systems over time where climate researchers are usually more concerned with the impact that organizational systems have on groups and individuals (Denison, 1996).

Despite these differences, organizational climate and organizational culture are similar and related concepts which are really only separated by the perspective and approach of researchers (Denison, 1996; Reichers & Schneider, 1990). It has been argued that the concept of culture subsumes the concept of climate (Ashforth, 1985). Culture is a deeper, less consciously held set of meanings (Reichers & Schneider, 1990). Climate can be understood as a manifestation (or artifact) of culture (Ashforth, 1985; Reichers & Schneider, 1990; Schein, 1985). Practitioner publications have also had an impact on the linkage of these two concepts (Barley et al., 1988).

Culture and climate research has converged over time through their usage of increasingly similar research methods and perspectives (Denison, 1996). The merger of these two concepts indicates that climate and culture represent the same concept that has been historically studied using different methods from different perspectives, but is now considered to represent the same phenomenon (Denison, 1996). The social interaction perspective that recognizes the interaction between the individual and the environment “blurs the distinction” between climate and culture (Glick, 1985, p. 604).

Taken overall, the concepts of climate and culture, are multi-level constructs with the lower levels often studied using qualitative methods, and the higher levels often studied using quantitative methods (Denison, 1996). Given the multi-level nature of this construct, it will be established that quantitative methods are most appropriate for the goals of this research study.

Because of the convergence of these concepts, through the remainder of this research the term ‘culture’ will be used to synonymously represent the concepts of both climate and culture.

The Combined Concept of Culture

Culture provides stability, fosters certainty, solidifies order and predictability, and creates meaning for individuals (Deal, 1985). The human need for cognitive order and consistency serves as a motivator for common language and shared categories of perception and thought (Schein, 1984). Individuals form attachments to the organizations to which they belong due to these positive psychological outcomes. Attachment is a fundamental human tendency (Freud, 1937). Attachment brings happiness and fellowship, confers status and power, lessens loneliness, and creates meaning for individuals (Deal, 1985). Striving for meaning is the most profound motivational force in man (Frankl, 1963). Meaning resides in social collectives (Glick, 1985) or in transactions (Schneider & Reichers, 1983). An individual’s search for meaning is heavily influenced by their participation in social groups. Culture has a powerful influence on individuals and organizations based on its ability to provide meaning for individuals and groups.

Culture is learned through two primary methods: (1) anxiety and pain reduction and (2) positive reward and reinforcement (Schein, 1985). Cultural assumptions learned by anxiety and pain reduction can be thought of as defense mechanisms that the group has learned in order to cope with anxiety and potential trauma. Trauma-based learning is stable because not only does the ritualized response avoid the pain, but the actual reduction of anxiety is itself very rewarding (Schein, 1978). Positive reward and reinforcement produces responses that continually test the environment and can produce behavior that is very resistant to change if the environment is inconsistent (Schein, 1978).

Definitions of organizational culture.

There are many definitions of culture offered by a variety of researchers in the literature. Several definitions will be reviewed to summarize different aspects of the definition of organizational culture. Kilman, Saxton et al. (1985b) define culture as the shared philosophies, ideologies, values, assumptions, beliefs, expectations, attitudes, and norms that knit a community together. Hofstede (1984) introduces the concept of mental programs, found at the universal, collective, and individual levels. Culture in this sense is defined as the collective programming of the mind. The term culture is sometimes reserved for describing entire societies; for groups within societies or organizations, “subculture” is often used (Hofstede, 1984, p. 48).

Culture is defined by Kopelman, Brief et al. (1990) in terms of: (1) psychologically meaningful descriptions of the work environment that serve as a basis for interpretation and, therefore, as a guide to behavior; (2) an individual-level construct, which likely can be aggregated at the organizational-unit level; and (3) a central core of dimensions that apply across a variety of work environments (but whose content focus may vary between organizational units).

Pritchard and Karasick (1973, p. 126) define organizational culture as “a relatively enduring quality of an organization’s internal environment distinguishing it from other organizations (a) which results from the behavior and policies of members of the organization, (b) which is perceived by members of the organization, (c) which serves as a basis for interpreting the situation, and (d) acts as a source of pressure for directing activity”.

Schein (1985) argues that the culture of any group or social unit is the total of the collective or shared learning of that unit as it develops its capacity to survive in its external environment and to manage its own internal affairs (internal integration). Survival in the environment is achieved through forming group solutions to problems in the external (e.g. survival, growth and adaptation) environment and solving problems in the internal environment (e.g. internal integration) (Schein, 1992).

Other authors share very similar definitions of organizational culture. Organizational culture is the pattern of shared beliefs and values that shapes the meaning of an institution for its members and provides them with the rules for behavior in their organization (Davis, 1985a). Organizational culture can also refer to the artifacts, perspectives, values, and assumptions shared by members of an organization (Dyer, 1985). Organizational culture can also be defined as a set of commonly held attitudes, values, and beliefs that guide the behavior of an organization's members (Martin, 1985).

Definition of culture for this study.

As established previously, climate is viewed as a manifestation of culture studied at the shallow levels of the concept. The formal definition of culture to be used in this study is: culture is a pattern of shared basic assumptions and manifestations of those 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, 1992).

Examining this definition in more detail, the problems of external adaptation include developing consensus on the: (1) primary task, core mission, or manifest and latent functions of the group; (2) goals; (3) means to be used in accomplishing the goals; (4) criteria to be used in measuring how well the group is doing against its goals and targets; and (5) remedial or repair strategies as needed when the group is not accomplishing its goals (Schein, 1983). The problems of internal integration include developing consensus on the: (1) common language and conceptual categories; (2) group boundaries and criteria for inclusion and exclusion; (3) criteria for the allocation of power and status; (4) criteria for intimacy, friendship, and love; (5) criteria for allocation of rewards and punishments; and (6) ideology and ‘religion’ relating to response to unexplainable events (Schein, 1983).

These external and internal solutions eventually come to be assumptions that are taken for granted and drop out of awareness. One of the powers of culture is derived from the fact that it operates as a set of assumptions that are unconscious and taken for granted (Schein, 1985). Just as schemata guide the behavior of individuals (Bartunek & Moch, 1987), the culture of an organization guides the behavior of its members (Davis, 1985a; Dyer, 1985). Organizational culture has been found to have construct validity due to the finding that it is “more a function of group membership than person-type or group by person-type effects” (Howe, 1977, p. 106).

Culture is a group phenomenon yet it is rooted in the individuals that make up the group. Individuals interpret events and information through organizing frameworks or schemata (Bartunek & Moch, 1987). Schemata are the portion of the perceptual cycle which is internal to the perceiver, modifiable by experience, and somehow specific to what is being perceived (Markus & Zajonc, 1985). Schemata are related to the concepts of alternative world views (Markus & Zajonc, 1985), paradigms (Kuhn, 1970), frames (Goffman, 1974), theories-in-use (Argyris & Schèon, 1978), and cognitive maps (Bougon et al., 1977). Schemata enable individuals to identify entities, specify relationships, guide and give meaning to behavior (Bartunek & Moch, 1987). Organizational schemata “generate shared meanings or frames of reference for the organization as a whole or for various subgroups within it” (Bartunek & Moch, 1987, p. 485).

Culture can be conceptualized in two ways. Some researchers conceptualize culture as a variable. This view is based on conceiving organizations as organisms where the “social world expresses itself in terms of general and contingent relationships among its more stable and clear-cut elements, referred to as variables” (Smircich, 1983, p. 347). The second approach of conceptualizing culture views it as a root metaphor, or something that an organization ‘is’. Culture as a root metaphor “promotes the view of organizations as expressive forms, manifestations or human consciousness” and unconscious psychological processes (Smircich, 1983, p. 347). This view promotes research into the subjective experiences and patterns that form organizations.

Levels of Culture

Researchers have recognized that culture operates at multiple levels within groups. There is significant consensus in the literature that organizational culture exists at four levels: artifacts, norms, values, and assumptions (Davis, 1985a; Davis, 1985b; Hofstede, 1984; Kilmann et al., 1985a; Rousseau, 1990; Schein, 1992).

Artifacts

The first level of culture comprises the visible artifacts and manifestations that an observer “can actively sense as they observe the culture” (Schein, 1992, p. 42). Schein (1992, p. 42) describes artifacts as:

The visible products of the group such as the architecture of its physical environment, its language, its technology and products, its artistic creations, and its style as embodied in clothing manners of address, emotional displays, myths and stories told about the organization, published lists of values, observable rituals and ceremonies, and so on. This level also includes the visible behavior of the group and the organizational processes into which such behavior is made routine.

Artifacts are easy to find, but hard to understand. The difficulty in understanding comes from the fact that the visible artifacts are derived from deeper levels of values and assumptions that give meaning to the artifacts that are not immediately visible (Schein, 1992).

Artifacts are part of organizational symbolism, which are “those aspects of an organization that its members use to reveal or make comprehendible the unconscious feelings, images, and values that are inherent in organization” (Dandridge et al., 1980, p. 77). Symbols perform three functions: (1) symbols are descriptive and express the culture of the organization; (2) symbols control and direct the energy of the firm; and (3) symbols help to maintain the organizational culture and guide actions consistent with that culture (Dandridge et al., 1980). There are three types of symbols: verbal (which include myths, legends and stories), actions (such as rites and rituals), and materials (such as status symbols, logos, awards and flags) (Dandridge et al., 1980).

Rites and rituals are two of the important symbolic artifacts in organizational cultures. Organizational rites take several forms: rites of passage (e.g. induction) which help to restore equilibrium in social relations following transitions; rites of degradation (e.g. firing) which dissolve social identities and their power; rites of renewal (e.g. annual retreats) which refurbish social structures and improve their functioning; rites of enhancement (e.g. seminars) which enhance social identities and their power; rites of conflict reduction (e.g. collective bargaining) which reduce conflict and aggression; and rites of integration (e.g. birthday or holiday parties) which encourage and revive common feelings that bind members together (Trice & Beyer, 1984, 1985a; Trice & Beyer, 1985b). Rites have important social functions in organizations. For example, parting ceremonies (a rite of degradation) provide a setting where people can exchange emotional support and are also an opportunity for managers to influence the culture of a dying organization (Harris & Sutton, 1986).

Rituals are similar to rites and serve important individual and organizational purposes. Rituals are reflected by: repetition, acting, stylized behavior, order, evocative presentational style, and a collective dimension of shared meaning (Moore & Meyerhoff, 1977). Rituals may cause individuals to experience a “transpersonal bonding essential to the human species” (Rappaport, 1978, p. 148). Ritual is particularly important in transitions because of its ability to repair, soothe, and transform (Langer, 1951). Organizations practice both social and uncertainty avoidance rituals that do not make the future more predictable, but they relieve some of the stress of uncertainty by creating a pseudo-certainty within which organization members can continue functioning (Hofstede, 1984). Rituals and ceremonies service to structure, validate, and stabilize collective action (Trice et al., 1969).

In addition to rites and rituals, organizational culture is also expressed through ceremonies, myths, sagas, legends, stories, folktales, symbols, language, gestures, and the physical setting (Trice & Beyer, 1984). The artifacts of organizational culture both express the underlying culture but also perform important individual and organizational functions, including the reinforcement of cultural elements.

Norms

The second level of organizational culture encompasses the norms of the group which describe the “behaviors and attitudes that the members of a group or organization pressure one another to follow that are not written but are transmitted from one generation of employees to another by stories, rites, rituals, and particularly, sanctions that are applied when anyone violates a norm” (Kilmann et al., 1985a, p. 113). Norms can also extend to collaboration between organizations that permit each organization to act independently, but within the collective interests of all organizations sharing a common concern (Joyce & Slocum, 1990).

Values

The third level of organizational culture are values, which give meaning to the norms and artifacts of the group (Schein, 1992) and can be expressed as a broad tendency to prefer one state of affairs over another (Hofstede, 1984). Values are the reasons behind behaviors (Schein, 1992). Values are derived from the process of physical and social validation as elements that help the group solve their external and internal problems. Values can be expressed in two ways, as those desired, and those that are desirable (Hofstede, 1984). If values are not based on prior learning they may only be what are called what Argyris and Schon (1978) have called ‘espoused values’ which can predict what people will say but may be inconsistent with what they do (Schein, 1992).

Assumptions

The deepest level of organizational culture holds the assumptions that have become so taken for granted that members will find behavior based on any other premise inconceivable (Schein, 1992). Assumptions are “fundamental beliefs and assumptions that pertain to the nature of the environment and to what various stakeholders want and need, how stakeholders make decisions, and which actions stakeholders are likely to take both now and in the future” (Kilmann et al., 1985a, p. 132). Assumptions are also known as a cultural paradigm (Schein, 1984).

Assumptions are similar to what anthropologists call dominant value orientations (Schein, 1992) that reflect the preferred solution among several basic alternatives. The difference is that assumptions have become so taken for granted that one finds little variation within a cultural unit and, for strongly held assumptions, members will find behavior based on any other premise inconceivable (Kluckhohn & Strodtbeck, 1961). Assumptions, in this sense are similar to what Argyris has identified as ‘theories-in-use’, the implicit assumptions that actually guide behavior, that tell group members how to perceive, think about, and feel about things (Schein, 1992). Because of the unconscious nature of this deepest level of culture, assumptions are very hard to change. Change made at this level has been called double loop learning, frame breaking (Argyris, 1976; Argyris & Schèon, 1978) or third-order change (Argyris et al., 1985) and can cause great anxiety.

Because of the anxiety of change in the basic assumptions, people will be most comfortable with others who share the same set of assumptions and uncomfortable in situations where different assumptions operate (Bartunek & Moch, 1987). These differences in assumptions can cause errors in perception and interpretation of events and actions (Douglas, 1986).

The assumptions shared by groups relate to the basic assumptions about the nature of reality, truth, time, space, human nature, human activity, and human relationships (Sathe, 1985a; Schein, 1985, 1999). At its deepest level, culture is the collective manifestation of human nature - the collection of human dynamics, wants, motives, and desires that make a group of people unique (Kilmann et al., 1985a).

Sub-cultures

In addition to varying in depth within the levels of organizational culture (artifacts, norms, values and assumptions), culture can vary between groups in an organization. While the overall organizational culture holds sway over the firm, moderately unique ‘sub-cultures’ can form in groups within the same organization (Schein, 1992). These sub-cultures commonly form in departments within large organizations (Kilmann et al., 1985a; Rousseau, 1990; Schein, 1992) and the number of sub-cultures is positively related to organizational size (James & Jones, 1976). Size is related to the existence of sub-cultures because it is difficult to maintain a highly integrated, uniform culture in a large, increasingly differentiated organization (Davis, 1985b). The existence of sub-cultures within a firm appears to be more the rule than the exception (Van Maanen & Barley, 1984) although this is disputed (Wilkins & Ouchi, 1983). Some authors have argued that the existence of sub-cultures based on the perception of organizational members indicates that a more appropriate term would be psychological culture (James & Jones, 1974). Follow-up research on this assertion however shows that the term organizational culture is more appropriate because a larger share of the variance is organization-specific rather than group specific (Drexler, 1977). The existence of sub-cultures is consistent with and supports the concept of organizational culture.

Sub-cultures are found within organizations when culture differs between groups with sufficient social stability (common history, stable membership) and a history of joint problem solving (Kilmann et al., 1985a; Louis, 1985a; Rousseau, 1990; Schein, 1978). Culture formation is driven by the human need for parsimony, consistency, and meaning causing the shared elements to form into patterns that eventually can be called a culture (Schein, 1978). Any group that gathers over time may develop common understandings distinct from those of other groups of the same general type (Schein, 1992).

A manager’s acknowledgement of the existence of sub-cultures may depend on their assumptions about the work place. Managers who hold a Theory X assumption tend to assume the existence of one culture (that espoused at the top level of the organization) where Theory Y assumptions open managers to the recognition of multiple cultures (Louis, 1985a; McGregor, 1960).

Several factors affect when and where sub-cultures form. Subcultures may form between groups by level in the organizational hierarchy, between line or staff positions, between departments or subunits, based on biographical influences, personality characteristics, or length of service of individuals (Powell & Butterfield, 1978). Sub-cultures may form because some understandings might be distinctive to people at one level of the organization (horizontal slice), among members of a vertical slice, or among members of a department different from those of other departments within the organization (Schein, 1978). An extreme view suggests that organizational culture may be viewed as a “system of integrated subcultures, not as a unified set of values to which all organizational members ascribe” (Riley, 1983, p. 414).
Sub-cultures can form among those in the lower levels of organizations based on antagonistic relations with management, the repetitive nature of lower-level work, conflicts with other departments, and difficulties in dealing with customers (McGregor, 1960). Managerial practices such as job enrichment, participative management and improved work conditions may reduce the likelihood of subculture formation (Louis, 1985a). Multiple reward systems may also give rise to multiple subcultures in one organization (Kerr & Slocum, 1987).

Sub-cultures may be in conflict with each other (Schein, 1984). There are three different types of subcultures that may form in an organization: enhancing, orthogonal and countercultural (Martin & Siehl, 1983). An enhancing subculture shows greater adherence to the core values of the dominant culture; an orthogonal subculture supports the dominant culture but also accepts a set of separate, non-conflicting values; lastly, a counter culture “presents a direct challenge to the core values of a dominant culture” (Martin & Siehl, 1983, p. 54).

Sub-Culture As A Key To This Study

The concept of sub-culture is key to this study. ERP systems are normally implemented using a phased, functional approach. For organizations that are predominately functional, the phased implementation will create temporal differences between organizational groups (departments) as some departments begin to use the new ERP system while others do not. The differences between departmental groups as the system is being implemented are hypothesized to create culture change that can be measured between the groups. It is this temporal difference between departments in a functional organization during ERP system implementation that provides the opportunity for this causal-comparative culture research.

Strength of Culture

The strength of culture can be defined as “(1) the homogeneity and stability of group membership and (2) the length of intensity of shared experiences of the group” (Schein, 1984, p. 54). The strength of a culture can range from weak to strong. A ‘weak culture’ refers to a low level of aggregation on cultural variables where a ‘strong culture’ refers to the situation where cultural variables aggregate to a high level of analysis (e.g. collectives) (Davis, 1985b). The concept of a ‘strong culture’ is related to the pervasiveness of a culture, determined by the degree that cultural elements are widespread and shared by members of a group (Dansereau & Alutto, 1990). Rousseau calls this the intensity of a sub-culture and the integration of an organizational culture (Kilmann et al., 1985a). Strong cultures can also be described as stable and more intense (Schein, 1984), thick and widely shared (Sathe, 1983), cohesive and tight-knit (Deal & Kennedy, 1983), and coherent (Weick, 1985). This same concept can be used to describe the level of organizational integration (Gregory, 1983). Strong socialization and indoctrination processes, articulating the culture, can lead to stronger cultures and greater effects on the firm.

Various statistical measures have been used to measure the strength of organizational culture. The two most prevalent are the level of statistical variation (e.g. standard deviation) and intraclass correlation (Joyce & Slocum, 1984). Hofstede and Neiujen (1990) use standard deviation of individual survey question scores for each group to measure strength of the organizational cultures for the twenty firms they studied. The higher the standard deviation, the lower the strength of the culture. Some researchers feel that intraclass correlation between individual survey question scores within the groups under study is the preferred method to measure the strength of culture (Joyce & Slocum, 1984).

Dimensions of Organizational Culture

Many authors have attempted to identify ‘the’ dimensions of culture. Most of these authors have built their dimensions on organizational and psychological theories. Instruments have been built that measure up to two hundred fifty four different dimensions of culture (Hellriegel & Slocum, 1974). This section provides a brief overview of some of the proposed dimensions of organizational culture along with an overview of the theoretical construct and dimensions of culture to be used in this study.

Literature Summary on Dimensions of Culture

The majority of dimensions of organizational culture in the literature are based on theoretical constructs in sociology and psychology. Several researchers have used two-dimensional topologies to describe organizational culture. A popular example of this topology is proposed by Sethia and Von Glinow (1985), who suggest that culture can be described along two dimensions, concern for people and concern for performance yielding four archetypes of culture. Other researchers offer differing two-dimensional constructs such as the amount and frequency of feedback and amount of risk-taking (Deal & Kennedy, 1982). Petrock (1990) also utilized a two-dimensional matrix suggesting four cultural types which include clan culture, adhocracy culture, hierarchy culture, and market culture. These conceptualizations of culture are plotted on a grid similar to Blake and Mouton’s (1994) managerial grid.

Other researchers suggest multiple dimensions that measure culture on a multi-scale continuum. Examples of these types of typologies include Wallach (1983) who proposes three dimensions of organizational culture: bureaucratic, innovative, and supportive. Harrison (1972) proposes four organizational ideologies which include power orientation, role orientation, task orientation, and person orientation. Kopelman, Brief et al. (1990) build upon the work of several authors (Campbell et al., 1970; Payne & Pugh, 1976) to identify five dimensions of culture including goal emphasis, means emphasis, reward orientation, task support, and socioemotional support. Litwin and Stringer (1968) propose nine dimensions of culture including structure, responsibility, warmth, support, reward, conflict, standards, identity and risk. Schein (1992) provides a comprehensive discussion of the dimensions of organizational culture, incorporating much of the work of other culture researchers. He identifies six dimensions of internal integration and four categories of external integration, which are an extension of Kluckhohn and Strodtbeck's (1961) classic comparative study of cultures in the U.S. Southwest.

Other researchers utilized a variety of quantitative methods to derive dimensions of organizational culture. An empirically based meta-analysis by Koys and Decotiis (1991) of over 80 dimensions of organizational culture from the literature yielded eight unique dimensions of culture that include autonomy, cohesion, trust, pressure, support, recognition, fairness, and innovation. A similar approach based on the study of hundreds of organizations by the Hay Group found eleven dimensions of culture (Gordon, 1985).

The preceding examples of various dimensions of organizational culture are a representation of the wide variety of theoretical constructs in the culture literature. Of the multitude of theoretical constructs available, the work of Gert Hofstede stands out due to the utilization of a superior methodology to establish the dimensions of culture. The work of Hofstede is the benchmark for both the study of national and organizational culture. This is due to the utilization of a combination approach based on large scale qualitative interviews and quantitative factor analysis to identify the discrete dimensions of national and organizational culture (Hofstede & Neuijen, 1990; Hofstede, 1984). The work of Hofstede and Neuijen (1990) will be used as the theoretical basis for this study.

Theory Base For This Study

Hofstede (1984) identified four dimensions of national (country) culture: power distance, uncertainty avoidance, individualist-collectivist, and masculine-feminine. This work was later refined to include a fifth dimension, Confucian dynamism (Hofstede and Bond 1988). Researchers have used Hofstede’s national culture dimensional framework to study the culture of organizations (Chatman & Polzer, 1998) but this approach is problematic because the national culture dimensions are not significantly differentiated between organizations in the same national culture groupings (Hofstede & Neuijen, 1990).

To establish the dimensions of organizational culture Hofstede and Neuijen (1990) conducted an in-depth study using both qualitative surveys and a quantitative factor analysis with twenty organizations from two similar national culture groups. Their analysis found that organizational culture could be described through nine dimensions. Three of the organizational culture dimensions exist at the deeper cultural value and assumption levels and are called the value dimensions (Hofstede and Neuijen 1990). These three dimensions include need for security (related to uncertainty avoidance), work centrality, and need for authority (related to power distance). The value dimensions are related to the national culture dimensions and, because they interact at the deepest levels of culture, are very resistant to change, and are less likely to be affected by changes in systems or structure of the organization (Hofstede & Neuijen, 1990).

The six practice dimensions of organizational culture operate at the two higher levels of culture through norms and artifacts. These six dimensions are called the practice dimensions of organizational culture and each dimension represents a continuum between two end points. The six practice dimensions of organizational culture are: process-results orientation, employee-job orientation, parochial-professional orientation, open-closed communication, loose-tight control, and normative-pragmatic orientation (Hofstede & Neuijen, 1990). These higher level cultural dimensions are more likely to be impacted by technological, process and organizational change (Schein, 1992). The practice dimensions of organizational culture form the theoretical basis for this study.

The first practice dimension of organizational culture is described by the continuum between a concern for means (process-oriented) to a concern with goals (results-oriented) (Hofstede & Neuijen, 1990). In process-oriented cultures “people perceive themselves as avoiding risks and making only a limited effort in their jobs, while each day is pretty much the same” (Hofstede, 1997, p. 189). In results-oriented cultures people perceive themselves as comfortable in unfamiliar situations and put in maximal effort, while each day is felt to bring new challenges” (Hofstede, 1997, p. 189). This dimension has been related to what Burns and Stalker (1961) have called mechanistic and organic systems. Peters and Waterman (1982) described a very similar concept that they called a bias for action. Peters and Waterman (1982) hypothesized that ‘strong’ cultures are more likely to favor results-oriented action. This hypothesis found support by Hofstede and Neuijen (1990) in their formulation of the process-results dimension of organizational culture.

The second practice dimension of organizational culture is described by the continuum between a concern for people (employee-oriented) to a concern for getting the job done (job-oriented) (Hofstede & Neuijen, 1990). In employee-oriented cultures “people feel their personal problems are taken into account, that the organization takes a responsibility for employee welfare, and that important decisions tend to be made by groups or committees” (Hofstede, 1997, p. 190). In job-oriented cultures “people experience a strong pressure to complete the job; they perceive the organization as only interested in the work employees do, not in their personal and family welfare; and they report that important decisions tend to be made by individuals” (Hofstede, 1997, p. 190). This dimension builds on the work of Blake and Mouton (1994) taking these two concepts and expanding them as constructs of social groups (as opposed to individuals).

The third practice dimension of organizational culture is described by the continuum between units whose employees derive their identity largely from the organization (parochial) to units in which people identify with their type of job (professional) (Hofstede & Neuijen, 1990). In parochial cultures employees “feel the organization’s norms cover their behavior at home as well as on the job; they feel that in hiring employees, the company takes their social and family background into account as much as their job competence; and they do not look far into the future” (Hofstede, 1997, p. 190). In professional cultures employees consider their private lives their own business, they feel the organization hires on the basis of job competence only, and they do think far ahead” (Hofstede, 1997, p. 191). This dimension is related to the sociological concept of localism and cosmopolitanism (Merton, 1968).

The fourth practice dimension of organizational culture is described by the continuum between open systems to closed systems (Hofstede & Neuijen, 1990) as they relate to communications climate (Poole, 1985). In an open systems culture employees “consider both the organization and its people open to newcomers and outsiders; almost anyone would fit into the organization, and new employees need only a few days to feel at home” (Hofstede, 1997, p. 191). In a closed systems culture employees “the organization and its people are felt to be closed and secretive, even among insiders; only very special people fit into the organization, and new employees need more than a year to feel at home” (Hofstede, 1997, p. 191).

The fifth practice dimension of organizational culture refers to the amount of internal structuring in the organization, tight versus loose (Hofstede & Neuijen, 1990). In loose control cultures employees “feel that no one thinks of cost, meeting times are kept approximately, and jokes about the company and the job are frequent” (Hofstede, 1997, p. 191). In tight control cultures employees “describe their work environment as cost-conscious, meeting times are kept punctually, and jokes about the company and/or the job are rare” (Hofstede, 1997, p. 191).

The sixth and final practice dimension of organizational culture deals with the “popular notion of customer orientation” describing a continuum with pragmatic units as market-driven and normative units as driven by the implementation of inviolable rules (Hofstede & Neuijen, 1990, p. 304). In normative cultures “the major emphasis is on correctly following organizational procedures, which are more important than results; in matters of business ethics and honesty, the unit’s standards are felt to be high” (Hofstede, 1997, p. 192). In pragmatic units “there is a major emphasis on meeting the customer’s needs, results are more important than correct procedures, and in matters of business ethics, a pragmatic rather than a dogmatic attitude prevails” (Hofstede, 1997, p. 192). This is related to Peters and Waterman’s concept of staying close to the customer (Peters & Waterman, 1982).

Sub-Cultures, ERP Systems and the Dimensions of Organizational Culture

As established previously, the literature supports the view that the organizational culture of groups within large organizations can vary (Kilmann et al., 1985b). These are called sub-cultures, which arise when culture differs between groups with sufficient social stability (common history, stable membership) (Rousseau, 1990) and a history of joint problem solving (Schein, 1978). In functional organizations sub-cultures may arise within the functional departments. If sub-cultures exist in an organization, functional departments are prime candidates due to the usually stable structures, focus on problem solving within a certain functional domain and similar education and background of members with similar functional job roles (Kilmann et al., 1985a; Schein, 1978). The potential of functionally based subcultures is in alignment with a research foundation based on ERP system implementation patterns.

Implementation of ERP systems usually follows a functional, phased approach (Krumbholz et al., 2000). As previously established, ERP systems cause major changes to the processes, structures, relationships, and communication patterns within the groups using the system. Because a functional, phased approach is usually taken, some functions will use the ERP system where others within the same organization will not. This temporal difference provides an opportunity to study the differences between groups within the same organization.

Organizational culture takes time to change, although some researchers believe that it changes slowly (Schein, 1985) where others believe that it can change rapidly, at least at the higher levels of culture such as artifacts, norms and possibly values (Litwin and Stringer 1968; Kilmann, Saxton et al. 1985).

Culture Formation

Impact of the Founder

Organizational cultures are formed by the founders of the organization and emerge as members of the organization interact with one another to solve the fundamental problems of internal integration of group members and environmental adaptations (Rousseau, 1990). Because organizations are interconnected entities, any change in the organization (and culture) must consider all parts and aspects of the organization (Schein, 1986). The culture will “always reflect the complex interaction between (1) the assumptions and theories that founders bring to the group initially and (2) what the group learns subsequently from its own experiences” (Schein, 1983, p. 75). The founder has a significant affect on the group because they are the starting point for all of the underlying assumptions and theories (Schein, 1983). The early goals are formulated and guided by the founder. Organizational goals become operationalized through behavior, and that behavior, in turn, yields structures and processes (Schneider, 1987).

The founder performs unique functions in the development of organizations. They (1) contain and absorb anxiety and risk; (2) embed non-economic assumptions and values; (3) stimulate innovation; and (4) originate evolution through hybridization (Schein, 1983). Founders are especially likely to introduce humanistic, social service, and other non-economic assumptions (Schein, 1983). There is consensus in the literature that organizational founders have a direct and lasting impact on the organizations that they start (Martin et al., 1985; Sathe, 1985b; Schein, 1983, 1985). Over time, as organizations mature and grow, additional factors affect the organizational culture.

Factors that Affect Culture

The culture of an organization is affected by external influences which include the national culture of the society in which the organization is located, ethnic groups of workers, local geographic community, professions and occupational groups and the industry to which an organization belongs (Ashforth, 1985; Schneider, 1983; Schneider & Reichers, 1983). To illustrate these effects, the myths of a national culture have a significant impact on the individuals and on organizational culture (Koprowski, 1983). Myths “renders an unintelligible complexity into a complexity that is more intelligible” (Lukas, 1987, p. 152). The industry of an organization also affects the organizational culture. Organizations within industries commonly share some of the same cultural characteristics (Louis, 1985a).

Industry competitive environment (e.g. market concentration and stability), customer requirements and societal expectations have an effect on the organizational culture of firms operating in that industry (Gordon, 1991). Relatively homogeneous industries tend to have firms with similar sizes, structures, technologies, personnel configurations, regulatory demands, and orientations leading to similar cultures (O'Reilly et al., 1991). Industry influences efforts to change the culture in directions which are directionally consistent with industry demands (Gordon, 1991). The opposite is also true, such that firms in heterogeneous industries may be less similar (O'Reilly et al., 1991). Ouchi (1980) utilizes a transaction cost methodology in order to suggest that the normative and informational characteristics of an industry drive firms to one of three modes of control and organization: markets, bureaucracies, or clans.

Culture is impacted by the physical environment through changes in the social interactions and symbolism it represents (Gordon, 1985). Design of the physical space affects the culture (Peponis, 1985). Physical settings typically contribute to the creation of sub-cultures by facilitating a group orientation and within-group communication, often at the expense of between group communication (Ashforth, 1985; Baker, 1980) This is an indirect method of changing culture (Baker, 1980).

Organizational size has an influence on management style and organizational culture (Connell, 2001). Specifically, there may be an inverse relationship between the degree of autonomy that employees feel and the size of the organization (Moorehead et al., 1997) because large organizations have a negative effect on member participation (Indik, 1965). As established previously, there is also a positive relationship between the existence of sub-cultures in a firm and organizational size (Schein, 1985).

Culture Change

The crux of this research is based on how ERP systems may change organizational culture. An understanding of the mechanisms and methods by which culture can be changed is a key to understanding how ERP systems are able to impact organizational culture. There are three perspectives on culture change as organizations grow and the founder’s impact begins to lessen: the interactionist perspective, the objectivist perspective, and the structuralist perspective (Ashforth, 1985). Studies provide support for all three of these perspectives having an impact on culture formation, but usually separately (Joyce & Slocum, 1984).

The Interactionist Perspective

The interactionist perspective argues that culture perceptions are a result of individuals' efforts to understand the organization and their roles within it and derives from the social interaction of its members (Schneider, 1983; Schneider & Reichers, 1983). This perspective was pioneered by Bowers (1973) whose work is based on the field of interactional psychology (Schneider, 1987) and the systems theory framework (Smircich, 1983). In the interactionist perspective, the culture is learned through two situations: positive problem-solving situations and anxiety-avoidance situations, both of which may produce positive or negative reinforcement (Schein, 1984). If a group shares the perception that a solution to a problem is working it will be adopted. If the solution continues to work it will come to be taken for granted and taught to newcomers (Schein, 1983). As a group is forming and growing the culture is the glue which is a source of identity and strength (Schein, 1984).

The Objectivist Perspective

The objectivist perspective argues that processes of attraction, selection, and attrition (ASA) produce a relatively homogeneous membership which gives rise to similar culture perceptions (Payne & Pugh, 1976). This perspective holds that people and situations are inseparable entities and that attraction to an organization, selection by it, and attrition from it result in the individuals who populate the organization and determine organizational behavior (Schneider, 1987). The attraction-selection-attrition process will effect the kinds of people who comprise an organization such that a limited type of people will populate the firm (Schneider, 1987). It is in this way that organizations themselves can be thought of as “culture-producing phenomena” (Smircich, 1983, p. 344). It is the persons who comprise the firm who cause them to be what they are (Schneider, 1987). This perspective holds that changes in structures and processes are unlikely to be useful in effecting organizational change. In this view, the key to change is to change the behavior of people and the best way to accomplish behavior change is to change the type of people attracted to, selected by, and that stay in an organization (Schneider, 1987). Individuals who exclusively support this perspective suggest that culture is not an organizational element that can be managed because it is an evolutionary concept (Gordon, 1985).

An evolutionary theory of culture change is based on the changes of group membership and their interaction in the firm over time. New members can produce culture change when brought in at high levels of the organization (Schein, 1984) and if they are successful in times of crisis (Sethia & Von Glinow, 1985). New leaders entering an organization that has encountered a crisis are in a particularly powerful position to initiate change because (1) members of the organization are looking for new ideas to resolve the crisis, and (2) the new leader is likely to receive credit for any subsequent successes (Dyer, 1985). A leader’s effect may be positive or negative. Psychologically dysfunctional leaders can even pass their dysfunctions on to their organizations where they can be manifested in the culture (Kets & Miller, 1986).

The behavior of the leadership of the organization, especially when the leadership has changed, can impact the culture. Changes in leadership style can quickly modify culture dimensions that, in turn, affect motivation and behavior affecting productivity, satisfaction, retention (or turnover), adaptability, and reputation (Sathe, 1985b). Leaders using role-modeling behavior consistent with the desired norms and values is a direct method to effect organizational culture (Baker, 1980).

Senior management may bring in new leaders in key positions who hold assumptions in greater alignment with the desired culture (Schein, 1990). Also the promotion and transfer of employees who embody the desired culture is an indirect method to change organizational culture (Baker, 1980). Leaders create and change cultures, and that this is one of the most important functions of leadership, but cultures are only partly influenced by leader behavior (Schein, 1978, 1999). Selection contributes significantly to value congruence upon joining the firm and socialization contributes significantly to changes in person-organization fit (Chatman, 1991; Gordon, 1985).

Organizational socialization is the process by which an individual comes to understand the values, abilities, expected behaviors, and social knowledge that are essential for assuming an organizational role and for participating as an organizational member (Louis, 1980). Effective socialization inspires individuals to think and act in accordance with organizational interests (Reichers, 1987) and can help to create a collective consciousness (Van Maanen, 1973, 1975). When members perceive that their organization has intensive socialization practices, they are more committed to organizational values (Caldwell et al., 1990). Socialization may be so important that firms may select employees at least partially based on their openness to socialization (Chatman, 1989). This is a gradual and indirect method of changing organizational culture that is likely only partially relevant to the impact of ERP systems under study here (Baker, 1980).

The Structuralist Perspective

The stucturalist perspective argues that organizational structure gives rise to culture as organizational members respond to that structure (Kilmann et al., 1985a). This perspective is based on the work of Mischel (1968) who argued that situations cause behavior. Because managers have less direct control over organizational culture they often turn to changes in structure, systems, and people’s skills in order to effect change (Schwartz & Davis, 1981). Organizational culture is a critical lever that managers can use to influence or direct the course of their organizations (Smircich, 1983) yet culture is very difficult to change due to the structural inertia that organizations face (Burns & Stalker, 1961; Hannan & Freeman, 1977). Organizations may influence cultural perceptions through changing structure, technology, and control systems (Ashforth, 1985). This approach to culture change is consistent with a system-structure view which proposes that the behavior of individuals can be shaped (Joyce & Slocum, 1990).

All of the mechanisms described in these three perspectives certainly impact organizational culture. Relative to this study, ERP systems work through all three perspectives because they change the structure of the organization, affect the interaction between members of the firm, and may change work to be more specialized, affecting the types of employees who are attracted to and selected by the firm. Although ERP systems can affect organizations through all three mechanisms, the focus of this study is on the cultural changes wrought by ERP systems through structural modifications to the organization and through changes in interpersonal interaction patterns.

Specific mechanisms for structuralist-based culture change.

Changes to organizational culture through structural mechanisms can be planned or unplanned. For planned changes the difference between the current culture and the desired culture is known as a culture-gap (Kilmann et al., 1985a). A culture gap occurs when organizational members persist in behaviors that may have worked well in the past but that are dysfunctional today (Ashforth, 1985). Culture-gaps are commonly identified through an analysis of the current and desired norms of the culture (Kilmann et al., 1985a). ERP systems may introduce unplanned change and may create culture gaps if the system changes the culture through structural modifications in an undesirable direction.

Structuring is “a process of generating and recreating meanings” (Ranson et al., 1980, p. 4). A more limited definition of the term structure is the “abstract, formal relations that constrain day-to-day action in social settings” (Barley, 1986, p. 79). An expanded definition of structure introduces the concept that structure is an emergent property of ongoing patterned action, interaction, behavior, and cognition (Manning, 1982; Silverman, 1971; Van Maanen, 1979; Weick, 1979). This concept derives from the concepts of negotiated-order theory (Strauss, 1978, 1982) and structuration theory (Giddens, 1979). Structure can be understood as a duality, that the structural properties of social systems are both the medium and the outcome of practices that constitute those systems (Bacon, 1992). For purposes of this research, structure will be defined as a flow of ongoing action and as a set of institutionalized traditions or forms that reflect and constrain that action (Barley, 1986). The interplay that takes place between the two is called the process of structuring (Barley, 1986). There are a variety of structural mechanisms through which culture can be changed. ERP systems may affect several of these mechanisms, which in turn may affect organizational culture.

The management approach taken may also have an effect on the process and effect of culture change. The greater the number of sub-cultures within an organization or the greater the depth of the desired change in culture, the greater the difficulty of changing that organization’s culture (Baker, 1980). Changing multiple cultures at deeper levels with lasting effect requires a Theory Y relationship-oriented management approach where changing a singular culture at surface levels can be successful using a Theory X task-oriented management approach but may result in only short-term changes (Kilmann et al., 1985a). This further suggests that culture change using multiple approaches may be successful. The top-down (Theory X) approach may be successful in initiating change at the surface levels, followed by a more participative (Theory Y) approach taken to perpetuate and sustain the changes in multiple sub-cultures at the deeper levels of culture (Kilmann et al., 1985a).

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