Organizational Subcultures in a Soft Bureaucracy : Resistance behind the Myth and Facade of an Official Culture

This paper develops a model of organizational culture and effectiveness based on four traits of organizational cultures; involvement, consistency, adaptability, and mission. These traits are examined through two linked studies: In the first, qualitative case studies of five firms are used to identify the traits and the nature of their linkage to effectiveness; In the second, a quantitative study provides an exploratory analysis of CEO perceptions of these four traits and their relation to subjective and objective measures of effectiveness in a sample of 764 organizations. The results show support for the predictive value of the traits, and help to illustrate the complementarity of qualitative and quantitative methods for studying organizational cultures. Two of the traits, involvement and adaptability, are indicators of flexibility, openness, and responsiveness, and were strong predictors of growth. The other two traits, consistency and mission, are indicators of integration, direction, and vision, and were better predictors of profitability. Each of the four traits were also significant predictors of other effectiveness criteria such as quality, employee satisfaction, and overall performance. The results also showed that the four traits were strong predictors of subjectively-rated effectiveness criteria for the total sample of firms, but were strong predictors of objective criteria such as return-on-assets and sales growth only for larger firms. This paper suggests that culture can be studied as an integral part of the adaptation process of organizations and that specific culture traits may be useful predictors of performance and effectiveness. The paper also illustrates how qualitative case studies and inductive theory building can be combined with quantitative comparisons and theory-testing to make progress on specific aspects of organizational culture research. (Theory Building; Culture Effectiveness) The relationship between the culture and functioning of social organizations has been a recurring theme in the social sciences for over 50 years. Sociologists, social anthropologists, and social psychologists have often presented culture and ideology as integral features of the functioning of a society (Weber 1930, Mead 1934, Radcliffe-Brown 1952). Each of these authors focused on culture as a critical aspect of the adaptation of social organizations, and viewed culture as a system of "socially transmitted behavior patterns that serve to relate human communities to their ecological settings" (Keesing 1974). This perspective has also been reflected in the work of ethnographers such as Whyte (1949) and Rohlen (1974), and by psychologists such as Schein (1985,1990) and Hofstede (Hofstede 1980,1991; Hofstede et al. 1990). Organizational researchers have also addressed the relationship between culture and functioning (Wilkins and Ouchi 1983, Barney 1986, Barley et al. 1988, Saffold 1988, Ott 1989), but have seldom developed explicit theories of organizational culture and effec204 ORGANIZATION SCIENCE/ Vo1. 6, NO. 2, March-April 1995 1047-7039/95/0602/0204/$01.25 Copyright O 1995. Institute for Operations Research and the Management Sciences DANIEL R. DENISON AND ANEIL K. MISHRA Organizational Culture and Effectiueness tiveness or presented supporting evidence (Siehl and Martin 1990). Progress has been made in related research areas such as socialization (Van Maanen and Schein 1979, Chatman 1991), and change (Schein 1985, Kotter and Heskett 1992) but with few exceptions (e.g., O'Reilly 1989) little attention has been given to the issue of organizational culture and effectiveness. The purpose of this paper is to develop and test a model of the cultural traits that appear to characterize effective organizations. Our intention is to develop an explicit theory about culture and effectiveness that can extend the implicit, but often unelaborated themes that appear in many culture studies. This is accomplished by presenting two linked studies: The first uses qualitative studies of five organizations to develop hypotheses about four cultural traits and their linkage to effectiveness. The second study then presents a quantitative test of these four hypotheses by comparing CEO perceptions of culture with subjective and objective measures of effectiveness in 764 organizations. Studying Organizational Culture and Effectiveness The topic of culture and effectiveness is of central importance in organizational studies, but progress in the development of theory and research has been slowed by a formidable set of research problems. For example, an integrative theory must encompass a broad range of phenomena extending from core assumptions to visible artifacts, and from social structures to individual meaning. Such a theory must also address culture as a symbolic representation of past attempts at adaptation and survival as well as a set of limiting or enabling conditions for future adaptation. Several attempts at integration have been presented (Allaire and Firsirotu 1984; Ott 1989; Schein 1985, 1990) but there is still limited consensus regarding a general theory of organizational culture, and healthy skepticism about whether culture can ever be "measured" in a way that allows one organization to be compared with another. The concept of effectiveness also presents a challenging set of problems. The multidimensional nature of the concept requires that effectiveness be defined by a complex of stakeholders, who may hold differing, incompatible, and changing criteria (Cameron and Whetten 1983, Lewin and Minton 1986). In recognition of these difficulties, some researchers have even called for a moratorium on empirical research on effectiveness, suggesting that inquiries be limited to single outcome studies (Goodman et al. 1983). Joining the ORGANIZATION /Val. 6, NO. 2, March-April 1995 SCIENCE two concepts of culture and effectiveness thus defines a research question which is important, but often problematic. The dearth of empirical research on culture and effectiveness can also be traced to the origins of culture research within organizational studies. The development of the culture perspective and the critique of the positivist approach to social science (Geertz 1973, Pettigrew 1979, Weick 1979, Martin et al. 1983, Frost et al. 1985) are closely linked. Most culture researchers advocate a phenomenological approach, emphasizing the qualitative understanding of meaning and interpretation. Several have argued that culture should not be studied as a "variable" with "outcomes" (Trice and Beyer 1984, Meek 1988, Sackmann 1991, Siehl and Martin 1990), and have thus discouraged the integration of culture research with other constructs of organization theory (including effectiveness) which are primarily discussed in terms of variables, dimensions, causes, or effects. Thus, the literature carries a message about epistemology as well as substance. The culture perspective is also intertwined with the popular literature on organizations that appeared during the 1980s (Ouchi 1981; Deal and Kennedy 1982; Peters and Waterman 1982; Kanter 1983; Kilman et al. 1985; Tichy 1987; Schein 1985, 1990). This literature, while perhaps loosly connected with the epistemological critique of positivism, was directly linked to a far more immediate concern: the rising tide of international competition. In contrast to the minor role that effectiveness has played in the scholarly literature, here the functional linkage between culture and effectiveness was a central issue. Unfortunately, the evidence presented was often no more than selective anecdotes and normative assertions regarding the value of culture. Thus, the popular literature, like the scholarly literature, has contributed little comparative evidence regarding culture and effectiveness. Several authors have attempted to integrate the functionalist and phenomenological perspectives. On a theoretical level, the crux of the issue has been the tension between the functionalist perspective emphasizing the predictable impacts of purposive, intentional forms of social organization, and a phenomenological perspective emphasizing the emergent and epiphenomenal nature of those same organizations. Giddens (1979) and Riley (1983), for example, have argued that researchers must seek a concurrent understanding of the impact of social structure on individuals as well as the part that individuals play in creating those structures. Each organizational actor must be understood as