The Competent Culture Paradigm: An Alternative to the Strong Culture Hypothesis

The strong culture hypothesis has long dominated the discussion concerning the effect of organizational culture on organizational performance. The efficacy of the hypothesis, however, has been criticized for a wide range of methodological weaknesses, including a poor research model and its ethnocentric bias. Following a critical review of the hypothesis, the author’s present an alternative paradigm based on a multi-variate, subculture/institutional culture framework for analyzing the effect of culture on organizational performance. Their proposed competent culture paradigm is designed to be both more sensitive to culture bias and to the complexity inherent in the dynamic forces of organizational culture. To enhance clarity of the paradigm, the authors also present a standardized taxonomy of the hierarchal levels of culture. The paper concludes with a proposal for future research to test and further refine the competent culture paradigm. Culture and Organizational Performance There is universal acceptance among organizational theorists that culture has an effect, though somewhat indeterminate, on organizational performance. The research has been less than conclusive in establishing a clear link, however, between cultural traits and their impact on organizational performance. To address this issue, we posit a new paradigm that we believe will prove more robust than the strong culture hypothesis for examining the culture/ organizational performance relationship. Since the variables organizational culture and organizational performance are central to this discussion we have used them in the context of the following generally accepted definitions. For organizational culture, we use Schein’s [1985, p. 187] most commonly cited definition: ,,a pattern of shared basic assumptions learned by a group as it solved its problems of external adaptation and internal integration which 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. ” As for organizational performance, we use the definition developed by Richard, et. al. [2009] as comprising three measures: (1) financial performance; (2) product market performance; and [3] shareholder return. Much of the organizational culture research has focused on what Denison [1984, pp. 5-22] called the ,,strong cultural hypothesis. ” Where, according to Sathe [1983, pp. 5-23], ,,strong culture” is characterized by beliefs and values that are widely shared throughout an organization and are more clearly ordered (meaning that, the relative importance of the various basic assumptions are well known). Proponents claim that an effective culture must be ,,strong” and possess distinctive traits, such as particular values, beliefs and shared modes of behavior [Saffold, G. , 1988 p. 546]. Deal and Kennedy [1982, p. 5] claimed that strong cultures were the principle driver of the continued success of American businesses. Denison [1984] found in his research that corporations with values that promoted participation generated higher profits than those without such values. Posner, Kouzes and Schmidt [1985, pp. 293-309] were able to link strongly shared values with various employee traits such as commitment, ethical behavior and self-confidence. Studies that have examined the link between the cultural type and cultural strength hypothesis and its effect on organizational performance [Smart, J. & St. John, E. , 1996, pp. 219-241] have also had some success. While Smart and St. John [1996] found a relationship between cultural strength and organizational performance, it was only in relation to its ability to enhance the effectiveness of two of the four forms of cultural types they investigated. Sathe [1983] claimed that stronger culture has a pervasive influence on behavior and organizational life producing more powerful effects than weaker cultures do. As shown above, much of this research occurred during the 1980’s and 1990’s, the peak of interest in the strong culture/organizational performance framework. Nevertheless, the strong cultural hypothesis continues to be found in the current literature and abounds in the commercial press and the management-consulting arena. Most recently, research has found that strong corporate cultures may not necessarily have positive effects on organizational performance. Sikorski [2008], criticizing the enhancing effect of strong The Competent Culture Paradigm.