A number of definitions of organizational culture have been offered; however, if managers and employees are consulted they may simply respond that culture is “how we do things around here”. There is obviously truth to such a statement but it would be a mistake to ignore the breadth and scope of the issues that are influenced by an organization’s cultural norms and values—how activities within the organization are carried out, how members communicate with one another, who is accepted into the organization and who is ostracized, and what is the organization’s overall morale. The culture of a particular organization is created and maintained by its members, particularly the founders and senior managers, based on a variety of influencing factors—both external and internal—and they are also the ones who can change and transform the culture when they are convinced that such actions are necessary in light of the then-current environment that the organization is facing.
Organizational culture should not be underestimated and, in fact, in most cases it is a more influential force than any other set of internal laws—rules and procedures—applicable to the members of the organization. Research has indicated that the culture of an organization has a strong influence on how the organization tackles problems and questions, sets strategy and creates the structures that determine the work activities and relationships of organizational members and also on how members behave when carrying out their organizational activities. There is also evidence that organizational culture plays a big part in defining the competitive position of the organization in its environment and the way in which the organization is perceived by external stakeholders. Organizational culture is an important determinant of the level of risk-taking that a firm is willing to tolerate, and organizational culture can itself become a core competency for an organization and can be used to distinguish it from competitors in the minds of customers and prospective members. There is no single culture that is universally appropriate for all organizations and there is clearly substantial diversity with respect to the dominant cultural attributes among successful and effective organizations.
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