Probing Question: What does 'corporate culture' mean?

Jun 15, 2012 By Melissa Beattie-Moss

Think Different. We Try Harder. Connecting People. The Citi Never Sleeps.

Big companies have long used catchy taglines to give a feel for their , or their "corporate culture" to use the buzzwords.

But what is really meant by the word "culture" when applied to big business? And are American companies changing their culture these days?

Says William Rothwell, professor of Workforce Education & Development in Penn State's College of Education, "The notion of corporate culture was derived from the earlier work on social culture of anthropologists, archeologists, and paleontologists. It later became a term adopted by other management writers and theorists until it has become common usage in the business world today."

However, says, Rothwell, most people misunderstand what corporate culture is and how to change it if it's not working well. The culture of an organization is not just something you can announce with a slogan, but rather the end result of actions you've taken, he explains. "I sometimes hear managers say that they want to 'change the corporate culture.' But they often forget that the culture is the result of a group or organization's experience. To change corporate culture, then, requires giving an organization a new experience. Organizational leaders shape the culture based on the role models they set, the actions they choose to take, and how the people of the organization perceive those actions."

Culture is not a monolithic thing, adds Rothwell, and "everyone knows that the way things are done in the accounting department of a company may be somewhat different from the way things are done in the engineering department, IT department, or HR department. While the corporate culture is shared, groups develop their own ways of interacting because of the nature of the work they do and the shared understandings they have developed from a common educational background." These are microcultures, says Rothwell, "the shared understandings of smaller groups within a larger corporate culture."

Is there a formula for a successful corporate culture? Authoritarian cultures in companies, as in nations, may be the most efficient, explains Rothwell, but competitive success may require more than efficiency. The trick today, he notes, is to move fast but with the best ideas. And the best ideas do not come solely from the senior leaders at the top. "The challenge is to unleash the creative potential of workers,"  Rothwell emphasizes. "Indeed, the leader's role has changed from authoritarian, who tells people what to do, to facilitator, who challenges people to come up with the best ideas and finds creative ways to identify obstacles to productivity and knock them down."

But can individuals really influence corporate culture? That depends on their own level of self-confidence and freedom from fear of retribution, says Rothwell—"and the type of corporate culture in which they find themselves."

In an open corporate culture, he explains, "leaders encourage people to speak their minds and take action. People feel empowered. In those corporate cultures, it is easy for people to have an impact and make a difference." By contrast, in closed corporate cultures that are hierarchical and authoritarian—"and most large organizations are of this kind"—making change often depends on swaying leaders. "And that can be an issue," adds Rothwell, "because change can hinge on the quality of who the leaders are, what role models they set, and how open-minded they are. Good ideas can get lost in bureaucratic shuffles and innovators can be discouraged if they do not fit the preconceived notions of the leadership."

But innovators shouldn't lose heart, says Rothwell, because things are trending their way. "In the future, American faces a challenge," he notes. "Large organizations will increasingly be placed at a competitive disadvantage because they can be just too slow-moving, too bureaucratic, and too prone to squash individual innovation.

While that's not such good news for large, traditional, and bureaucratic organizations, it could open new opportunities for small business, entrepreneurs and all those who "think different."

Explore further: 3 Qs: Economist makes the case for new quasi-experiments as a way of studying environmental issues

add to favorites email to friend print save as pdf

Related Stories

Corporate Culture Matters For Firm Policies, Study Finds

Dec 12, 2007

Corporate culture involves more than just dress codes and the atmosphere in the office – it helps define a company's most important economic decisions, according to new research. Researchers examined corporate culture in ...

Unique research on inner life of Google

Apr 23, 2012

Google is one of the world's most innovative companies. Why? Ask Swedish researcher Annika Steiber at Chalmers University of Technology. She has been seeking answers inside the company's headquarters Googleplex ...

Diversity in workplace enhances bottom line

Dec 13, 2011

( -- The more diverse a company’s workforce is, the more loyal, happy and productive its employees tend to be, according to a new study led by a Ryerson University professor.

Success in mergers and acquisitions

Oct 14, 2010

Could casual Fridays and meeting times determine the success of billion dollar mergers and acquisitions in the business world?

Recommended for you

Which foods may cost you more due to Calif. drought

Apr 17, 2014

With California experiencing one of its worst droughts on record, grocery shoppers across the country can expect to see a short supply of certain fruits and vegetables in stores, and to pay higher prices ...

Performance measures for CEOs vary greatly, study finds

Apr 16, 2014

As companies file their annual proxy statements with the U.S. Securities and Exchange Commission (SEC) this spring, a new study by Rice University and Cornell University shows just how S&P 500 companies have ...

Investment helps keep transport up to speed

Apr 16, 2014

Greater investment in education and training for employees will be required to meet the future needs of the transport and logistics industry, according to recent reports by Monash University researchers.

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

not rated yet Jun 19, 2012
Good analysis. The author should have cited his references like Burns, Northouse, Kouzes & Posner, and a few others who said exactly what he said. But I'll let it slide b/c his analysis at the end was quite succinct and, in my opinion, accurate. With the ability to outsource expensive and tedious facets of a business, such as manufacturing, small, innovative companies can compete with the giant corporations in almost any market.

More news stories

Poll: Big Bang a big question for most Americans

Few Americans question that smoking causes cancer. But they have more skepticism than confidence in global warming, the age of the Earth and evolution and have the most trouble believing a Big Bang created the universe 13.8 ...

Atom probe assisted dating of oldest piece of earth

( —It's a scientific axiom: big claims require extra-solid evidence. So there were skeptics in 2001 when University of Wisconsin-Madison geoscience professor John Valley dated an ancient crystal ...