Review the discussion of organizational culture and organizational performance. Discuss the three theoretical views of this link. What can you now conclude about organizational culture and organizational performance?

Organizational culture and organizational performance:

Several lines of theoretical and empirical research show a relationship between characteristics of an organization’s culture and organizational performance. The theories vary in their explanations, but all point to a link between culture and performance.

One theory says organizations have a competitive advantage when their culture is valuable, rare, and not easily imitated. The value of an organization’s culture derives from the guidance it gives to direct people’s behavior toward higher performance. Rarity refers to the features of a culture that are not common among competing organizations. Such rarity can come from the unique personalities of the organization’s founders and the unique history underlying the culture. Cultures that are not easily imitated make it hard for competitors to change their cultures to get the same advantages. Difficulty of imitation follows from the rare features of some cultures and the difficulties managers have when trying to change a culture.

A second theoretical view focuses on environment–culture congruence. Organizations facing high complexity and high ambiguity require a cohesive culture for effective performance. They feature widely shared values and basic assumptions that guide people’s behavior. For organizations facing low uncertainty and low complexity, building a cohesive culture could be costly. Those organizations will reach high performance with more formal control processes such as organizational policies, rules, and procedures.