Theories Regarding the Nature of Organizational Culture - Research Paper Example

Theories Regarding the Nature of Organizational Culture Table of Contents Table of Contents 1 Introduction 2 Discussion 2 Organizational culture & its impact on innovation 2 Role of Leaders in Driving Organizational Culture to Facilitate Innovation 6 Servant Leadership 7 Leadership Power Indices 8 Conclusion 11 Introduction “When we apply the concept of culture to groups, organizations, and occupations, we are almost certain to have conceptual and semantic confusion, because such social units are themselves difficult to define unambiguously”. -Schein (2010, p. 11) The above lines are not only depicting scholarly arguments of Schein (2010) but denoting actual level of perplexity surrounding the integration of culture in organizational innovation context. On the other hand, Johnson, Whittington and Scholes (2011) used case studies of Land Rover, IKEA, Eden Project and some other companies in order to highlight the importance of culture in deciding business or marketing strategy. Schein (2010) tries to understand the dimensions of organizational culture and how the organizational culture can direct innovation while the scholar also tried to highlight role of leaders in shaping the organizational culture. Careful consideration of the research works of Johnson, Whittington and Scholes (2011) reveals the fact that significant amount of confusion exists regarding the intra level relationship between innovation, organizational culture and leadership despite the fact the many researchers already conducted research on topic. These gaps in the literature have influenced the researcher to conduct research on the topic and write this research paper. In the next section, the researcher will critically review theories regarding nature of organizational culture, including how it may impact on innovation, and how it may be affected by the leaders of an organization. Discussion Organizational culture & its impact on innovation Schein (2010) found it difficult to derive a definition of culture due to conceptual and semantic confusions while the scholar also argued that it is not possible to define different social groups under the roof of universally accepted definition of culture. In such context, Alvesson and Sveningsson (2008) suggested that the focus should be on defining culture within organization rather than understanding the culture of social groups sharing similar kind of traditions, rituals, history and customs. Brooks (2009) also tried to define the organizational culture in terms of norms, behavior of members and knowledge sharing, yet, such definition is far from capturing full dimensions of culture. To clear out confusions regarding definition and characteristics of organizational culture, the research paper will use Schein’s (2010) idea for organizational culture. According to Schein (2010), organizational culture has dimensions like behavioral regularities, group dynamics, espoused values, ideological principles, unwritten rules of the organization, communication between members, special competencies displayed by group members, shared cognitive frames between members, the way team members celebrate within organization, emotional and aesthetic response etc. Now, the fact is that it is very difficult to integrate all the mentioned elements within same organizational context but there is no doubt that these factors play vital role in shaping the organizational culture. Schein (2010) also identified three levels of culture such as, Artifacts, Espoused Beliefs & Value and Underlying Assumptions. Artifacts- structure of the organization and business process can help the firm to define its culture. For example, W.L. Gore & Associates which is known for its lattice organizational structure and business process fostering innovation and creativity (Gore, 2013). Espoused Beliefs & Value- strategies of the organization and vision statement can be termed as the brickwork behind culture. For example, Procter & Gamble uses front back hybrid matrix business strategies in order to customize products in accordance with socio-cultural dimensions of particular country (Dyer, Dalzell, and Olegario, 2008). Underlying Assumptions- perception and feelings of people in the organization which can act as ultimate action source for them. For example, Johnson, Whittington and Scholes (2011) gave example of culture of IKEA (renowned furniture retailer) where members share common understanding of helping customers to assemble furniture items. Up to this point, the idea of organizational culture has been discussed but reader may ask how organizational culture can drive innovation? To answer this question, Cameronn and Quinn (2006) used the example of General Motors which has used its culture to facilitate new product development and innovation. However, these scholars gave examples where changing the norms, layout and forms of organizational culture instigated innovation but very few of them ever succeeded in describing theoretical pathway for linking organizational culture with innovation to culture. Lewis (2006) also gave examples where cultural shift influenced business strategy of organizations but the research works never tries to highlight theoretical models regarding relationship between organizational culture and innovation. Solesvik and Encheva (2010) tried to understand the relationship between organizational culture and innovation from knowledge management perspectives. However, definition of innovation should be understood before creating link between organizational culture and innovation. Zhou, (2006) defined innovation as the strategy to develop new product or improvise new approach which are not similar to existing product offering in the market. Zhou (2006) argued that innovating new product or business process requires integration of financial resources, knowledge resources, intellectual capital etc and due to such resource requirements, number of companies use imitation orientation to copy existing products or competitor’s business processes. Consideration of the research works of Cameronn and Quinn (2006) reveals the fact that innovation can be achieved through two fold activities, 1- through socialization, organizational members come to know about skill competency of other members while 2- through coordination, members coordinate activities in order to develop innovative capacity. Cameronn and Quinn (2006) proposed Competing Values Framework (CVF) in order to identify four dimensions of organizational culture such as adhocracy, clan, market and hierarchy which can facilitate innovation. Figure 1: Competing Values Framework (CVF) (Source: Cameronn and Quinn, 2006) According to the model, adhocracy culture is needed in order to bring flexibility and increase ability of the organization to cope with political, technological and other external challenges. Adhocracy culture can help organizations to bring creativity and innovation through the integration of risk taking attitude and entrepreneurship. Clan Culture- team work, knowledge sharing between team members, employee engagement and common understanding of organizational vision statements among work groups are pertinent variable of clan culture. Integration of these variables can help an organization to direct the culture to facilitate innovation. Market Culture- this type of culture is purely competitive in nature and top level management of organizations use its resources to control predictability of market variables like doing market research to understand customer need, establishing partnership with other firms to develop competency, acquiring small firms to wipe out competitive threat, consolidating market share through strategic initiatives etc and through this approach, companies achieve the resource competency to achieve innovation. Hierarchy Culture- organizations change its organizational structure in accordance with innovation requirements and external environmental challenges. Now, the challenge is to find exact juxtaposition of the mentioned four cultural dimensions which can direct innovation for organization. One thing to remember is that drive for innovation can come from external environment such as change in political pressure, need for complying with environmental sustainability norms etc (McLean, 2005). In such context, Hartley and Branicki (2006) stated that innovation can be driven by four types of aspects of political awareness for organizations such as; Adjusting innovation policy and culture in context to regulation, competition, trade agreements etc. Adjusting innovation policy and culture in context to interaction with interest of politicians. Adjusting innovation policy and culture in context relationship with partners, suppliers, foreign ministry, public boards etc. Adjusting innovation policy and culture in context shift power blocks within organization (Hartley and Branicki, 2006). It is evident from the above discussion that relationship between organizational culture and innovation policy can be directed by external instigators like political environment, change in foreign policy and environmental norms etc. How organization can understand which cultural type can be used in order to facilitate innovation? Well, that is pretty interesting question because most of the times, organizations face the perplexity of adjusting culture in line with innovation. Adhocracy Culture- organizations prefer to use organic structure rather than bureaucratic structure and employees are being empowered to take decisions in contingent period. Due to the autonomy in decision making, risk bearing capacity of the organization increases which is needed for experimenting with design, layout or business process (Schein, 2010; Naranjo-Valencia, Jime´nez and Sanz-Valle, 2011). Clan Culture- knowledge sharing is the core theme of the culture and assumption is that clan culture encourages team working. In team working, members tend to share knowledge, skills with each other which ultimately increase overall knowledge and skill capacity of the team which open the room for creative thinking and innovative process application (Schein, 2010; Naranjo-Valencia, Jime´nez and Sanz-Valle, 2011). Market Culture- there are organizations which approach to problems in strategic manner and cultural norm of these organizations is to understand the market dynamics and incorporate variables of market dynamics in new product development. In this culture, innovation is done through mechanical approaches such as searching the market need and integrating the technological resources to innovate new product that can satisfy market needs (Schein, 2010; Naranjo-Valencia, Jime´nez and Sanz-Valle, 2011). Hierarchy Culture- in many cases, organizations rapidly changes the structure which is hindering the scope of innovation. For example, centralized structure of the organization might limit the responsibility team members and also limit the scope of their participation innovation process (Schein, 2010; Naranjo-Valencia, Jime´nez and Sanz-Valle, 2011). Role of Leaders in Driving Organizational Culture to Facilitate Innovation Schein (2010) and Carson, Tesluk and Marrone (2007) defined leadership as the trait, characteristics of a very individual which can influence the activities of subordinates or in simple words, leadership can be defined as the ability of an individual to direct and motivate subordinates to follow the direction of the individual in command. In such context, House et al. (2004) conducted cross society analysis and found that dimension of leadership changes in accordance with change in cultural norms and trends. Hence it can be said; leadership norms effective in particular society might need to be adjusted in order to remain effective in other societies. Considering the research works of G. Hofstede, G J. Hofstede, and Minkov (2010), it can be said that external cultures might differ in terms of power distance between upper class in the society and common people, individualistic thinking process, masculinity and risk & uncertainty avoiding mentality. However, extent of such variability is less in case of organizational culture and nature of leadership in organization is bounded by certain assumptions. Cropanzano and Mitchell (2005) argued that leaders might influence the culture of the organization through their action and these scholars also defined different leadership characteristics such as democratic leadership, servant leadership, transformational leadership etc which can facilitate innovation culture within organization. However, the study will only focus on servant leadership style in order to understand their influence on develops innovation culture within organization. Servant Leadership Trompenaars (2010) defined servant leadership as leader’s motivation to act as servant for followers or enrich the lives of followers by providing significant importance to opinion of sub ordinates. Cropanzano and Mitchell (2005) took help of Leader Member Exchange (LMX) in order to address how servant leaders develop shared value among followers. According to LMX theory, capability and social status of team members should be respected by leaders and such effort would help team members to approach the leader without any hesitations or fear. Cropanzano and Mitchell (2005) stated that leaders should motivate team members to share knowledge with each other through periodic team meetings, constant flow of communication and practicing such exercises would increase common understanding of the mission statement among team members. According to LMX model, leaders should try to engage employees in the work process by empowering them to make decisions in contingent period while Cropanzano and Mitchell (2005) suggested that leaders should bear the open mindset to accept innovative ideas from subordinates which can ultimately develop belongingness among workers. According to the above argument, servant leadership is useful in empowering employees to make decisions and developing shared value system among workers. In such context, Wang and Noe (2010, p. 117) defined knowledge as ‘information processed by individuals including ideas, facts, expertise, and judgments relevant for individual, team, and organizational performance’’ hence developing shared value system among team members can directly or indirectly influence knowledge sharing among team members. In the first part of the discussion, the researcher has already described how knowledge sharing between team members can facilitate innovation and therefore it can be surmised that if servant leadership helps to develop knowledge sharing culture then the same leadership style would be able bring innovation within organization. Holbeche (2006) stated that organizations go through change process while making room for innovation or solving existing business problem or business process reengineering. Zboralski, Salomo and Gemuenden (2006) rightly argued that leaders can pacify the resistance from team members to the change process by taking strategic initiatives. According to Zboralski, Salomo and Gemuenden (2006), in case of change process designed for achieving innovation, organizational leaders can take initiatives like empowering workers to make important contribution change process, conducting knowledge session among participants in order to enhance common understanding of the change objectives among team members etc which can not only pacify resistance to change but also generate motivation among organizational culture for achieving innovation. Zboralski, Salomo and Gemuenden (2006) assumed that servant leaders listen to the feedback of subordinates patiently while such practice can instigate development of innovation culture in systematic manner. For example, servant leaders empower the subordinates to take decisions in contingent period and gaining the empowerment, subordinates start incorporating the shared knowledge in innovation process without fearing the uncertainty or failure and due to such care free approach, chance for achieving innovation gets increased (Zboralski, Salomo and Gemuenden, 2006). Considering the mentioned theoretical assumptions, it can be said that leaders play vital role in directing the organizational culture to achieve innovation. Leadership Power Indices Yukl (2010) argued that leaders can use five types of power indices in order to shape the organizational culture or influence behavior of subordinates. These five types of power indices are Referent power, Reward power, Legislative power, Coercive power and Expert power. 1-Referent power- leaders use their communication skill; interpersonal skill and personality to influence organizational members to participate in change process or simple improve performance level. 2- Reward power- in innovation driven change process, organizational leaders provide financial and non-financial reward to subordinates to participate in the change process or achieve innovation objectives of the organization. 3- Legislative power- leaders might use their social status or hierarchy in order to influence decision process of organizational members but the process is not much effective when it comes to developing employee engagement level. 4- Coercive power- leaders might use physical threats or harassment to force subordinates to participate in the change process and that is probably the most deprived version of leadership power exercise. 5- Expert power- leaders might use their knowledge, skill and domain expertise to influence actions of subordinates. Yukl (2010) argued that successful leaders mostly uses expert power and referent power in order to develop shared value culture within organization which can not only promote knowledge sharing but facilitate innovation also. Rahim, Antonioni and Psenicka (2001) used following diagram in order to show how implementation of leadership power by leaders can improve job performance of subordinates and create the drive for innovation among them. Figure 2: Working Pattern of Leadership Power Indices (Source: Rahim, Antonioni and Psenicka., 2001) According to the model, leaders can use their interpersonal skill and domain knowledge in order to influence decision process of subordinates and the leader can also personality and communication skill in order to encourage subordinates to work in team. Rahim, Antonioni and Psenicka (2001) also pointed out that leaders also use problem solving style to gain respect among subordinates. Therefore, it can be assumed that effective problem solving styles of leader decreases magnitude of hindrance in job performance of subordinates. Implementing leadership power by leaders can enhance scope of knowledge sharing, empowerment and decrease resistance to change among subordinates. Functioning of all these aspects in synchronized manner would directly or indirectly instigate culture of innovation within organization (Rahim, Antonioni and Psenicka, 2001). However, these theories might sound well in defining how leaders can facilitate culture of innovation but is there any practical examples available which can substantiate these theoretical claims? The answer is yes, case of W.L. Gore & Associates can be cited in order to show how leaders of the organization have created knowledge sharing culture which can facilitate innovation. Real Life Case Study: W.L. Gore & Associates W.L. Gore & Associates subsidiary of US multi-national company Gore-Tex. Product offerings of the company include fluoropolymer products, polymer products and fabrics (Gore, 2013). The company is known for its innovative product design, ability to customize offer and develop new products in accordance with changing market dynamics (Gore, 2013). On the other hand, W.L. Gore & Associates offers products that can be used for medical purposes, electronic, leisure and industrial requirements. Considering research works of Solesvik and Encheva (2010), it can be said that W.L. Gore & Associates consciously uses the concept of shared leadership in order to create the culture of innovation. In simple words, the company uses lattice management structure where employees are connected with each other and top level management of the company encourages team members to communicate with each other in cross functional manner. For example, W.L. Gore & Associates calls the employees as associates and each operating units consist of 150 to 170 associates. Associates are empowered to make decisions, share knowledge with cross functional departments, and contribute to new product development (Gore, 2013). Therefore, it can be said that each of the associate work as leader in the organization who is responsible for his/her action. In this way, W.L. Gore & Associates has created leaders who can not only support the innovation culture but also provide contribution to sustainable growth of the company. Conclusion It is evident from the above discussion that organizational culture is dynamic in nature which can be directed by leadership style, leader’s ability to integrate powers, employee engagement, knowledge sharing, motivation among subordinates to support the change process etc. On the other hand, it has been identified by the study that certain leadership traits can facilitate the culture which supports cross department knowledge sharing, learning from external environment, implementation of learning in achieving innovation either in product/service development or process development. Therefore, it can be concluded that the relationship between leadership style of leaders, organizational culture and innovation might not be symmetrical but it plays vital role in providing sustainable competitive advantage to companies. Reference List Alvesson, M. and Sveningsson, S., 2008. Changing organizational culture. London: Routledge. Brooks, I., 2009. Organisational behaviour. 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