Reasons for corporate culture to become the focus of scientific research

As it turned out, corporate culture influences greatly companies’ performance. This conclusion was made due to the following observations:

• structural changes of companies. The corporate world has changed since the 1980s. there are now processes of destructuring, decentralization (their symptom is so-called self-managed teams). There is no need for management to control everyday performance of companies’ staff. It has become obvious that companies with strong corporate culture simply don’t need a sophisticated bureaucratic hierarchy and system of control. When people share values and behavioural norms, there is no need to tell them what to do in a certain situation: the company is sure that its members make the right decision guided by cultural norms and values. The changes in the corporate world show that companies should have not only strong culture, but also flexible one, the one that easily adapts to changing conditions. It is worth stressing that the latter (flexibility) is more important than the former. While analyzing company merges, scientists came to the conclusion that in the majority of cases it was corporate culture that made merges a failure.
• The research has proved that policies of all thriving companies (i.e. those that function efficiently and have clear goals and principles) necessarily contain a notion of corporate culture as the foundation of the company’s success. Thus, the image of the Johnson and Johnson company is based on its responsibility to clients, employees, managers, populations of areas where its subsidiaries are located and its shareholders. One of the fundamental principles of the Hewlett-Packard corporate culture is that all people want to be creative and are ready to be creative if the conditions favour creativity. One of the company’s top managers, Mr Platt, in his Yale speech said that his company does not need a thick book of rules: instead, the company relies on its values and on the employees ability to act in the best way under any circumstances.

Collins and Porras in their Built to Last have analysed development of 18 successful companies and tried to understand what makes them different from their less successful rivals. The authors arrived at the conclusion that all successful companies revealed a tendency to culture-like corporate culture: the companies’ ideologies were persistently imposed, employees complied with the main ideological principles, new members had to ideally fit in the companies, the employees were encouraged to maintain egalitarian relationships. The authors also noticed that these companies adapted more easily to changes.

• There is quantitative, empirical evidence of relations between a company’s culture and its performance. The research has proved that successful companies focus their attention on shareholders, clients and employees. Thus, in Hewlett-Packard, Pepsico etc. managers take into account employees, clients and shareholders’ interests under any circumstances. On the other hand, managers of low-performance companies exhibited arrogance and conceit, thought that they know answers to all questions; regardless of their claims, the managers did not think high of either shareholders or employees or companies’ clients; the managers were hostile to top managers, especially when there were changes within the companies. Another research compared 12 strong-corporate-culture companies and 20 weak-corporate-culture companies from 1977 to 1988 and discovered that the former showed greater profits.

A number of studies, conducted by T.Peters and R.Waterman, have shown that there is a direct relation between good performance and corporate culture of a company. Naturally, culture is not the only element in success; other aspects also play a role, e.g. a company’s strategy and structure, production organization and reward system, state of the market, competition etc. but corporate culture is a key element to success.