Determinants of Organizational Culture

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At the very onset of this topic, it is useful to distinguish determinants and dimensions of OC. Determinants are the causes, while dimensions are the components of OC. You may say, determinants are those which influence whereas dimensions are those which are influenced.  

Although OC refers to the internal environment of an organization, the nature of OC is determined by a variety of internal and external factors. One of the basis premises of organizational behavior is that outside environmental forces influence events within organizations. After acknowledging the dynamics of internal as well as external factors in this section, we will consider in greater detail the following seven internal factors. You will find these factors as determinants of OC in the following order:  1. Economic Condition

2. Leadership Style
3. Organizational Policies
4. Managerial Values
5. Organizational Structure
6. Characteristics of Members
7. Organizational Size

Economic Conditions
Several dimensions of OC are influenced by an organization’s position on the economic cycle. The economic condition of any organization influences whether its budget should be “tight” or “loose”. In times of prosperity- when budgets are more loose than tight – the organizations tends to be more adventuresome. On the other hand, tight budget would lead to an air of caution and conservatism within an organization. Few managers are willing to suggest new programmers (probably deserving merit) when the order from above is to exercise tight control over expenses. So, dimensions of OC like “Risk-taking”, “Control”, Progressiveness and Development” etc. are directly influenced by economic conditions.

Leadership Style
The leadership style prevailing in an organization has a profound influence in determining several dimensions of OC. The influence is so pervasive that you may often wonder whether OC is product of the philosophy and practices of prominent persons in an organization.

Consider, for example, the results of an experimental study where three organizations were “created” by simulation. All these three Organization-A, B and C-were identical in terms of nature of business, size of the organizations, characteristics of employee, and initial economic condition. The major difference among these organizations was the “leadership style”. Organization A was characterized by authoritarian style with high power motivation. Organization B was characterized by democratic style with affiliation motivation. Organization C was characterized by goal directed style with achievement motivation. The meaning of these different leadership styles and their effects on different dimensions of OC can be influence more dimensions of OC than another style.

Organizational Policies 
Specific organizational policies can influence a specific dimension of OC to quite an extent. For example, if the company policy states that layoffs will be used only as a last resort to cope with business downturn, then it would, in general, foster an internal environment that is supportive and humanistic. Similarly if you are working in a company where it is agreed that the first beneficiaries of increased profit, then the OC will be characterized by High Reward Orientation and probably by High Progressiveness and Development.  

Managerial Values 
The values held by executives have a strong influence on OC because values lead to actions and shape decisions. Values add to perceptions of the organization as impersonal, paternalistic, formal, informal, hostile or friendly. You will learn more about managerial values under the topic: Managerial Ethos  

Organization Structure 
The design or structure of an organization affects the perception of its internal environment. For example, a bureaucratic structure has an OC much different from a System 4 organization. What is a System 4 organization? According to Rensis Likert, all...
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