While there are many definitions of organizational culture, I think that one of the clearest was offered by Edgar Schein. He defined organizational culture as
a pattern of basic assumptions—invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration—that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems. 1
Schein argued that there are three levels of culture in any organization. The most visible level of culture is where observable organizational artifactssuch as technology, art, dress, pictures, architecture, and audible behavior occur. A cultural artifact is a term used to refer to any observable item or action created by humans that gives information about the collectivity of the creators, the users, or both. The intermediate level of organizational culture is the values and beliefs about what the purpose of the organization is, and what gives meaning to its existence. Usually, there is a social consensus as to what values and beliefs matter most within an organization. And finally, at the deepest unconscious level within an organization, there are assumptions about human nature, human relations, time, and the organizational and environmental interface. Schein argued that these assumptions serve as the foundation for the values, norms, and beliefs within all organizations, and are hardest to change. 2
Some observers argue that organizational culture can be a “social control” mechanism that is more efficient and effective than more formal and traditional control mechanisms due to its fluid pervasiveness. 3 However, a more common view is that organizational culture is the “social glue” that makes organizational life meaningful. 4
In recent years, organizational culture has emerged as a key source of competitive advantage for many firms. Since resources can be easily obtained by new entrants, technology can be easily copied by competitors, and employees are now highly mobile, traditional ways of generating competitive advantage through industry positioning are less relevant today. Furthermore, it has been increasingly observed that a strong set of core values and beliefs often leads to competitive advantages and superior performance for many firms. Since performance above industry norms is a common indicator of competitive advantage, organizational culture is getting more attention by strategists. Finally, since culture is relatively hard to imitate, the competitive advantage is often sustainable. 5
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