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Cultural Inertia and Uniformity in Organizations

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  • Denis Gromb

Abstract

We analyse aspects of the structure of organizational culture. We show that old and culturally uniform organizations are prone to cultural inertia; that is they are reluctant to adopt a different culture in response to a change in the environment. Cultural uniformity can be beneficial because the associated inertia protects and therefore encourages culture-specific investments by agents within the organization. We also explore the model?s implications for such issues as cultural uniformity within an organization, cultural heterogeneity across organizations, the destabilizing effect of growth and mergers, and the conflicts arising in the management of organizational culture.
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  • Denis Gromb, 2007. "Cultural Inertia and Uniformity in Organizations," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 23(3), pages 743-771, October.
    • Handle: RePEc:oup:jleorg:v:23:y:2007:i:3:p:743-771
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    File URL: http://hdl.handle.net/10.1093/jleo/ewm021
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    Cited by:

    1. Mikel Berdud & Juan M. Cabasés Hita & Jorge Nieto, 2014. "A Pilot Inquiry on Incentives and Intrinsic Motivation in Health Care: the Motivational Capital Explained by Doctors," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 1401, Departamento de Economía - Universidad Pública de Navarra.
    2. Kao, Lanfeng & Chen, Anlin, 2020. "How a pre-IPO audit committee improves IPO pricing efficiency in an economy with little value uncertainty and information asymmetry," Journal of Banking & Finance, Elsevier, vol. 110(C).
    3. Sandra Silva & Jorge Valente & Aurora Teixeira, 2012. "An evolutionary model of industry dynamics and firms’ institutional behavior with job search, bargaining and matching," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 7(1), pages 23-61, May.
    4. Mikel Berdud & Juan M. Cabasés & Jorge Nieto, 2012. "Incentives Beyond the Money: Identity and Motivational Capital in Public Organizations," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 1214, Departamento de Economía - Universidad Pública de Navarra.
    5. Costa, Dora L. & Kahn, Matthew E., 2006. "Forging a New Identity: The Costs and Benefits of Diversity in Civil War Combat Units for Black Slaves and Freemen," The Journal of Economic History, Cambridge University Press, vol. 66(4), pages 936-962, December.
    6. Ahern, Kenneth R. & Daminelli, Daniele & Fracassi, Cesare, 2015. "Lost in translation? The effect of cultural values on mergers around the world," Journal of Financial Economics, Elsevier, vol. 117(1), pages 165-189.
    7. Mikel Berdud & Juan M. Cabasés Hita & Jorge Nieto, 2012. "Motivational Capital and Incentives in Health Care Organisations," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 1209, Departamento de Economía - Universidad Pública de Navarra.
    8. Sandra Tavares Silva & Aurora A.C. Teixeira, 2006. "An evolutionary model of firms' institutional behavior focusing on labor decisions," FEP Working Papers 227, Universidade do Porto, Faculdade de Economia do Porto.
    9. Luoma, Arto & Luoto, Jani & Siivonen, Erkki, 2003. "Growth, Institutions and Productivity: An empirical analysis using the Bayesian approach," Research Reports 104, VATT Institute for Economic Research.
    10. Ruckes, Martin & Rønde, Thomas, 2010. "Dynamic incentives in organizations: Success and inertia," Working Paper Series in Economics 7, Karlsruhe Institute of Technology (KIT), Department of Economics and Management.
    11. Thanassoulis, John & Morrison, Alan, 2017. "Ethical standards and cultural assimilation in financial services," CEPR Discussion Papers 12060, C.E.P.R. Discussion Papers.
    12. Kets, Willemien, 2021. "Organizational Design: Culture and Incentives," SocArXiv 3y8t4, Center for Open Science.
    13. HIROTA Shinichi & KUBO Katsuyuki & MIYAJIMA Hideaki, 2007. "Does Corporate Culture Matter? An Empirical Study on Japanese Firms," Discussion papers 07030, Research Institute of Economy, Trade and Industry (RIETI).
    14. Hou, Qingsong & Li, Weifang & Teng, Min & Hu, May, 2022. "Just a short-lived glory?The effect of China's anti-corruption on the accuracy of analyst earnings forecasts," Journal of Corporate Finance, Elsevier, vol. 76(C).
    15. Ito, Satoshi & Fujimura, Shuzo & Tamiya, Toshihiko, 2012. "Does cultural assimilation affect organizational decision-making on quality-related incidents? — A company's post-M&A experience," Journal of International Management, Elsevier, vol. 18(2), pages 160-179.

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    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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