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1. Electronic copy available at: http://ssrn.com/abstract=1744040
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A GENERIC THEORY OF ORGANIZATIONAL CULTURE
Daniel Dauber, WU -Vienna University of Economics and Business (daniel.dauber@wu.ac.at)
Gerhard Fink, WU -Vienna University of Economics and Business (gerhard.fink@wu.ac.at)
Maurice Yolles, Centre for the Creation of Coherent Change & Knowledge (C4K)
(m.yolles@ljmu.ac.uk)
Abstract
This paper aims at developing a generic model of organizational culture, which (1) connects to
recognized properties and processes of organizational theory, (2) reduces complexity, (3)
provides a powerful and extensible construct, (4) allows for epistemic distinctions like objects,
events, boundaries, processes and environments, and (5) provides structured response to problem
situations. We suggest a model that distinguishes between the internal environment
(organizational culture, strategy, structure, operations) and external environment (legitimization
environment, task environment) of an organization. The presented generic model of
organizational culture allows for diagnostic analyses in order to map and create typologies
depending on context.
Introduction
This paper offers a theoretical construct exploring organizational culture from the perspective of
thematic fields of organization theory. The approach focuses on redefining existing concepts of
organizational or corporate culture in a way that a new concept of organizational culture fits
thematic classes of organization theory. It requires further elaboration and development of a
questionnaire to be applied and tested across different contexts and samples. The presetend model
has the capacity to provide pragmatic meaning in case studies and may contribute to the
identification of dysfunctions in organizations. This is the first approach to take a view from the
thematic fields of organization theory on research into organizational culture.
Theories of organizational culture revisted and link to organizational theory
The construct of organizational culture has been subject to research for some decades. Various
models can be found across different disciplines of research. Generally, approaches to
organizational culture can be classified into two categories: (1) dimensions approach (e.g.
Hofstede et al., 1990; Sagiv & Schwartz, 2007), (2) interrelated structure approach (e.g. Schein,
1985; Hatch, 1993; Homburg & Pflesser, 2000; Allaire & Firsirotu, 1984).
The dimensions approach is one of the most prominent approaches to cultural constructs, in
particular for quantitative research. Classic anthropological research designs have partly lost
ground due to the paradigm of cultural dimensions by Hofstede (1980, 2001) and paved the way
for new research contexts that required the quantitative measurement of cultures. Hofstede et al.
(1990) and Sagiv & Schwartz (2007) emphasize that organizational culture dimensions
considerably differ from national culture dimensions. Nevertheless they are related to each other.
Sagiv & Schwartz (2007) explain that organizations operate under pressure of societal values. A
generic model of organizational culture needs to illustrate these findings by
The interrelated structure approach of organizational culture is characterized by bidirectional
links indicating interdependence, i.e. linear or recursive processes that illustrate certain
relationships between domains of a model. While there exists a great variety of heavily cited
models (Schein (1985) [10.682 times cited], Hatch (1993) [482 times cited], Homburg & Pflesser
(2000) [343 times cited] and Allaire & Firsirotu (1984) [482 times cited]), we have chosen
Schein (1985) and Hatch & Cunliffe (2006) as a starting point for the development of a generic

2. Electronic copy available at: http://ssrn.com/abstract=1744040
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model of organizational culture. Both models are well-rounded and recognized in their respective
fields, however are rooted in organization theory (Hatch & Cunliffe, 2006) or culture theory
(Schein, 1985). We argue that a combination of both models provides richer insights in culture
dynamics in organizations. In addition, the presented model consists of domains and relationships
that are rooted in culture and organization research and establishes a more comprehensive link
between these two fields of research. Figure 1 provides a visual representation of these models.
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Figure 1 about here
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Developing a generic model of organizational culture
According to Hatch & Cunliffe (2006) we can distinguish between four domains: (1)
Organizational culture and identity, (2) organizational strategy, (3) organizational design,
structure and processes, and (4) organizational behavior and performance. Hatch & Cunliffe
(2006) also refer to ‘strategic response to external environment’. However, ‘responding’ clearly
refers to a certain form of action, namely reaction to a certain event. Thus ‘strategic response to
external environment’ denominates a process and not a domain, which will be discussed when we
refer to relationships between the organization and the external environment.
Figure 2 shows the result of blending widely recognized organizational culture theory (Schein,
1985) and organization theory (Hatch & Cunliffe, 2006). In the following, the model, will be
discussed in light of existing research.
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Figure 2 about here
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The relationship between operations and organizational structure
Operations, i.e. organizational behavior and performance, unfold as observable manifestations
(phenomena) of pre-defined strategies as regulated by organizational structures. This domain puts
into effect patterns of behavior, strategies and structures. It makes an organization’s existence as
a market player visible. Successful operations lead to profits, thus constitute economic
survivability of an organization.
Structures are the manifestation of strategic orientations and regulate information flows,
decision-making and patterns of behavior, i.e. the ‘internal allocation of tasks, decisions, rules,
and procedures for appraisal and reward, selected for the best pursuit of […] [a] strategy’ (Caves,
1980: 64). Level of hierarchy and control in an organization can, among other issues, be
identified in this domain. Structures develop due to the need to organize behavior in a meaningful
way and provide orientation for organizational members to set actions that comply with
organizational strategy, organizational culture and, as a result, accepted patterns of behavior.
In line with Schein (1985) organizational structures and behavior represent the observable
manifestation of organizational strategies (espoused values). Thus, operations and are structures
are directly linked to each other as they both refer to artifacts, in the nomenclature of Schein
(1985). Thus, structures build the frame of reference for running organizational operations and
guide or cushion behavior of members of an organization, which translate into certain ‘patterns of
behavior’ supported by organizational structures. At the same time, behavior is also reversely
linked to structures. Here we account for adjustment processes on the level of artifacts.
Considering that organizations might need to change over time, e.g. due to extensive
internationalization through M&As, it may become necessary to restructure certain or even all

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parts of an organization to align organizational behavior in a way to accomplish organizational
tasks and comply with a pre-defined strategy. Thus, structures need to change if organizational
behavior does not lead to the expected performance (e.g. on the market) (Harris & Ruefli, 2000)
identified through ‘performance assessment’. This might be coupled to certain changes in
strategy as well (see below). Missing to change structures or operations would threaten economic
survivability of an organization.
Defining the relationship between strategy, structure and operations
Strategies are classically defined as the overall orientation of an organization for reaching pre-set
goals and objectives (Chandler, 1973; Whittington, 2001), i.e. a long-term plan for maximizing
profits (Caves, 1980) or covering costs, in case of non-profit organizations. Furthermore,
organizational strategy ‘is an organization process, in many ways inseparable from the structure,
behavior and culture of the company in which it takes place’ (Andrews, 1971: 53). Strategies
influence the interaction between structures and behavior and vice versa. This conclusion derives
naturally from Schein (1985) who argues that ‘espoused values’ have an impact on ‘artifacts’,
which in turn influence ‘espoused values’. As organizational structures as well as behavior
belong to artifacts, both are affected by strategy. By considering this, we follow the seminal work
on strategy-structure-fit. Chandler’s (1973: 48) famous postulation that ‘structure follows
strategy’ can be considered as a starting point for this debate. He empirically observed that
organizations after changes in strategies suffered from a phase of ineffectiveness. However, after
structural changes, organizations started to become more profitable again. Similar conclusions
have been drawn by several other scholars or implicitly refer to such a causal link (e.g.
Donaldson, 1987, 1996; Hamilton and Shergill, 1992, 1993; Andrews, 1971, Williamson, 1975,
Ansoff, 1965). Therefore we can deduce that different strategies require different structures
(Stopford & Wells, 1972; Wolf & Egelhoff, 2002). On the other hand, structures provide the
frame of reference for future information processing and strategic decision-making. Thus it is
also true that structures have an impact on future strategies (e.g. Child, 1972; Galbraith and
Nathanson, 1978; Fredrickson, 1986). For our model of organizational culture, we assume a
feedback relationship between structure and strategy as proposed by more recent research
(Amburgey & Dacin, 1994; Harris & Ruefli, 2000) and which is implicitly linked to Schein
(1993).
As mentioned above, strategies might be subject to change. However, in order to be aware of the
fact that strategies need to change, it is necessary that an organization recognizes deficits in
performance through performance assessment. While the pure assessment of, e.g. decreasing
revenues, does not necessarily lead to learning and changes in strategies, we have to account for
organizational learning as ‘processes of detecting and correcting error’ (Argyris, 1977: 116).
However, ‘learning’ should not be confused with ‘adaptation’ (for a more detailed discussion see
Fiol & Lyles, 1985) as mentioned above for the relationship between behavior and structures.
According to our model, performance assessment might lead to ‘adaptation’ of structures. In
contrast, only through ‘learning’ a change in strategy might take place. Thus, assessing
organizational performance might constitute a trigger for learning processes, but by no means
should be understood as an automatic sequence of processes. Organizations might or might not
learn from their mistakes. Dodgson (1993) argues that only organizations, which ‘purposefully
construct structures and strategies so as to enhance and maximize organizational learning’, can be
considered as ‘learning organizations’ (Dodgson, 1993: 377). We constitute, that through
performance assessment changes in strategy and structure can be triggered, but learning processes
rely on favorable conditions, which would allow organizations to learn.

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Argyris (1977) distinguishes between two forms of learning: ‘single-loop learning’ and ‘double
loop learning’. ‘Single-loop learning’ refers to processes of detecting errors and adjusting
existing strategies to meet new requirements. ‘Double-loop learning’, by contrast, refers to a
more profound process of learning, where ‘underlying organizational policies and objectives’
(Argyris, 1977: 116), i.e. underlying assumptions, are questioned and changed. This is
comparable to what Fiol & Lyles (1984) describe as ‘lower-level learning’ and ‘higher-level
learning’. Consequently ‘double-loop learning’ is more concerned with changes in organizational
culture than in organizational strategy.
The impact of organizational culture on strategy, structure and operations
Schein (1985) postulates that organizational culture is directly linked to espoused values, i.e.
strategy in our model. As culture is often defined as a set of guiding principles, we can illustrate
this by arguing that culture affects the process of operationalization. This implies that strategies
are put into effect through structures and operations by considering cultural values, i.e.
underlying assumptions, held within an organization. This leads to the following conclusions: (1)
Operationalization has to stand in line with corporate values. (2) All domains – strategy, structure
and operations – are indirectly affected by organizational culture. (3) Organizational values
constitute the shared ‘ethics’ of doing business. Given the hierarchical order established by
Schein (1985), it becomes clear that the impact of organizational culture on operations unfolds
through strategy and structure, thus supporting the idea of a ‘guiding’ influence on organizations
by underlying values during operationalization as defined in our model.
Schein (1985) highlights that espoused values (strategy) have an impact on underlying
assumptions. This process represents ‘double-loop learning’ (see definition above). While single-
loop learning is a precondition for double-loop learning, it would be wrong to assume that single-
loop learning automatically leads to double-loop learning. By contrast, Argyris & Schön (1978)
showed that actually many organizations are quite good in single-loop learning, but fail to learn
on a higher level, i.e. double-loop learning.
In view of the above we can define a model of organizational culture that reflects internal
processes of an organization, linking organizational culture, strategy, structure and operations
systematically to each other. In addition it provides theory-driven insights into dynamic processes
of an organization, which allows mapping change processes between all domains, determined by
well-defined processes (see Figure 2).
Adding the aspect of environmental relationships to the model of organizational culture
Similar to Hatch & Cunliffe, we define organizations as open systems that interact with their
external environment. We define external environment as ‘all elements outside the boundary of
the organization’ (Daft, 2009) to which an organization needs to adapt (Aldrich & Pfeffer, 1976).
But the organization can also have an impact on its environment. While the organizational
environment can be viewed as ‘relatively fixed conditions’ (Gartner, 1985: 700), we opt for a
rather dynamic approach, which can account for rapid changes in the environment as triggers for
changes in organizations. Donnelly-Cox & O’Regan (1999) identify two different and
distinguishable external environments to which an organization is fundamentally linked to:
Legitimization environment and task environment.
Legitimization environment refers to all stakeholders of an organization, as defined by Freeman
(1984). Thus, organizations are legitimized by and need to justify their activities to several
groups of stakeholders, e.g. customers, shareholders, employees, suppliers, etc., which sometimes
may even pursue conflicting interests. We understand legitimacy as ‘a generalized perception or

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assumptions that the actions of an entity are desirable, proper or appropriate within some socially
constructed system of norms, values beliefs and definitions’ (Suchman, 1995: 574). Child (1972)
highlights that organizations do not only reflect their ‘members goals, motives or needs’, but are
to some extent dependent on goals, motives and needs of the external environment. With
reference to society, as a rather general group of stakeholders, we find the notion of ‘pressure’
related to national culture. Sagiv & Schwartz (2007) argue, that organizations are living under
social pressure and have to operate in line with societal values in order to be accepted as a
member of society. The idea of ‘social pressure’ on an organization has already been mentioned
in earlier years, e.g. by Parsons (1960) and Meyer & Rowan (1977). Furthermore Hofstede et al.
(1999) emphasize that national culture is different from organizational culture. Thus,
organizational culture is strongly affected by national culture in two ways: (1) Through society
and (2) through employees who bring in their own perception of national values (see also Sagiv
& Schwartz, 2007). Therefore there are two important aspects that needed to be mapped by the
proposed generic model of organizational culture: (1) A separate domain which represents the
‘legitimizing environment’ and (2) two processes that link this domain to organizational culture,
namely ‘pressure of legitimization’ and ‘legitimization management’ as a response to the
pressure by stakeholders that the organization operates in a way ‘that is consistent with societal
beliefs’ (Donnelly-Cox & O’Regan, 1999: 17).
Task environment is what mostly likely could be associated with ‘the market’. However, we
abstain from using the term ‘market’, as organizations may pursue different operations related to
several markets or even activities that are only loosely linked to ‘markets’, e.g. voluntary support
of elderly or handicapped people. Generally, organizations develop strategies to achieve certain
tasks that are either profitable or, at least, constitute financial survivability. Thus, organizational
structures need to account for certain levels of performance (Child, 1972). Consequently,
operations (as determined in our model) are directed at the successful accomplishment of tasks,
performed within a given organizational structure. Therefore operations are directly linked to task
environment in two ways: (1) through ‘actions’, determined as a coupling of structures and
operations, and (2) through ‘market feedback’ as a response to organizational operations.
Concluding remarks
The paper provides a new, dynamic and generic model of organizational culture that is built on
existing research and combines various theories, concepts and constructs. We defined
organizations by referring to four domains (organizational culture, strategy, structure and
operations) and the external environment by distinguishing between legitimization environment
and task environment. Moreover, we defined unidirectional processes that build links between
domains, which have been developed by considering seminal work in the respective research
fields. More research would be necessary to evaluate the explanatory power of the model and its
validity across different contexts. However, the generic model of organizational culture
represents a significant step forward to a more holistic, comprehensive and interdisciplinary
approach to cultural dynamics in organizations by combining seminal work in the fields of
organization theory and culture theory.

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List of figures
Figure 1: Organizational models by Schein (1985) and Hatch & Cunliff (2006)
Figure 2: Generic model of organizational culture: Internal and external environment
(References are available on request)