Managers, consultants, and management researchers are increasingly realizing the important role of organizational culture in determining the decision-making patterns and the long-term success of organizations. A unique characteristic of most continuously successful organizations, according to Peters and Waterman, is that they possess consciously developed recognizable cultures that support innovation and strategic actions. What are oganizational cultures and how do they influence strategic decisions? To answer this question, one must begin by examining organizational cultures as shared systems of meanings that convey significance to events and circumstances. Organizational culture can be described with a set of concrete products through which this system is stabilized and perpetuated. These products include myths, sagas, language systems, metaphors, symbols, ceremonies, rituals, value systems, and behavior norms.
Purpose, commitment, and order are generated in an organization both through the feelings and actions of its founder and through the amalgam of beliefs, ideology, language, ritual, Shared assumptions determine the nature of cultural products. For example, some assumptions deal with the concept of a hero or a role model to be emulated. Other sets of assumptions create norms for dealing with repetitive problems (rituals) or norms for rewarding performance (awards and ceremonies). Still others constitute the organization's value systems or its preference for outcomes and means of achieving the outcomes. The process of sharing assumptions and the degree of consensus or homogeneity of these assumptions determine the strength and uniqueness of cultural products and processes (James, 1998, pp.129-132).
Cultural products mediate or substitute for rationality in strategic decisionmaking. Since strategic decisions deal with ill-structured and novel problems, they involve intricate interpretation tasks. Their interpretations involve subjective judgments by managers which are shaped by cultural norms of the organization. Facit Inc., the manufacturer of mechanical calculators, provides a good example of how this occurs. When Facit managers were faced with initial information on the electronic calculator technology, they did not interpret it as a strategic opportunity or as a threat. They just disregarded it as unimportant. This interpretation was consistent with the existing "mechanical engineering" culture of Facit.
Since many top managers were themselves mechanical engineers and Facit Inc. had one of the most advanced and successful production facilities for manufacturing mechanical calculators, they had all come to believe in the superiority and invulnerability of their products. In reality, the electronic revolution virtually destroyed the mechanical calculator industry and Facit, of course, incurred huge losses (Hammer & Champy, 1993, pp.42-48). Strategic decisionmaking often provides a milieu in which cultural assumptions are explicated and cultural products are recreated. The strategic decision-making process has been described by several researchers as consisting of the following basic steps: (1) formulating the problem and setting objectives, (2) generating solution alternatives, (3) reaching a consensual understanding of problems and solutions, and (4) choosing the most feasible solution.
Although the actual process varies from this idealized conception in several ways, this general description is used here to examine the influence of organizational culture on strategic ...