What is Organizational Culture?

Definition: Organizational culture, also known as corporate culture, is a strategic intangible scheme that incorporates basic assumptions and values which define the behavior, operation, and activities of an organization. In other words, it’s the general attitude, mood, and motivation, or lack thereof, of the people in the company.

What Does Organizational Culture Mean?

What is the definition of organizational culture? Organizational culture represents an company’s common beliefs and concepts that create the social and psychological environment of an organization. In the contemporary business environment, the company culture often contributes to its success, as it is unique and it cannot be transferred to competitors. It can also contribute to its failure. Based on corporate culture, members know how they should perform their jobs, behave, and dress.

Furthermore, culture dictates the freedom of participation in the managerial decision-making. A strong culture has a strong influence on organizational members and creates committed employees by instilling clear cultural values and beliefs. A weak culture can breed apathy, resentment, and unproductive workers.

Let’s look at an example.


A great example of strong organizational culture is Toyota. By introducing the “Toyota Way”, the company has managed to create a unique corporate culture, which respects all organizational members, supports teamwork, stimulate personal and organizational growth and instills a long-term vision to meet organizational challenges. The ‘Toyota Way” encompasses the Vision, the Target, the Practical Application, the Testing, the Dialogue and the Place to inspire the manufacturing of Toyota vehicles.

All the values and methods recommended by the “Toyota Way” reflect continuous improvement and respect for people. Toyota bases its corporate culture on the principle of Ideal Pragmatism, i.e. the right to pursue two contradictory perspectives through a dialectical method that leads an organization to overcome its limitations and seek for the best organizational results. Thus, through the implementation of “both and more” principle, the company seeks the ideas and suggestions of respectful organizational members that add value to the organization.

The example of Toyota proves that when the organizational culture is appropriate, it can act as a competitive advantage and a fundamental reason for business success. Conversely, when it is inappropriate, it serves as a competitive disadvantage and causes failure. A good example of this is the toxic culture that led to the demise of Enron.

Summary Definition

Define Organizational Culture: Organizational culture and leadership is the internal atmosphere and mood among employees at a company that is driven by management intentionally or unintentionally.

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