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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," 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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    Cited by:

    1. 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(04), pages 936-962, December.
    2. Erkki Siivonen & Arto Luoma & Jani Luoto, 2003. "Growth, Institutions and Productivity: An empirical analysis using the Bayesian approach," Research Reports 104, Government Institute for Economic Research Finland (VATT).
    3. 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.
    4. 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 Business Engineering.
    5. Morrison, Alan & Thanassoulis, John, 2017. "Ethical standards and cultural assimilation in financial services," CEPR Discussion Papers 12060, C.E.P.R. Discussion Papers.
    6. 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, pages 23-61.
    7. 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.
    8. 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).
    9. Sandra T. Silva & Jorge M. S. Valente & Aurora A. C. Teixeira, 2007. "An evolutionary model of industry dynamics and firms' institutional behavior with job search, bargaining and matching," FEP Working Papers 241, Universidade do Porto, Faculdade de Economia do Porto.
    10. 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.
    11. 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, pages 160-179.
    12. Jose Apesteguia & Martin Dufwenberg & Reinhard Selten, 2007. "Blowing the Whistle," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 31(1), pages 143-166, April.
    13. João Correia-da-Silva & Carlos Hervés-Beloso, 2007. "Private Information: Similarity as Compatibility," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), pages 395-407.

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    JEL classification:

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

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