Corporate Culture as a Resource for Management: Comment

Abstract

According to Donald C. Langevoort [2006, p. 83], corporate culture is a means of communication and coordination in organizations that, as such, reduces uncertainties, resolves ambiguities, and can offset agency costs. We agree. We are finding it particularly helpful how Langevoort adapts the sociological term sense making to rational-choice analysis, by reading corporate culture as a device (a) to coordinate the perceptions of individual organization members when collective action is required, (b) to avoid uncertainty and ambiguity caused by not knowing the reactions of other organization members, and (c) to induce aligned motivations and emotions as often expressed by organizational/corporate identity or firm loyalty. This clearly sheds some light into the black box of corporate culture. But is there empirical evidence for what this black box is claimed to contain? In this comment, we cull some of the evidence from the literature. And we offer a formal model for an element central to Langevoort' s analysis: the risk of management crowding out beneficial corporate culture by engaging in explicit monitoring.