How does industry affect culture?

A lot has been said about where culture comes from and how it is sustained. Most of the emphasis seems to be placed on the founder of the company- they seem to be the main source of a company’s culture. If not the founder, culture is said to come from within the company, formed by the people of the organization. However, I think there other forces that guide the formation of culture, such as the industry the organization is in.

Personally, I thought that certain types of industry would require certain types of culture. For example, technological companies such as Google or Apple would require a culture of innovation, or that Airlines would a culture of safety to work in. Different industries would place more or less stress on certain values. Changes in industry may also lead to changes in companies too. It seemed reasonable to think so, but the textbook had no mention of it and I thought industry would be an interesting factor to look into. At the same time, I realized that many different companies from the same industry could have completely different but successful cultures. A good example would be one covered in class, Southwest Airlines. Compared to other Airlines which seem more professional, Southwest’s “fun-luving” attitude is a stark contrast among them (the way they spell “love” is already a good indicator).

Just a reminder on how Southwest Airline's logo looks like <3

Just a reminder on how Southwest Airline’s logo looks like <3

 

So, I went to research how industry affects culture, and found this article that covers both culture formation and culture differences within an industry (although the latter is not extensively touched upon). The article can be summed up using their model on how industry-driven culture is formed as seem below.

Fig1

The industry requires basic assumptions that are shared among all organizations within it, which in turns affect the values of the company. These values should be consistent with the basic assumptions. An example given in the article was that of an electric utility company, with the basic assumption that customers need uninterrupted service. The company can diverge into different paths to fulfil this assumption: one could be to innovate and provide technology to ensure wide coverage; another could be to only serve customers in their reach. There are 3 assumptions covered in the article: Competitive requirement, customer requirement and societal expectations.

Competitive environment: More complex and dynamic environments will lead to culture of adaptability or a culture that deals with uncertainty.
Customer requirement: Can be said to be demands for novelty or reliability. Assumptions of novelty can lead to adaptation and adopting values related to change and diversity, while assumptions of reliability are hard to change.
Societal expectations: What expectations the society may have of the industry, for example, changes in people’s expectations of health and safety.

These 3 influences the basic assumptions in an industry and provides a basis for culture. If there is environment change, past behavior become ineffective, which causes the company to change. I think this can explain why some companies with strong culture fail. As the environment changes they do not adapt to it, and this leads to their failure. One example would be General Motors, who failed to cope with the new competitors and technology that surfaced.

This model also explains why companies from the same industry can have such a wide variety of cultures. As long as the basic assumptions are met, however the company chooses to work with it is up to other influences, like the founder of the company. So bringing it back to the airline industry, the assumption of providing safety for passengers could manifest in a professional or “fun-luving” way. Either culture could succeed in the industry as long as it doesn’t violate these assumptions. (For fun, here’s a video of a Southwest crew rapping the flight safety information: http://www.youtube.com/watch?v=pvdCFYLf_JI)

This model has indeed cleared up my seemingly inconsistent thoughts about culture and industry. Any comments or critique is appreciated! 🙂

References:

http://kottke.org/09/06/why-gm-failed

Gordon, G. G. (1991). Industry Determinants of Organizational Culture. The Academy of Management Review, 396-415.

 

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