The Close Relationship Between Management Practices and Corporate Culture

52 Pages Posted: 11 Oct 2019

See all articles by Donald N. Sull

Donald N. Sull

MIT Sloan School of Management

Hyo Kang

Marshall School of Business, University of Southern California

Neil Thompson

MIT Computer Science and Artificial Intelligence Lab (CSAIL); MIT Initiative on the Digital Economy

Date Written: September 30, 2019

Abstract

A growing body of literature finds that a healthy corporate culture is associated with superior financial performance. A separate stream of research has found that a firm’s adoption of management “best practices” is correlated with higher efficiency and productivity. To date, the cultural and management practices literatures have proceeded in parallel, with few studies considering the relationship between an organization’s processes and its culture. This paper uses data from a carefully-designed survey of 370 organizations and nearly ten thousand managers to simultaneously measure corporate culture and management practices. Our key finding is that the quality of a company’s management practices and health of its corporate culture are highly correlated. This implies that studies which measure either culture or processes in isolation are likely to overstate their impact on performance. We also provide suggestive evidence that management practices may cause changes in corporate culture, or at least that this effect is stronger than the reverse.

Keywords: Corporate culture; management practices; strategy

Suggested Citation

Sull, Donald N. and Kang, Hyo and Thompson, Neil, The Close Relationship Between Management Practices and Corporate Culture (September 30, 2019). Available at SSRN: https://ssrn.com/abstract=3462116 or http://dx.doi.org/10.2139/ssrn.3462116

Donald N. Sull (Contact Author)

MIT Sloan School of Management ( email )

100 Main Street
Cambridge, MA 02142
United States

HOME PAGE: http://mitsloan.mit.edu/faculty-and-research/faculty-directory/detail/?id=58805

Hyo Kang

Marshall School of Business, University of Southern California ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

HOME PAGE: http://hyokang.com

Neil Thompson

MIT Computer Science and Artificial Intelligence Lab (CSAIL) ( email )

32 Vassar Street
G766
Cambridge, MA 02142
United States
617-324-6029 (Phone)

HOME PAGE: http://www.neil-t.com

MIT Initiative on the Digital Economy ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

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