In the article "Toward a Theory of Organizational Culture and Effectiveness" Daniel Denison and Aneil Mishra examine the theory that an organization's culture has both qualitative and quantitative links to their performance. In the article the authors illustrate a theory of the relationship between culture and effectiveness, and state that there are four major cultural traits that are typically examined; involvement, consistency, adaptability and mission. Involvement and consistency focus mainly on the organization's internal composition and mission while adaptability and mission focus on the correlation between the organization and external environmental factors.
Logical Adequacy: On the surface this theory makes sense. Many managers and directors in businesses today like to talk about the importance of the "culture" of a business. It then leads to reason that a variety of internal and external factors such as those listed would contribute to this culture.
Empirical Adequacy: In their empirical research the authors sample five organizations for qualitative analysis and evaluate how the culture they observe translates into performance.
They also sample 764 organizations for quantitative research by survey, and record what each corporation's CEO believes to be the culture of his or business and then compare this data against the quantitative performance factors of the organization. The data they find does in fact confirm that there are significant correlations between positive findings in the four major cultural traits and both positive qualitative and quantitative effectiveness of the organization.
Prescriptive Adequacy: While this is interesting, as with many empirical studies, there are some drawbacks. Besides the obvious problems which can occur with survey based studies, one major assumption of this theory is that culture affects performance, without looking at the possibility that positive or negative performance may determine the culture of an organization.
Denison, Daniel and Aneil K. Mishra. "Toward a Theory of...