Various business management theorists have introduced models of the types of corporate culture because there is no one common theory of the different models of organizational culture. It is mainly because businesses are very different in the ways that they operate.
Geert Hofstede proposed a theoretical model of corporate culture that links national cultures and corporate cultures. He studies six dimensions of culture including: power distance, individualism vs. collectivism, masculinity vs. femininity, uncertainty avoidance, long-term orientation vs. short-term orientation and indulgence vs. restraint.
Dimensions of corporate culture by Geert Hoftstede
Every business organization has its own mix of the following dimensions of corporate culture including:
- Power distance. This dimension reflects how a society handles inequalities among people in the society, or unequal distribution of power within the business organization. Low power-distance rating reflects the society’s view that people should have equal rights and people strive to equalize the distribution of power. High power-distance rating reflects a hierarchical order in the society where everybody has a place and which needs no further justification.
- Individualism vs. Collectivism. This dimension considers the extent to which people feel that they should look after themselves and others, or it is the responsibility of the government and general society to take care of people.
- Masculinity vs. Femininity. This dimension focuses on the extent to which a culture conforms to various gender values. Masculinity refers to values attributed to men such as strength, aggressiveness, victory or competitiveness while femininity refers to values attributed to women such as calmness, softness, quality of life or collaboration.
- Uncertainty avoidance. This dimension reflects the extent to which people in a business organization prefer predictability (structured routines) over uncertainty (flexible structures). It can be expressed through customs, habits, rules, regulations, loyalty, etc.
- Long-term orientation vs. Short-term orientation. This dimension reflects whether people make sacrifices today for the benefits to be gained in the future. Businesses with long-term orientation will invest for the future while those with short-term orientation will focus on maximizing profits.
- Indulgence vs. restraint. This dimension reflects how people control their impulses and desires. In business environment it refers to work arrangements, well-being or the style of work environment.
Types of corporate culture by Geert Hoftstede
Based on different mix of dimensions, the following types of organizational culture can emerge:
1. POWER DISTANCE:
- High power distance. Organizations might have centralized decision-making, clear chain of command, and formal communication. High power-distance cultures tend to have centralized decision-making with no delegation and empowerment.
- Low power distance. Organizations might encourage employee participation, flatter structures, and informal communication. Low power-distance cultures tend to be decentralized decision-making, with delegation and empowerment.
2. INDIVIDUALS vs. COLLECTIVISM:
- Individualistic. Emphasis on personal achievement, individual rewards, and looser team structures.
- Collectivistic. Focus on group loyalty, interdependence, and stronger emphasis on group conformity.
3. UNCERTAINTY AVOIDANCE:
- High uncertainty avoidance. Organizations might have detailed rules, structured work environments, and resistance to change.
- Low uncertainty avoidance. Organizations might be more flexible, adaptable, and open to experimenting with new ideas.
4. MASCULINITY vs. FEMININITY:
- Masculine (Task-oriented). Organizations might prioritize assertiveness, competition, and material success.
- Feminine (Relationship-oriented). Organizations might value collaboration, consensus building, and quality of life.
5. LONG-TERM vs. SHORT-TERM ORIENTATION:
- Long-term oriented. Organizations might emphasize planning, saving, employee development, and patient decision-making.
- Short-term oriented. Organizations might focus on immediate results, quick wins, and less emphasis on long-term investments.
6. INDULGENCE vs. RESTRAINT:
- Indulgent. Organizations might offer flexible work arrangements, prioritize employee well-being, and have a casual work environment.
- Restraint. Organizations might have stricter work discipline, less emphasis on leisure activities, and a more formal work environment.
It is important to note that these are just five dimensions of corporate culture, and in reality, most companies will have a culture that is a mix of these dimensions. The best type of corporate culture for a company will depend on a variety of factors, such as the company’s industry, size, and stage of development.
