Corporate Culture: Definition, Importance, and Implementation

Corporate culture is the sum total of the ethics, principles, and values of a company. It promotes growth, innovation, and communication between companies. This article discusses the definition, importance, and implementation of corporate culture.

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Corporate culture
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Corporate culture can be defined as the sum total of the ethics, principles, the values of the
company and the way the company performs it operations. Corporate culture aims to promote
growth, innovation and communication between the companies. It can be stated that corporate
culture aims to motivate people, which in turn results in the overall growth and expansion of
companies by enhancing the work atmosphere (Guiso, Sapienza & Zingales, 2015). Thus it can
be inferred that every company must have a culture which ensures the development of growth
and prosperity It can be further defined as the value that is sustained and preserved within the
company which helps the management and the employees to ensure the promotion of innovation
in the company. It can be mentioned that though corporate culture acts as an enhancer of growth
and stability within the company, it also acts as an impediment to restrain trade by the company
(Guiso, Sapienza, Zingales, 2015). Therefore in light of the aforementioned discussion about
corporate culture it can be stated that stability of a company which is promoted by the corporate
culture.
It is worth noting that the definition of corporate culture is relative concept. The perception of
corporate culture comes from the culture of a person and his perspective of culture. The
corporate culture can be assessed by the pace of work, the reaction of the company to humorous
events and methods that are used by the company to solve the problems faced by it. Corporate
culture within a company promotes healthy competition and also assists the company to tackle
competition (Audi, Loughran & McDonald, 2016). Corporate culture involves providing
motivation to the employees which can be gauged by the incentives provided to the employees
by the management for fulfilling their responsibilities delegated to them by the management. It
can be mentioned that incentives can be monetary as well as non monetary. Some of the non
monetary incentives include appraisals, promotion, rewards and recognition. It has been opined

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by Zingales & Poterba (2015), that top of the hierarchy of a company must have qualified,
efficient and deserving personnel who can manage the operations and the proper functioning of
the company. Therefore, it can be inferred that the managers and directors of companies must
have good leadership skills.
It can be stated that corporate culture provides a framework about how a company is required to
carry out its functions in compliance with the norms of the society and help to determine how the
relevant missions and the rules will be implemented so as to ensure that there is significant
development in the Corporate culture. It is to be mentioned that every employee who is acting
within a framework guided by the corporate culture is expected to achieve his targets as well as
have his morals boosted in harmonious way (Zingales & Poterba, 2015). However, the corporate
culture of different companies is different. Therefore, it can be inferred that two companies will
have different corporate cultures even if they have the same rules and regulations governing
them. It can be noted that decision making is an intrinsic part of corporate culture of companies
(Wook et al., 2016). The board of directors of companies needs to make rational and
constructive decisions in relation to the governance of the company and must ensure that the
decision made by them are in the best interest of the company and its stakeholders. Therefore, it
can be inferred from the discussion that any decision made by a director in relation to the
governance of a company must be ethical. An ethical decision is one which weighs the best
alternatives of such decision before concluding that such decision is the best. Corporate culture
must be flexible in approach for the purpose of ensuring an environment which is sustainable.
Corporate culture also includes a far sighted approach to achieve the objectives of the company
and to tackle the problems encountered by the same. Corporate culture can be best implemented
by good leadership skills of the leaders as it is best to lead by example. The government of

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Australia had conducted several enquiries into the financial scandals which had plagued the
banks of Australia. The Australian Prudential Regulations Authority (APRA), based on the
reports of the enquiries conducted by the government stated that its behavioral and
organizational factors shall provide a proper explanation about why the scandal took place and to
ensure that such an event does not happen in future which would result in the fall of grace of the
financial institution. However, the reports provided by the government did not contain
substantial information to draw a final conclusion of the scandals. A panel had been formed to
inspect the bank fraud, respond to the risks and monitor the actions of the directors for the
purpose of ensuring that the risks are mitigated.

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Reference List:
Guiso, L., Sapienza, P., & Zingales, L. (2015). The value of corporate culture. Journal of
Financial Economics, 117(1), 60-76.
Hickman, C. R., & Silva, M. A. (2018). Creating excellence: Managing corporate culture,
strategy, and change in the new age. Routledge.
Audi, R., Loughran, T., & McDonald, B. (2016). Trust, but Verify: MD&A Language and the Role
of Trust in Corporate Culture. Journal of business ethics, 139(3), 551-561.
Liu, G., & Tan, J. (2017). Corporate culture: threat to researchers. Nature, 542(7641), 295.
Zingales, L., & Poterba, J. (2015). Causes and Consequences of Corporate Culture. NBER
Books.
Wook, K., Beresford, A. K. C., Pettit, S. J., Mason, R. J., & Sanchez Rodrigues, V. (2016). The
roles of corporate culture in the selection of effective risk management strategies.
Australian Prudential Regulation Authority