Defining the term culture

From a paper by Gary Gorton and others.

A sensible list of elements in that package, though neither nearly exhaustive nor likely satisfactory to all, is as follows, adapted from a variety of such lists in the literature:
• unwritten codes, implicit rules, and regularities in interactions;
• identities, self-image, and guiding purpose;
• espoused values and evolving norms of behavior;
• conventions, customs, and traditions;
• symbols, signs, rituals, and group celebrations;
• knowledge, discourse, emergent understanding, doctrine, ideology;
• memes, jokes, style, and shared meaning;
• shared mental models, expectations, and linguistic paradigms.

Pointer from Tyler Cowen.

The paper goes down hill from there, ending up with a mathematical model. I think that the best way to approach the issue of corporate culture is to ask what problems various practices are supposed to solve. I think that in general there are three types of problems, all of which plague the process of central planning in general:

1. Coordination/resource allocation. Without a price system, how do you allocate resources efficiently? For example, the corporate organization chart is supposed to help with coordination. Also supposed to address the coordination problem is that bane of every white-collar worker, the business meeting.

2. Incentives/principal-agent problems. How do you implement systems that are not gamed to the advantage of individuals within the firm but to the disadvantage of the owners of the firm?

There are many problems of this type. And there are various errors that could be made in either direction, e.g. giving middle managers too much incentive to take risks or too much incentive to be risk-averse.

3. Playing the game of evolution: stick with the status quo; copy another player; or innovate. Each alternative has its pros and cons, depending on market conditions and internal capabilities. If your business plays the game well, you coalesce around making the right moves. If you don’t, you make too many mistakes and you lose.

Hiring practices are important here. If you always promote from within, that will bias you toward playing “status quo.” If you hire a lot of senior management from other firms, that will bias you toward “copy.” If you hire junior people and advance them quickly, that will help you play “innovate.”

5 thoughts on “Defining the term culture

  1. A social grouping evolves a “Culture” out of sufficient commonality of the motivations of itd members.

  2. Can Elinor Ostrom’s work help here? Sorry, not familiar enough with it to say yes, but it seems to be in the right area.

  3. Alright, here’s a cultural data point.

    Every single time I log into YouTube I get a spot from Terry or Glenn about the election.

    They are all…horribly insulting. Every single one from both candidates is loaded with lies, betrays that supporting either of them them is useless, and is so utterly devoid of content I want the sun to explode and end existence.

    I’m Glenn Youngkin. I’m mad that Terry doesn’t want parents to have a say in their kids education. So it’s important that in the same add I point out that I want teacher pay to increase to new heights. Because the best way to protect people from CRT is to make sure properly taxes for education double like the northeast.

    I’m Terry. My whole party burned down our cities over CRT and BLM. I support out cops. Murders in VA are at a 20 year high but whatever. In debates I remind everyone I support CRT, which doesn’t exist, but racist cops are the problem. Boo Trump. BOO! Trump. Glenn like Trump. Trump Bad. Ignore that I did blackface with a dude in a klan hood. Parents shouldn’t have a say in their kids education!

    Yeah delete this is you want I’m just so tired.

  4. I would argue for a fourth category: degree of social bonding.

    I suppose you could argue that this is instrumental in achieving the other three goals, but it seems like it takes on a life of its own.

    Firms seem to want to encourage tight social/tribal bonds to highly varying degrees. Some are perfectly satisfied with a mostly transactional relationship. Some seem hell bent on making you part of their tribe. Maybe you could frame this in terms of farmer vs forager values.

    This dimension seems to interact a lot with the other dimensions such that, if you weren’t aware of the firm’ position on the social bonding axis, its approaches to the other problems could be puzzling.

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