Main Body

Corporate Culture

Corporate culture consists of the shared beliefs and attitudes that influence the behaviour of those within the corporation. Every organization has a distinctive culture, which affects how employees interact with each other, how they dress, how they talk, and how they treat external stakeholders.

Corporate managers and leaders are often thought of as being responsible for creating and maintaining an appropriate corporate culture. Leaders and managers have a range of mechanisms available to them in their efforts to shape culture. To begin, they shape culture by their hiring decisions and policies. Hiring aggressive, belligerent individuals will tend to result in a culture that accepts or even encourages such behaviour. They also shape culture by the incentive structures they put in place. A ‘winner-take-all’ bonus system will likely encourage a culture in which employees see each other as competitors, rather than fostering a cooperative culture. Human resource policies may also do a lot to shape corporate culture. If minor failures are met with swift punishment, the culture that results is likely to be one of fear and resentment. Finally, those at the top of an organization can influence culture by the example they set through their own behaviour. If those at the top act like bullies or engage in sexual harassment, this sends a strong signal that is bound to shape culture.

Culture is widely believed to be important in either encouraging or discouraging employees to behave ethically. Some corporate cultures encourage a focus on winning “at any cost,” even when the price to be paid is a loss of integrity or harm to customers. Some cultures encourage adherence to the “letter of the law,” even when such adherence falls short of ethical excellence. Other cultures foster a set of shared values, including by talking openly and frequently about what those values are, such that employees find it relatively easy to determine the right thing to do, even when the rules set out in their code of ethics do not provide clear answers.

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The Concise Encyclopedia of Business Ethics Copyright © 2023 by Chris MacDonald and Alexei Marcoux is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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