Subcultures in Large Companies: An Exploratory Analysis

Abstract

The purpose of this paper is the exploratory study of the existence of subcultures in Spanish companies. Determining the main
descriptive characteristics, number and composition and its relation to certain processes and organizational variables. An
empirical study has been performed, which involved senior managers from large companies, showing a description of existing
subcultures and departments to which more often associated to these subcultures, which for the purposes of this study are
defined by those departments that by their actions, expressions and attitudes are different from the rest of the organization.
This work also identifies several lines of future work.

Full text

M.D. Lytras et al. (Eds.): WSKS 2010, Part II, CCIS 112, pp. 8–18, 2010.
© Springer-Verlag Berlin Heidelberg 2010
Subcultures in Large Companies: An Exploratory
Analysis
Enric Serradell-López1 and Carlos Grau Algueró2
1 Business and Sciences Department, Open University of Catalonia
eserradell@uoc.edu
2 Organization Department, University of Barcelona
cgrau@ub.edu
Abstract. The purpose of this paper is the exploratory study of the existence of
subcultures in Spanish companies. Determining the main descriptive character-
istics, number and composition and its relation to certain processes and organ-
izational variables. An empirical study has been performed, which involved
senior managers from large companies, showing a description of existing sub-
cultures and departments to which more often associated to these subcultures,
which for the purposes of this study are defined by those departments that by
their actions, expressions and attitudes are different from the rest of the organi-
zation. This work also identifies several lines of future work.
Keywords: Subcultures, corporate culture, creativity, innovation, large companies.
1 Introduction
From the 80's an explosion of work aimed at analyzing the culture and its impact on
organizations. Since the pioneering work of Deal and Kennedy [3 ] and Peters and
Waterman [ 14 ] show evidence of how corporate culture is set up as a crucial element
in obtaining competitive advantages in today's world. Her ethereal and intangible
nature, originates that its treatment are multidimensional and multidisciplinary.
Hofstede's studies [ 8 ] and in recent years the initiative Globe (2004) show that cul-
tural or national values, or even employees values arising differences in the perform-
ance of the companies and business results. These are factors that are beyond what is
readily understandable. They don't appear on the financial statements and they aren't
easily observable. There is a wide debate over whether or not corporate culture pro-
vides the flexibility to change, market orientation, market adaptation, or whether to
give flexibility or rigidity in contrast to the new environment.
The main purpose of our study was to analyze in a descriptive way, first, if in the
opinion of Spanish senior managers exist distinct subcultures within a company. Sec-
ond, determine whether there are certain departments routinely prone to creation of
subcultures and to what extent, and thirdly, to determine whether a relationship exists
between the existence of subcultures and departments with a greater or lesser alloca-
tion to the creativity and innovation within the company.

Subcultures in Large Companies: An Exploratory Analysis 9
2 Literature
Organizations face daily a changing and often unpredictable environment. Adapta-
tion to these changes is a question difficult to answer. However, since the theory of
organizations suggests a wise statement ([ 5: pag 4] : "organizational agility requires a
judicious mix of stability and reconfigurability [ 2 ].
The existence of a strong corporate culture means that there are certain values that
are shared by the organization at all levels. The consequence is that employees have a
certain attitude and behaviours, showing a course of action that increases the likeli-
hood of achieving the proposed objectives. In a way, the culture is the most immuta-
ble of organizations, ensuring that in certain cases, provide the desired stability.
Kotter and Heskett [ 9 ] in their famous study of the corporate culture of American
companies revealed that the simple existence of a strong culture was not sufficient to
explain differences in results between companies, and that as a conclusion was neces-
sary a shared culture and an alignment between the culture, values and behaviours of
people with the company strategy.
In modern times, with an increasing trend of business concentration and thus to
increase in size, some authors believe that large companies often have many cultures,
which are formed over time as the result of segmentation , importation, technological
innovation and ideological differentiations [ 19 ]. Aspect that is well known by multi-
national companies, which take into account aspects of national culture in the daily
management of their activities, oriented both customers and employees. To show this
the celebrated work of Hofstede [ 8 ] conducted in the IBM company already collects
in depth these differences.
As we expressed before, if the culture is crucial for the success or failure of the
current company why not imitate? From the standpoint of resources, if the relevant
aspects of a culture can be described, conscious imitation of the culture may be imper-
fect. The existence of multiple and often conflicting cultures or subcultures within the
company makes management culture highly problematic [ 1 ].
In this line of analysis manifest Trice and Beyer [ 18 ] considering that the level of
analysis most appropriate for modern organizations is the level of subculture, as it is a
mistake to believe that the organization has a homogeneous culture. Thus, organiza-
tions are comprised of multiple subcultures interacting with each other, which means
that in practice have a different set of values, norms and behaviours. The members of
a subculture interact and work together, which means sharing a similar way of work-
ing. This idea links with the conception of the present organizations as culture-based
systems that integrate internal knowledge and, at the same time, recognize and assimi-
late the external knowledge. In this sense, DeLong and Fahey [ 4 ] provide keys to
assess the relationship between knowledge and culture / subcultures:
• The cultures and subcultures influence especially as knowledge is perceived
as useful, important or valid.
• Subcultures often lead to its members to identify important knowledge dif-
ferently to other groups within the organization.

10 E. Serradell-López and C.G. Algueró
According to these authors, subcultures consist of a set of values, norms and prac-
tices exhibited by specific groups or units within an organization.
The different views of knowledge often lead to communication problems and con-
flict between functions, as subcultures different criteria in the assessment of knowl-
edge. A culture that clearly values some units over others undermines the sharing of
any knowledge.
The culture of a company and the relationship between subcultures determine how
you create the new knowledge about the environment as genuine (accepted) or re-
jected as distributed throughout the organization.
Furthermore, organizational subcultures relate to different cultures developed be-
tween different organizational groups or professions (such as subcultures blue collar /
white collar); linked to departments or functional areas (subcultures of engineering /
production, marketing) or cultures associated with professional or scientific disciplines).
An important distinction concerns the concept of counter-culture. Martin and
Siehl [ 12 ] argue that subcultures can be defined as those parts of the organization
with different strategic and operational objectives of the rest of the organization and
counter-cultures with completely different purposes, which may cause an impediment
to study organizational culture as an all. Whereas the subunits should be the areas of
study of culture, but with the nuance that different units have been welded by some
kind of centralized culture before afford to develop their own autonomous behaviours
[ 21 ]. The study of the sub and countercultures give a good indication of the organi-
zation as a whole. The work of Fortado [ 6 ] examines the relationship between
organizational subcultures and the dominant culture. In this sense, Lucas [ 11 ] con-
siders that subgroups should be the unit of analysis of culture because culture is the
sum of the ways that separate interest groups are able to resolve their differences. In a
totally opposite view Riley [ 15: pag. 414 ]) where it considers that organizational
culture is composed of "integrated subcultures" and that there is a unified set of values
that can be ascribed to all members of the organization. What gives an idea of the
diversity of opinions and debate about the concept.
Under the point of view of organization and management, several authors suggest
lines of work for understanding subcultures and their link to various organizational
variables. Schein [ 16 ] suggests that subcultures can be used as a methodology to
promote change and culture management, so that cultural change comes as through
radical changes in specific subcultures (Trice and Beyer, 1991).
Boisnier and Chatman [ 2 ] believe that strong cultures can foster innovation by
stimulating creativity subcultures, or in other words, sub-cultures in which creativity
is seen as a central value. Subcultures may serve as containers in which creative ideas
can be made regardless of restrictions or influences of strong cultures [ 12 ].
Subcultures provide an additional advantage for the management of innovation,
because they are far enough apart to encourage the development of creativity but also
are part of the organization. If innovation is to implement creative ideas, subcultures
provide a place for creativity and growth as a way to coordinate with members of the
dominant culture to implement these ideas [ 10 ]. Subcultures may connect these two
aspects, because, first arising from a strong culture and at the same time are connected
with the resources and capabilities to coordinate the organization [ 2 ]. These same
authors suggest that strong cultures that enable emerging subcultures are more inno-
vative than companies that do not allow strong culture subcultures emerge.

Subcultures in Large Companies: An Exploratory Analysis 11
Based on the above we propose to test the relationship between subcultures and
the creativity and innovation of enterprises. It also will test what are the findings of
value that managers in different departments, trying to verify whether there are differ-
ences due to the fact that exist subcultures.
3 Method
The information was obtained by means of an electronic survey, which had previously
been tested by academics and managers, and was aimed at the senior management of
large companies. The selection of companies was made from the SABI (Iberian Bal-
ance Sheet Analysis System) database. The data were collected in the second half of
2007 and the first quarter of 2008.
The final sample is made up of 310 companies, with their headquarters in Catalo-
nia, which meet the criteria for a large company as defined by EEC regulations1and
have met the three criteria for two years running. Companies which were subsidiaries
of other companies were excluded, as it has been deemed that the introduction of
subsidiary and associated companies could lead to artificial homogeneity in the final
results. The sample is fairly representative of the economy, as there are companies
from most sectors.
From the mailing undertaken, 81 full answers were received, representing a re-
sponse rate of 26 %. The use of electronic surveys enables data transcription errors to
be avoided in the responses received. They are also stored on a server which allows
the answers obtained to be identified in real time. Only responses received from sen-
ior management have been taken into account; there was a screening question for this
purpose.
The information has been measured mostly based on Likert-type questions on a 5-
point scale, with 1 being "Strongly disagree" and 5 "Strongly agree". The use of an
electronic questionnaire has provided access to and completion of data by managers,
thus avoiding the usual process of tabulation and data entry by eliminating transcrip-
tion errors. The industrial and territorial distribution is very wide, although the object
of study was to make a significant treatment from a statistical standpoint, but merely
exploratory.
4 Results of the Study
From the data obtained, we proceed to conduct a descriptive assessment. The first
question related to the degree of compliance, on a scale of 1 to 5 (1: maximum disagree,
5: maximum agreement) on whether he considered the existence of departments with
1 Commission Recommendation of 6 May 2003: 2003/361/CE. Number of employees: More than
250; Volume of sales: more than 50 million Euros; and volume of assets: more than 43 million
Euros. It has been deemed that, because of their size, large companies are those most likely to
have differences based on corporate culture, as a result of their complexity and the existence of
multiple interactions between employees. We also start out from the fact that they all have sys-
tems and procedures designed to obtain relevant information from their environment.

12 E. Serradell-López and C.G. Algueró
different ways of acting and thinking, and that for the purposes of this work we have
named as subcultures within the company. From all the firms surveyed, 74 of them
consider that there are departments with different ways of thinking or behaving. Al-
though, only 64 of them are capable to cite at least one, as presented in Table 1.
Table 1. Existence of subcultures
Frequency Percent
Without subcultures 17 21
With subcultures 64 79
Total 81 100
Another issue that we had set in the study was to answer the question of how many de-
partments within the company owned a different way of doing things. That is, to quantify
the number of subcultures within companies. The results are presented in Table 2.
Table 2. Number of subcultures
Number of subcultures Frequency Percent
0 17 21
1 14 17,3
2 27 33,3
3 12 14,8
4 6 7,4
6 2 2,5
7 2 2,5
8 1 1,2
Total 81 100
On average companies have 2 subcultures (27 companies), 14 companies have 1
subculture, and 12 companies have 3 subcultures. It should be noted that the scope of
study was limited to subcultures that coincide with the functional areas of business.
We have not taken into account the existence of subcultures related to professional
fields, business units, or territorial criteria that they could well be but have not been
able to analyze in our study.
Another issue to be explored was the composition of subcultures. That is, what
departments were those mentioned further as repositories of different ways to act and
think. The summary of data related to the departments is presented in Table 3. Ac-
cording to these results, the more mentioned departments are Production, Finances,
Sales and Human Resources. As expected, the General Management Department was
the area less often cited.

Subcultures in Large Companies: An Exploratory Analysis 13
Table 3. Departmental subcultures counter
Department Yes No
Production 26 55
Finances 25 56
Sales 24 57
Human Resources 22 59
Purchases 20 61
Marketing 18 63
Research and Development 17 64
General Management 10 71
At present several doubts arise about the possibilities and effects posed by the ex-
istence of certain subcultures in business. Do not forget that subcultures do not nec-
essarily determine the corporate culture as a whole, but simply represent an approach
to a complex problem. It should also be considered cautiously as provided by Theve-
net [ 20: pag 20 ] when he considers that: "corporate culture is not one of their lead-
ers, although this is very important.". While we believe is an adequate approximation
given to the exploratory content of our study.
Employee's recruiting according to the culture of the company
The influence of corporate culture in companies is difficult to quantify. However, we
assume, for simplicity, that it is possible to approach it based on observable behav-
iours. A decisive step in its analysis involves studying how culture determines what
kind of knowledge is valuable. This question has been studied investigating if top
management usually takes into account the corporate culture in the process of recruit-
ing new staff. To this end, staff has been divided into three groups: the first one
corresponds to the recruitment of new officers, the second, the recruitment of non-
managers for key positions, and thirdly, the recruitment of other staff.
Most of the companies consider the corporate culture for staff recruitment. The
majority of the managers surveyed (over 90%) believe that it is taken into account for
recruitment of executives (average 3,82 out of 5) hiring a non-management worker for
a key post in the company (an average of 3,79 out of 5) as well as for other staff (an
average of 3,34 out of 5).
The mean analysis performed allows us to reject the null hypothesis of equality of
the means by which we can accept the hypothesis that the large companies, at least in
our sample, take into account culture in the recruitment process and also the high
direction is incorporated in the selection process more in leadership positions that in
the rest of staff.
In addition, managers declare that they have subcultures have it in mind those
companies with subcultures. Because when you make the contrast of mean differ-
ences, we can reject the hypothesis of equal means and accept the hypothesis that
there are differences between the means. These differences are significant from the
statistical point of view.

14 E. Serradell-López and C.G. Algueró
It has also been able to check as the companies that declare that they don't have
subcultures; they keep in mind cultural approaches in the selection of personal in
more measure that the companies with subcultures.
That is, considering the firm as a unitary culture (which some authors qualify as
strong culture) takes greater account of that variable in the selection process. As
presented in Table 4.
Table 4. Recruitment and culture
Mean values
Without subcultures With subcultures N
Recruitment team 4,38 3,70 74
Hiring key post 4,31 3,68 75
Hiring other personnel 3,77 3,25 74
It is important to pause for a moment on the data from Table 4. The existence of
multiple subcultures is considered by some as a sign of weakness of the dominant
culture. When several subcultures are present, it doesn't exist an only behaviour sys-
tem, performance and work inside the company. Thus, an indicator of the strength of
culture, with all possible pros and cons could be extracted with the inverse of the
existence of subcultures. The existence of a culture without subcultures, provide a
common guide to all departments. For reasons of space, we do not go to assess what
are the main characteristics of firms without subcultures.
Creativity
Table 5 presents the statistics of the variables associated with the tendency to creativ-
ity and innovation. The idea, following Martins and Terblanche [ 13 ] studies and in
accordance with Boisnier and Chatman [ 2 ] was to test if creativity and innovation
are encouraged by the existence of subcultures.
The analysis of means reveals such differences exist. However, valuations of
companies with subcultures are lower than in companies without subcultures, counter
to the idea proposed by those authors. The only exception is for Purchasing depart-
ment (2, 50 against 2, 95). The differences of means are not significance except for
the case of Marketing and Research and Development.
Value: the existence of subcultures - Innovation Variables
In general, there are differences in means between the variables related to innovation
capacity, depending on the existence of subcultures. Although, by applying the aver-
age differences in contrasts, these differences are not significant.
Innovation items correspond to previous work of Subramaniam and Youndt [ 17 ]
as we can see in Table 6. The factor analysis matches the first three items with the con-
cept of incremental innovation and the last two with the concept of radical innovation.
However, once made the appropriate statistical analysis, the evidence is inconclu-
sive. The means of the companies without subcultures are, in all the cases lower.
However, the results haven’t statistical significance.

Subcultures in Large Companies: An Exploratory Analysis 15
Table 5. Subcultures and Tendency to creativity and innovation
Department Subcultures N Mean
values Deviation typ.
Without 15 2,87 , 915 Finances
With 58 2,53 1,080
Without 12 2,50 , 798 Purchases
With 57 2,95 1,109
Without 12 3,58 1,165 Sales
With 60 3,30 1,078
Without 13 4,23 , 599 Marketing
With 54 3,37 1,350
Without 12 3,42 1,084 Production
With 54 3,17 1,060
Without 14 3,00 , 961 Human Resources
With 61 2,49 1,164
Without 11 4,45 , 522 Research and Devel-
opment With 50 3,78 1,075
Without 15 3,93 , 594 General Management
With 61 3,49 1,059
Table 6. Existence of subcultures and innovation
Subcultures N Media Deviation
typ.
The company is able to make minor changes /
improvements in the way of working
Without
15 3,80
, 775
With
64 3,78
, 967
The company has made innovations that
strengthen existing product lines or service
Without
14 3,93
, 917
With
63 3,70
, 944
The company has made innovations that
strengthen the company's ability to compete
Without
15 4,00
, 655
With
63 3,76
1,103
Innovations are typically become obsolete the
current lines of product or service
Without
14 3,21
, 699
With
60 2,82
, 983
Innovations are usually done to make
obsolete the offer of the competitors
Without
14 3,29
, 726
With
61 2,72
1,097

16 E. Serradell-López and C.G. Algueró
5 Conclusions and Final Considerations
This paper has presented an exploratory work on a specific aspect of Spanish compa-
nies as is the description of existing subcultures. Data from 81 large Spanish compa-
nies allow an approach to the content of corporate culture by studying one of its
manifestations as the existence of subcultures within them. We are aware of the lim-
its posed by the identification of subcultures with departments, since it is perfectly
possible that the subcultures arise and develop in different areas such as those related
to certain responsibilities or relating to the location of subsidiaries, for example.
The study of subcultures emerged and developed to be regarded as subgroups the
basic units of cultural analysis. So that the organizational culture would consist of
integrated subcultures, and as it considers Lucas [ 11 ] culture is configured as the
sum of the ways that separate interest groups are able to resolve their differences. In
this paper we have proceeded to describe the number of subcultures, identifying them
with the departments or functional areas of business.
The exploratory analysis conducted analyzing top managers answers has identified
that most of the companies surveyed had several departments with different ways of
thinking and acting, in some ways what we could qualify as a subculture. Since 79%
of those, they consider to have at least 1 department in that situation, and an average
of 2. Subsequently, proceeded to determine which departments was the further men-
tioned being those of Production and Finance the aforementioned first and Marketing
and General Management cited the least. The fact that was cited 10 times the area of
General Management believe it is an interesting result that should be studied further
in the future. The area of General Management in theory has the responsibility for
managing the organizational culture. The fact that the managers themselves, belong-
ing to senior management consider that culture differs from the general management
could be explained as a signal and an objective to be considered towards a corporate
culture change requirement.
A third area of study was the finding that the companies consider the concept of
culture as an instrument for new employee’s recruitment. Furthermore, the impor-
tance given to culture in the recruitment of management team was superior to that of
other staff. Therefore, it was verified that culture directly affects the recognition of
value within the company. Similarly, the analysis of means shows that in those com-
panies which don’t have subcultures more intensely use the corporate culture values
in the process of recruitment. This leads us to assume that companies without subcul-
tures have a corporate culture of greater intensity than is taken into account in further
recruitment. No doubt, also a consideration in future studies.
Finally, they appear two aspects of exploratory nature. The first refers to whether
the existence of subcultures affects the creativity of companies, according to the idea
proposed by Boisnier and Chatman [ 2 ] The exploratory results show that in compa-
nies where exist subcultures, in general, all the departments have less tendency to
creativity (except for Marketing and Research and Development), therefore, although
this difference exists, is not significant since statistical point of view, and it is oppo-
site to that proposed by these authors, except for the two departments mentioned.
Finally, we examined whether there are differences in the value of some items
related to innovation. Therefore, there is an inverse relationship, in line with the relation-
ship described above between subcultures and creativity. The existence of subcultures

Subcultures in Large Companies: An Exploratory Analysis 17
behaves in lower average values of all items related to innovation, although this differ-
ence is not statistically significant.
This exploratory work should be expanded with other samples and enriched by the
contributions of new constructs as possible to deepen the ideas presented. One aspect
that suggests the study is the consideration that culture, by their intangible nature and
tacit content is difficult to create and develop. In addition, just so the efforts of man-
agers seeking to engage a cultural change in organizations have to take into account
the aspect of existence and intensity of subcultures. Thus, following the idea of
Schein [ 16 ] will be possible to manage the cultural change departing the change of
all or some of the existing subcultures that are contained in areas, departments or
professional groups. An issue than certainly, would be a future idea for business
management.
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