ORGANIZATIONAL CULTURE AND COMPETITIVE ADVANTAGE: A Theoretical Review

Abstract

Organizational culture relates to the values adopted by an organization in carrying out its activities. Habits, traditions, and general ways of doing things that exist in an organization today are the result or result of what has been done before in the past. And the human factor becomes important in implementing these values with full awareness and responsibility. The human element is an important element in the organization, which plays an active and dominant role in achieving organizational goals. In an effort to achieve organizational goals, an atmosphere and conditions are needed that can provide comfort to members of the organization so that they can carry out their duties properly. For this reason, a conducive organizational culture is needed to create enthusiasm in achieving organizational performance. However, to achieve a good organizational culture is not easy, efforts are needed how to unite the members of the organization as a solid work team and have the same motivation to work in order to have strong competitiveness.

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ORGANIZATIONAL CULTURE AND
COMPETITIVE ADVANTAGE: A Theoretical Review
Arquimino Ramos
Faculty of Social Science and Humaniora, Universidade da Paz
Lena Ellitan
Faculty of Business, Widya Mandala Catholic University Surabaya, Indonesia
Abstract
Organizational culture relates to the values adopted by an organization in carrying out its
activities. Habits, traditions, and general ways of doing things that exist in an organization
today are the result or result of what has been done before in the past. And the human factor
becomes important in implementing these values with full awareness and responsibility. The
human element is an important element in the organization, which plays an active and
dominant role in achieving organizational goals. In an effort to achieve organizational
goals, an atmosphere and conditions are needed that can provide comfort to members of the
organization so that they can carry out their duties properly. For this reason, a conducive
organizational culture is needed to create enthusiasm in achieving organizational
performance. However, to achieve a good organizational culture is not easy, efforts are
needed how to unite the members of the organization as a solid work team and have the
same motivation to work in order to have strong competitiveness.
Introduction
Organizational culture has recently come to the fore and has become the subject of
discussion and study, both among practitioners and scientists. Many discussions and
seminars are held by various parties who seek to reveal matters relating to the creation and
development of organizational culture. These symptoms simply show that organizational

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culture is felt to be important and of course it is felt to have direct or indirect benefits for
organizational development. Like the cultures in an area, organizational culture also has
taboos that regulate the organization's actions towards fellow members of the organization
and towards people from outside the organization's members, so an organization also has a
culture that regulates how its members behave. This is called organizational culture, by
knowing the organizational culture we can find out how the organizational culture affects
employee attitudes and behavior, where the organizational culture comes from, and whether
the organizational culture can be regulated or not.
According to Richard West and Turner in their book Introduction to the theory of
communication analysis and application, Organizational culture in the context of
communication is a scope of symbols. communication, (actions, routines and conversations)
and the meanings people attach to the symbols. In the corporate context, organizational
culture is considered as a strategy in achieving goals and power. If the organizational culture
is considered as a symbolic set that is communicated to organizational members for
organizational control, then the communication symbols (actions, routines and
conversations) can be interpreted as the formation of understanding, the communication
process itself becomes the main focus of attention, because this process is the formation of
that meaning. .
Organization is symbolic behavior, and its existence depends on shared meanings and on
interpretations obtained through human interaction. Organizations “depend” on the
existence of a common mode of interpretation and shared understanding of experience that
allows daily activities to become routine or so. When groups encounter new situations, new
interpretations must be formed to maintain regular activities (Rohim, 2002: 150). Based on
this background, this paper aims to discuss the urgency of organizational culture in building
competitiveness.
Organizational culture

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Organizational culture relates to the values adopted by an organization in carrying out its
activities. Habits, traditions, and general ways of doing things that exist in an organization
today are the result or result of what has been done before in the past. And the human factor
becomes important in implementing these values with full awareness and responsibility. The
human element is an important element in the organization, which plays an active and dominant
role in achieving organizational goals. Humans are planners, actors, as well as determinants of
the realization of organizational goals. An organization consisting of various groups of
individuals who work together and interact with each other, will form a habit that will
eventually shape the organizational culture in the organizational system. Organizational culture
is an integrated pattern that results from individual behavior in the organization including
thoughts, actions that are learned and taught to the next generation.
The term organizational culture emerged from the general concept of culture rooted in
anthropological, historical, sociological and psychological perspectives. Kroeber & Kluckhohn
(1952) released a list containing 160 different definitions of culture as an indication of the
diversity of concepts of the term culture. The importance of culture for a leader is emphasized
by Schein (2010) with a statement “The bottom line for leaders is that if they do not become
conscious of the cultures in which they are embedded, those cultures will manage them.
Cultural understanding is desirable for all of us, but it is essential to leaders if they are to lead.”
It is said that the basic thing for leaders to know is that if they are not aware of the culture they
are in, it will govern them. Cultural understanding is expected by all of us, but it is very
important for leaders if they are to lead.
Organizational culture is generally understood as a set of key values, assumptions,
understandings and norms shared by members of the organization and taught/inherited to new
members of the organization as the right thing (Daft, 2005). Organizational culture is an
important factor that managers can use to direct training in their companies (Smircich, 1983).
The study of organizational culture includes several aspects including based on its level
(visible, expressed values, assumptions used), strength (strong or weak), and adaptability
(adaptive or non-adaptive). Organizational culture can be assessed with many dimensions
although conceptually it seems different but basically has similarities with regard to the models
and theories used. For example, culture can be categorized in several ways as

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adaptability/achievement/clan/bureaucratic (Daft, 2005), clan/adhocracy/hierarchy/market
(Cameron and Freeman, 1991; Quinn and Cameron, 1983; Quinn and Rohrbaugh, 1983), and
communal/fragmentation/network/mercenary (Goffee and Jones, 1998). Wallach (1983) views
that organizational culture is a combination of three categories, namely bureaucratic,
innovative and supportive with different degrees. This study adapts Wallach's (1983)
framework. Wallach (1983) states that the organizational culture index (OCI) describes the
profile of organizational culture with the dimensions of stereotypes and organizational image
can be described from the combination of these three dimensions. Bureaucratic culture is
characterized by the following characteristics: hierarchical, cross-departmental relationships,
organized, systematic and has clear lines of responsibility and authority in the organizational
structure. An innovative culture has the following characteristics: creative, results-oriented,
and a challenging work environment. A supportive culture is characterized by teamwork and
people-oriented (relational), encouraging employees to take action and a trusting work
environment. An employee can be more effective in his current job and realize his best potential
when there is a match between individual motivation and organizational culture. This has
significant implications in the processes of recruitment, management, motivation, development
and retention of employees (Shadur et al., 1999). Effective leaders act as cultural builders and
creators of market orientation (Narver et al., 1998). The importance of the leadership role in
transforming organizational culture and creating market orientation is clearly emphasized by
Senge (1990) in Narver et al., (1998) by stating "Top management plays a critical leadership
role in changing a culture in general, and in creating a market. orientation in particular. Building
an organization's culture and shaping its evolution is the “unique and essential function of
leadership”
Dimensions of Organizational Culture
According to Denison and Neale William S (1996), organizational culture is defined as the
values, beliefs and principles that serve as the basis of an organization's management system
and a set of management practices and behaviors that help and reinforce these basic
principles. Four characteristics of organizational culture that characterize the framework of
Denison et al., (2003), namely, first, Involvement includes organizational capabilities that
effectively empower organizational members, build organizations around teams and develop

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the capabilities of organizational members at all levels. Second, consistency, namely the
organization tends to be effective because it has a strong culture that is very consistent, well
coordinated and well integrated. Third, adaptability is the organization's ability to translate
the pressures of the business environment into action. Fourth, mission which is a meaningful
long-term direction for the organization. This shows that successful organizations have clear
goals and directions and express a vision of how the organization will be seen in the future.
According to Schein (2010), organizational culture is the values and behavior of people who
are considered as tools leading to the successful achievement of organizational goals which
can be found at three levels, namely, first, surface-level artifacts of culture that can be seen
such as dress style, language and member behavior. organization. Second, the exposed
values in the form of strategies, goals and organizational philosophy. All of these things
reflect the values that exist within the organization and become the beliefs of members of
the organization in dealing with one another in carrying out their duties and authorities.
Third, basic assumption values, culture is difficult to understand because it is at a
subconscious level. Basic assumptions are the key in understanding organizational members
to do something. The basic assumptions guide the behavior of organizational members.
There are many dimensions that differentiate culture. This dimension influences behavior
that can lead to misunderstanding, uncertainty or even conflict. The concept of culture
originally came from the field of anthropology and got its place at the beginning of the
development of organizational behavior science, by Morrey and Luthans 1987. Luthans
(1998) in Sopiah (2008:129-130), mentions a number of important characteristics of
organizational culture including; (1). Rules of behavior: In the form of language,
terminology and rituals used by members of the organization (2). Norms: Standards of
behavior that include instructions on how to do something. Furthermore, in society we are
familiar with religious norms, social norms, moral norms, customary norms and others. (3).
Dominant Values: The main values that are expected from the organization to be carried out
by members, such as high product quality, low absenteeism, high productivity and
efficiency, and high work discipline. (4). Philosophy: An organization's belief in policies
about what its employees and customers like, like you is our hope. Consumers are King.(5).
Rules: Strict rules of the organization. New employees must learn these rules so that their
existence can be accepted in the organization. (6). Organizational Climate: The overall

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feeling that includes physical things, how members of the organization interact and how
members of the organization control themselves in dealing with customers or outsiders of
the organization.
The Urgency of Organizational Culture in Building Competitiveness
Starbuck and Holloway (2008) suggest that there are at least four factors that can influence
OCB, namely: Cultural factors, namely that employees or staff will be more likely to take
actions that go beyond their work responsibilities, if they: (a) have been satisfied with their
work, (b) can receive fair and caring treatment from supervisors, (c) believe that they are
treated fairly by the institution or organization. Furthermore, organizational culture can be
the cause of the quality of OCB development in an organization. In a positive organizational
climate, employees or staff will feel more willing to do their work more than what is required
in the job description, and will always support the organization's goals if they are treated by
superiors with sportsmanship and with full awareness and believe that they are being treated.
fairly by the organization (Araujo, et al. 2013).
It is said that top management plays a very important leadership role in changing
organizational culture in general and creating market orientation in particular. Building
organizational culture and shaping the evolution of organizational culture is an essential and
unique leadership function. In line with Senge, Schein (1983) found that the three most
powerful mechanisms for uniting and transforming culture are the manifestations of
leadership, namely (1) providing role models, teaching and training; (2) the role of leaders
in measurement and control; and (3) the leader's response to organizational incidents and
crises. The theory and findings of Jaworski and Kohli (1993) confirm the importance of top
management leadership in creating market orientation. Thus it can be emphasized that
leadership is very important in realizing and maintaining successful cultural change in an
organization. Without proper leadership, it is absolutely impossible to create a market
orientation.
Fekete & Bocskei, (2011) research results in the manufacturing industry in Hungary stated
that hierarchical culture has a negative influence on performance, because hierarchical

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culture described by internal efficiency, stability, coordination and control is still weak in
emphasizing security of ownership and compliance with norms and regulations. . In contrast
to that, Calciolari et al., (2017) found that hierarchical culture has a positive effect on
financial performance as long as the company is able to focus internally and enforce rules
or regulations that affect the way the organization works. Research by Kotter and Heskett,
(1992) showed that a strong organizational performance improvement culture or a strong
culture increased organizational revenue by 756% between 1977-1988, and only 1%
increase over the same time period; companies without a performance improvement culture.
This is because the company has a culture that emphasizes the involvement of all major
managerial constituents, namely customers, shareholders and employees (Santoso et.al.
2019).
Conclusion
The importance of building organizational culture, especially with regard to efforts to
achieve organizational goals. Organizational culture consists of relatively stable
characteristics. This culture has been developed over the years and is rooted in strong values
that employees believe in so that they get high commitment. Furthermore, there are a number
of forces constantly working to maintain that culture. There are policies that shape
organizational beliefs about how employees and/or customers are treated. There are also
strict guidelines regarding the achievement of goals. Newcomers must learn existing
techniques and procedures in order to be accepted as members of a growing group. It is the
overall “feeling” conveyed by the physical setting, the way participants interact, and the way
organizational members relate to external customers and individuals. Organizational culture
greatly influences performance where in an organization employees form an overall
subjective perception of the organization based on factors such as risk tolerance, team
pressure, and support. In fact, this overall perception becomes the culture or personality of
the organization. These favorable or unfavorable perceptions then affect the performance
and satisfaction of its members, with a greater impact on cultural reinforcement.
Organizational culture refers to the system of shared meanings held by members that
distinguishes the organization from other organizations. This system of shared meaning,

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when examined closely, constitutes a key set of characteristics that the organization values
and maintains. The culture in an organization is characterized by the existence of an
observable way of acting from all members of the organization, the existence of norms that
contain standards of behavior from members and the existence of certain rules and
regulations that bind all members of the organization. Organizational culture is characterized
by the existence of an organizational climate, which is an interaction that affects each other
between individuals and their environment, both the physical environment and the social
environment. This environment will be perceived and felt by the individual, giving rise to
certain impressions and feelings. Habits, traditions, and general ways of doing things that
exist in an organization today are the result or result of what has been done before. This
leads to the highest source of an organization's culture, namely its founders.
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