BUS608: Ethical and Strategic Management

The organizational culture affects almost every aspect of company's business operations by its influence on employees' interpretive schemes. This influence may be observed through a large number of factors affected by organizational culture like determination of appropriate strategy, control systems within the company, leadership styles, models of organizational structure, organizational changes, knowledge management, job satisfaction, motivation, leadership style, communication, etc. Many studies point to a causal relationship between organizational culture and organizational performance where it can be "a magic wand for the success" and "a silent killer". Regardless of different opinions regarding organizational culture, there is general agreement about its crucial influence on the success of the company, except that some factors may be affected more and some of them less.

The importance of organizational culture and its influence on business operations of the company arise, among other things, from its role in the process of formulation and implementation of business strategy within the company. The strategy is very important plan decision that has a decisive success on company's business operations. The influence of organizational culture on business strategy of a company may be observed through three very important areas, such as: the content and nature of the strategy, the process of strategy formulation and implementation process of the same. Studies that analyzed influence between companies' strategies and their organizational culture point to a conclusion that there is mutual cause-and-effect relationship between these categories. Notwithstanding the fact that remains unclear what is the cause and what is the consequence in this relationship, studies have shown that organizational culture affects both the formulation and the selection and implementation of a business strategy. Likewise, the selection and implementation of a certain strategy through different mechanisms may reinforce or change the existing organizational culture. What remained less known in theory and practice are the nature and mechanisms of organizational culture and strategy.

Regardless of large number of papers published with regard to this topic, this problem has been rarely empirically researched and reviewed so far. Therefore, the aim of this paper is, in addition to theoretical explanation of mechanisms through which organizational culture influences the business strategy, to set up the hypothesis about the influence of organizational culture on the strategy that will be empirically tested. The paper first defines organizational culture and presents its significance and content. The strategy and types of strategies that will be used in research are defined thereafter. Then follows a theoretical explanation of the manner the organizational culture influences the business strategy. The hypothesis about implications of certain types of organizational culture on business strategy in Montenegro is set at the end.

Source: Gordana Nikčević, http://business.expertjournals.com/ark:/16759/EJBM_206nikcevic2014pp37-46.pdf
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