The Need For Group Psychology In Business Commerce Essay

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Organizational Culture seeks to analyze how a person/group psychology, attitudes, beliefs and values, and reactions are reflected by the organization they are in. In order to better research this area of organizational behavior, OB researchers have utilized frameworks in order to classify organizational culture. "Competing Values Framework" (CVF) is the most widely used approach for classifying organizational culture. CVF is the most commonly used framework, as it 'provides a practical way for managers to understand, measure, and change organizational culture' (Kinicki & Kreitner, 2009).

CVF, shows that organizational effectiveness differs along two axes; highlighting the different focuses of each company (see Diagram 1.1). By combining these two axes, it creates the four types of organizational cultures (i.e. Clan, Adhocracy, Market, and Hierarchy Cultures) that many are familiar with today; segregating them according to their different core values and different sets of criteria for analyzing its organizational effectiveness.

Diagram 1.1 Competing Values Framework: Types of Organizational Behavior


A clan culture is one that has a high internal focus; meaning that its main focus is on its employees. It also concentrates less on stability and control, and more on flexibility. Clan cultures believe that the secret to being successful is to develop human resources, working as teams and being concerned for the people working for you.

An example of a company with such a culture is DHL International. In companies like DHL International, employees are driven not by strict rules, but by shared visions, goals and outcomes. Obviously, rules still exist, but these are usually more informal, and are communicated between the employees through the socialization process. Another unique feature of clan culture is that the relationships among the workers are more personal and family-like, hence the term "clan". Mutual trust and loyalty are what holds such organizations together. In organizations with a clan culture, employees may also have the freedom and power to make certain decisions such as firing or hiring people. Participation is also encouraged, and so employees may even be involved in the decision-making processes of the organization. They are also persuaded to work as teams. The leaders in this culture are also more facilitative and supportive, and so less experienced or newer employees are more likely to receive mentoring and nurturing from them. In a clan culture, the main aim is to achieve high morale of the workers, attain their commitment, and to develop their human resources.


Apple, Google and Pixar are examples of organizations with simple or 'no' structure; this organizational culture is classed as "Adhocracy". This culture highly focuses externally and values flexibility to enhance working attitude like innovation, creativity, thinking out of the box, and adapting to constant change especially in new-start-up companies and mature industries that is undergoing constant change, growth and new development.

Google is known as largest search engine (49.2%) on the web in year 2000 with reliable and instant search results made it possible with the help of fostering adhocracy culture. Employees of Google are constantly motivated to be innovative, having positive mindset towards changes and growth in the same time providing cutting edge outputs. With this, Google from only providing search engine services to provide services like Gmail, Image search, Google News, You Tube, Google Maps, AdSense and etc. Google allows its' employees to take initiative and experiment with new and crazy ideas. This leads to more innovative and creative applications like Google Transliteration, Browser Size, Google Goggles, Google Chrome, and hundreds of other different applications to further enhance one's 'internet' experience. This culture is definitely suitable for innovative and cutting edge output companies like Google to maintain its ranking in the industry.


Based on CVF, a corporation which practices a market culture is based on an external focus with its locus on stability and control. Companies with a market culture focuses on external elements; i.e. its' customers and shareholders, as a result tend to create a competitive environment, and cultivate aspiration to deliver results and accomplish goals. Thus, market-driven companies develop values and standards which have strong leanings towards customer-focus.

Intel, the world's largest semiconductor chip manufacture, is a company with a market culture. Intel's mission is to do a great job to satisfy their customers, employees and stockholders by being the preeminent supplier to the worldwide digital economy. "Intel is putting the people and resources in place to sharpen our focus on the development of platforms that meet the demands of our customers and provide innovative and exciting new technologies for the marketplace," said Paul Otellini, Intel president and CEO. On order to fulfill this promise, Intel uses the search engine marketing (SEM) system which allows the company is able to identity and track meaningful feedback from customers. In addition, Intel salespeople are encouraged to spend more time out of the office, talking to customers and designers and taking their ideas and concerns back to their workplace.


While organization with mechanistic cultures such as market and hierarchy both rely on values of control and stability, hierarchical cultures are postulated to excel in attaining greatest internal coordination (Leisen, Lillly & Winsor, 2002). Organizations dominated by the hierarchy culture concentrate on maintaining manufacturing lines or services which are not only efficient, but also reliable, fast, and smooth-flowing (Twati & Gammack, 2006). To achieve this internal efficiency, uniformity, integration, and evaluation, hierarchical corporations focus on the execution of regulations and motivate staffs through order, security, rules, and regulations (Denison & Spreitzer).

Dell Inc., the world's largest computer maker is one such company with a hierarchy culture, fitting into the competing values framework's lower left quadrant. Five years ago, things were looking pretty grave when Dell was going through a particularly tough crisis with a persistent decelerating sales growth (Kraeuter, 2005). In its attempt to break out of the slump, Dell emphasized on keeping costs low and maximizing production efficiency. It differentiates itself from its competitors by consistently churning out high-quality hardware and providing comprehensive after sales support, all at a markedly bargain price (Robbins, 2001).


To quote Dynamic Foundations, LLC, website:

"Organizational culture has been described as " people behave when no one is looking...We believe that organizations will ultimately get only as far as their organizational cultures take them."

By cultivating successful organizational culture(s), our society is able to define and understand how some people are better suited to function in the environment they are in; based on the organizational culture they are immersed in daily (i.e. Clan, Adhocracy, Market, and Hierarchy).