The relationship between organisational culture and strategy formulation in South African firms

Abstract

The main objective of this study was to investigate the relationship between organisational culture and strategy formulation in South African organisations. Contemporary organisations are faced with new challenges and changes on the political, economic, social and technological front. In order to cope with these changes, organisations need to devise strategies. The question was asked whether the culture of organisations is conducive to the formulation of strategies. In order to achieve the objectives of this study, a literature study and empirical research was conducted. Although the literature available on the individual concepts of organisational culture and strategy formulation is extensive, the literature tends to focus on only one of the two concepts, and the relationship between the two concepts is generally ignored. In this study the two individual concepts were examined and a comprehensive interaction analysis of culture and strategy was done. A model was developed to depict the main elements of organisational culture. Managers increasingly realise the importance of organisational culture as a component of the strategic management process. However, confusion often exists on what organisational culture is. A strategic management model indicated the central role organisational culture should play in the strategic management process. A diagnosis has to be made of which aspects of the present culture are strategy supportive and which are not. It is important that organisations ensure there is a fit between culture and strategy. The relationship between four different culture types (power, role, task and person) in an organisation was investigated, as was the manner in which those organisations formulated strategies. This investigation was part of the empirical research. The purpose was to investigate the relationship between organisational culture and strategy formulation, and not to investigate the elements (manifestation) of an organisation's culture. Descriptive statistics and advanced statistical methods were used to assess this relationship empirically. The results showed significant differences between organisational culture and the manner in which organisations formulated strategies. These differences occurred especially in those organisations having a task, role and power culture. It was concluded that organisations should place increased emphasis on aligning culture and strategy. Attempts should be made to include the culture of an organisation when formulating strategies. Each organisation needs to develop a keen awareness of its own culture and purposefully link all changes and strategies to its culture. The selection of strategies cannot only be based on financial and strategic implications, while the cultural aspects are being ignored. This can be a major determinant of corporate performance and the difference between a strategy's success or failure.