Culture is given credit for some of the greatest business successes and blamed for some of the biggest failures. Policymakers often point to dysfunctional corporate culture in banking as a first-order contributor to the recent financial crisis.1 Several books identify culture as a key driver of Google's success.2
We try to answer these questions in multiple ways. First, we surveyed 1348 chief executives and financial officers (CEOs and CFOs, referred to interchangeably as executives or managers) across a wide range of North American public and private firms. The details underlying the survey evidence and an econometric investigation into the effects of culture on business outcomes are reported in an accompanying paper5 by the same four authors that supplement this paper; referred to henceforth as GGHR. Second, the survey contained several open-ended questions. We analyze the text of these questions to enhance our understanding of the survey respondents' views of the corporate culture. Third, we conducted in-depth interviews with business executives representing over 20% of the US equity market capitalization. The purpose of this paper is to discuss the interview evidence and the open-ended responses from the survey. We summarize the survey statistics to provide context for the interviews and open-ended responses.
Survey evidence offers a number of insights into corporate culture. Briefly, the survey shows that managers are largely united in believing that corporate culture is one of the most important forces behind value creation and the ultimate success or failure of a firm. The majority of executives consider corporate culture to be a top three value driver at their companies. Almost every officer believes that improving their corporate culture would increase their firm's value. The current CEO is seen as the most influential person responsible for setting the firm's current culture.
The interviews offer insight into how other firm policies and practices may reinforce or work against the effectiveness of the culture. Boards affect culture not via active management but primarily via CEO choice. The finance function may influence the culture, especially when it serves an internal governance role by acting as steward of integrity. Incentive compensation and hiring, firing, and promotion decisions also may modify the effectiveness of a firm's culture. Some schemes reinforce the culture by rewarding employees for living the values of the culture while other schemes that are not well aligned with the culture lead employees to ignore the cultural values.
Additional survey evidence reveals what decisions and actions are influenced by corporate culture. Managers believe that corporate culture has a substantial effect on the creativity at the firm, the productivity of employees, and hence, on firm value and on profitability. Cultural fit is seen as so important in an M&A deal that most managers would walk away from acquirin
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