Organizational dynamics: culture, design, and performance

Abstract

Abstract We examine the two-way interplay between organizational cultures and organizational design, where culture is modeled as the prevailing social identities among workplace groups that can affect project choices. In a setting where cultural dynamics depend on the expected relative payoffs of holding different identities, we investigate how tribalism and charismatic leadership shape organizational dynamics and steady-state cultures. We show how a strong culture can be a virtue when it permits greater delegated authority, but a vice when the culture is poorly aligned with organizational objectives. We apply our analysis to concrete debates about the interaction of design, performance, and culture (JEL L23, M14).