Developing a Unique Corporate Culture:

How a Small Company Can Use that for Sustainable Growth

Bill Y. Chen and Grace Shen
Many small businesses were successful in its beginning stages, but failed when they were
in the expansion/fast growing stages. There are many possible factors/sources that may have
led these companies failures such as lacks of financial resources, clear and appropriate
business plan, marketing or lacks of effective management and strategic visions. One of
common problems of these failed companies is its lack of forming and developing an
appropriate corporate culture.
In this article, we will discuss why a small company needs to form and develop an
appropriate corporate culture to sustain its growth; what the main elements of the corporate
culture are; and how to form/develop such a culture.
I.

Why developing a corporate culture is so important for a small companys sustainable

growth

What does the corporate culture do for a company? It fulfills the purpose in influencing
communication, motivation and workplace identification as well as ability to learn and change. It
also functions as a kind of control, and its values and norms specify appropriate and inappropriate
behaviors that shape and influence the way its peoples behave. In Microsoft, for example, the
established support norms tell employees that they should be innovative and entrepreneurial, and they
should take risk of doing experiment even if there is a significant chance of failure. (Hill & Jones,
2007)
Some researchers considered culture as the collective programming of the human mind
(Hofstede 2001), thus an influencer of human system in a companys operation. In order for a
company to be successful, many of these human systems must work together in synergy to form
distinct collectively held beliefs that can positively contribute to its corporate culture to facilitate and
sustain growth/success. In a company, when: (1) the more in tuneless of the fundamental beliefs and
frame of mind of its people, the more they are in sync with changing external environment and
potential customers need; (2) the more efficiency of the internal structures and capabilities that are
shaped by the corporate culture, the more transformable of the products and services in matching
customers need and yielding better profit; (3) the more collectively held beliefs in investing profits in
developments that secure its future, the more effectiveness in sustainable advantages they possess.
This kind of fused synergy intensifies even more for small business because of its smallness, and will
elaborate further later in the article.
Corporate culture in part is created by founders/leaders; one of the most decisive functions of
leadership is the creation, implementation, and sometimes even the destruction of its culture. The
unique talent of leaders is their ability to understand the importance of the culture and develop that
culture appropriately. One distinguishing difference between leadership from management is that a
leader creates and changes culture, while a manger lives within that culture. In a way, leader guides
the embryonic and shakeout stages of business life cycle, and manager deals with growth and
maturity stages. Consequently, leaders behavior influences a complex group learning process that
creates the initial culture as well as when company survival is threatened because elements of its
culture have become maladapted, it is ultimately the function/responsibility of leadership to recognize
and change the situation. Thus managers can carry on with companys growth and maturity. In this
sense leadership and culture are conceptually intertwined.

There is a kind of right or wrong culture. The right kind of culture will energize and
influence how effective organizations are, and this is what leaders are trying to instill in their
company. Failure of developing the right kind of corporate culture leads to unsustainable of
profitability and competitiveness that results in business decline or ultimately failure.
A company with the right kind of culture significantly outperforms the others that do not have
these traits. The synapses of Harvard Business Schools eleven years research concluded that each
company can develop its own unique culture, and these cultures could either hurt or help a companys
performance. Stronger or not all culture can exert a powerful effect on individuals and on their
performance either positively or negatively, especially under hostile situation. Companies culture
that emphasizes on their customers, stockholders, employees and leadership impact significantly on
their long-term performance and thus produce a much larger margin than those are not - revenue was
4.1 times higher (682% vs. 166%); stock price was 12.2 time higher (901% vs. 74%); net income was
756% improvement vs. 1%; ROI was 15 times higher. (Kotter & Heskett, 1992)
Corporate culture will be a more determent factor in companys success or failure in the coming
decade due to the increasing globalization and intense competition. Performance-degrading cultures
have a negative financial impact for a number of reasons; and the most significant is the tendency to
inhibit companies from adopting needed strategic or tactical changes sufficiently and timely. In
current turbulence financial condition, the effects are more substantial and irreversible for such
degrading cultures.
Cultures that encourage inappropriate behavior and inhibit change to more appropriate strategies
tend to emerge slowly and quietly over a long period of many years even when companies are
performing well. But once these cultures exist they can be enormously difficult to change because
they are deep and invisible to those involved, and because they are often the existing power structure
in the company as well as for many other reasons. Change corporate culture is complex; it takes time
and right kinds of leadership. The leadership must be guided by a realistic vision of what kinds of
culture enhance performance a vision that is currently hard to find especially in small business
community.
Therefore, forming and developing an appropriate corporate culture is especially crucial for a
small companys sustainable growth because of limited human resources constraints. Each person
represents a significant portion of a companys infrastructure and its smooth integration represents a
vital component in carrying out changes while turbulence and rapid expansion are the norm. When
manager/employee joins a company each brings his/her diverse view/value/opinion; each may
requires to play multiple roles while serves more customers, more types of products, more intensity
and wider competitions; needs more innovations in process, product and servers, needs more advance
technologies to coexist or replace outdated systems; all of these requires a right kind of corporate
culture to support and to facilitate the change and integration. When a small company has its
appropriate corporate culture in place, even less adequately, can effectively benefit from the synergy
within the company and build change as well as learning with commonly accepted and practiced
values/norms quickly and continuously.
II.

What are the main elements deciding the corporate culture?

More often a corporate culture is emerged, evolved and shaped by the distinctiveness and
thoughts of the companys founders or the founding team as well as a multitude of environmental and
political appropriate factors than simply being created or invented from scratch. These multitude
factors play a role in shaping the corporate culture: the nature of the industry its level of maturity
and competition, current technologies and customer needs; the expectation of financial backers
quick return versus growing value over time; the economic situation the potential customers

purchasing power; and social/cultural setting influences the value of managers, potential employees
and society at large thus shapes the expectation toward the company.
The collectively held fundamental beliefs make up the foundation of the corporate culture. Those
beliefs will influence how the environmental factors are being perceived and interpreted by
companys leaders and subsequently wind up in developing strategies to gain from these opportunities
and challenges. The strategy is implemented through the human system with its correlated structure
and processes in attempt to achieve noticeable outcomes that can be incorporated into companys
future performance. To generate those successful performance outcomes, the company must find the
right fit in interpreting the relevant external factors and able to transforming them within and through
its existing culture framework effectively and continually.
Corporate culture, therefore, can be summed up as collectively held fundamental beliefs which
determine the companys general direction with respect to the relevant external environments and
specific distinctiveness of its leaders, managers and employees with purpose as the overarching goal,
evolved closely with its strategies and designs. Hence, four key elements frame the company culture
- its purpose (vision, mission), strategy, design (structures and processes) and leaders/members.
In addition, four constrains influence and drive the collectively held behavior that define the
elements of a culture: the way work is actually carried out in a company, the companys ability to
adapt and change, the companys interpersonal interactions and the companys learning mechanisms.
The major collectively held beliefs can be categorized as: observed behavioral promptness when
people interact; group norms; supported values; rules of the game (visible and invisible); climate;
embedded skills; habits of thinking, metal models and linguistic paradigms; and shared meanings. All
of these concepts relate to culture (Schein 1992). Shared meanings mean (1) it involves some level
of less conscious and visible but constancy; (2) it guide and incorporate various parts into a coherent
whole at a less conscious level. In order to achieve this coherent whole that are initially multicultural
based, one can envision how disagreement on this higher level of corporate cultures abstraction can
make group formation extremely difficult. Thus, the collectively held belief also represents
multilevel perspectives, they can either complement one another in a positive sense or work against
each other or cause disruptive outcome.
III.

Why forming /developing corporate appropriate culture is so important?

The Corporate culture signifies the invisible influence of human system within an organization.
Those fundamentals shape, guide and organize the collective thinking actions, attitudes and related
opinions within a company. Therefore, it is the key driver of companys daily operations.
It reduces complexity enables routine and quick response to day-to-day activities by utilizing
commonly held beliefs as a perception filter in sorting relevant from not relevant, and by employing
collective thought patterns in determining situation specific guidelines that bring in actions. Without
an appropriate method in reducing complexity, meaningful engagement is less likely to happen and
within an acceptable timeframe, resulting in irreversible negative effect for small businesses when
product/service differentiation is expected to be the norm.
It coordinates actions when basic beliefs are held collectively they allow internal integration
and platform for synchronized action. The platform is a necessary frame of mind for workers to
communicate meaningfully among cross functional and hierarchical setting within the company.
This common rule for encoding, decoding or interpreting information, in achieving mutual
understanding becomes even more apparent when individuals with differently cultures work together.
The term system, for example, can means very differently for managers, hardware engineers,
software engineers and human resources background, and thus frame their decisions and acting out

without collectively held frame of reference could cause catastrophe outcome especially for small
businesses.
It offers a source of meaning the preciseness of the commonly held beliefs that play out in
concrete terms will inspire the degree that employees draw meanings from their work and thus the
degree they associate with their immediate colleagues, their department and eventually the company
as a whole. Why does their company exist? What is its objective? What sets their company apart
from others? What makes their company really special? Why does it make sense to put effort into
this company or a job? Depending on the tangible implication of companys frame of mind,
corporate culture holds the key to its purpose, and that influence employees association with its
purpose whether strongly, moderately, minimally or none so ever. Hence, the corporate culture
directly affects the motivation of employees and managers and their willingness to put effort into the
company, and this is one of the critical competitive components of small businesses.
It provides continuity the thought, behavior and learning history are cuddled of companys
collective memory. They stem from problems being solved successfully in companys dealings. The
collective learning history acts as support for categorizing norms and guideline for acceptable actions.
This kind of experience encourages a sense of knowing, know-how, ease and continuity, and can be
drawn from when problem arises. The successful experience is shared among participated members
and passed on to new members and unsuccessful one is dodged. Thus, affect small businesses
learning and adoptability that are the key elements for continuous growth.
These key functions induce communication, enthusiasm and identification in the workplace and
the ability to learn and adapt in a company. Sequentially, these will improve effectiveness of small
businesses and eventually sustainability.
The way small business leaders design its company structure also affects the company culture,
such as whether authority is delegated or held by the founder or tasks are divided or held by an
individual, will develop cultural norms and values accordingly within the company. It is important
for leaders to be aware of this implication when implementing their strategies, because once
companys culture is in place, it is difficult to influence change if inappropriate. Nokias original
emphasis on innovation was no longer sufficient to give the company a competitive advantage; its
new emphasis on responsiveness to customers to succeed in cell phone business has also changed its
current cultural values and norms.
IV.

How to develop its unique corporate culture?

A small company can develop its corporate culture gradually and consistently from start-up phase
or intentionally tackle it in reaction to a problem or crisis. The deliberately assessment of the existing
culture may lead the company to confirm its culture and maintain it with routine inspection,
modification and then continuous development. When existing culture is not confirmed, the company
may purposely adjusts or refocuses certain aspects of its corporate cultures basic beliefs, values and
behaviors that become diffused, eroded or even somewhat forgotten over time.
Once the corporate culture along with its primary beliefs and values as well as collective behavior
patterns has been confirmed, refocused or given a new focus and a period of steady evolutionary
cultural development will follow. In this stage, there are two iterative courses of action. At first,
examines the existing corporate culture regularly, on the alert for any unplanned fundamental values
deviation. Also routinely scans relevant environment to recognize changes in the market or society
and technological advancement. Starts on necessary measure if needed be, otherwise, keep on
companys course but mindful to preserve and cultivate the existing corporate culture and review it
regularly.
The phases of corporate culture development:

a. Motivation in determining and establishing basic beliefs of existing culture:

Developing a corporate culture starts from the companys inception. Usually the founder or
founding team emphasizes on specific purpose or identity. Focus on ways of working together in
achieving intended results, such as: Who are we as a company? What does our company stand
for? What and how do we want to accomplish? All of these provide a common direction that glue
members together in selecting from an array of beliefs and values that anchoring on those deemed
important to form the basic beliefs. From the commonly held beliefs, corporate culture starts to
take shape, and gets implemented in an interconnected ways.
A crisis situation can often trigger a serious reworking of some components of a corporate
culture or it can confirm and reinforce the existing culture and beliefs, values and behaviors. It is
easier for small business to take the crisis opportunity to revise beliefs and values, the new focus
and interpretation can change its practices to endure in areas that are essential to the companys
development. When a small business consciously and seriously evaluates its environment
regularly and adjusts gradually, radical changes in its corporate culture will become unnecessary.
When evaluating a critical crisis being triggered either internally or externally can
fundamentally change the way problem is solved in a company--how employees and supervisors
interact and how they deal with difficult situations. This crisis-management approach will result
in a consensus-based decision-making process that is an essential cornerstone in forming a culture
for small businesses. It will also lead to a feeling of solidarity expressed phrase we are one
family, an anticipative approach which is important in companys continuous learning. This
kind of crisis response skill is indispensable for small business to survive in an industry that is
vulnerable to external crisis, and also a capability that is hard to replicate by competitors. Crises
and difficult situation that infringe on a companys fundamental values can actually be used to
strengthen the companys culture that had evolved from the crisis and revive awareness and
appreciation of its core strengths, for example, the ability to innovate and self-organize
employees toward common goals.
b. Corporate cultures development and implementation process:
With the desired culture in mind, a company examines its existing structures and processes,
modifies them if needed. For example, use management-by-objects approaches to incorporate
companys values into goal agreements that are in line with business priorities to pursue.
Develop training sessions or utilize socializing events to convey and discuss values important
to the company as one of the ways in implementing its corporate culture.
After company has consciously charted the course for a corporate culture does not mean the
job is done. To ensure that the culture is lived as planned and does not drift off its course
unnoticed or faded into nothingness, it needs to be evaluated regularly
c. Examining living corporate culture regularly
At least two systematically processes from different perspectives need to be in place to check on
the company as a whole and its relevant environment, especially the exterior one.
Within the company, how well values and priorities are implemented and absorbed into the
daily routine: such as, review jointly established goals to ensure emphasis remain on customers,
quality and innovation as well as on improvement of opportunities; and evaluate relationship
among workers to take in the general mood and concerns directly. The monitor of key external
environment gives the small company the opportunities to research further if the changes affect
the existing culture, such as site visits of key customers to uncover deficiencies and come up with
appropriate response quickly.

The consistent checking, keeps the dialogues going, jointly identifying challenges and
opportunities for improvement that eventually will lead to a continuous process of evolutionary
culture development that matters the most to a small company and to avoid major surprises down
the road.
d. Maintain, adjust and examine corporate cultures cycle continuously:
The constantly evaluating the cycle of the corporate culture can create a learning organization that
has the ability to renew itself as one of the small companys core competencies. This is especially
apparent in companys internal crisis situation that may lead to quick changes in the priorities and
values anchored in its corporate culture. It can strengthen the existing culture while the
companys acknowledging relevant environment is changed. It can keep a close eye on the
changes while assess its meanings for the company.
The companys introspection and relevant environment information, such as keeping in touch
with their customers and keeping constant watch on their competition, is critical to decide
whether and how the company and its culture needs to be changed. For example, adopt a system,
such as touching base with the head of sales to discuss competitors and their strategic
developments, along with the implications for the company regularly will help the company to
adjust its culture and strategies.
When a company engages in ongoing dialogues across functions and bridges various levels
within the company, it can generate a better understanding on both sides and improve
cooperation. This kind of diverse feedback systems can reveal unwelcome development early on,
so allow quick reactions to correct the course.
The attention to internal influences can turn these opportunities to good advantage with
culture development measures that become part of goal agreements for those responsible in
implementing them. With these types of measures in place, a company can evaluate its
effectiveness in goal reviews and subsequently lead to new measures. This self-contained cycle
of culture development can be anchored in the companys culture as one of the key pillars. With
this process, the companys leaders can act as a culturally aware team and contribute to
cultivating, maintaining and modifying corporate cultures priorities and values as they evolve.
V.

What are the pitfalls in developing corporate culture?

Although reducing complexity is important for small company but too much relying on developed
routines can lead to stagnancy and not able to recognize opportunities or challenges when a new
situation arises and therefore hinders the companys ability to adapt. Formerly successful practices
may slowly go off course unnoticed and eventually lead to the companys failure. Small companies
can especially vulnerable when dominance by a or few vocal members who stubbornly refuse to
accept changes, thus unable to adjust to changed environment that may eventually lead to the
companys failure. We can find many of these examples in the real business world.
The emergence of subcultures is given even in small companies and not necessary a threat, as
long as there are appropriate measures in place to ensure managers/workers know and live to their
core priorities and values and do not isolate themselves from the rest of the company entirely.
It is especially critical for small company in selecting new members that fit to its culture; if it
becomes apparent that the new members action does not reflect desired cultural values, after a period
of time, it is better off to part with the person, despite the superiority of certain qualities of the person
has, than to compromise the companys corporate culture.
Culture and leadership are two sides of the same coin, in that leader (founder) first create a
culture when they create the company; this is truer for small businesses. Once the culture exists, it

determines the criteria for leadership and thus determines who will or will not be a leader. But if a
culture becomes dysfunctional, it is the unique function of leadership to perceive the functional and
dysfunctional elements of the existing culture and to manage cultural evolution and change in such a
way that the group can survive in a changing environment. But if the leaders/founders do not become
conscious of the culture in which they are embedded, the culture will manage them. Thus cultural
understanding is desirable for all of us, but it is essential to leaders/founders if they are to lead.
A culture is multidimensional and multifaceted phenomenon which ultimately reflects the
companys effort to cope and learn and remain in this on-going process. Based on founders own
culture history and personality, the original idea and notion and how to fulfill the idea were formed.
Founders typically have strong assumptions about the role the companies play in the sociality. They
are quite comfortable in imposing their view on employees as the fledgling the company copes, and
often enough they will cling on to them until such time they become unworkable or the company fails
or breaks up.
As the company grows, some of the founders have to learn somewhat painfully that they did not
send as clear and consistent signals as they thought; and they must be able to learn from their own
experience and have to modify or withdraw from their own assumptions in some areas gradually. But
some of the founders did not perceive their own conflicts and inconsistencies and hence could not
understand why some of their best young right-hand person failed to respond to their competitive
incentives and even left the company. They can be perplexed, angry and blaming the young righthand person while still holding onto their own assumptions and conflicts. Their failure to see some of
the unsettling political climate within the company the absence of stock options, the arbitrary
rewarding of family members had made the young right-hand persons career progress too uncertain,
that could lead to their companys failure.
We can find many cases in the real business world that a culture does not survive if the key culture
carriers depart and if the majority of the company members are experiencing some degree of conflict
because of a mixed message that stems from the leaders/founders during the growth period. Even
with a strong culture, the founders own conflicts become embedded in the culture, creating conflict
and ultimately lack of stability.
Finally, a woodcutters story from Tao seems relevant to corporate culture.
The woodcutter must split wood, even it is cold and snowy, otherwise his family will not
stay warm, and those who depend upon him will not survive. He worked hard to store wood
prior to the first cold so he would have the luxury for merely splitting kindling now, because
he was industries in the previous one he labors in concert with the season.
He strikes the wood with the grain, and let the axe fall with its own weight. Trying to
chop across the grain, and adding strength to the swing of the axe are the effects with no or
minimal gain. Like the woodcutter, we can all benefit from working according to seasonal
circumstances. Whether it is the time or the method, true labors are half initiative and half
knowing how to let things proceed on their own.
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