Article | RAND Journal of Economics | winter 2010

On the Origin of Shared Beliefs (and Corporate Culture)

by Eric J. Van den Steen

Abstract

This article shows how corporate culture, in the sense of shared beliefs and values, originates (often unintentionally) through screening, self-sorting, and manager-directed joint learning. It shows that such culture will be stronger among more important employees and in older and more successful firms where employees make important decisions and the manager has strong beliefs. It further shows how a manager's beliefs influence culture, how culture persists despite turnover, and why the suggested link between culture and performance may be a case of inverse causality. It finally shows that, from an outsider's perspective, organizations may tend to over-invest in corporate culture.

Keywords: Organizational Culture; Learning; Values and Beliefs; Employees; Decisions; Power and Influence; Performance; Perspective;

Citation:

Van den Steen, Eric J. "On the Origin of Shared Beliefs (and Corporate Culture)." RAND Journal of Economics 41, no. 4 (winter 2010): 617–648.