Page 127 - MS Year in Review 2020

THE BOTTOM LINE

The Bottom Line is that an optimal or correct approach for defining corporate
culture is that core values must be based upon the five core value dimensions that

our empirical research has identified: (1) customer orientation, (2) employee
orientation, (3) standards of performance and accountability (4), innovation and/or
commitment to change and (5) company process orientation.

Our original empirical research has found that these five key dimensions of culture

which have a statistically significant relationship to (are shown to effect)
financial performance. 107

Although we have reviewed the literature of culture management, we have not
found any other set of variables that have been identified as empirically related to

(drivers of) financial performance. In addition, we have conducted factor analytic
studies which have supported the validity of the proposed five factor framework. 108

The Bottom Line is that companies ought to be using the five of areas of
corporate culture values which we have identified as the categories to

develop their core values. Failure to do so implies that one or more of the crucial
areas of culture which have been shown to impact financial performance might be
neglected. This, in turn, means that the management of corporate culture will be

suboptimal.

107 Eric Flamholtz and Yvonne Randle, Corporate Culture: The Ultimate Strategic Asset, Stanford
University Press, 2011
108 Eric Flamholtz, Culture and The Bottom line, European Management Journal, 2000: 268-275;
Eric Flamholtz and Rangapriya Narasimhan-Kanan, European Management Journal, 2005: 50-64.

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