Organizational Culture in Enterprises Applying the Humanistic and Economic Paradigm of Management

Abstract

The issue of organizational culture has recently become particularly important. One of the reasons for that is the increasing empowerment of employees, which requires changes in organizational culture. The need for change stems from the belief that management and culture should stand in harmony. The aim of this chapter is to examine the relationship between management paradigms and the orientations of organizational cultures. To accomplish that, a literature review was carried out on both paradigms of management (economic and humanistic) and groups of vales (terminal and instrumental), as well as on the types of organizational culture (task-oriented and human-oriented). The research problem focuses on determining the orientation of organizational culture and its dominant values through the lens of the management paradigm. Reflections on the relationship between management paradigm, values, and the orientation of organizational culture are theoretical, revisional, and conceptual. On the basis of the literature analyses, a model of the relationship between the paradigms applicable in the management and the type of organizational culture resulting from their application was created. In the model, the economic paradigm was assigned a task-oriented type of organizational culture, unlike the humanistic paradigm, which was assigned a human-oriented type of culture.

1. Introduction

In recent years, the internal work environment has become increasingly important. Researchers prove that nowadays, it is not the technological changes that are the most significant in the company, but rather a new approach to employees. This new approach means that an employee is perceived not as an economically understood capital, but primarily as a human being—each has his/hers unique potential and investments in him/her are unlimitedly developing. This humanistic approach assumes that man develops throughout all their life, and this is a crucial feature of human nature. Under the humanistic management, the employee shall strive to develop his/her personality, competences, and skills. There are no predictable limits to this development. The human-focused approach is more and more emphasized but still rarely applied. It contrasts the economic approach that prevails in the business world. Both approaches make different assumptions about human nature and refer to different values in management. The adopted values determine the shape of the organizational culture of the companies applying them. Thanks to organizational culture, the enterprise becomes a psychological environment with social dimensions.

The issue of organizational culture is not new in management literature, and the belief in its growing importance does not raise doubt among researchers. However, although the very concept is considered crucial in management sciences, it is also viewed as an ambiguous notion. Despite this ambiguity, it has been successfully adopted in management theory and is frequently used in interpreting the behavior of employees. Culture is attributed with many functions that can be performed in relation to both the internal and external environment of an organization. It is widely accepted that it is culture that decides whether a given organization is able not only to survive on the market but also to develop successfully. And although in every organization so much depends on it, there are still questions that have not found comprehensive answers in previous studies. One of such questions should examine the nature of the relationship between management system used in a given company and type of organizational culture. The present considerations attempt to fill this research gap. They fall within the broader context of the dependence of organizational culture on individual subsystems of organizations. The study of its relationship with those subsystems, for instance, with the management system, is possible thanks to recognizing organizational culture as part of the organizational system. In this article, the main research problem is to determine the linkage between the subsystem (management and its relevant paradigms) and the organizational culture orientation.

Investigating and explaining the relationship between the economic and humanistic paradigm of management and the orientation of organizational culture focused on tasks and social relations is the main axis of this research. In order to explain this dependence, reference was made to M. Rokeach’s Test of Values and the types of final and instrumental values contained therein, which were grouped into categories of interpersonal, intrapersonal, competence, and moral values. A model approach to these relationships was presented after prior analysis of the literature concerning both management paradigms and specific types of values and orientations of organizational cultures.

The article consists of four parts preceded by an introduction and crowned with conclusion. They are devoted to presenting the basic assumptions of the economic and humanistic management paradigm, explaining the concept of organizational culture by defining the place of values and the typology of values in organizational culture, presenting orientation in organizational culture, and linking orientation with management paradigms.

2. Humanistic and economic paradigms in management

The humanistic and economic paradigms coexist in contemporary management theory. They differ, however, with regard to their understanding of a human being, its needs, and motivation to take action [1, 2].

The economic paradigm assumes that business activity aims at profit maximization and interpersonal relations are perceived as short-term transactions [3, 4]. With disregard to moral considerations, the mechanism of utility and self-interest prevails [2, 5, 6]. Hence, a man is conceived mainly as a homo economicus—he or she is searching for the quickest gratification of undertaken actions, often acting opportunistically for the sake of own gain. Therefore, people are creatures seeking to increase the material usefulness of the broadly understood benefit. It is appropriate to favor individual benefit rather than the social, collective one [3]. Supporters of the economic orientation in management tend to assume that the main goal of an enterprise is profit maximization, and the primary and only duty of managers is to earn money for the shareholders [7].

However, in recent years, a humanistic paradigm has emerged and is now being more and more heard of [7, 8, 9]. The basic concept of this approach is the one where a man is conceived as a zoon politicon and has the right to unconditional respect for dignity [10]. Unlike the economic paradigm, the humanistic one assumes that human nature is not given once and forever and can be improved through continuous education [11, 12]. Humanistic management flourishes as an almost natural response to management models where the main search for financial returns damages the well-being of people, both inside and outside the company. It is an alternative proposal to the management of the companies where the well-being of people is prioritized above the achievement of merely financial goals [12].

What mostly distinguishes the two views is the ethical component. It remains a central category in the humanistic approach as it attributes the inalienable right to respect for one’s own dignity, independent of ethnicity, nationality, social status, or gender to every human being [8, 13]. Human is identified as a rational being who realizes his/her right to freedom in social interactions based on values.

Humanistic management creates and runs a business using three interrelated principles. All three have ethical connotations and require the use of:

1. Unconditional respect for the dignity of every human being that underpins all interpersonal relationships, including business relationships;

2. Ethical reflection, an integral part of all business decisions;

3. Seeking normative legitimacy for corporate actions that is critical to establishing corporate accountability [4].

Applied together, these three principles contribute to the development of humanism through economic activities that bring values to all mankind. The need to respect the human dignity as a goal of humanistic management results in economic and social impacts [2]. In this approach, management involves assuming responsibility for ethical issues in business decisions. Shifting from the one-dimensional goal of profit maximization to the multidimensional and value-based understanding of organizational success is a fundamental principle.

3. The concept of organizational culture

The term culture, which originally referred to the cultivation of fields, quickly gained a wider meaning. Since the times of Cicero, who wrote about the “cultivation of the human soul,” it has been used in a metaphorical sense, referring to other spheres. In the broadest sense, culture encompasses all that is the aftermath of collective activity in the behavior of human societies. If one refers culture to an organization, it is the result of a joint action of managers and subordinates, aimed at achieving the set objective. It determines the manner of its implementation, resulting from the values professed in a given organization. Culture is about shared views, ideologies, values, beliefs, expectations, and norms [14]. By studying the organizational culture of a company, one learns about the way of thinking of its employees and the principles and norms they follow. With this knowledge, it is possible to choose effective methods of influencing their behaviors [15].

The adaptation of cultural analysis to business practice resulted in creating an organizational cultures elements canon. It includes cultural values, basic assumptions, social and organizational norms, ways of communication, stories, narratives, myths, metaphors, rituals, symbols, customs, organizational heroes, taboos, cultural patterns, cultural artifacts, and subcultures [16, 17]. Organizational culture is therefore a set of values manifested, among others, in such areas of behavior as the way employees are treated. It is a set of norms on how managers relate to their subordinates and how these subordinates relate to their subordinates [18].

The concept of organizational culture is broad-based, ambiguous, and abstract. Being a complex phenomenon, it is uneasy to analyze. The difficulties are caused by many reasons, one of which seems to be utterly important. It is the fact that organizational culture is not isolated from other elements of the whole organizational system. Multidirectional relationships with other subsystems (strategy, structure, human resource management, etc.) make culture arduous to study. Many elements and relationships between them are invisible, often unconscious, and thus difficult to observe and measure [19]. Despite that, researchers persistently strive to get to know organizational culture better because of the functions it performs. It sets boundaries, provides employees with a sense of identity, and facilitates their engagement not only in their own interest but in the interest of the entire organization. It is a social binder that serves to maintain the integrity of the organization thanks to standards that define what employees should do and how they should do it and what values should guide their behaviors. It also serves as an explanatory and control mechanism, shaping the attitudes and behaviors of employees [20]. The recognition of organizational culture as part of the organizational system makes it possible to study its relationship with other subsystems, for example, with the management system. In this work, the research problem was the interdependence between one of the organizational subsystems, that is, management and organizational culture. This issue has not received much attention so far. The article is an attempt to fill the existing gap in this field.

3.1 The place of values in organizational culture

The study of values is recognized as an appropriate and necessary part of the research on culture. “If we shy away from considering values, we cease to deal with something that is most important both within individual cultures and in human culture seen as a whole (…). When we eliminate values, we are left with a barren list of cultural elements or events, and there is a constant temptation to revive it by introducing the values we have just discarded, or by camouflaging the introduction of values derived from our culture” [21]. Benedict in “Patterns of Culture” [22] argues that the difference between cultures is not determined by the presence or absence of important values, but by the extent to which opposing values cooperate, that is, whether they are more or less synergistic in nature. If Benedict only analyzed values without paying attention to the relationships between them, she would not be able to understand the subtleties and power of culture. Referring to her concept of synergy as transcending the dichotomy of values, Trompenaars and Hampden-Turner [23] formulated the definition of culture, assuming that it is a scheme by which a group habitually mediates in the case of differences between values—for example, between rules and exceptions, technology and people, conflict, and consensus. Cultures can learn to reconcile such values at ever higher levels, so learning the many exceptions leads to better rules. Such reconciliation brings health, wealth, and wisdom. On the other hand, cultures in which one pole of values dominates and combats the other are a source of stress and plunge into stagnation.

American anthropologists Kluckhon and Strodbeck [24] argue that each culture emphasizes a limited number of values (called cultural values) that concern solving basic human problems. According to the dictionary, “values are culturally conditioned, established and transmitted views on what is desirable, beneficial and valuable in a given social reality: these views enter into mutual relations according to a hierarchy, creating a system of values and norms within a specific culture” [25].

The determination of individual cultures’ typical values has long been used in the descriptions of cultures made by anthropologists or historians. In the most valuable characteristics or synthetic analyses presented by researchers such as Malinowski et al. an extraction of value determinations can be observed. “In this way, the description brings characteristics of the actual physiognomy of culture. Such a characteristic is important both in the internal aspect of its own coherence and non-contradiction, and in the external aspect – by formulating an implicit or explicit comparison with other described cultures” [21]. Values, like any other manifestation of culture, are part of nature and therefore fall within the field of science interest.

The concept of value derives from German words Wert and Wuerde, which mean honor, dignity, and seriousness. Values in an organization are a set of common features that determine the actions of people and thus constitute the criteria for making decisions. Some authors define values as the unique DNA of an organization that allows it to maintain its continuity and contributes to the consolidation of its market success. A value system assures that when making choices, everyone throughout the organization follows the same principles.

Numerous research of organizational culture emphasize that values are its key component. Ł. Sułkowski, who defines it as a “learned product of group experience based on values, norms, and resulting cultural patterns,” perceives values as the core element. This view is consistent with the method of defining adopted by Schein et al. [17].

Ł. Sułkowski states that organizational culture contains four elements, the first of which—the most central—includes both terminal and instrumental values. The second element, forming another cultural circle, includes patterns, norms, and cultural rules, as well as rituals, myths, symbols, and taboos. These elements of culture are directly related to personal and environmental values and influence organizational behaviors (third element), constituting their basis. By embracing the behaviors of employees—intentional (conscious) and habitual (unconscious)—they shape the structure of communication and power in the organization. The last element, artifacts, is related to external, material aspects, such as the layout of space [26]. They are secondary to values, norms, and basic cultural assumptions. The system of elements established by Ł. Sułkowski is presented in Figure 1.

Figure 1.

Axiological model of organizational culture. Source: Sułkowski, 2002.

Assuming that values in an organization are centrally located, the study of organizational culture consists in the search for these values. It is easiest to observe the “outer” layer of culture, including artifacts and behaviors [27]. By examining the external symptoms of culture, one can indirectly look for basic, internal elements. A study in search for different value configurations in organizations should include an analysis of all presented spheres leading to the identification of key values. Such a study—indirectly also through the study of “external” symptoms of culture—makes it achievable to reach the internal key elements. However, it is also possible to take a different path, omitting external elements, consisting in reaching the values directly. Such a straight way gives a greater chance of reaching all the values present in the organizational culture, allowing for its better recognition.

3.2 Typology of values in organizational culture

Often used in research and treated as a universal tool for the study of values (thus used to study the organizational culture) is the M. Rokeach Value Test. M. Rokeach is the creator of the well-known and widely used classifications dividing values into two types: terminal and instrumental values.¹ Terminal values (safety, material well-being, social maturity, perfection, love, environmental protection, passionate life, beauty, self-esteem, friendship, pleasure, family, equality, inner peace, life success, happiness, social recognition, freedom, salvation, health, and human life) relate to behavior; instrumental values (ambitious, pure, intellectual, loving, logical, independent, responsible, courageous, cheerful, helpful, obedient, hardworking, tolerant, creative, honest, kind, talented, faithful, forgiving, and balanced) deal with the extreme (terminal) states of existence. Terminal values embrace moral categories (e.g., honesty) and competence categories (e.g., intelligence). They can also be classified into one of two groups: intrapersonal values—focused on the individual (such as prosperity, exciting life, social recognition, dignity, freedom, and prosperous life) or interpersonal values—focused on society (such as mature love, friendship, wisdom, equality, and sense of accomplishment).

Instrumental values are described either as personal (the final way of describing oneself) or as social (the final way of describing society). Among personal values, there are moral values (e.g., honest, responsible, forgiving, and obedient) and competence values of cognitive and intellectual nature (e.g., ambitious, independent, courageous, intellectual, and gifted). Social values related to interpersonal relationships include such instrumental elements as helpful, tolerant, and courteous.

The usefulness of the M. Rokeach Value Test for management practice was confirmed by the research on professional groups [28, 29] and on ethnic and religious groups in the organization [17, 30] conducted in the 1980s, 1990s, and at the beginning of the twenty-first century.

4. Orientations of organizational cultures

Organizational culture has many theoretical models, typologies, and classifications. They are often cited in management literature and repeatedly used in empirical research undertaken by authors from many countries. Their most cited creators are E. Schein, G. Hofstede, F. Trompenaars and Ch. Hampden-Turner, and Ch. Handy. The issue of organizational culture orientations in terms of prevailing values has attracted less attention than models and classifications of cultures. However, a certain number of research do exist, the earliest of which was a study conducted at Ohio State University in the 1940s, when two fundamental values of behavioral traits were discovered: the structure of initiation (task orientation) and consideration (relationship orientation) [31]. Another research that yielded similar results is a University of Michigan study that presented two analogous types of behavioral traits: production-focused and worker-focused [32].

Also in later literature, it is noted that organizational culture, which is shaped by external and internal factors, can in practice adopt one of two orientations—task orientation or interpersonal relationships orientation. Each of them points to a different purpose and to those aspects of everyday life that are considered the most important in a given organization. Many analysts (despite the fact that not everyone uses the same terminology) consider these two orientations of organizational culture to be crucial [17, 33, 34].

Several researchers [19, 35, 36] deeply discussed task and relationship orientations and considered them to be the most important in organizational culture. They perceived them as valuable for studying as they bring forth the most general aspects in social groups in organizations. The two are also useful when investigating leadership, group processes, and conflict management [37]. Task orientation refers to the focus on the very work and goals of the organization. Relationship orientation refers to the human side and how interrelations are valued [34].

In literature, a diverse nomenclature is used in relation to the abovementioned orientations of organizational cultures. Harrison [36] proposes to use the term of task culture and person culture, arguing that the concept of task culture encompasses the goals of an organization that are relevant to all its activities and that members of the organization are expected to support. On the other hand, he refers to the concept of an organizational culture oriented at a person based on harmonious interpersonal relationships.

Cameron and Quinn [38] use different terms, namely, goal orientation and support orientation. The content of these terms remains coincident with the terms used by Schein [19] who distinguished task-oriented and relationship-oriented organizational culture. These two are also referred to by him as as aimed at “being” and “doing”.

Task orientation reflects the degree to which members of an organization are willing to pursue common goals. In this case, achieving the goal is the greatest value [36]. The most important thing is to perform the task, so the focus is put on the achievements of employees, rewards, and competing.

Relationship orientation emphasizes the importance of belonging to a group—employees are actively involved in solving work-related problems. In this case, the aim of an organization is primarily to meet the needs of employees [19]. What this orientation reflects is the concern for employees, emphasizing the importance of bonding, participation, and cooperation. At the core of any organizational culture lies the assumption about proper interpersonal relationships, thanks to which a group can feel safe and efficient at work [19].

5. Bridging cultural orientations with management paradigms

Based on the terminal/instrumental division of values, it is possible to link the dominant values with the organizational culture orientation. Among terminal values, the intrapersonal ones—focusing on the individual (e.g., prosperity, exciting life, social recognition, dignity, freedom, and prosperous life)—will foster the emergence of task orientation, while interpersonal values—focusing on society (e.g., mature love, friendship, wisdom, equality, and sense of accomplishment)—will create favorable conditions for the relational orientation. Among the instrumental values, the relational orientation will be favored by moral values (e.g., honest, responsible, forgiving, and obedient), while task orientation will be supported by competence values, especially cognitive and intellectual, having a more personal character (e.g., self-acceptance—ambitious, independent, courageous, intellectual, and talented).

In task-oriented organizational cultures, intrapersonal values belonging to the group of terminal values will dominate, and as for the group of instrumental values, competence, cognitive, and intellectual values will be the most prevailing.

In the interpersonal relations oriented organizational cultures, interpersonal (focusing on society) and moral values will dominate from the group of ultimate values.

Referring the two orientations to management paradigms, it can be assumed that when a humanistic paradigm is present in management, an organizational culture concentrated on human relations is created, while when an enterprise is managed in accordance with the economic paradigm, a task-oriented culture emerges. This conclusion results from a comparative analysis of the values dominant in the organizational culture with the assumptions underlying in the studied management paradigms. The relationship between the discussed paradigms and the orientation of organizational culture is shown in Figure 2.

Figure 2.

The model of dependence between management paradigms and organizational culture orientations. Source: Own elaboration.

The conclusions drawn from the analysis allow to state that it is, as a consequence, the management system based on the dominant paradigm (economic or humanistic) that determines the basic values in the organization and thus affects the organizational culture orientation. The presence of certain values results from the assumptions adopted in a given management paradigm. The management system based on the economic paradigm emphasizes the importance of terminal values belonging to the group of intrapersonal values and instrumental values representing the competence group. The management system referring to the humanistic paradigm, in contrast, considers interpersonal and instrumental values (among moral ones) as the most important.

6. Discussion and conclusion

The subject of the article is the organizational culture under the influence of the management paradigm used in the enterprise. It presents two orientations of organizational culture, one of which—orientation on interpersonal relations and the values associated with them—is determined by the application of the humanistic paradigm, while the other—orientation on tasks—is more closely related to the economic paradigm and its basic values.

Usually, organizations are designed to achieve certain goals, and therefore, the organizational task must be known and highly accepted by all organizational members. Relationship-oriented and task-oriented behaviors are not seen as mutually exclusive and can be combined [39]. It should be recognized that aside from duties, the mutual relations are crucial. Therefore, on the one hand, it is necessary to know how important the organizational task is for its members and, on the other hand, how important mutual relations are.

When considering learning organizations and their cultures, Schein concluded that task and relational orientation are equally important [19]. It should therefore be assumed that both orientations determine the organizational culture. Effectiveness of the organization depends on the willingness of its members to accept the goals and tasks, together with the sense of community. Schein believed that in a stable environment, it is safer to be task-oriented, while in a complex and dynamic environment, there is a greater need for a relationship orientation. This is due to the necessity of mutual trust and the need for efficient communication between employees. The communication is necessary to solve numerous problems arising in the changing environment [19].

In contrast, Harrison [36] recognizes that the strongest side of task-oriented organizational culture is coping in a changing environment, but he also believes that human-orientation is not inappropriate in such conditions. He highlights the growing pressure on organizations to create a relational culture. This pressure stems from the changing environment in which organizations operate in. What is required is a greater emphasis on interpersonal relationships involving both employees and customers, business partners, shareholders, and representatives of various interest groups [32].

In the light of the discussion on the benefits of alternative use of particular paradigms in specific market situations, a complementary approach should be considered appropriate. Economic management is recommended in engineering companies with a project structure in which deadlines, rules, and the hierarchy of performed activities are important. However, in service companies, operating on the basis of employees’ creativity and common values, better results in relation to teamwork and greater involvement of employees can be obtained by applying humanistic management. The alternative use of paradigms in management is also supported by cultural conditions affecting the orientation of the organizational culture of enterprises operating in a specific cultural and social environment.

Recently, as a result of organizational culture research on Vietnamese enterprises, a division of interpersonal orientation into two sub-orientations has appeared in literature [40]. The relationship orientation has been divided into status orientation and unity orientation. Status orientation reflects the distance between organizations/leaders and employees. It makes it easier to deal with bureaucratic systems that prevent local workers from competing fairly. Conversely, the unity orientation emphasizes the sense of community. Working in a group is perceived as efficient and harmless, even if it is inconsistent with the instructions received from superiors.

Increasingly numerous studies prove the cultural conditioning of organizational culture orientation. The orientation toward unity reflects the collectivist Confucian values [41]. This proves that organizational culture is influenced not only by management paradigms but also by other factors, such as the impact of cultural values. A need for further research into the determinants of organizational culture orientation is indicated. This need is also evidenced by the results of the comparative research on the value of organizational cultures of social and commercial enterprises in Poland operating in the dairy, trade, and insurance industries [42]. A comparative study of management reports relating to language artifacts constituting one of the elements of organizational culture confirmed the existence of differences in the orientation of the organizational culture of the surveyed enterprises. Organizational cultures of social enterprises turned out to be more oriented toward social relations than toward commercial enterprises, while organizational cultures of commercial enterprises were more often task-oriented. The study found that corporations often require employees to conform to predetermined values, while social enterprises build organizational culture to a large extent based on the values and needs of its members.

Values are a key component of organizational culture. The creation of a relevant value system in an organization contributes to improving the effects of its activities and consolidates its favorable image. In order to develop the appropriate organizational culture (fulfilling assigned functions), the knowledge of its relationship with other subsystems is needed. The article addressed the issue of the linkage of the organizational culture orientation with the adopted management paradigm. After analyzing the existing literature, the thesis was made that in humanistically managed enterprises, an organizational culture based on interpersonal relations is created, while in enterprises managed in accordance with the economic paradigm, a task-oriented culture prevails. This thesis was supported by referring to values and their model approach by M. Rokeach. The basis was the assumption that the management paradigm determines the values that consequently determine the orientation of the organizational culture. As a result of the undertaken analysis, a model of dependence of the organizational culture orientation on the management paradigm was created, indicating the final and instrumental values that generate and justify this dependence. This model can serve as a research framework in empirical research on the determinants of organizational cultures and value systems in organizations.

Conflict of interest

The author declares no conflict of interest.