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Nama : Oscar Sindi Nova NIM : 09408144037 Judul :Influence of Leadership style, Compensation and Organizational culture on Job statisfaction. Introduction Phenomena Problems 1. Leadership style In reviewing the literature on project success factors, we found it largely ignores the project manager, and his or her leadership style and competence. This is in direct contrast to the general management literature, which considers effective leadership a success factor in organizations, and has shown that an appropriate leadership style can lead to better performance.General Management Literature on Leadership Styles and Competence Throughout history, people have tried to say what makes a good leader. Some of the most often quoted historical authors include Plato, Machiavelli, Hobbes, and Locke from the West (Collinson, 1998), and Confucius and Xunxi from the East (Collinson, Plan, & Wilkinson, 2000). As early as 500 B.C., Confucius listed the virtues (de) of effective leaders. Four were key to his beliefs: • Jen (love) • Li (proper conduct) • Xiao (piety) • Zhang rong (the doctrine of the mean) 2. Compensation The level of compensation and the extent of pay-for- performance for chiefexecutiveo¦cers (CEOs) has been a topic of considerable controversy in the academic and business

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Page 1: Web viewAs early as 500 B.C., Confucius listed the virtues (de) of effective leaders. Four were key to his beliefs: • Jen (love) • Li (proper conduct) • Xiao (piety)

Nama : Oscar Sindi Nova

NIM : 09408144037

Judul :Influence of Leadership style, Compensation and Organizational culture on Job statisfaction.

Introduction

Phenomena

Problems

1. Leadership style

In reviewing the literature on project success factors, we found it largely ignores the project manager, and his or her leadership style and competence. This is in direct contrast to the general management literature, which considers effective leadership a success factor in organizations, and has shown that an appropriate leadership style can lead to better performance.General Management Literature on Leadership Styles and Competence Throughout history, people have tried to say what makes a good leader. Some of the most often quoted historical authors include Plato, Machiavelli, Hobbes, and Locke from the West (Collinson, 1998), and Confucius and Xunxi from the East (Collinson, Plan, & Wilkinson, 2000). As early as 500 B.C., Confucius listed the virtues (de) of effective leaders. Four were key to his beliefs:• Jen (love)• Li (proper conduct)• Xiao (piety)• Zhang rong (the doctrine of the mean)

2. CompensationThe level of compensation and the extent of pay-for-performance for chiefexecutiveo¦cers

(CEOs) has been a topic of considerable controversy in the academic and business communities. Critics of CEO compensation practices argue that because the board of directors is inßuenced by the CEO, the board does not structure the CEOÕs compensation package to maximize value for outside shareholders. The purpose of this paper is to examine whether there is an association between the level of CEO compensation and the quality of ÞrmsÕcorporate governance, and whether Þrms with weaker governance structures have poorer future performance.

Page 2: Web viewAs early as 500 B.C., Confucius listed the virtues (de) of effective leaders. Four were key to his beliefs: • Jen (love) • Li (proper conduct) • Xiao (piety)

3. Organizational CultureSince the early eighties, the construct of organizational culture has attracted much

attention fromboth academics and practitioners. Evidence has been reported that culture dimensions varysigni®cantly across organizations, be they captured by behavioral norms and expectations(e.g. Cooke and Rousseau, 1988), perceived practices (e.g. Hofstede, Neuijen, Ohayv andSanders, 1990), or organizational values (e.g. Chatman and Jehn, 1994; O'Reilly, Chatman andCaldwell, 1991; Sheridan, 1992). Research also provides evidence for the role of organizationalculture in predicting organizational e€ectiveness (e.g. Calori and Sarnin, 1991; Denison, 1984,1990) and individual responses (e.g. Sheridan, 1992).

4. Job StatisfactionJob satisfaction is the degree to which people like their jobs (Rocca and

Kostanski, 2001). A person with ahigh level of job satisfaction holds positive attitudes towards the job, while a person who is dissatisfied with his or her job holds negative attitudes about the job (Robbins et aI. 1994). Busch, Fallan, and Pettersen (1998) define job satisfaction as the positive emotional response to a job situation resulting from attaining what the employee wants and values from the job (Locke, 1976, Locke et al., 1983, and Olsen, (1993).

Literatur Review

Description

Theoretical and empirical finding

1. Leadership styleA leadership style is a leader's style of providing direction, implementing plans, and motivating people.There are many different leadership styles that can be exhibited by leaders in the political, business or other fields.

Main Schools of Leadership Theory

Over the last seventy years, there have been six main schools of leadership theory (Dulewicz& Higgs, 2003; Handy, 1982; Partington, 2003):1. The trait school2. The behavioral or style school3. The contingency school4. The visionary or charismatic school5. The emotional intelligence school6. The competency school.

Page 3: Web viewAs early as 500 B.C., Confucius listed the virtues (de) of effective leaders. Four were key to his beliefs: • Jen (love) • Li (proper conduct) • Xiao (piety)

Path Goal Theory

One contingency theory that has proven popular is path-goal theory (House, 1971). The idea is the leader must help the team find the path to their goals and help them in that process. Path-goal theory identifies four leadership behaviors:• Directive leaders• Supportive leaders• Participative leaders• Achievement-oriented leaders.

These are similar to the four styles of path-goal theory (House, 1971) and the two styles from the visionary school (Bass, 1990). So, although these are offered as styles, they are related to the styles of the competence and visionary schools more than those of the style schools.

Kinds of leadership style : Authoritarian

The authoritarian leadership style or autocratic leader keeps strict, close control over followers by keeping close regulation of policy's and procedures given to followers.

Paternalistic LeadershipThe way a Paternalistic leader works is by acting as a father figure by taking care of their subordinates as a parent would. In this style of leadership the leader supplies complete concern for his followers or workers. In return he receives the complete trust and loyalty of his people.

DemocraticThe democratic leadership style consists of the leader sharing the decision-makingabilities with group members by promoting the interests of the group members and by practicing social equality.

Laissez-faireThe laissez-faire leadership style is where all the rights and power to make decisions is fully given to the worker. This was first described by Lewin, Lippitt, and White in 1938, along with the autocratic leadership and the democratic leadership styles.

Transactional

The transactionalstyle of leadership was first described by Max Weber in 1947 and then later described by Bernard Bass in 1981. Mainly used by management, transactional

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leaders focus their leadership on motivating followers through a system of rewards and punishments.

Transformational

A transformational leader is a type of person in which the leader is not limited by his or her followers' perception. The main objective is to work to change or transform his or her followers' needs and redirect their thinking.

Indication of the effect Leadership Style on job Statisfaction

(Bass (1985) defined transformational leadership with respect to how followers perceive and act toward the leader. For example, followers are seen striving to emulate their transformational leaders; they place a great deal of trust in their leader’s judgement, as well as mission; they support the leader’s values and typically adopt them, and frequently form strong emotional ties to the leader. Further, it might be suggested that transformational leaders develop within their subordinates the attributes of charisma, intellectual stimulation and individual consideration. These personal characteristics directly support the dimensions of service quality (Parasuraman et al., 1988).The fact that it was particularly significant for the checkout personnelmight suggest that its importance might increase as jobs become more routine and/or organizations fail to provide the stimulation contextually.

H1 : Leadership Style effect on Job Statisfaction positively.

2. Compensation

compensation (also executive pay), is financial compensation received by an officer of a firm. It is typically a mixture of salary, bonuses, shares of and/or call options on the company stock, benefits, and perquisites, ideally configured to take into account government regulations, tax law, the desires of the organization and the executive, and rewards for performance.

prior theory and empirical work

Consistent with prior theory and empirical work (Rosen, 1982 and Smith and Watts, 1992), we expect that larger Þrms with greater growth opportunities and more complex operations will demand higher-quality managers with higher equilibrium wages. We proxy for Þrmsize and complexity with Þrm sales. We proxy for the ÞrmÕs investment opportunity set with the year-end marketto- book ratio averaged over the previous Þve years. Finally, we include fourteen industry-indicator variables as controls for industry di¤erences in the demandfor managerial talent.

Types of compensationThere are six basic tools of compensation or remuneration:

salary

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short-term incentives (STIs), sometimes known as bonuses long-term incentive plans (LTIP) employee benefits paid expenses (perquisites) insurance

In a modern corporation, theCEO and other top executives are often paid salary plus short-term incentives or bonuses. This combination is referred to as Total Cash Compensation (TCC). Short-term incentives usually are formula-driven and have some performance criteria attached depending on the role of the executive. For example, the Sales Director's performance related bonus may be based on incremental revenue growth turnover; a CEO's could be based on incremental profitability and revenue growth. Bonuses are after-the-fact (not formula driven) and often discretionary. Executives may also be compensated with a mixture of cash and shares of the company which are almost always subject to vesting restrictions (a long-term incentive). To be considered a long-term incentive the measurement period must be in excess of one year (3–5 years is common). The vesting term refers to the period of time before the recipient has the right to transfer shares and realize value. Vesting can be based on time, performance or both. For example a CEO might get 1 million in cash, and 1 million in company shares (and share buy options used). Vesting can occur in two ways: "cliff vesting" (vesting occurring on one date), and "graded vesting" (which occurs over a period of time) and which maybe "uniform" (e.g., 20% of the options vest each year for 5 years) or "non-uniform" (e.g., 20%, 30% and 50% of the options vest each year for the next three years). Other components of an executive compensation package may include such perks as generous retirement plans, health insurance, a chauffeured limousine, an executive jet, and interest-free loans for the purchase of housing.

Indication of the effect compensation on job statisfaction

One study specifically examined the relationshipbetween compensation satisfaction and job characteristics by comparing public and private leisure service professionals (Yen &McKinnery, 1992). In that study they found that private managers were more satisfied with their pay raises, structure and administration than public managers. They further found positive relationships between perceived job characteristics and compensation satisfaction. Compensation systems have undergone extensive changes with benefits representing a larger proportion of total pay than 20 years ago (Williams, et al.2008). However, a literature review does not reveal any recent study that specifically examined.compensation satisfaction and job characteristics in the commercial leisure profession.

H2: Compensation effect on job satisfaction positively

3. Organizational culture

Organizational culture is the behavior of humans who are part of an organization and the meanings that the people attach to their actions. Culture includes the organization values, visions, norms, working language, systems, symbols, beliefs and habits. It is also the pattern of such collective behaviors and assumptions that are taught to new organizational members as a way of perceiving, and even thinking and feeling.

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Organizational culture affects the way people and groups interact with each other, with clients, and with stakeholders.

Ravasi and Schultz (2006) state that organizational culture is a set of shared mental assumptions that guide interpretation and action in organizations by defining appropriate behavior for various situations. At the same time although a company may have their "own unique culture", in larger organizations, there is a diverse and sometimes conflicting cultures that co-exist due to different characteristics of the management team. The organizational culture may also have negative and positive aspects.

Schein (2009), Deal & Kennedy (2000), Kotter (1992) and many others state that organizations often have very differing cultures as well as subcultures.

Organizational culture refers to culture in any type of organizationbe it school, university, not-for-profit groups, government agencies or business entities. In business, terms such as corporate culture and company culture are sometimes used to refer to a similar concept,.

Although the new idea that the term became known in businesses in the late 80s and early 90s is widespread, in fact corporate culture was already used by managers and addressed in sociology, cultural studies and organizational theory in the beginning of the 80s.

The idea about the culture and overall environment and characteristics of organization, in fact, was first and similarly approached with the notion of organizational climate in the 60s and 70s, and the terms now are somewhat overlapping.

Tribal cultureDavid Logan and coauthors have proposed in their book Tribal Leadership that organizational cultures change in stages, based on an analysis of human groups and tribal cultures. They identify five basic stages:

1. Life sucks (a subsystem severed from other functional systems like tribes, gangs and prison—2 percent of population);

2. My life sucks (I am stuck in the Dumb Motor Vehicle line and can't believe I have to spend my time in this lost triangle of ineffectiveness—25 percent of population);

3. I'm great (and you're not, I am detached from you and will dominate you regardless of your intent—48 percent of population);

4. We are great, but other groups suck (citing Zappo's and an attitude of unification around more than individual competence—22 percent of population) and

5. Life is great (citing Desmond Tutu's hearing on truth and values as the basis of reconciliation—3 percent of population).

This model of organizational culture provides a map and context for leading an organization through the five stages.

Personal and organizational culture

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Main: Personality psychology, Identity (social science)

Organizational culture is taught to the person as culture is taught by his/her parents thus changing and modeling his/her personal culture. Indeed employees and people applying for a job are advised to match their "personality to a company’s culture" and fit to it. Some researchers even suggested and have made case studies research on personality changing.

National and organizational cultureCorporate culture is used to control, coordinate, and integrate of company subsidiaries. However differences in national cultures exist contributing to differences in the views on the management.Differences between national cultures are deep rooted values of the respective cultures, and these cultural values can shape how people expect companies to be run, and how relationships between leaders and followers should be resulting to differences between the employer and the employee on expectations. (Geert Hofstede, 1991) Perhaps equally foundational; observing the vast differences in national copyright (and taxation, etc.) laws suggests deep rooted differing cultural attitudes and assumptions on property rights and sometimes; the desired root function, place, or purpose of corporations relative to the population.

Indicator of the effect Organizational Culture on Job Statisfaction

Kerego&Mthupha (1997) views job satisfaction as the evaluation of the organisational context, while organisational climateprovides a description of the work context. They defined job satisfaction as the feeling of employees about their job. the outcomes, which a person actually receives and those that he expects to receive. Job satisfaction is thus related to job characteristics and people will evaluate their satisfaction level according to what they perceive as being important and meaningful to them. The evaluation of the different aspects of the job by employees is of a subjective nature, and people will reflect different levels of satisfaction around the same factors.

H3: Organizational Culture effect job statisfaction effect on job statisfaction positively.

4.Jobstatisfaction

Job satisfaction is how content an individual is with his or her job. Scholars and human resource professionals generally make a distinction between affective job satisfaction and cognitive job satisfaction. Affective job satisfaction is the extent of pleasurable emotional feelings individuals have about their jobs overall, and is different to cognitive job satisfaction which is the extent of individuals’ satisfaction with particular facets of their jobs, such as pay, pension arrangements, working hours, and numerous other aspects of their jobs.

Page 8: Web viewAs early as 500 B.C., Confucius listed the virtues (de) of effective leaders. Four were key to his beliefs: • Jen (love) • Li (proper conduct) • Xiao (piety)

Affective job satisfaction is usually defined as anunidimensional subjective construct representing an overall emotional feeling individuals have about their job as a whole. Hence, affective job satisfaction for individuals reflects the degree of pleasure or happiness their job in general induces. Cognitive job satisfaction is usually defined as being a more objective and logical evaluation of various facets of a job.

HistoryOne of the biggest preludes to the study of job satisfaction was the Hawthorne studies. These studies (1924–1933), primarily credited to Elton Mayo of the Harvard Business School, sought to find the effects of various conditions (most notably illumination) on workers’ productivity. These studies ultimately showed that novel changes in work conditions temporarily increase productivity (called the Hawthorne Effect). It was later found that this increase resulted, not from the new conditions, but from the knowledge of being observed. This finding provided strong evidence that people work for purposes other than pay, which paved the way for researchers to investigate other factors in job satisfaction.

Scientific management (aka Taylorism) also had a significant impact on the study of job satisfaction. Frederick Winslow Taylor’s 1911 book, Principles of Scientific Management, argued that there was a single best way to perform any given work task. This book contributed to a change in industrial production philosophies, causing a shift from skilled labor and piecework towards the more modern of assembly lines andhourly wages. The initial use of scientific management by industries greatly increased productivity because workers were forced to work at a faster pace. However, workers became exhausted and dissatisfied, thus leaving researchers with new questions to answer regarding job satisfaction. It should also be noted that the work of W.L. Bryan, Walter Dill Scott, andHugo Munsterberg set the tone for Taylor’s work.

Some argue thatMaslow’s hierarchy of needs theory, a motivation theory, laid the foundation for job satisfaction theory. This theory explains that people seek to satisfy five specific needs in life – physiological needs, safety needs, social needs, self-esteem needs, and self-actualization. This model served as a good basis from which early researchers could develop job satisfaction theories.

Job satisfaction can also be seen within the broader context of the range of issues which affect an individual's experience of work, or their quality of working life. Job satisfaction can be understood in terms of its relationships with other key factors, such as general well-being, stress at work, control at work, home-work interface, and working conditions.

Models of job satisfactionAffect theory

Edwin A. Locke’s Range of Affect Theory (1976) is arguably the most famous job satisfaction model. The main premise of this theory is that satisfaction is determined by a discrepancy between what one wants in a job and what one has in a job. Further, the theory states that how

Page 9: Web viewAs early as 500 B.C., Confucius listed the virtues (de) of effective leaders. Four were key to his beliefs: • Jen (love) • Li (proper conduct) • Xiao (piety)

much one values a given facet of work (e.g. the degree of autonomy in a position) moderates how satisfied/dissatisfied one becomes when expectations are/aren’t met. When a person values a particular facet of a job, his satisfaction is more greatly impacted both positively (when expectations are met) and negatively (when expectations are not met), compared to one who doesn’t value that facet. To illustrate, if Employee A values autonomy in the workplace and Employee B is indifferent about autonomy, then Employee A would be more satisfied in a position that offers a high degree of autonomy and less satisfied in a position with little or no autonomy compared to Employee B. This theory also states that too much of a particular facet will produce stronger feelings of dissatisfaction the more a worker values that facet.

Dispositional theory

Another well-known job satisfaction theory is the Dispositional Theory. It is a very general theory that suggests that people have innate dispositions that cause them to have tendencies toward a certain level of satisfaction, regardless of one’s job. This approach became a notable explanation of job satisfaction in light of evidence that job satisfaction tends to be stable over time and across careers and jobs. Research also indicates that identical twins have similar levels of job satisfaction.

A significant model that narrowed the scope of the Dispositional Theory was the Core Self-evaluations Model, proposed by Timothy A. Judge, Edwin A. Locke, and Cathy C. Durham in 1997. Judge et al. argued that there are four Core Self-evaluations that determine one’s disposition towards job satisfaction: self-esteem, general self-efficacy,locus of control, and neuroticism. This model states that higher levels of self-esteem (the value one places on his/her self) and general self-efficacy (the belief in one’s own competence) lead to higher work satisfaction. Having an internal locus of control (believing one has control over her\his own life, as opposed to outside forces having control) leads to higher job satisfaction. Finally, lower levels of neuroticism lead to higher job satisfaction.

Opponent process theory event in question. Events that seem negative in manner will give rise to the feelings of stress or anxiety. Events that are positive give rise to the feeling of content or relaxation. The other process is the opponent process, which induces feelings that contradict the feelings in the primary processes. Events that are negative give rise to feelings of relaxation while events that are positive give rise to feelings of anxiety. A variety of explanations have been suggested to explain the uniformity of mood or satisfaction. This theory shows that if you try to enhance the mood of individual it will more likely fail in doing so. The opponent process theory was formulated to explain these patterns of observations.

Equity theory

Equity Theory shows how a person views fairness in regard to social relationships. During a social exchange, a person identifies the amount of input gained from a relationship compared to the output, as well as how much effort another persons puts forth. Equity Theory suggests that if an individual thinks there is an inequality between two social groups or individuals, the person is likely to be distressed because the ratio between the input and the output are not equal.

Page 10: Web viewAs early as 500 B.C., Confucius listed the virtues (de) of effective leaders. Four were key to his beliefs: • Jen (love) • Li (proper conduct) • Xiao (piety)

For example, consider two employees who work the same job and receive the same benefits. If one individual gets a pay raise for doing the same or less work than the other, then the less benefited individual will become distressed in his workplace. If, on the other hand, one individual gets a pay raise and new responsibilities, then the feeling of inequality is reduced.

Other psychologists have extended the equity theory, suggesting three behavioral response patterns to situations of perceived equity or inequity (Huseman, Hatfield, & Mile, 1987; O'Neil &Mone 1998). These three types are benevolent, equity sensitive, and entitled. The level by each type affects motivation, job satisfaction, and job performance.

1. Benevolent-Satisfied when they are under-rewarded compared with co-workers2. Equity sensitive-Believe everyone should be fairly rewarded3. Entitled-People believe that everything they receive is their just due

Discrepancy theory

The concept of discrepancy theory explains the ultimate source of anxiety and dejection.An individual, who has not fulfilled his responsibility feels the sense of anxiety and regret for not performing well, they will also feel dejection due to not being able to achieve their hopes and aspirations. According to this theory, all individuals will learn what their obligations and responsibilities for a particular function, over a time period, and if they fail to fulfill those obligations then they are punished. Over time, these duties and obligations consolidate to form an abstracted set of principles, designated as a self-guide.Agitation and anxiety are the main responses when an individual fails to achieve the obligation or responsibility.This theory also explains that if achievement of the obligations is obtained then the reward can be praise, approval, or love. These achievements and aspirations also form an abstracted set of principles, referred to as the ideal self guide.When the individual fails to obtain these rewards, they begin to have feelings of dejection, disappointment, or even depression.

Two-factor theory (motivator-hygiene theory)

Frederick Herzberg’s Two-factor theory (also known as Motivator Hygiene Theory) attempts to explain satisfaction and motivation in the workplace. This theory states that satisfaction and dissatisfaction are driven by different factors – motivation and hygiene factors, respectively. An employee’s motivation to work is continually related to job satisfaction of a subordinate. Motivation can be seen as an inner force that drives individuals to attain personal and organizational goals (Hoskinson, Porter, & Wrench, p. 133). Motivating factors are those aspects of the job that make people want to perform, and provide people with satisfaction, for example achievement in work, recognition, promotion opportunities.These motivating factors are considered to be intrinsic to the job, or the work carried out. Hygiene factors include aspects of the working environment such as pay, company policies, supervisory practices, and other working conditions.

While Herzberg's model has stimulated much research, researchers have been unable to reliably empirically prove the model, with Hackman & Oldham suggesting that Herzberg's original formulation of the model may have been a methodological artifact. Furthermore, the theory does not consider individual differences, conversely predicting all employees will react in an identical

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manner to changes in motivating/hygiene factors. Finally, the model has been criticised in that it does not specify how motivating/hygiene factors are to be measured.

Job characteristics model

Hackman & Oldham proposed the Job Characteristics Model, which is widely used as a framework to study how particular job characteristics impact on job outcomes, including job satisfaction. The model states that there are five core job characteristics (skill variety, task identity, task significance, autonomy, and feedback) which impact three critical psychological states (experienced meaningfulness, experienced responsibility for outcomes, and knowledge of the actual results), in turn influencing work outcomes (job satisfaction, absenteeism, work motivation, etc.). The five core job characteristics can be combined to form a motivating potential score (MPS) for a job, which can be used as an index of how likely a job is to affect an employee's attitudes and behaviors. A meta-analysis of studies that assess the framework of the model provides some support for the validity of the JCM.

Motivating Potential Score

The motivating potential score (MPS) can be calculated, using the core dimensions discussed above, as follows Jobs that are high in motivating potential must be also high on at least one of the three factors that lead to experienced meaningfulness, and also must be high on both Autonomy and Feedback. If a job has a high MPS, the job characteristics model predicts that motivation, performance and job satisfaction will be positively affected and the likelihood of negative outcomes, such as absenteeism and turnover, will be reduced.

Model

Compensation

Organizational Culture

Job Statisfaction

Leadership Style

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Culture is everything," said Lou Gerstner, the CEO who pulled IBM from near ruin in the 1990s.",Culture Clash: When Corporate Culture Fights Strategy, It Can Cost You, knowmgmt, Arizona State University, March 30, 2011

the application of the term culture to the collective attitudes and behavior of corporations arose in business jargon during the late 1980s and early 1990s. Unlike many locutions that emerge in business jargon, it spread to popular use in newspapers and magazines. Few Usage Panelists object to it. Over 80 percent of Panelists accept the sentence The new management style is a reversal of GE's traditional corporate culture, in which virtually everything the company does is measured in some form and filed away somewhere.", The American Heritage® Dictionary of the English Language, Fourth Edition copyright ©2000 by Houghton Mifflin Company. Updated in 2009.Published by Houghton Mifflin Company.

One of the first to point to the importance of culture for organizational analysis and the intersection of culture theory and organization theory is Linda Smircich in her article Concepts of Culture and Organizational Analysis in 1983. See Linda Smircich, Concepts of Culture and Organizational Analysis, Administrative Science Quarterly, Volume: 28, Issue: 3, Publisher: JSTOR, doi:10.2307/2392246, 1983, pp. 339-358

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