Innovation: The development of innovative products and services is a primary key to competitive advantage. Increased competitiveness, reduced costs and the overall satisfaction of employees are additional reasons for organisations to be innovative. Firms that make a conscious decision to establish and maintain their positions in increasingly competitive markets require the commitment of their workforce to a number of important business objectives: focus on customer needs, focus on technology, commitment to improvement of products and processes among others.
It has been shown that innovation is an uncertain event under the best of conditions, but, it is necessary for long term sustainability of an organisation. Freeman and Soete (1997) note that “not to innovate is to die”. Tidd et al (1997) conclude in their introduction that innovative companies “are on average twice as profitable as other firms”. Innovation has been identified as an important factor for businesses striving to achieve better performance (DTI, 1998) and it is perceived as one of the essential elements for continuing success and profitability of organisations (DTI, 1998). Innovation is also regarded as a crucial element in the marketing success of organisations and it has been observed that those that were more innovative, as defined by patent registrations, grew more quickly and were more profitable with profits and growth being more resistant to downturns in economic cycles.
The need to create and maintain a sustainable competitive business in the complex and fast paced business environment of the 21st century is a key issue facing many of us. What is also becoming increasingly clear is that simple repetition of what has been successful in the past is no longer enough to ensure future viability. The shapers of culture in an organisation, its leaders and managers, need to create an environment in which the qualities of creativity, investigation and innovation can flourish.
Corporate Culture: Corporate culture holds the organisation together acting as a force for cohesion. Long term performance and sustainability requires an adaptive culture in the firm, one that will allow and enhance innovation. An organisation wishing to nurture an adaptive workforce, one which is creative and innovative, needs to create an environment which eliminates, as far as possible, cautious and protective attitudes amongst its staff. Implicit is that culture is an asset in all organisations. If culture is an asset, then a large number of functions can be attributed to the corporate culture. Hampden-Turner (1990) suggests that: “the culture of an organisation defines appropriate behaviour, bonds and motivates individuals and asserts solutions where there is ambiguity. It governs the way a company processes information, its internal relations and values.”
A corporate culture influences a number of organisational functions directly related to the members of the group. These functions include; conflict reduction, co-ordination and control, reduction of uncertainty, motivation and competitive advantage. There has been a tendency to emphasize the positive implications of culture. However not all corporate cultures are necessarily functional; the numbers of poorly performing and failing organisations would indicate that in these cases the corporate culture could be said to be dysfunctional.
Each firm highlighted organisational culture as the key factor to their success. A number of researchers identify the powerful effect that corporate culture has on performance and hence the long term viability of an organisation. Corporate culture also has visible effects on individuals in that it can affect employee morale, commitment, physical and emotional health and hence productivity.