MAINTAINING AN ORGANIZATIONAL CULTURE DURING A WORKFORCE EXPANSION - DIVA PORTAL
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DEGREE PROJECT IN INDUSTRIAL MANAGEMENT, SECOND CYCLE, 30 CREDITS STOCKHOLM, SWEDEN 2021 Maintaining an organizational culture during a workforce expansion A case study at a software product development scaleup JOSEFIN OSBJER KTH ROYAL INSTITUTE OF TECHNOLOGY SCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT
Maintaining an organizational
culture during a workforce expansion:
A case study at a software product
development scaleup
by
Josefin Osbjer
Master of Science Thesis TRITA-ITM-EX 2021:274
KTH Industrial Engineering and Management
Industrial Management
SE-100 44 STOCKHOLMBibehållande av en organisationskultur
under tillväxt av antal anställda: En fallstudie
på ett produktutvecklings scaleup
av
Josefin Osbjer
Examensarbete TRITA-ITM-EX 2021:274
KTH Industriell teknik och management
Industriell ekonomi och organisation
SE-100 44 STOCKHOLMMaster of Science Thesis TRITA-ITM-EX 2021:274
Maintaining an organizational culture during a
workforce expansion: A case study at a software
product development scaleup
Josefin Osbjer
Approved Examiner Supervisor
2021-06-03 Monica Lindgren Charlotte Holgersson
Commissioner Contact person
Abstract
Researchers have already studied organizational culture and expansions of organizations
separately. However, the combination of these, how organizational expansion challenges
may affect cultural aspects is rare and the niche of this study. This qualitative case study
investigates how organizational culture can be maintained during fast workforce expansion
in a product department. The first step in this study was to study what can characterize an
organizational culture in a department where product development and technology are
central, in a software development scaleup. The empirical results present 13 cultural areas
characterizing the organizational culture in the case company, which has similarities to Clan
culture that promotes collaboration and personal development. Similarities with Engineering
culture and Hacker culture are present in the product department as well. Some cultural
aspects may be seen as unique for the case company’s product department, which are
humbleness and the focus on work-life balance. Further, some employees argue that they
have never felt as proud of the product at previous workplaces, as they do at the case
company. These cultural aspects have explicitly been explained as unique in the empirical
results and not found in the reviewed literature. Further investigation focused on possible
reactions to a workforce expansion, by the interviewed employees. This included both
positive expectations and areas of concern. The challenges that may occur in a fast-growing
workforce and possible solutions were investigated as well. Four areas of possible
expansion challenges were detected in the empirical results, which were related to
organizational structure changes, cultural distribution, inclusive organization, prioritizations,
and work focus switches. Through the analysis process, cultural aspects that may be
affected by these challenges were analyzed and discussed. The presented possible
solutions focus on how to manage possible challenges that may occur and at the same time
maintain cultural aspects of foremost trust, inclusion, transparency, diversity, culture
distribution, constant change, and innovation.
Key-words
Organizational culture, organizational cultural maintenance, organizational culture
development, organizational expansion, workforce expansion, scaleupExamensarbete TRITA-ITM-EX 2021:274
Bibehållande av en organisationskultur under
tillväxt av antal anställda: En fallstudie på ett
produktutvecklings scaleup
Josefin Osbjer
Approved Examiner Supervisor
2021-06-03 Monica Lindgren Charlotte Holgersson
Commissioner Contact person
Sammanfattning
Forskning om organisationskultur och tillväxt av företag har tidigare gjorts separat.
Kombinationen av dessa ämnen, hur utmaningar relaterat till tillväxt av ett företag kan
komma att påverka kulturella aspekter är sällsynt och denna studies nisch. Denna kvalitativa
fallstudie undersöker hur organisationskultur kan bevaras under snabb tillväxt av antal
anställda i en produktavdelning. Först gjordes en tolkning av vad som karakteriserar en
organisationskultur i en avdelning där produktutveckling och teknik är det centrala, i en
produktutveckling scaleup som jobbar med mjukvara. The empiriska resultaten presenterar
13 kulturella områden som karakteriserar organisationskulturen på fallföretaget, vilken har
likheter med Klankultur som främjar samarbete och personlig utveckling. Likheter med
Ingenjörskultur och Hacker-kultur är också närvarande i produktavdelningen på fallföretaget.
Vissa av de kulturella aspekterna kan anses unika i fallföretagets produktavdelning, vilka är
ödmjukhet och fokus på work-life balance. Fortsättningsvis argumenterar vissa anställda att
de aldrig känt sig så stolta över produkten de utvecklar på tidigare arbetsplatser, till skillnad
från den stolthet de känner för produkten på fallföretaget. Dessa kulturella aspekterna har
ansetts unika av de anställda i de empiriska resultaten och har inte påvisats i andra studier
inkluderat i litteraturstudien. Nästa fokus i studien var att undersöka vilka möjliga reaktioner
de intervjuade anställda på fallföretaget hade gällande tillväxt av antal anställda. Dessa
reaktioner belyste både positiva förväntningar och orosområden. De möjliga utmaningarna
som kan uppkomma i en snabbväxande organisation och möjliga redskap för att lösa dessa
undersöktes också. Fyra områden av möjliga tillväxtsutmaningar upptäcktes i de empiriska
resultaten, vilka var relaterade till förändringar av organisationsstruktur, kulturdistribution,
inkluderande organisation, prioriteringar och arbetsfokus. Under analysprocessen
upptäcktes kulturella aspekter som kan komma att påverkas av dessa möjliga utmaningar,
vilka var analyserade och diskuterade. De presenterade potentiella lösningarna fokuserar på
hur man bemöta dessa möjliga utmaningar sammanknippade med företagstillväxt och hur
man samtidigt kan bevara kulturella aspekter så som främst tillit, inkludering, transparens,
mångfald, kulturdistribuering, konstant förändring och innovation.
Nyckelord
Organisationskultur, kulturbevarande, kulturutveckling, organisiell tillväxt, tillväxtföretag,
tillväxt av antal anställda, scaleupTable of content
1. Introduction 1
1.1 Background 1
1.2 Problem formulation 2
1.3 Research purpose 3
1.4 Research questions 3
1.5 Delimitations 3
2. Theory 4
2.1 Literature review 4
2.1.1 Organizational culture 4
2.1.1.1 Organizational culture research 4
2.1.1.2 Different categories and types of organizational culture 5
2.1.1.3 Organizational culture in tech companies 6
2.1.1.4 Hacker culture 7
2.1.2 Organizational expansion 8
2.1.2.1 Growth phases in small organizations 9
2.1.2.2 General challenges during organizational expansion 10
2.1.3 Maintaining organizational culture during workforce expansion 11
2.1.3.1 Managing organizational culture during
organizational expansion 12
2.1.3.2 Inclusion in an expanding organization 13
2.1.3.3 Importance of innovative space during expansion 14
2.1.3.4 Trust in expanding organizations 15
2.1.3.5 Communication in expanding organizations 16
2.1.3.6 Change management during expansion 18
2.2 Theoretical framework 18
2.2.1 Schein’s model - Three levels of culture 18
2.2.1.1. Artifacts 19
2.2.1.2 Espoused Beliefs and Values 19
2.2.1.3 Basic Underlying Assumptions 20
2.2.2 Greiner’s Model - The Five Phases of Growth 20
3. Methodology 22
3.1 Research setting 22
3.2 Research design and approach 22
3.3. Research process 23
3.3.1 Data collection 23
3.3.2 Data analysis 263.4 Research quality 26
3.4.1 Insider research 27
3.5 Ethical considerations 28
4. Empirical results 29
4.1 Organizational culture in the product department 29
4.1.1 Artifacts 29
4.1.2 Espoused Beliefs and Values 32
4.1.2.1 Including, transparent and open 32
4.1.2.2 Helpful, trustful, humble, and open to feedback 32
4.1.2.3 Goal-oriented, product focus, responsibility, ownership, and
to feel proud of the product 33
4.1.2.4 Self-leadership and flat organization 33
4.1.2.5 Innovative and creative thinking, fast-moving, and
constant change 34
4.1.2.6 Friendly and fun atmosphere 34
4.1.2.7 Work smart and work-life balance focus 35
4.1.2.8 Diverse, international, and gender-equal 35
4.1.3 Basic Underlying Assumptions 36
4.1.3.1 Organizational culture distribution is essential 36
4.1.3.2 A technical heavy culture that influences product decisions 36
4.1.3.3 A young set of people contribute to fast movements 36
4.1.3.4 The norm of satisfaction at work 37
4.1.3.5 Driven employees and atmosphere is wishful 37
4.2 Organizational expansion reactions 37
4.2.1 Current expansion phase 38
4.2.2 Organizational expansion reactions 38
4.2.2.1 Positive expectations 38
4.2.2.2 Organizational structure changes 38
4.2.2.3 Cultural distribution 40
4.2.2.4 Organizational inclusion 41
4.2.2.5 Prioritization and switch of work focus 42
5. Analysis & Discussion 44
5.1 Organizational culture in a product department 44
5.2 Organizational expansion reactions 47
5.3 Organizational culture aspects that can be affected by the
organizational expansion challenge 48
5.3.1 Current expansion phase 485.3.2 Organizational expansion challenges and how these may
affect cultural aspects 48
5.3.2.1 Organizational structure changes 48
5.3.2.2 Cultural distribution 51
5.3.2.3 Organizational inclusion 53
5.3.2.4 Prioritization and switch of work focus 54
5.3.2.5 Further possible challenges 56
5.4 Growth phase model including expansion challenges, solutions,
and affected cultural aspects 59
5.5 Sustainability contribution 61
6. Conclusion 62
6.1 Key findings 62
6.2 Theoretical contribution 62
6.3 Practical implication 63
6.4 Limitations and future research 63
7. References 64Acknowledgment This topic of study has truly been interesting to study since I have an interest in company development and how organizational culture can create value and bring success to an organization. I am thankful that I was able to study the organizational culture and investigate possible concerns and challenges that may occur during fast workforce expansion in the case company since the case company was a culture-driven company that grew rapidly during the study. The most challenging part of this study was to see patterns of how possible expansion challenges may affect the cultural aspects, but in the end, I am proud of the outcome. I have learned so many new things that will benefit my future career as an engineer. Furthermore, I would like to thank certain individuals for the help, support, and feedback I have gotten during the research process. Firstly, I would like to thank my supervisor Charlotte Holgersson, Associate Professor at KTH, for guidance and support throughout the study. I have had stimulating and fruitful discussions with you. Your feedback has enabled me to achieve a higher academic level of study, and I am thankful for your time spent helping me develop the study. Further, I would like to thank Åsa Johansson Palmkvist for leading and organizing the seminars throughout the semester. The seminars have been interesting and helpful for the research process. Further, I would like to thank my examinator, Monica Lindgren, for valuable feedback during the opposition. I would also like to thank Frida Annestrand and Charlotte Lindblom for the feedback during the opposition seminars, which gave me insights into how to develop the report further. Finally, I would also direct a thank you to my company contact at the case company for having an open mind and ensuring I accomplish my academic goals and not only their wishes. I have felt support in deciding my way to deliver the results, and the collaboration has been smooth.
1. Introduction
The introduction includes background, problem formulation, research purpose, and research
questions as well as delimitations.
1.1 Background
The climate for starting new companies in Sweden has thrived in the last decade (Preger
2017). Around five percent of all new companies in Sweden are working within
programming and information services (Tillväxtanalys 2021), and the chance of survival for
Swedish startups was 80 percent in 2017 (Preger 2017). When a startup experiences business
and organizational growth, it enters a level to become a scaleup. Although, the definition of a
scaleup is not yet precisely described in the literature (Monteiro 2019). However, the
EU-funded startup European Partnership has defined what a scaleup is. They claim that
scaleup is “a development-stage business, specific to high-technology markets, that is looking
to grow in terms of market access, revenues, and the number of employees, adding value by
identifying and realizing win-win opportunities for collaboration with established companies”
(van Winden et al. 2020). To become a successful scaleup and likewise survive as a startup,
Aulet (2013) states that a company needs to develop a valuable and innovative product. The
definition of products includes physical products and services as well as the delivery of
information (Aulet 2013). Some entrepreneurs, for instance, Appelo (2019), argue that some
entrepreneurs fail during the success journey because they do wrong things during the wrong
stages in the business lifecycle. However, even though a startup does the right things at the
right time and becomes a “successful startup”, the phase of scaling the organization and the
business can be a challenge in many different aspects.
One possible challenge during growth can be to maintain or promote the existing
organizational culture. Expansion challenges may influence the culture in one or another way.
There are different definitions of organizational culture, and it can be defined from different
perspectives (Schein E. & Schein P. 2017) and dynamics (Hatch 1992). According to Bolman
and Deal (2017), organizational culture is the glue of an organization that can unite people
and helps the enterprise achieve desired outcomes. Furthermore, Ogbonna (1992), defines
organizational culture as the “collective programming of the mind that distinguishes members
of one known group from another” and as well have an impactful influence on the
organizational outcomes. Alveson (2013), claims that in younger, innovative organizations,
the interest, and importance of the organizational culture is to a great extent and represents
the company’s DNA.
Further, in the first decade of the twenty-first century, a new culture at successful software
development startups started to thrive. A subculture that Rayner (2018) calls Hacker culture.
This culture was represented by a new set of thinking around lean startup methods, agile
software development (Agile Manifesto 2001), and design thinking when it started to appear
in the startup scene. This culture changed thoughts of work, leadership, and innovation
(Rayner 2018). Nowadays, this culture influences the general business innovation world, and
1the hacker type of culture is strived for in most tech startups around the world. Hacker culture
is known by many as a Startup culture and embraced by top-tier corporations (Rayner 2018).
In this study, the culture investigated will be called the organizational culture in a product
department. The interpretation of the organizational culture is done in a company working
with software product development. The product department is including responsibilities and
roles related to multiple areas such as product strategy, product development, and the core
technology in the software development company. During the organizational culture
investigation in the product department, all roles are included, not only the engineers and
software developers.
1.2 Problem formulation
Studies about organizational culture and the expansions of small companies have been
researched by the research community separately. However, the combination of these topics
is rare in previous literature and the core problem investigated in this study. Organizational
expansion challenges affecting an organization’s culture in a tech scaleup are the niche for
this study. This niche is relevant and of interest since many tech startups and scaleups value
this organizational culture highly. On one hand, because culture is essential in the company’s
DNA (Alveson 2013). On the other hand, because a thriving and positive organizational
culture can represent a positive factor that enables productivity and performance success in
the company (Kenny 2012). Furthermore, founders at different companies, like Google and
Apple, claim that their positive organizational culture is the foremost source of having a
sustainable competitive advantage in the long-term perspective (Simoneaux & Stroud 2014).
However, the problem is that it is hard to aim for a specific culture if it is not defined.
Therefore the existing organizational culture needs to be interpreted and defined to create
awareness of the culture in a tech company. Furthermore, this study is interesting since the
trend for starting tech startups is strong globally nowadays. Entrepreneurs may have an idea
or product, but to become a successful scaleup over time is a complex task to achieve. It is
hard and complex to build an organizational culture the way you aim for and it influences all
employees included in the culture. Another problem small companies may face is how fast
expansion of the workforce may affect the organizational culture. The understanding of
possible challenges and different solutions is crucial to enable the maintenance of the
organizational culture. Although, the problem is that there is barely any scientific literature
investigating how to maintain or promote an organizational culture during a scaleup or
guidelines for entrepreneurs. Therefore, how an organizational culture may be affected during
an expansion of the workforce is relevant and valuable to study.
21.3 Research purpose
The research purpose is to investigate how different aspects of an organizational culture can
be affected during a fast workforce expansion. This investigation is executed in a product
department in a scaling software product development company. The aim is to collect
empirical data to define and analyze what characterizes an organizational culture in a product
department. Furthermore, the study aims to investigate what reactions to a fast workforce
expansion the employees may have. The focus will be to analyze concerns and expansion
challenges that may occur that can affect cultural aspects. Further, the analysis aims to
investigate possible solutions to maintain different organizational culture aspects during
different growth phases.
1.4 Research questions
To be able to answer the main research question, two research subquestions need to be
studied. These research questions are:
RQ: In what way can a strong organizational culture be affected by an expanding workforce?
RQ1: What can characterize an organizational culture in a product department at a
software development scaleup?
RQ2: What are the reactions to an upcoming workforce expansion in a scaling
product department?
1.5 Delimitations
Delimitations are necessary to create a well-applicable study that contributes to the research
community. The focus was to investigate a product department at a fast-growing software
development scaleup and delimited other departments at the case company. It was decided to
only focus on the product department since the case company is a tech scaleup in a business
where strong organizational tech culture is highly valued and therefore a fascinating
subculture to investigate. Further, the chosen case company has a strong organizational
culture. A delimitation is to not investigate an organization where the culture is not strong,
valued, or focused on in the company. During the investigation of expanding workforce
challenges, the focus was on an individual and organizational level (Blomkvist & Hallin
2015). The interpretation of the case company’s organizational culture will be the first step to
analyze reactions of an organizational expansion. However, the main focus is on the main
research question. Therefore, the main focus of the analysis is how the cultural aspects may
be affected in different ways during an organizational expansion. To ensure an in-depth and
qualitative case study can be executed within the timeframe and with the human resources
available for this study, these delimitations are needed.
32. Theory
The purpose of this chapter is to summarize previous literature related to areas of interest:
Further, it includes a theoretical framework that helps to analyze the empirical data.
2.1 Literature review
The literature review includes two areas of study. The first part includes literature related to
organizational culture, and the second part covers a review of literature related to the
expansion of small companies.
2.1.1 Organizational culture
This chapter includes a literature review of organizational culture and organizational tech
culture. Literature presenting different definitions, categories, and types of organizational
culture is presented. Furthermore, a literature review of organizational culture at tech
companies, tech departments, startups, and scaleups is presented.
2.1.1.1 Organizational culture research
Organizational culture is a complex phenomenon, made of multiple dimensions that are
communicated between members in the culture and can constantly change over time
(Alvesson 2013, Keyton 2011). Schein (2009) argues that organizational culture is “deep,
stable and complex”. Organizational culture includes how artifacts, norms, and behavioral
patterns mirror the values, experiences, and work setting at the organization by members and
differentiates an organization from another (Homburg & Pflesser 2000, Schneider et al. 2013,
Ortega-Parra & Sastre-Castillo 2013). Schein claims there should be a formal definition of
what organizational culture is (Schein 1985). This definition has been updated throughout the
years. However, in 2017, Schein describes organizational culture as: “The culture of a group
can be defined as the accumulated shared learning of that group as it solves its problems of
external adaptation and internal integration; which has worked well enough to be considered
valid and, therefore, to be taught to new members as the correct way to perceive, think, feel,
and behave concerning those problems. This accumulated learning is a pattern or system of
beliefs, values, and behavioral norms that come to be taken for granted as basic assumptions
and eventually drop out of awareness.” (Schein, E. & Schein, P. 2017).
Ogbonna (1992) defines organizational culture as “the interweaving of the individual into a
community and the collective programming of the mind that distinguishes members of one
known group from another. It is the values, norms, beliefs, and customs that an individual
holds in common with members of a social unit or group”. However, some researchers argue
that different members in the culture can have different experiences and beliefs of what the
organizational culture is and are therefore a subjective phenomenon (Martin 2002, cited in
Keyton 2011). People form an attachment to a culture. This attachment is the main reason for
resistance to cultural changes, according to Rutherford (2001). Organizational culture is
dynamic, and it can be seen as a process and a boundary-making practice. However, culture
4can both be inclusive and exclusive (Rutherford 2001). An example by Rutherford (1999) is
that a historical male culture where gender differences are neglected, and gender inequalities
are ignored, affects women in an exclusionary way.
According to Tran (2017), organizational culture is the key to make a company last and be
successful. Kotter and Heskett (1992) describe how organizational culture may change over
time if it is not actively focused on. In this case, it may end up like International Business
Machines Corporations, IBM’s culture, that strayed from their historical organizational
culture due to a culture of arrogance that grew in the organization. Furthermore, Kenny
(2012) claims that building and maintaining a positive organizational culture is an essential
aspect of improving performance and productivity. Another benefit is that a company’s
organizational culture enables the company to differentiate itself from other companies and
competitors (Weber & Tarba 2012).
2.1.1.2 Different categories and types of organizational culture
In reviewed literature, different organizational culture types in theories and frameworks are
presented. According to Schein’s model (Schein, E. & Schein, P. 2017), organizational
culture builds upon three areas. This model was presented by Schein E. in 1985 in the first
edition of Organizational culture and leadership (Schein, E. & Schein, P. 2017) to be able to
analyze an organizational culture through the fast-growing categorization of multiple levels.
The culture categories are 1) artifacts, 2) espoused beliefs and values, and 3) basic underlying
assumptions. The artifacts category is visible but difficult to decipher and includes processes
and structures through observed behaviors. There is an awareness of the beliefs and values in
the organization, which refers to ideas, goals, aspirations, and values related to ideologies.
Assumptions are usually taken for granted but are invisible beliefs and values. These basic
assumptions determine behaviors, perceptions, thoughts, and feelings (Schein E. & Schein P.
2017). Even though many researchers have adapted this model, Hatch (1992) asserts that
there are gaps in this model, which she claims her model of dynamics of organizational
culture can fill. In her model of dynamics, manifestation, realization, symbolization, and
interpretation are preferable to include, to define organizational culture including symbols
and processes, according to her.
Furthermore, other research studies have investigated how different types of organizational
cultures can be grouped. The Competitive Values approach introduced by Quinn and
Rohrbaugh (1983) is widely used in literature. This model is based on an initial exploratory
literature review of organizational culture by seven researchers, everyone with doctorates,
and six out of seven had published research articles on the topic. This model is structured by
an axis representing flexible structure versus controlled structure and the other axis
representing internal focus versus external focus. This model includes four different
organizational culture types and is used by many researchers (e.g. Cameron, De Graff, Quinn
& Thakor 2014, Denison & Spreitzer 1991). The model by Cameron et al. (2014) presents
names of these four organizational culture types. These are Clan culture, Hierarchy culture,
Market culture, and Adhocracy culture.
5Clan culture is based on collaboration orientation and is an internally focused culture with an
individual and flexible structure (Cameron et al. 2014). This culture is recognized by broad
employee involvement, a human affiliation that leads to a positive approach to the
organization, and strong interrelations between colleagues. By building consensus, the
organizational culture can be strengthened and develop human competencies. In the study by
Quinn and Rohrbaugh (1983), this cultural type's goal is to create personal development for
the employees with means of cohesion and morale. Clan culture companies can be successful
through hiring, retaining, and developing their human resources (Fiordelisi & Riccia 2014).
Hierarchy culture is focused on internal maintenance and is structured through stability and
control, which is the significant base of this culture (Cameron et al. 2014). The means are
information management and communication to reach the goal of structure and control in this
internal process type of model (Quinn & Rohrbaugh 1983). Comprehensive use of
standardized processes, strong belief in reinforced rules, and uniformity are common
characteristics for companies with a hierarchy culture (Fiordelisi & Riccia 2014).
Market culture is rooted in the competition dynamics and achieving concrete results. It is
externally oriented with a structure of stability and control (Cameron et al. 2014). This
rational goal model uses the means of planning and goal setting to achieve productivity and
efficiency (Quinn & Rohrbaugh 1983). For companies with this culture, customers and
shareholders are the highest priority and assess success through the growth of profitability,
revenues, market share, and meeting budget targets (Fiordelisi & Riccia 2014).
Adhocracy culture is based on energy and creativity with a focus on external positioning. It is
structured through individuality and flexibility (Cameron et al. 2014). This open system
approach has the goal to create growth and resource acquisition through the means of
flexibility and readiness, according to Quinn and Rohrbaugh (1983). Fiordelisi and Riccia
(2014) describe that companies with an Adhocracy culture focus on innovation. More
specifically, these companies strive to innovatively expand the product line, test radical and
new processes for breakthroughs. Furthermore, these companies aim to include logistic and
distribution innovations to enable them to transform entire industries and develop innovative
technologies (Fiordelisi & Riccia 2014).
2.1.1.3 Organizational culture in tech companies
Organizational culture varies and is unique for each company, and can be of a certain
characteristic for technology-driven companies. Schein E. and Schein P. (2017) describe
Apple and its organizational culture. A culture assessment during the 1980s was done by a
group, with the aim to identify how the business growth would impact the culture, structure,
and the need for expanding physically. Culture aspects concluded in the cultural assessment
were innovative thinking and a culture of fun social life at work (Schein, E. & Schein, P.
2017). Toma and Marinescu (2013) assert that the core of the culture during Steve Jobs’s
second era at Apple mainly focused on the product rather than profit. High-performing
6individuals and teams that were open-minded and innovative influenced the culture. This
culture was passionate about doing simple and beautiful products (Toma & Marinescu 2013).
During this period, with Jobs in the lead, the company achieved great success (Kaliannan &
Ponnusamy 2014).
At Hewlett-Packard, HP, the core of the organizational culture is about autonomous ways of
working and creative thinking (Childress 2013). Another tech company, that is significant for
having a strong culture, is IBM (Kotter & Heskett 1992). In the 1930s, the organizational
culture was characterized by customer focus and highly motivated and loyal employees.
However, IBM’s culture has changed over time, and during the 1980s their culture strayed
from its historical culture (Flamholtz & Randle 2011). Further, Tran (2017) describes the
company culture at Google as an open culture where employees and customers can raise
opinions or ideas to ensure a convenient and human-friendly working environment. However,
Google’s organization consists of many different subcultures (Tran 2017).
Kunda (1995a) did a critical ethnography of a large high-tech corporation in the US during
the 1990s, which led to the definition of Engineering culture. The decoding of the
Engineering culture is defined by Kunda (1995b) from different perspectives. He presents
results of how organizational reorganizations and constant change is part of the culture.
Further, the culture is built by and includes highly ambitious, independent, and committed
coworkers. Kunda (1995b), describes how managers should enable colleagues to realize what
to do rather than telling them what to do. An interviewee explained, “Power plays don’t
work. You can’t make ‘em do anything. They have to want to”. Kunda (1995b) claims that
organizational culture can be controlled normatively through rules that are explicit and
implicit, with the purpose to guide and shape members’ behaviors and experiences of the
organization. Disciplines are not taught by supervision or rewards, standards for performance
are rather taught by peer pressure. The organizational structure present in Engineering culture
defined by Kunda (1995b) is bottom-up and people-focused, and experiences as free, without
a traditional corporate structure. Hierarchical differences between different roles of the
members in the culture are vague and underplayed. Economical rewards are not used, rather
rewards related to belongingness, participation, and experience of the communion are
existent in an Engineering culture. Behavior rules are not strict in this kind of culture, but
behaviors such as being creative, taking risks and initiatives, and focusing on doing the
“right” things are encouraged. Kunda (1995b), describes that members included in the
Engineering culture feel a strong identification and are engaged in the company and the
projects with enthusiasm, which is the aim for normative control. Ensure the members in the
culture behave and perform well in the company while feeling intrinsic work satisfaction.
2.1.1.4 Hacker culture
When new tech startups appeared at the beginning of the twenty-first century, another
organizational culture appeared in many startups. Rayner (2018) calls the organizational
culture in tech startups Hacker culture. Hack and hacker first started to appear as an MIT
lingo (Levy 2010), and in the 1960s, the MIT Hacker culture was developed (Rayner 2018).
7Practices related to the Hacker culture focus on agile software development, entrepreneurship
following lean startup methodology, and design focus of products, services, and user
experience. Rayner (2018) calls these three aspects the startup triad. These practices differ in
some ways, but common viewpoints are emphasizing agility, collaboration, speed, customer
focus, and iterative experiments to enable learning (Rayner 2018).
The agile principles are
”
● Individuals and interactions over processes and tools.
● Working software over comprehensive documentation.
● Customer collaboration over contract negotiation.
● Responding to change over following a plan.
” (Agile Manifesto 2001).
In a product department that is applying agile principles, the agile values influence the
organizational culture. Furthermore, the organizational culture at a tech department is
influenced by the two other aspects as well. Humble, O'Reilly, and Molesky (2014) claim that
a modern lean methodology can enable a culture that promotes creativity and a willingness to
constantly improve things. To ask yourself the questions “why” and “how” certain things and
processes are done, is essential to this organizational culture (Humble, O'Reilly & Molesky
2014). Design thinking does influence the organizational culture of tech departments. Design
thinking related to the digital era promotes creativity, collaboration, and the culture of
multicultural design thinking according to Lee, Ostwald, and Gu (2020).
Furthermore, the Hacker culture embraces leaders to be future-focused, enables creative
actions at the company, and ensures the employees feel free to try things out and make
mistakes (Rayner 2018). The same principles are applied by Hacker entrepreneurs that build
their agile organizations from the start. These founders can influence the culture to be brave,
entrepreneurial, and aim to become big but at the same time fast (Butler & Tischler 2015).
This culture and principles that pioneered tech startups at the beginning of the twenty-first
century made big companies think in a new way and manage innovation differently (Rayner
2018). Mark Zuckerburg has a motto of “Move fast and break things” at Facebook, which
may imply a thrive of innovating new features for the customers fast. However, this culture
can create scandals for the company, according to Taneja (2019). He claims that this
fast-moving era is over, and companies need to take more responsibility. He suggests striving
for “minimum virtuous products” is essential, which is more guarded for the potential harms
of its stakeholders instead of “minimum viable products”, MVP, commonly used in tech
organizations. However, this culture may have worked in some areas better than others since
the culture at Facebook has created a high-performing company.
2.1.2 Organizational expansion
This chapter includes a literature review of organizational expansions, challenges related to
growing organizations, and important aspects of this literature field.
82.1.2.1 Growth phases in small organizations
During the second half of the nineteenth century, studies about business and economic growth
were executed (e.g. Rostow 1960, Steinmetz 1969). However, in 1972, Greiner introduced a
model with five phases of growth, considering both sales and expansion of employees
(Greiner 1972). This model includes evolution phases with growth parameters and revolution
phases with crises. The model is based on the organization's size on one axis and the age of
the organization on the other axis. However, no gradation is seen on the axes since different
organizations can have a different timespan of each phase and can be of different sizes while
entering the different phases. For instance, an organization in a rapidly expanding market
usually needs to recruit new employees fast to meet the market demand. For fast-growing
companies, the evolutionary period tends to be kept short compared to slowly growing
businesses or mature companies where these periods can be over a long period (Greiner
1972). Other researchers have afterward developed this model further. For instance, Churchill
and Lewis (1983) call the five phases of small business growth described above Existence,
Survival, Success, Take-off, and Resource Maturity. Another example is a study by Scott &
Bruce (1987) where the five phases for small business growth are named Inception, Survival,
Growth, Expansion, and Maturity.
According to Greiner (1972), it is “important to note that each phase is both an effect of the
previous phase and a cause for the next phase”. The first phase of a small and young
organization is represented by the growth of creativity and crisis of leadership (Greiner
1972). In the second growth phase, the growth is enabled through direction and crisis of
autonomy. Furthermore, the third growth phase is including growth through delegation and
crisis of control. An example of a controlling pattern of management is the command and
control management style, which has previously been used in the military (Alberts 2007).
However, this management style where the managers control what gets done and give
commands or orders what the workers should do can also be found in the economics and
business world. According to Alberts (2007), this traditional view of this management style is
not suitable in organizations nowadays.
In the fourth growth phase, growth is achieved through coordination. This phase includes a
period where product groups are created through a merge of decentralized units. Further, an
increase in formal planning and procedures may also appear. This phase can include newly
entered employees with the skills to apply company-wide programs of control for managers.
Technical functions, like data processing, become centralized, while daily operating decisions
are still decentralized. The coordination systems aim to enable growth through efficient
allocation of the organization’s resources (Greiner 1972). Churchill and Lewis (1983) claim
that owners need to ask themselves a few questions to enable growth in the take-off phase. If
the answers are no, changes need to be made to enable the expansion of the organization.
These questions are “a) Do I have the quality and diversity of people needed to manage a
growing company?, b) Do I have now, or will I have shortly, the systems in place to handle
the needs of a larger, more diversified company?, c) Do I have the inclination and ability to
delegate decision-making to my managers?, and d) Do I have enough cash and borrowing
9power along with the inclination to risk everything to pursue rapid growth?“ (Churchill &
Lewis 1983).
The fourth revolution phase, the red-tape crisis, is about a decreased confidence between
managers and staff (Greiner 1972). This may be exemplified through, for example,
employees feeling that the line managers are uninformed or uncooperative, while managers
may be resistant to heavy staff directions by employees not familiar with a company’s
conditions. An increasingly criticized approach against a bureaucratic system may appear.
Innovation speed and problem-solving can be less prioritized in this phase. This may occur
due to new processes, and that the company has become too big and complex to manage it
with rigid and formal programs and systems (Greiner 1972).
Lastly, when the organization is mature and large, the growth is through collaboration in the
fifth growth phase (Greiner 1972). This phase is characterized by more spontaneous
management actions, which can be a challenge for experts in the phase four management
system and managers relying on formal methods. The management style is more inspired by
a behavior approach and flexibility. Focuses are to solve problems quickly in the teams and
task group activities can be arranged with cross-functional roles. Further, matrix type is
frequently used to structure teams, and simplified, multipurpose systems are developed from
previous formal systems. Key managers may attend conferences or workshops to focus on
major problems, and managers are educated in behavior skills to manage teamwork and
conflicts even better. Information systems may be applied in real-time decision making, and
the encouragement of experiments of new practices are done (Greiner 1972).
On one hand, Churchill & Lewis (1983), claims that if the entrepreneurial spirit is maintained
in a large size company in the resource maturity phase, the company will most likely have a
tremendous force in its given market. On the other hand, if the entrepreneurial spirit
disappears or dilutes in a company that has reached the fifth growth phase, it may enter the
sixth phase of Ossification. This phase is characterized by a lack of innovative thinking and
decision making and a risk-avoiding behavior of losing the company's success (Churchill &
Lewis 1983). So the main challenge in the fifth phase is to not settle down, but keep on being
curious and experiment to continue developing the organization and the products.
2.1.2.2 General challenges during organizational expansion
The European Union has presented challenges for SMEs, small and medium-sized enterprises
in the EU over many years (Muller et al. 2015). The main challenges and most pressing
problems for SMEs in the EU 2015 were 1) finding customers, 2) availability of skilled staff
or experienced managers, 3) regulations, 4) competition, 5) access to finance, and 6) cost of
production or labor. In 2019 the annual report including ten case studies (Muller et al. 2019)
concluded that the stated challenges 2015 are still existent. Lack of an ecosystem of, for
example, regional developers is a faced challenge as well. Furthermore, the lack of
recognition and understanding that intangible assets like research, development, and
innovation, RD&I, is value-adding was also an explained challenge (Muller et al. 2019).
10Related to the challenge of recruiting new talents is the aspect of retaining talents in the
organization. In the book Good to great, Collins (2001) and his research team present a five
years long organizational study, including 15 high-performing organizations. Collins (2001)
presents multiple findings to develop a good organization into a great one, and one of the
findings is that “People are not your most important asset. The right people are”. Ensuring the
talents within the company and newly acquired employees are the “right” people for the
company is essential, according to Collins (2001).
Greiner (1972) asserts that when the size of an organization increases, problems concerning
enlarged communication and coordination, increased levels of hierarchies, new
functionalities appear, and roles and tasks become more interrelated. Furthermore, Greiner
(1972), explains that traditional management practices may change multiple times to meet the
growing organization’s needs. If an organization fails to abandon past management practices,
is in a risk zone to level off in the growth rates. In revolutionary phases, managers need to
find new organizational practices as a new basis to manage the next growth phase (Greiner
1972). Furthermore, another general challenge for many growing organizations is the
leadership aspect. While the workforce expands, it is hard to keep up the same speed of
employing or promoting leaders. One challenge is to create a scalable leadership system
(Taneja & Chenault 2019). If no delegation is done, the founders and managers can be
challenged by the lack of time spent on strengthening the culture, values, and mission of the
fast-growing organization (Taneja & Chenault 2019).
When a company becomes big and mature, a risk of lack of innovative work can appear at the
company, which creates new kinds of challenges. One example of destroying innovative ways
of working appeared at 3M during their experiment Six Sigma (Rayner 2018). The
experiment included implementing a regime of process improvement that was data-driven,
with controlled and monitored ways of working of the employees, which killed the innovative
work at the company (Rayner 2018). However, 3M did not end up at the graveyard the same
way as companies like Data General and Digital Equipment Corporation, which could not
transform and be innovative when a transformation of the market appeared (Taneja &
Chenault 2019). The authors (Taneja & Chenault 2019) claim that recent studies imply that
half of the S&P 500 may be replaced if the companies do not reinvent themselves in ten
years, which is a threatening challenge for many of these companies.
2.1.3 Maintaining organizational culture during workforce
expansion
During organizational expansion, the culture may be maintained or changed. Different ways
of how to maintain and distribute cultural aspects are presented below.
112.1.3.1 Managing organizational culture during organizational
expansion
In the article by Ogbonna (1992), he presents different arguments of the view of
organizational culture. On one hand, some researchers radically argue that organizational
culture simply exists and can not be changed. On the other hand, other researchers argue that
the organizational culture is complex, but it can be managed and changed. Culture
management includes how to create, maintain and develop a culture, according to Ogbonna
(1992). Furthermore, Schein (2009) also argues that organizational culture can be improved.
However, organizational changes can be driven by external factors like political, economical,
change of market, technological, cultural, and demographic changes (Child 2015). Change
can also be driven by internal aspects, which may be caused due to, for instance, new
employees in key positions, people developing new ideas and ambitions, pressure to
reorganize due to the need for divisions, diversification, and rapid growth of the workforce
(Alvesson & Sveningsson 2016).
Schein (1995) claims that the founder of an organization influences the organizational culture
at the beginning of a company journey. The founder is biased by personal traits and previous
cultural background and experiences (Schein 1995, Schein 2009). O’Reilly, Caldwell,
Chatman, and Doerr (2014) also assert that CEOs and founders of an organization can affect
the organizational culture through their personality, assumptions, and previous experiences.
For example, Steve Jobs influenced the organizational culture at Apple from his assumptions
and previous experiences with the main focus on innovation, which resulted in great success
for the company (Kaliannan & Ponnusamy 2014). Additionally, Kaliannan & Ponnusamy
(2014) mean that constant change in an organization is needed to be high-performing in
today’s globalized business environment. Multiple studies show that the most common cause
of organizational change failure is if the organizational culture is neglected, according to
Cameron and Quinn (2011).
Harvard Business Review refers to a study made by Gartner (2019) in their magazine (HRB
2019). The study shows that three aspects need to be considered to create cultural alignment
and not strengthen the culture in the wrong ways in the organization. The first aspect is to 1)
avoid using buzzwords, which are simple adjectives, which do not reflect the culture or ways
of working in the organization while describing the culture. If the goal is to align the culture
to a greater extent, it is essential to work with the tensions in the culture. The second aspect is
to 2) gather unfiltered feedback from the employees. It is necessary to enable open-end
answers in surveys and not only measure the culture through multiple-choice. Preferably is
that employees speak freely about the culture in an open setting. The third aspect is that 3)
business leaders need to embed culture leadership and remodel processes that are not aligned
with the organizational culture (Gartner 2019).
122.1.3.2 Inclusion in an expanding organization
When an organization grows and many new employees enter an organization, a challenge to
maintain inclusion may appear. This involves inclusive leadership, organization, and artifact.
Shorea, Cleveland, and Sanchez (2018) write that an inclusive organization is where
inclusion practices and processes are present at all organizational levels. This includes an
inclusive climate, inclusion practices, inclusion by leaders, perceived organizational
inclusion, and workgroup inclusion. The model by Shorea, Cleveland, and Sanchez (2018)
focuses on how to achieve inclusion in an organization. The model has two main levels of
Management Promotion Orientation and Management Prevention Orientation, seen in Figure
1.
Figure 1. A model of inclusive organizations (Shorea, Cleveland & Sanchez 2018).
As the amount of people increases in an expansion organization, the diversity of people will
increase (Randel et al. 2018). Due to this development, leaders need to understand and
behave in a way that is inclusionary for all team members to encourage this diversity and
maximize team performance. Furthermore, these inclusive leadership behaviors also enable
improvement of work experience and satisfaction for all team members and improved
effectiveness (Randel et al. 2018). Managers influence the organizational environment and
cultural aspects where inclusive treatment is most likely included (Nishii 2013). Randel et al.
(2018) created a model, seen in Figure 2, enabling inclusive leadership where the first step is
individual difference factors of leaders, which are pro-diversity beliefs, humility, and
cognitive complexity.
13Figure 2. A model of inclusive leadership (Randel et al. 2018).
Five main behaviors of leaders are seen in the inclusive leadership dimension. The five
behaviors are divided into two categories. In the category Facilitates belongingness, the
behaviors 1) supporting individuals as group members, 2) ensuring justice and equity, and 3)
sharing decision-making are included. In the Value uniqueness category, the behaviors
included are 4) encouraging diverse contributions and 5) helping team members to fully
contribute. Randel et al. (2018) claim that all behaviors are relevant, but the behaviors
presented as the Value uniqueness dimension may be a more difficult challenge to overcome
by many leaders. The next step represents the perception of belongingness and group valuing
uniqueness. Through these perceptions, members will feel an identification with the group
and feel psychologically empowered. The last step in the inclusive leadership model presents
the behavioral outcomes of creativity, work performance, and reduced turnover.
However, Edmondson (1999) claims that the team's history matters when trying to shape or
strengthen the psychological safety within the group. The shared beliefs in a group of how
others will react or behave are established over time, and therefore, the progress can vary in
time depending on starting point. The relationships between individuals in the team affect the
progress of psychological safety (Edmondson 1999).
2.1.3.3 Importance of innovative space during expansion
To make sure a company is innovative is highly important for long-term success. Price and
Toye (2017), describe that it is necessary to create a culture where it is safe to try things out,
fail and learn. These cultural aspects are essential for a company to be innovative, which for
example Steve Jobs adopted at Apple (Toma & Marinescu 2013). But to be innovative when
a company grows and expands, some tools can be necessary to be aware of. To not get stuck
in a groupthink (Nahavandi 2015) of the innovative work at the company and gather ideas
externally is essential (Price & Toye 2017). A method is to track how many of the adopted
ideas are externally gathered and improve this record to become innovative in the long term.
Diverse and critical thinking to challenge biases, original thoughts, and ideas are relevant for
innovation and can be maintained through routines and rituals that result in new insights and
conclusions (Price & Toye 2017).
Microsoft is an example of enforcing innovation in the long term in the tech industry (Taneja
& Chenault 2019). The current CEO, Satya Nadella, applies a growth mindset instead of
14seeing the company as a fixed, well-performing company. For instance, to not only have a
single focus on Microsoft, but the company has also created the cloud service Azure, which is
another profit maker enabled through an innovative mindset that has enabled the company to
be one of the most valuable corporations in the world (Taneja & Chenault 2019).
Furthemore, Podolny and Hansen (2020) argue that organizational structure can promote
innovation as well. One example is that Apple decided to have a functional organizational
structure instead of a multidimensional structure, which is more common for a company with
the size and complexity of Apple. Applying a dynamic functional structure may benefit
companies that act in industries with constant technological changes and industry shifts
(Podolny & Hansen 2020). At Apple, experts in each functional domain have the right to
decision-making, and bets are needed for new technology and designs since the market is
moving so fast. Since the decisions rely on technical experts and not general managers, the
odds increase that these bets will be successful (Podolny & Hansen 2020).
Furthermore, to enable innovation in a large organization, knowledge sharing is essential.
Spotify is a Swedish IT company that has scaled into a large agile organization (Smite, Moe,
Levinta & Floryan 2019). The organizational structure is designed to encourage
collaboration, innovation, and autonomy with a bottom-up focus. The structure includes
squads, chapters, tribes, and guilds. Squads are cross-functional teams and chapters are a
group of people with the same line manager. Tribes are a constellation of multiple squads and
guilds are communities similar to communities of practice, CoPs. CoPs have been used by
many large-scale tech companies and include people containing the same skill set in the
organization, where knowledge is shared (Smite et al. 2019).
2.1.3.4 Trust in expanding organizations
The two dimensions of interpersonal trust and enable vulnerability discussed in the literature
are ability and benevolence (Abrams, Cross, Lesser & Levinet 2003). The ability refers to the
trust of someone with the right competence and skill set, while benevolence concerns the care
of others’ well-being and personal trust. Perceived trustworthiness is influenced by three
factors in an organization (Mayer, Davis & Schoorman 1995). These are ability, benevolence,
and integrity. The last factor, integrity, means personal integrity, where the trustee follows
acceptable principles seen by the trustor. Additionally, the trustor’s propensity and traits can
influence the trust. However, if these factors are in place trust can create more risk-taking in
relationships while meeting perceived risk, which will develop the trustworthiness factors
iteratively.
Abrams et al. (2003) present a study, based on literature and interviews in 20 organizations.
The outcome is a summarized list of ten behaviors and practices that promote interpersonal
trust, seen below.
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