Discussion paper

DP17382 Organizational Dynamics: Culture, Design, and Performance

We examine the two-way interplay between organizational cultures and organizational design, where culture is modeled as the prevailing social identities among workplace groups that can affect project choices. In a setting where cultural dynamics depend on the expected relative payoffs of holding different identities, we investigate how tribalism and charismatic leadership shape organizational dynamics and steady-state cultures. We show how a strong culture can be a virtue when it permits greater delegated authority, but a vice when the culture is poorly aligned with organizational objectives. We apply our analysis to concrete debates about the interaction of design, performance and culture.


Besley, T and T Persson (eds) (2022), “DP17382 Organizational Dynamics: Culture, Design, and Performance”, CEPR Press Discussion Paper No. 17382. https://cepr.org/publications/dp17382