Increasingly, the investment industry is waking up to the important link between firm culture and firm success. According to Focus Consulting Group, which conducts regular corporate culture surveys on nearly 70 investment organizations and advises firms on culture and leadership, over 95% of investment professionals surveyed agree that culture is important to success. This supports Charles Ellis’s famous assertion that, when it comes to the success for investment organizations, “in the long run, culture dominates.”
In many ways, this acknowledgement that culture influences performance parallels a similar development in other business fields. According to the 2013 survey conducted by the Katzenbach Center at Booz & Company, 84% of the 2,200 executives and employees surveyed from various industries report that “culture is critically important to success” and 60% believe that “culture is more important to success than strategy and business model”.3 Lyons, Chatman and Joyce (2007) find that culture influences innovation and client service meaningfully. Kets de Vries, Guillen and Korotov (2011) argue that a dysfunctional corporate culture and a lack of senior level self-awareness on how leaders contribute to the dysfunction impede organizational renewal, even when change is necessary for the survival of the firm. This contributes to the high failure rate for change initiatives observed in Beer and Nohria (2000) as well as for M&A’s for firms with conflicting culture (Camerer and Weber (2001)). Killingsworth (2012), reviewing evidences from the legal ethics literature, argue that corporate culture has greater influence on ethical behaviors and legal compliance than does explicit rules and policies.