Organizational culture refers to a system of shared assumptions, values, and beliefs that show employees what is appropriate and inappropriate behaviour. These values have a strong influence on employee behavior as well as organizational performance. Culture is by and large invisible to individuals. Even though it affects all employee behaviours, thinking, and behavioural patterns, individuals tend to become more aware of their organization’s culture when they have the opportunity to compare it to other organizations. An organization’s culture may be one of its strongest assets, as well as its biggest liability. In fact, it has been
argued that organizations that have a rare and hard-to-imitate organizational culture benefit from it as a competitive advantage. Culture, or shared values within the organization, may be related to increased performance. Researchers found a relationship between organizational cultures and organization's performance, with respect to success indicators such as revenues, sales volume, market share, and stock prices.
It is important to have a culture that fits with the demands of the organization’s environment. In other words, just as having the “right” culture may be a competitive advantage for an organization, having the “wrong” culture may lead to performance difficulties, or may be responsible for organizational failure, and also act as a barrier preventing the organization’s growth. Organizational culture is an effective control mechanism for dictating employee behaviour. Culture is in fact a more powerful way of controlling and managing employee behaviours than organizational rules and regulations. When problems are unique, rules tend to be less helpful.