Organizational culture and social control

Abstract I analyze the formation of organizational social norms, focusing on the interaction between two distinct groups, a dominant and a dominated one, such as management and workers, whereby the former is interested in the latter group adopting its preferred norm. To this end, the management exercises social control, using pecuniary awards for complying with norms deemed appropriate. I explore how social disapproval of deviance from the dominant norm and commitment to the organization interact with pecuniary control policies in affecting compliance, and consider an application to profit-maximizing behavior of competitive firms.