Organizational cultural strength as the negative cross-entropy of mindshare: a measure based on descriptive text

Marchetti, A and Puranam, P (2022) Organizational cultural strength as the negative cross-entropy of mindshare: a measure based on descriptive text. Humanities and Social Sciences Communications. ISSN 2662-9992 (In Press)

Abstract

The strength of an organization’s culture is an important property that may have implications for organizational structure, performance, diversity, and inclusion, independent of its content. However, progress on conceptualizing and measuring cultural strength has been restricted so far. We propose a novel measure of an organization’s cultural strength as the negative average cross-entropy of its members’ mindshare distributions, defined on a support comprising a set of firm-specific cultural elements. Using descriptive text data produced by 2.9 million individuals in about 95 thousand US firms from the employee review website Glassdoor.com, we calculate our measure of organizational cultural strength using topic modeling and show that it behaves as theoretically expected: older, smaller, and more geographically concentrated firms have stronger organizational cultures. We also note some intriguing associations between organizational cultural strength, role differentiation, and gender imbalance within firms. Finally, we discuss opportunities for using this new measure to understand how organizations work more generally.