Suraj Prasad and Marcus Tomaino
We look at how an organization’s level of resources interacts with its culture—that is, its shared beliefs and preferences. We consider an organization where workers exert effort to develop projects. These projects (a) have externalities for other members, (b) compete for funds when resources are scarce, and (c) can be implemented in various ways, which members have beliefs and preferences over. When resources are plenty, so that all feasible projects are funded, workers’ efforts are independent of each other and a coherent culture is optimal. By contrast, when resources are scarce, competition across workers with diverging beliefs or preferences (competing cultures) can be optimal.