Identity, Coordination, and Organizational Culture

Abstract

Organizations often need to coordinate on uncertain judgments, yet employees interpret the same evidence through identity-shaped perspectives. We develop a Bayesian coordination model in which agents share objectives but enter with correlated, identity-linked priors and then choose actions that trade off accuracy against conformity to an organizational norm; in equilibrium, this norm becomes the organization’s culture, aggregating subgroup core values through higher-order beliefs about what others will do. The equilibrium is unique and linear, and culture matters not only through heterogeneous priors but through their correlation structure, which shapes higher-order beliefs and generates a cultural multiplier. We show that stronger within-group correlation increases within-group cohesion while amplifying between-group polarization; when groups are asymmetric, the organizational consensus exhibits majority-culture assimilation beyond mechanical averaging. A welfare decomposition clarifies how information policies (better signals and shared evidence) and integration policies (stronger cross-group mixing) reallocate disagreement across within-group dispersion, between-group polarization, and mean distortions. The framework provides a tractable theory of organizational culture as an equilibrium outcome of belief aggregation under coordination incentives, linking cultural structure to measurable predictions and design-relevant comparative statics.