Edgar H. Schein, a professor at the MIT Sloan School of Management, is the one of the most well known theorists working with organizational culture.

In his book: Organizational Culture and Leadership" (1992) Edgar H. Schein defined culture accordingly:

"A pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems".

Edgar H. Schein (1992) developed a model to explain the elements in organizational or corporate cultures. Edgar Schein's model of corporate culture resembles the functionalistic models put forward by cultural theorists such as Geert Hofstede and Fons Trompenaars. The models put forward by Hofstede, Trompenaars and Schein all presumes, that culture can be determined by the core values and assumptions of a given culture - national and/or corporate. The core values will have ramifications for the visible elements in the culture such as e.g. dress codes, behaviors, expected behaviors etc.

Edgar Schein's model of culture contains the following layers:

Artifacts
Artifacts are the visible elements in a culture. Artifacts can be recognized by people not part of the culture. Artifacts can e.g. be dress codes, furniture, art, work climate, stories, work processes, organizational structures etc. The outsider might easily see these artifacts, but might not be able to fully understand why these artifacts have been established. To understand this, outsiders can look at the espoused values in the culture.

Espoused values
Espoused values are the values normally espoused by the leading figures of a culture. Espoused values could e.g. be represented by the philosophies, strategies and goals sought realized by e.g. leaders. However, the values sought by leaders should be supported by some general and shared assumptions about e.g. how a company should be run, or how employees should be managed. If espoused values by leaders are not in line with the general assumptions of the culture, this might signal trouble.

Assumptions
Assumptions are the actual values a culture represents. These values are often ill-defined, and will oftentimes not be especially visible to the members of the culture. Assumptions and espoused values are possibly not correlated, and the espoused values may not at all be rooted in the actual values of the culture. This may cause great problems, where the differences between espoused and actual values may create frustrations, lack of morale and inefficiency. Core assumptions can e.g. be assumptions regarding the human nature, human relationships etc.

Great leaders must understand which culture is present in his/her organization, if the leader wants to lead effectively. If the leader is not aware of the culture, the culture will lead the leader. Accordingly, the leaders of a culture will potentially not be successful in implementing strategies or philosophies that do not fit with the core assumptions of the culture.

Leaders can therefore try to align the espoused values and artifacts to the basic assumptions, or try to change the basic assumptions of the culture's members. The latter can therefore be seen as a cultural change process, where the basic assumptions are changed to fit the espoused values and artifacts of e.g. a company.

Cultural change may be needed, when the environment of the company changes. Competition or new regulations may require a new organizational culture, in which whole new sets of organizational values may be needed. Accordingly, assumptions may have to be changed, so that the company can survive and develop, and so that the values pursued by business leaders will get accepted by the members of the culture.