Edgar H. Schein, a professor at the MIT Sloan School of Management, is 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 developed a model to explain the basic elements of cultures. Edgar Schein's model resembles the functionalistic models put forward by cultural theorists such as Geert Hofstede and Fons Trompenaars, and can be used to analyze all kinds of cultures including corporate and national cultures. The models put forward by Hofstede, Trompenaars and Schein all presumes that cultures can be explained and understood by looking at the core values and assumptions of a given culture. Core values will shape the visible elements within cultures such as e.g. behaviors, expected behaviors, dress codes etc. Edgar Schein defines these visible elements of cultures as espoused values and artifacts.

Below, the three elements of the model are presented, which decribes the relationship between basic assumptions, espoused values and artifacts.

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 reflects the shared values within the specific culture. 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.

By using Edgar Schein's model, leaders will be able to understand cultural elements, and be able to analyze the relationship between deep rooted assumptions and common business practices within the company. Likewise, leaders can try to change the basic assumptions of a given culture, and hence maybe improve the effectiveness of the company. The latter can therefore be seen as a cultural change process, where basic assumptions are sought changed to fit the wanted espoused values and artifacts of 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.