CRITICAL ANALYSIS

Relationship between Organisational Culture and Organisational Performance

Abstract

This study explores the moderating role of national culture and industry characteristics (i.e.? technology-type and growth rate) on the relationship between organizational cultural values and business outcomes. It is suggested that the relationships between specific organizational values and business outcomes (both customer satisfaction and business performance) should vary across national cultures. Specifically? it is anticipated that the relationship between specific organizational values and business outcomes are likely to be greater when the cultural values of organizations are consistent with those of the host country? technology? and growth characteristics.

Relationship between Organisational Culture and Organisational Performance

Introduction

The intensification of research on organizational effectiveness has led to the identification of several organizational factors that have an influential role in the determination of organizational performance. Organizational culture is one such factor that has received much attention in organizational behavior (e.g.? Chatman and Jehn? 1994; Hofstede et al.? 1990; Marcoulides and Heck? 1993; Schein? 1990; Trice and Beyer? 1984) and marketing (e.g.? Deshpandé? Farley? and Webster? 1993; Deshpandé and Webster? 1989; Kitchell? 1995) literatures? because of the key role it plays in determining levels of organizational outcomes. A common hypothesis about the role of organizational culture is that if an organization possesses a "strong" culture by exhibiting a well-integrated and effective set of specific values? beliefs? and behaviors? then it will perform at a higher level of productivity (Denison? 1984). Given the influence of an organization's culture on its productivity? the development of theory to guide the study of the forms and consequences of organizational culture is of primary importance to improving organizational performance. Such efforts will be rewarding? particularly because the variables which comprise culture have been postulated to be under the control of organizational leaders (e.g.? Deal and Kennedy? 1982; Ouchi? 1981).

In addition to internal factors? features present in the external environment in which the organization operates are likely to affect the suitability of an organization's culture. Specifically? national culture and industry characteristics are likely to determine which organizational values lead to superior business outcomes. In other words? the parameters of the relationships between specific organizational values and outcomes will logically differ for firms in vastly different national cultures and in industries using vastly different technologies. The goal of the present research is to seek to understand these important sources of influence.

This paper explores the possible moderating effects of national culture and industry characteristics--technology used and growth rate--on the relationship between organizational culture and outcomes (both customer satisfaction and business performance). It also discusses whether organizations whose cultures match those of their home country experience lower customer satisfaction and performance levels when they operate in another country with different cultural orientations.

Conceptual Background and Hypotheses

Organizational Culture

As a result of reviewing more than 100 studies in organizational behavior? sociology? and anthropology? Deshpandé and Webster (1989) defined organizational culture as a "pattern of shared values and beliefs that help individuals understand organizational functioning and thus provide them with the norms for behavior in the organization" ...