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Abstract
This study examined the impact of organizational culture dimensions on organizational performance metrics such as
Sales growth, Client Satisfaction and Market Share. Organizational cultureplays an indispensable role to be considered by
various dynamic organizations to sustain competitive advantage for exaggerating the organizational performance. The
main aim of the present study is to investigate the relationship among the organizational culture dimensions and
organizational performance metrics in the Software (IT) companies which are operating in state capital region of
Telangana.
Keywords: Organizational culture (OC), Organizational performance (OP), Sales growth (SG), Client Satisfaction (CS),
Market Share (MS), IT industry
Introduction
Culture is the way how organizations perform their actions by accomplishing their tasks.
Organizational culture is a system of shared assumptions, beliefs and values which hinder the
people’s behaviour in various dynamic organizations. Each and every organization has a unique
culture, that provides various guidelines and boundaries for their members in executing the diverse
behaviours. In simple, “The culture of an organization is characterized as the organization’s immune
system” (Michael D. Watkins, 2007).
Organizational Culture leads to the enhanced productivity and employees can achieve their
organizational goal effectively and efficiently (Dr. Darakhshan Anjum & Alka Sharma, May 2014). In
IT industry, the OP is dependent on many variables of OC (R. Durgadevi & Vasantha Shanmugam,
2017). IT employees require an open environment for sharing their novel ideas and participating in
decision making. This enables a collaborative approach in helping each other as they are the crucial
component of the global economy. This type of environment can only be formulated by the culture
of respective organizations.
OC and job performance of employees (Sheridan, 1992). (Luthans 1998) declared that there is a
unique OC in each and every organization, but businesses are not paying any attention towards it.
According to Stewart (2010), norms and values of OC have a direct significant impact on the
organizational performance and profitability. OC has a strong impact on the performance of
employees enhancing the productivity which thus enhances the OP (Fakhar Shahzad, 2012).
According to Fakhar Shahzad, 2014 the most important elements in increasing OP are employee’s
participation and their commitment towards achieving the goals of an organization. Organizational
culture, safety and negotiation and work environment among the software employees are the most
determining factors considered for OP (M Sakthivel Murugan, 2009).
OC acts as a glue in combining the nonhuman resources (hardware) and human resources (software)
of an organization for creating the excellent performance (Yirdaw, 2015). In short, it is how the
organizational employees interact with one another (Simoneaux and Stroud 2014). Warren Buffet
(World’s richest business person) and Howard Schultz (Starbucks Coffee Company founder)
confirmed OC acts as a crucial aspect for organizational success (Flamholtz and Randle, 2012;
Childress, 2013).
OC of an organization forms a vital part of every corporation. It’s truly very significant to recognize
the importance of an OC because it affects the way the organization responds to fluctuating
requirements and desires of the business environment (FatihCura,2018). The culture’s influence on
business performance is appreciated by professional managers (Barbara N. Unger et al 2014). Hence,
to improve OP and to recognize the effect of an OC on employees, it is vital to understand the way
OC affects the OP.
b. Organizational Performance
The phrase performance was emerged in mid-nineteenth century and used primarily to define
results of a sporting challenge. The term performance has its origin from a Latin word called
“performare” which means completion of a proposed activity (Butnaru Gina Ionela and Corina Matei
Gherman, 2012). The term performance evaluates the amount of work done by an organization and
assess competitiveness.
OP comprises of analyzing the performance of firms in adjacent to their targets and objectives. The
Senior Manager of Pitcher Partners Louise James, definedOP as how far a planned team of
individuals are effective in accomplishing their tasks.
Organizations play an indispensable role in daily routine lives and thus prosperous enterprises are
one of the vital components of developing nations. The limelight of any organizations is continuous
performance. In today’s research OP is one of the most commonly used dependent variable. The
influence of OP on companies (Paul Folan and Jim Browne, 2005) has become one of the key
components in the empirical research (Patrizia Garengo et al., 2005). Scholars had diverse thoughts
in defining OP and majority them used performance as a process of collecting and measuring the
input and output efficiency as well as transactional efficiency (Fakhar Shahzad et al, 2012). Donthu
and Yoo, 1998 emphasized that there is an effect of culture on consumer behavior, service quality
and satisfaction. Also, Cho et al 2013 postulated that better OC needs better service quality.
Client satisfaction and Market performance are non- financial performance indicators which aids in
enhancing OP (Chen & Quester, 2006). Majority of companies have been measuring performance on
the basis of customer loyalty and employee satisfaction (Ittner and Larcker, 2003). The OP design has
a direct connection with survival and organizational success (Ahmed & Shafiq, 2014) and it indicates
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how the business completes its goals. Menon, A.G., and Mohanty, B. (2012) examined the articles of
various measures of OP which are published in Strategic Management Journal between 1980 and
2007. It was observed that total 487 times OP was measured in the fore studies. Out of that, 52% of
the studies accessed accounting returns, 17% examined growth over certain period, 12% used as a
stock market returns, 5% measured hybrid measures-a combination of accounting returns, growth
and stock market returns, 4% examined survival as OP measure and 8% used market share as
performance measure. The authors understand that there is an overlap of OP measures (Shailendra
Singh and Vishal Gupta 2010).
Concept of OP is complex and multi-dimensional. It includes both financial and non-financial criteria
(Jaehoon Rhee et al 2010). Extant literature discloses that to measure the financial aspects of
organizational performance, scholars use either stock market or accounting based measures (Borut
Likar et al, 2014; Tsao, S.M. and Lien, W.H. 2013; Hult, G.T.M., et al 2008; Muhammad Saqib Nawaz,
et al 2014).
Colase B. (2009) defined the concept as “a bag-word which covers diverse notions like growth,
competitiveness, profitability, productivity, return and efficiency”. Despite of the fact that profit is
the main aim of any enterprise, researchers spent more on client satisfaction and their experiences
with service organizations. Jason D. Shaw et al 2005, Schneider, B et al 2005 and Anderson et al.,
1997 considered OC and customer satisfaction and established a strong link in influencing OP.
From the above literature, the present study focused on analyzing the impact of OC on OP by
considering three variables of OP i.e., sales growth, client satisfaction and market share.
Objectives: The general objective of this study is to see the effect of organizational culture
dimensions on organizational performance.
The Specific objectives of this study are
1. To study the effect of organizational culture on sales growth.
2. To study the effect of organizational culture on client satisfaction.
3. To know the effect of organizational culture on market share.
Hypothesis setting up
Based on the present study and objectives the hypotheses were set up as follows
H1: All the 12 OC H2: All the 12 OC dimensions H3: All the 12 OC dimensions have
dimensions have have significant impact significant impact on Market
significant impact on on Client satisfaction. share.
Sales Growthn Sales
Management
growth. Management communication Management communication
communication
Employee motivation Employee motivation Employee motivation
Results orientation Results orientation Results orientation
Team orientation Team orientation Team orientation
Employee recognition Employee recognition Employee recognition
Confrontation Confrontation Confrontation
Employee development Employee development Employee development
Programmes programmes programmes
Employee welfare Employee welfare Employee welfare
Job security Job security Job security
Planning orientation Planning orientation Planning orientation
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Innovation and risk Innovation and risk taking Innovation and risk taking
taking
Employee commitment Employee commitment Employee commitment
Research Methodology
Th researcher used self-administered questionnaire to collect the primary data. The data has been
collected from various IT organizations located in and around Hyderabad. A total of 360
Questionnaires were distributed to collect the data from various IT companies. OC was measured as
a result of cumulative experience of the employee, using 35 question items adapted to the software
industry. In doing so, the research:
• Included eight dimensions of corporate culture described by using the survey of
management climate (Gordon & Cummins, 1979).
• Four dimensions were added based on the review of related literature.
The following are the twelve dimensions which are used to conceptualize OC:
✓ Management communication:This dimension involves an openness to communicate by
increasing the level of employee participation.
✓ Employee motivation: This dimension involves creating the acceptance of employees to
perform in their best in terms of their abilities.
✓ Results orientation: This dimension emphasizes on holding employees who are liable/obliged
for clear end results.
✓ Team orientation: This dimension analyses the amount of cooperation and coordination
among the employees of different departments.
✓ Employee recognition: This dimension emphasizes on to the extent of recognition of
employee by the organization in the form of employee recognition programmes.
✓ Confrontation: This includes to the extent of addressing the issues of the organization
openly.
✓ Employee development programmes/ People orientation: This dimension is concerned with
the growth and development of employees by the organization.
✓ Employee welfare: This dimension emphasizes on the amenities that are provided for the
betterment of employees.
✓ Job security: This dimension emphasizes on the assurance for the peoples jobs in the
organization.
✓ Planning orientation: This element focuses on how the plans are managed by the employees
by avoiding the deviations.
✓ Innovation and Risk taking: This element defines the extent to which individuals are
encouraged to take risks and innovate.
✓ Employee commitment: This element focuses to the extent of manager-subordinate
relationship in the organization to enhance organizational excellence.
• Scaling: In total, thirty-five variables from the above twelve dimensions were selected to
measure OP. Respondents were asked to evaluate on these thirty-five parameters. All were
measured on five-point Likertscale from 1(strongly disagree) to 5 (strongly agree).
• OP Metrics: The information was collected from the various IT companies of state capital
region on the following OP metrics:
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1. Sales Growth
2. Client Satisfaction
3. Market Share
Results and Analysis of the Data
1. Exploring the Relationship between OC and Sales growth
The relationship between various dimensions of OC and Sales Growth was first investigated
using Karl Pearson product correlation analysis. Preliminary analysis revealed that there were no
violation of the assumptions of linearity and homoscedasticity (i.e homogeneity of variance), and all
associations were found to be significant at 0.95(1-α) confidence levels, with the strongest positive
association being between sales growth and the dimension i.e., management communication
(r=0.87, p<0.05), employee motivation (r=0.845, p<0.05), team orientation (r=0.86, p<0.05) and
innovation and risk taking (r=0.82, p<0.05). Negative correlation existed between sales growth and
confrontation (r=-0.873, p<0.05) as shown in Table-1. In order to observe the mathematical model,
fit of the multiple regression model and to find out the best predictors of sales growth, multiple
step-wise regression was applied using SPSS-20 software tool with the all twelve dimensions of OC
as the predictors.
Preliminary analysis revealed no violation of the assumption regarding sample size, multi
co linearity and outliers. In terms of the relationship between the twelve OC dimension and sales
growth, the adjusted R2 = 0.77 was found to be statistically significant (F=8.826, P<0.05) with 0.95
confidence level as shown in Table-3. Five, out oftwelve dimensions of OC namely ‘management
communication’, ‘employee motivation’, ‘team orientation’, ‘innovation and risk taking’, and
‘confrontation’ were found to be statistically significant (p<0.05). In addition, management
communication had the highly positive effect (b=1.159, t=4.971, P<0.05) on sales growth whereas
confrontation has a negative impact (b= -1.26, t= 3.560, P<0.05) with sales growth in IT companies.
Also other three variables such as employee motivation (b=0.249, t= 4.257, p<0.05), team
orientation (b=0.124, t= 2.840, p<0.05), innovation and risk taking (b=0.198, t= 3.53, p<0.05) showed
positive effect as shown in Table-4. The values of the Variance Inflation Factor (VIF) and Tolerance
Value (TV) for the linear step-wise regression model statistics is presented in Table-2. As indicated in
Table-2, the values of VIF, served as an indicator of multi co linearity. Clearly these values were far
below the cut-off value of 10. In addition to it could be seen that the tolerance value for each
independent variable are not less than 0.20 or 0.10 that indicates there is no evidence of multi co
linearity. In other words, there is no significant evidence of multi co linearity problem in the
regression model as presented.
Table -1: Correlation Analysis: Organizational Culture and Sales Growth
Dimensions of organizational Culture
Pearson
Organizational
Risk
People
communicati
commitment
Performance
Confrontatio
programmes
Managemen
developmen
Job security
recognition
Correlation
orientation
orientation
orientation
orientation
motivation
Innovation
Employee
Employee
Employee
Employee
Employee
Planning
welfare
Results
taking
Team
Karl
and
on
/
t
-
0.87 0.845 0.58 0.86 0.61 0.64 0.70 0.67 0.57 0.82 0.56
SG r ** ** ** ** **
0.87* ** ** ** ** ** **
*
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In terms of the relationship between twelve OC dimensions and client satisfaction, the
adjusted R2 = 0.68 was found to be statistically significant (F=10.859, P<0.05) with 0.95 confidence
level as shown in Table-7. Three, out oftwelve dimensions of OC namely ‘management
communication’, ‘employee motivation’ and ‘innovation and risk taking’, were found to be
statistically significant (p<0.05).
Planning orientation
Results orientation
Employee welfare
Team orientation
communication
Organizational
Confrontation
Management
development
commitment
Performance
Job security
recognition
orientation
Employee
Employee
Employee
taking
PW 0.82* 0.80* 0.58* 0.65* 0.61* - 0.58* .70* .67* .57* .81* .56*
r * * * * *
I 0.67** * * * * * *
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predictors. Preliminary analysis revealed no violation of the assumption regarding sample size,
multicollinearity and outliers.
In terms of the relationship between the twelve OC dimensions and market share, the adjusted R2 =
0.77 was found to be statistically significant (F=8.706, P<0.05) with 0.95 confidence level as shown in
Table-11. Four, out of twelve OC dimensions namely ‘management communication’, ‘employee
development programmes/people orientation, ‘innovation and risk taking’ and employee
commitment were found to be statistically significant (p<0.05).
In addition, management communication (b=0.182, t=2.90, P<0.05), employee development
programmes/ people orientation (b=1.13, t= 5.12, p<0.05), innovation and risk taking (b=0.14, t=
3.43, p<0.05) and employee commitment (b=1.58, t= 6.38, p<0.05) showed positive effect on market
share as shown in Table-12. The values of the Variance Inflation Factor (VIF) and Tolerance Value
(TV) for the linear step-wise regression model statistics is presented in Table-10. As indicated in
Table-10, the values of VIF, which served as an indicator of multi co linearity, are less small. Clearly
these values were far below the cut-off value of 10. In addition to it could be seen that the tolerance
value for each independent variable are not less than 0.20 or 0.10 that indicates there is no evidence
of multi co linearity. In other words, there is no significant evidence of multi co linearity problem in
the regression model as presented.
Table-9: Correlation Analysis: Organizational Culture and Market Share (MS)
Dimensions of organizational Culture
Pearson Correlation
and
Results orientation
People orientation
Employee welfare
Team orientation
communication
Organizational
Confrontation
programmes/
Management
development
commitment
Performance
Job security
recognition
orientation
motivation
Innovation
Risk taking
Employee
Employee
Employee
Employee
Planning
QO 0.89* 0.51* 0.76* 0.6* 0.63* - 0.83* 0.69* .46* .62* .84* 0.81*
r * * * * *
S .73** * * * * * *
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