You are on page 1of 21

The Impact of Organizational Culture on Company Performance

1 Introduction:

As the business environment all over the world became very competitive and the
organizations are struggling to survive within this rivalry world. Organizations start to
find and looking for other ways to be more innovative, creative and competitive
searching for the most important factors that could affect their performance, thus among
many of the different factors that could influence the organizations performance; the
organizational culture has been suggested in different studies by many researchers (Yesil
& Kaya, 2013).

The aim for the study of this research is to determine the relationship between the
organizational culture and its influence on the company performance, and in order to
know how organizational culture can help in enhancing the organizational performance,
given the fact that many organizations need a real different change in their external
environment dynamism, where it was found that many and different organizations have
fallen, despite the fact that they followed the most widely recognized techniques and
common strategies, but they have failed to implement them because of idleness, and even
opposition, showed in their organizational culture (Neagu & Nicula, 2012).

In these circumstances, organizational culture must be broad and accepted


through all the organization if the goal is to positively affect the organization
effectiveness and evolution, where managers and directors must distinguish each element
and component in the organization culture that slow down the organization development
and change them into attitude, values and behaviors that support the accomplishment of
the new business objectives (Neagu & Nicula, 2012).
The Impact of Organizational Culture on Company Performance

a literature review was made, where the most important factors and dimensions of
culture were identified, the performance management and organizational performance
were illustrated with identification of the four perspective of the balanced scorecard as
one of the most important measurements of the organizational performance, then finally
we concentrated on reviewing the literature on the link between organizational culture
and organizational performance.

2 Organizational Culture

Schneider, B., Ehrhart, M. G., & Macey, W. H. (2013) stated that there is not
agreement on what culture is nor how it should be studied, but the issues have been
somewhat clarified.

Raymond Williams argued about the culture complexity and did consider it as a
trickier to define and to analyze, culture is one of the two or three most complicated
words in the English language. (Williams, 1983, p. 87)

(Martinez, Beaulieu, Gibbons, Pronovost, & Wang, 2015) indicated that


organizations are not just firms, government agencies, hospitals and schools but it is
everything around us as, unions, social movements, communities and more.

Waterman (1982) point out that the organizational culture as a predominant and
cohesive set of shared values transferred by different typical means for example via
stories, myths, legends.

As indicated by Schein, the organizational culture is the values, beliefs and norms
combined together created by a certain group of people or community that may affect the
employees behavior or the way of thinking and feel during facing or solving different
problems and issues that may arises (Schein, 2010). This model has worked effectively
for an adequate timeframe keeping in mind the end goal to be affirmed and will be
transmitted to new employees as a fitting model of perception and analysis of problems
(Girneata & Potcovaru, 2015).
The Impact of Organizational Culture on Company Performance

Moldoveanu and Dobrin stated that the organizational culture are a set of
knowledge, ideas, standards, rules and basic assumptions that shape the method by which
work is processed and rotated by the employees (Moldoveanu & Dobrin, 2007). While
Shahzad in a short definition considered the organizational culture as a set consists of
knowledge, values, beliefs, explanations, communications and behaviors for a different
group of people, gathered together at the same time and at the same place (Shahzad,
2012).

(Neagu & Nicula, 2012) stated that the organizational culture considered to be
one of the most critical important subjects that drawn the attentions of many literatures
lately, because of the extraordinary performance accomplished by the Japanese
organizations, as result of their impressive degree of their specific cultures.

Organizational cultures in an organization helps in understanding on how to


differentiate between what is actually done inside the organization and what is officially
announced by managers. Knowing that there are different principles, techniques,
articulations, decisions are translated and applied through organizational culture (Neagu
& Nicula, 2012).

Ovidiu Nicolescu and Ion Verboncu provided a comprehensive definition for the
organization cultures and indicated that it is a set of values, beliefs, ambitions,
expectations and behaviors combined together overtime in each organization, which
dominates inside the organization and accommodate directly and indirectly the
organization functionality and performance (Nicolescu & Verboncu, 2001).

Schein defined cultures in term of basic assumptions, values and the shared belief
(Schein, 1985). Ovidiu-Iliuta indicated that Schein point of view is that the
organizational culture do exists at three levels: basic assumptions, values and the
artifacts: where organizational culture consists of the principles and norms that shows the
appropriate behaviors inside the organization from those who are not, and that cultures
should not be identical or similar across the different departments within the same
organizations, as may overtime different groups inside the same organization develop
their own sub cultures (Ovidiu-Iliuta, 2014).
The Impact of Organizational Culture on Company Performance

According to Stewart, the organization norms and values can directly affect the
employees to be fully devoted to their organization and those norms cannot be seen but if
the companies interested on maximizing their profit and in increasing their employee
productivity, norms are to be considered on the first place (Strewart, 2010).

(Hofstede, 1984, p.21) defines culture as "the collective programming of the


mind, which distinguishes one human group from another ... Culture in this sense,
includes systems of values, and values are among the building blocks of culture." Few
years later Hofstede then broadened culture as "mental programming ... patterns of
thinking and feeling, and potential acting" (Hofstede, 1991, p.4)

2.1 Dimensions of Organizational Culture

Hofstede searches the different elements of culture that can influence and affect
the organizational behavior. Using the IBM employees in 50 different countries in three
regions in the world, he provides reasons why culture differences may exist in these
different regions. And he did perfectly analyze the organization culture of IBM on the
basis of four dimensions (power distance (PDI), individualism (IDV), uncertainty
avoidance (UAI) and masculinity (MAS)) (Hofstede, 1980).

Hofstede and Bond determined the 5th dimension (Long-term Versus Short-term
Orientation) based on eastern Chinese values using 23 countries (Hofstede & Bond,
1988).

(Hofstede & Peterson, 2000) inspected the issues of the cooperation between
national cultures and organizational culture. The studies demonstrated that there are
highly resistant national and regional cultural groups over time, influencing the behavior
of both society and organizations, and that define and show why some subsidiaries of the
same organization can be more productive than others although they have the same
organizational culture.

2.2 Hofstede Dimensions of Organization Culture:


The Impact of Organizational Culture on Company Performance

Power Distance: It measures the degree of acceptance of inequality among people


of the same society, or employees on the same organization (Hofstede, 1980).

A highly PDI classification is the larger the acceptance of inequality; peoples are
tending to be highly accepting the hierarchical order, where everyone in the society has a
place without any explanation or further justification (Perera & Mathews, 1990).

A lower PDI means explanation and justification is required to understand why these
inequalities do exist; where peoples with low PDI claim for their right to eliminate and
minimize that inequality in that relationship who do exist between the subordinates and
the supervisors, whereas low PDI values states that all peoples are equals whether they
are supervisors or subordinates and they all should have equal rights (Hofstede, 1980,
2001).

Individualism versus Collectivism: Whether people are looking after themselves


and their immediate family only or they are belonging to groups and looking after each
other in exchange for loyalty (Hofstede, 1980).

The more IDV scores the more the people focus on their own self interest rather than
on the groups they may belong, where people in that case are more independent
(Hofstede, 1980,2001).

Masculinity/Femininity: Cultures in which the prevailing social values are success,


money and things or the overwhelming social values are caring for others and the quality
of life (Hofstede, 1980).

Uncertainty Avoidance: are people are risk takers or risk averts (Hofstede, 1980).

Perera and Mathews pointed for the main issue involved in that dimension; which is
the fact of the unknown future and how people interact toward that, the more uncertainty
avoidance peoples are likely to react for the elimination of the unpredictable future that
creates a higher level on anxiety (Perera et al., 1990).
The Impact of Organizational Culture on Company Performance

Long-term Versus Short-term Orientation: the length of time where people make
plans and expect results and their tendency of scarifying today for future results
(Hofstede et al., 1988).

2.3 Factor Affecting Organizational culture:

(Girneata & Potcovaru, 2015) indicated in their study that there are several factors
that significantly play and contribute in changing the organizational culture, these factors
are as follow:

Clarity: in order to adapt to the market environment, leaders must understand well the
organization vision, mission, goals and values and make sure that they are delivered
clearly to their subordinates;

Communication: as highly skilled employees is now needed in all different industries,


employees also must understand clearly what their role and how their work affect the
organization objectives thus communication skills are needed to be widely shared
through the company all different departments.

Collaboration: is the environment where employees working and collaborate together,


competition between employees can just produce short term results while collaboration
can achieve long term sustainable growth for the organizations;

Connections: To seize the opportunities employees must be connected together


especially in the dynamic environment;

Compassion: to build other success factors, employees must be emotionally involved


together where they will be able to understand each others opinions, ideas and beliefs;

Credibility: to strong the link between the intention and results, leaders must take
systematic actions to build the trust, maintain stability that result at the end to
organizational success;

Creativity: organizational culture that support the linear thinking and creativity through
applying automated straight procedures will results in creating new competitive
advantages.
The Impact of Organizational Culture on Company Performance

2.4 The Denison Theory of Organizational Culture

Starting from Schein (1985) approach of organizational culture, Denison


developed the model of organizational culture based on four cultural traits adaptability,
mission, involvement and consistency (Denison & Mishra, 1995).

Denison designed a framework using the four cultural traits to show the
differences between two important issues, the difference between the internal integration
and external adaptation and between the change and stability, thus involvement and
consistency focus on the dynamics of internal integration while mission and adaptability
focus on the dynamic of external adaptation, on the other hand involvement and
adaptability stands for the organization ability to change, while consistency and mission
shows the organization ability remain stable and predictability overtime (Denison &
Mishra, 1995).

3 Company Performance
3.1 Performance Management

Ovidiu-Iliuta defined the performance management as a strategic and integrated


approach to achieve a sustainable competitive advantage for an organization through
improving the employees performance and investing in their capabilities, by doing that
the organization goals will be met effectively and efficiently, the study stated that people
are the most important assets who create the competitive advantage and not the capital
(Ovidiu-Iliuta, 2014).

Campbell, McCloy, Oppler, and Sager (1993) stated that job performance is a
controllable individual action that support and lead at the end in reaching the
organizational goals.

Performance management is a system that makes use of the human resources full
potential by removing the barriers and motivating the employees of the organization
(Armstrong & Baron, 1998). Kandula states that performance management is to create
competitive advantage through development and employees motivation (Kandula, 2006).
The Impact of Organizational Culture on Company Performance

Ovidiu-Iliuta assumes that training strong employees through developing their


capabilities will positively affect the organization as its competitive advantage will be
improved (Ovidiu-Iliuta, 2014).

3.2 Organizational Performance

Organizational performance is a method for organizing the behaviors and


implications that serves the employees of the organization as a guide for adaptation and
survival, where solid leaders can effectively spread the core values among the
organization employees through clear vision and mission statements; they also
acknowledge their employees about the expected performance, how they will be
evaluated? And at the same time they link motivation to the achievement of these
performances, thus they creates an internal competition inside the organization, that is
lead at the end to the creation of strong organizational culture results to a long-term
positive business performance (Girneata & Potcovaru, 2015).

The estimation of the organization performance in a manufacturing and services


organizations is critical (Brynjolfsson, 1993). Kaplan and Norton indicated that clear
performance cannot be provided by a single measure, where managers have to choose
between operational and financial measures (Kaplan & Norton, 1992).

The balanced scorecard was proposed by Kaplan and Norton (1992) to measure
the organization performance, where it consists of four dimensions (Financial
Perspective, Customer Perspective, Internal Business Perspective and Learning
Perspective), the balance scorecards considered to be one of the most critical tool that
works in supporting and ensuring that the organization strategy is translated into rational
set of performance measurements. It is simply contains a set of financial and non
financial measures that allow managers to have a quick comprehensive view on
businesses that assists them at the end in achieving the organizations goals and objectives
in a successful manner (Kaplan & Norton, 1992).
The Impact of Organizational Culture on Company Performance

Yesil and Kaya carried a study on the effect of organizational culture on firm
financial performance, and stated that it is too difficult to indicate that the culture
dimensions do not affect the company performance directly without mediator and advised
for further studies using different context and different measurements as Balanced Score
Cards (Yesil & Kaya, 2013).

(Chavan, 2009) indicated that the most important part of the balanced scorecard is
the feedback and learning, where leaders will be able to analyze the drawn data from the
balanced scorecard and determine whether they are on the right way or where the
modification and adjustments should take place and how it should be, in another words
changes will be the objectives that should be defined correctly to rebuild the initiatives to
improve the capabilities.

3.3 The Balanced Scorecard Perspective (Chavan, 2009)

3.3.1 Financial Perspective

How the organization should appear to their shareholder to succeed financially?


Where the measures are return on capital; improved shareholder value and asset
utilization.

3.3.2 Customer Perspective

How the organization should appear to their customer to achieve vision? The
measures are: products and/or service qualities; customer relations; image and reputation.

3.3.3 Internal Business Processes

At what business processes the organization must surpass to attain the


shareholders and the customer satisfaction, the measures are product and service
production; product and service delivery and the after sales services.

3.3.4 Learning and Growth Perspective

How the organization will maintain and keep their ability to change and
improvement to achieve the organization vision? The measures are; the capabilities of the
The Impact of Organizational Culture on Company Performance

employees; the capabilities of the organization information system, motivations and


employees empowerment.

Source; Kaplan, R. S., & Norton, D. P. (2007). Using the Balanced Scorecard as a Strategic
Management System. Harvard Business Review, 85(7/8), 150-161.

According to Kaplan and Norton (2007) many organizations found that there is a
cause and effect relationship between the four perspective measurements of the balanced
scorecard, thus there is a significant correlation between employees morale which is one
of the measures in the learning and growth perspective, and customer satisfaction which
is the most important part on customer perspective measure. Also customer satisfaction,
The Impact of Organizational Culture on Company Performance

in turn was correlated with quick invoice payment that is lead to an essential decrease in
account receivable and so a higher return on capital employed. The organizations found
also that there is a correlation between employees morale and the number of suggestions
made by the employees - the two measures in the learning and growth measure and
between an increased number of suggestions and lower rework which is an internal
business process measure.

4 The Relationship between Organizational Culture and the


Company Performance:

4.1 The Link between Organizational Culture and Performance

Many literatures on this topic assumed that culture is directly related to


performance since culture affects the behavior of the employees of the organization
through two main functions internal integration and coordination (Galves & Garca,
2011; Hofstede, 1988; Martins & Terblanche, 2003)

Kandula (2006) stated that the main key to good performance is reaching a strong
culture. The study asserts that because of the differences in organizational culture,
implementing the same strategies in two similar industrial organizations even at the same
location may not lead to the same results at the end.

According to Ovidiu-Iliuta (2014) many scholars indicated that the main element
that support in achieving a perfect performance is to develop a strong organizational
culture. A strong culture is the one in which the employees of an organization work
effectively together, share the same core values, and take their own decisions that is
meets at the end the organization main goals and objectives. Also sometimes culture
became a barrier when trying to apply new strategies, and that is clarify why strategies
may succeeded in one company and fail in another, although the two companies are in the
same industry or even at the same geographical area (Ovidiu-Iliuta, 2014).

Organizational culture and performance management are interdependent thus the


change in one affects directly the other, that is why mangers have to understand the effect
The Impact of Organizational Culture on Company Performance

of organizational culture to get benefit from practicing the performance management


(Magee, 2002).

Other studies addressed the relationship between the type of culture and the
organizational performance, indicating that the organizational culture has an active and
effective direct role in performance management, cultivated by the belief that cultures are
different and that certain cultures may acts and perform better than others, also the
studies showed that strong and positive cultures empower the employees operating
effectively in a great attitude attaining the organizational success, whereas a weak and
negative cultures may demotivate the organizations employees and decrease their
performance and end up with no achievement (Kandula, 2006; Ovidiu-Iliuta, 2014).

Ogbonna (1993) argued that management can predict the employees behaviors
and their responses to a certain strategic options and minimizing the degree of undesired
outcomes if the strongly held values are widely shared.

To manage and control the organizational cultures managers and leaders must be
characterized of having a high degree of ethics and morality, thus the actions and values
they takes must be in context to what expected by their employees, mutual respects
affects the relations between employees and their managers, leaders is the employees
model where lack of involvement in any raised problem will influence the employees
negatively to act the similarly which will result at the end to low performance and failing
in achieving the organizational goals. Also companys leaders must encourage their
employees by giving them the opportunity of growth and development, support them
with the needed training programs where employees in turn will feel that their tasks are
being appreciated acting directly to the success of their leaders ending to achieve the
organizational objectives, if the employees feels the opposite, the stress and tensions will
affect them negatively leading to a reduce in their performance and the organizational
performance as well (Girneata & Potcovaru, 2015).

Many studies indicated that the company performance depending on the degree of
shared values of the strong culture, and that the reason of linking the performance to the
The Impact of Organizational Culture on Company Performance

organizational culture is that culture can play a significant role in creating competitive
advantage (Ogbonna & Harris, 2000).

According to the resource-based view of the firm, culture considered to be one of


the organization source of sustainable competitive advantage because of its valuable,
rareness, complexity and its difficultly of being imitated by other competitors as its most
important characteristics is being tacit (Coyne, 1986).

Although that many theorists and researchers indicated that organizational culture
is linked to the organizational performance, it was also found that other researchers and
studies suggested that the relationship between the organizational performance and
organizational culture are weak, due to in fact of the appearance of what is called the
recourse based view of competitive advantages, that claims that the success of culture to
create a sustainable competitive advantage depend on the degree of its rareness,
complexity and imitability (Ogbonna & Harris, 2000).

Krefting and Frost (1985) proposed that if the organization boundaries analyzed
and defined in a way that facilitate the employees interaction together by limiting the
scope of processed information to a proper levels, the organizational culture can succeed
in creating a competitive advantages.

Early researchers also claim that the raise of the organizational sustainable
competitive advantages comes from the generation of the organizational competencies
and that both are unique, unrivaled and difficult to be imitated by other competitors. Thus
the organizational culture uniqueness quality can succeed in making it a powerful source
that generates superior advantages over the competitors. Also many studies advised
researchers and organizations to discover the multiple drained benefits that can be
obtained from the culture more than just concentrating on the perceptible side of the
organization (Ogbonna & Harris, 2000).

Ogbonna and Harris (2000) indicated that many studies are perfect in their claims
in linking the organizational performance to the organizational culture, and that is shown
in what is called the excellence writers works who contend that the successful
companies and organizations are differentiate from others by their ability in developing
The Impact of Organizational Culture on Company Performance

and creating cultural values that are consistent with the organization strategies, although
this work was widely accepted by many researchers, but it also faced many criticism and
arguments by others.

Denison (1990), Gordon and DiTomaso (1992) both assumed that there is a link
between a specific organizational culture attributes and the organizational performance,
and that the organizational culture will keep linked to the organizational performance if
its succeeded in being adapted to the environmental changes, with preserving that the
culture must remains on its unique qualities of being difficult to be imitated by others and
do not depend only of being strongly widely shared.

Kotter and Heskett (1992) provided significant evidence that the organizational
culture is an impressive element that affects the organization sustainable success, they
conducted a study along eleven year period for 207 large American companies where
they discovered that those companies who focused in developing their culture in all the
managerial elements including employees, customers and shareholders with a strong
management system at all levels, perform better than those who did not manage their
cultures well, where those who performed better and managed their culture well
succeeded in increasing their revenue by 682% and net income by 756% comparing to
increase in revenue for only 166% and only 1% net income for other companies who did
not.

(Girneata & Potcovaru, 2015) argued that the main symptoms that indicate that
there is a weakness of organizational culture include the following:

No mutual information sharing between the employees.


The employees do not have the feeling of being a part of the organization.
Employees do not understand that their tasks affects the organization
objectives, they just concern of doing what is required, without having the
chance to express their knowledge.
No mutual trust between the employees at all levels.
Existing values and employees received rewards are conflicting.
Different leadership style within the same organizational culture.
The Impact of Organizational Culture on Company Performance

(Girneata & Potcovaru, 2015) indicated that strong managers have to search for
these negative elements and provide suitable solutions to fast cure the negativity that
opposes the company strategies and turn it to positive elements where the positive
organizational culture will enable the organization to drain a great benefits, and that can
be achieved by training strong employees through developing their capabilities that will
positively affect the organization as its competitive advantage will be improved over
other competitors.

(Girneata, 2014) states that adaptability has a direct effect on organization success
as the organizational culture support the companies social and economic efficiency as
well as the companies adaptability in the competitive context, and that the relation
between adaptability and performance in most industries identified when there is a strong
changes in the business environments.

(Ganescu, 2011) pointed for the importance for being an organization with a
strong effective culture, as the negative consequences of the economic and social
environment changes can be mitigated, the study also states that the organizational
culture is very important in achieving the organization sustainable growth objectives,
which can be obtained by achieving the business excellence, employees engagements,
product quality and customer satisfaction that leads at the end to the growth in the
organizational culture as well.

4.2 Denisons Framework of Organizational Culture

Denisons developed his model of organizational culture based on Schein (1985)


approach of organizational culture by underling the beliefs and assumptions that reflect
the deepest level of organizational culture, where the comparisons of organizations is
made based on the surface level values and between their manifest practices. Where the
values considered being more attainable than the assumptions and more credible than the
artifacts. (Denison, 2000 in Yilmaz, 2008)
The Impact of Organizational Culture on Company Performance

Denisons framework main purpose is to distinguish between two important


issues, the difference between the internal integration and external adaptation and
between the change and stability, the model was developed using four cultural traits
adaptability, mission, involvement and consistency all this traits have been shown in the
literatures and many studies to have an influence on the organizational performance
(Denison & Mishra, 1995)

Source; Denison, D. R., & Mishra, A. K. (1995). Toward a theory of organizational


culture and effectiveness. Organization science, 6(2), 204-223.

Denisons theory proposes that organizations are most effective if they have high
level of employee involvement, staple internal consistency, adaptability and have a strong
clear mission (Denison & Mishra,1995).

4.2.1 Adaptability

(Kanter, 1983) criticized the well integrated organization of being difficult to


react and change to the market. (Nadler 1998, Senge 1990, Stalk 1988) indicated that
most adaptable organization are derived by their customers, and characterized of being
risk takers, have the ability to change and always learn from their previous experiences
and their mistakes.
The Impact of Organizational Culture on Company Performance

Organizations with high performance differentiated from those of low


performance by their strong ability in restructuring behavior and procedures that help
them to adapt and react directly to the competitive environment and customers. Also
successful organization encouraging the new ideas and seeking different solutions for
solving any problems may arise, they always keep changing the systems for better
organization improvement. Moreover the employees of high performing organizations
work in upgrading themselves they keep searching for new ideas, different values and
better process to meet their customer expectations in addition to their ability to learn from
their mistakes before learning from their success (Ovidiu-Iliuta, 2014).

(Boyce, Nieminen, Gillespie, Ryan, & Denison, 2015) identified the adaptability
as the degree in which the organizations concentrated on learning from other competitors
as well as from their customers, and also on having a flexible response and adaptive
reaction at both organizational and employees levels.

4.2.2 Mission

Organizations are considered to be effective and successful if they have a sense of


purpose and clear directions that help in defining the organizational strategic objectives
and main goals and expressing the organization vision of how the company will be in the
future (Mintzberg, 1987; 1994; Ohmae, 1982; Hamel & Prahalad, 1994). When an
organizations basic mission changes, consequently changes in different part of the
organizational culture will occur (Denison, 1990).

(Ovidiu-Iliuta, 2014) indicated that effective organizations are those who have a
very clear mission and succeed in acknowledging their employees how their works and
tasks support and assist in the organizational performance, and how their daily works
related to the organization vision. Also successful organization characterized by having
multiyear strategies, their objectives and goals are short term and high priorities are
established.

Mission is the degree in which the companies have designed clearly their strategic
direction that allows setting the organization goals and objectives and which progress can
be traced (Boyce et al., 2015).
The Impact of Organizational Culture on Company Performance

4.2.3 Consistency

(Saffold, 1988; Davenport, 1993) stated that successful organizations are those
who have strong cultures that are highly consistent, well integrated and well coordinated.
The behavioral and norms are rooted in a set of core values, the employees of the
organizations interact positively together where the leaders and the subordinates can
reach easily to an agreement even there is a diverse point of view (Block, 1991).
Consistency considered being a powerful source of the organization stability and internal
integration that results from high level of conformity and from a common mentality
(Senge, 1990).

Consistency is the organization main source of control, coordination and


integration. It supports organizations in developing their internal governance system
based on consensual support. Where effective organizations support managers and
employees in taking consistent decision, any problems arises are discussed openly
between all the involved parties as all employees understand well that their tasks and
work affect others and affected by others, that is why employees in those successful
organization keen to keep their tasks aligned to the organizational goals and objectives
(Ovidiu-Iliuta, 2014).

Internal consistency is the degree of existence of a clear set of values and


acceptance of these values inside the organization, where effective organization have a
smooth coordination and integration between all departments and employees on the same
organizations (Boyce et al., 2015).

4.2.4 Involvement

In successful organizations executives, managers and employees at all level are


empowered to have their own decision; they understand well that their decision will
affect their work which is directly linked to the organization goals and objectives
(Katzenbach, 1993; Spreitzer, 1995).

High involved organizations differ from others by their ability in making their
employees feel self appreciated in return employees become more attached and self
The Impact of Organizational Culture on Company Performance

committed toward their organization, they invest in their employees capabilities through
several training and coaching, organizations are empowering their employees in an
informed framework where each employee knows well his main responsibility and his
limit which decisions they are allowed for and which is beyond their responsibility, also
high involved organizations are team oriented where all employees works in a team and
support each other to achieve at the end the organizational goals and objectives (Ovidiu-
Iliuta, 2014).

(Kotrba, Gillespie, Schmidt, Smerek, Ritchie, & Denison, 2012) indicated that
there is a kind of interaction between the cultural consistency and the other cultural traits
mission, adaptability, and involvement on the organizational performance, where they
carried a study to discover whether these interactions affect the relationship between the
cultural consistency and market to book ratio, sales growth, and return on assets. The
study derived a data from 88879 employees in 137 public organizations using the
Denison Organizational Culture Survey. The study shows that there is a significant
positive interaction between the consistency and the other culture traits, thus high
performer organizations can predict the market to book ratios and the company sales
growth, as they are found to be both consistent and adaptable. Also the study shows that
there is a negative interaction when predicting return on assets.

Although Denison and Mishra (1995) stated that the four culture traits have a
significant positive effect on the company performance, other researchers indicated that
there are negative results observed during their study (Deshpande, Farley, & Webster,
1993).

Deshpande et al. (1993) conducted a study in Tokyo for a sample of Japanese


organizations and discovered that the market culture is correlated with better
performance, followed by the adaptability (adhocracy culture), while the involvement
(clan culture) and the hierarchy culture are more correlated with a bad performance. Also
Xenikou and Simosi (2006) concluded from their study for a sample of Greek companies
that the market culture was associated to the organization performance while the clan
culture (involvement) or humanistic orientation did not show any relation with the
The Impact of Organizational Culture on Company Performance

company performance, and that the organization high performance are derived from the
organizational norms that create the productivity and effectiveness.

Other studies finding support the theoretical argument that a mediator variable
affect the relationship between the organizational culture and the organizational
performance where Tseng (2010) stated that knowledge conversion mediates such
relation, Zheng, W., Yang, B.,. & McLean, G. N. (2010) went for knowledge
management as a mediator, and Han, J.K., Kim, N., & Srivasta, R.K. (1998) went for the
innovativeness as a mediator variable. Thus other empirical studies indicated that there is
no direct relation between organizational culture and performance (Han et al., 1998;
Tseng, 2010; Zheng et al., 2010).

5 Conclusion

Despite the fact that there are several studies and authors stated that there are no
direct link between the organizational culture and performance, and indicated that
mediator variables can link between the two variables (Han et al., 1998; Tseng, 2010;
Zheng et al., 2010). There are many other studies provide with an evidence that there is a
direct relation between organizational culture and organizational performance (Denison,
1990; Denison & Mishra, 1995; Fey and Denison, 2003; Denison et al., 2004). Also other
type of studies extended their research from previous studies on the link between
organizational culture and performance, and empirical demonstrated the importance of
the culture traits interaction on performance (Kotrba et al., 2012). For instance (Brown,
1998; Kim, S., Lee J., & Yu K., 2004) concluded that strong organizational culture has
significant important consequences for its impact on the organizational performance. On
the other hand Yesil and Kaya study findings support the argument which indicated that
each culture has its own specific unique characteristics that can flourish in its particular
context of time, conditions and environment (Yesil & Kaya, 2013).
The Impact of Organizational Culture on Company Performance

Other authors called for further research areas using different context and
different measurements as Balanced Score Cards as advised by (Maltz, A.C., Shenhar,
A.J., & Reilly, R.R., 2003; Fekete, H., & Bcskei, E., 2011; Yesil & Kaya, 2013). While
(Patterson ,F., Kerrin, M., Gatto-Roissard, G., & Coan, P., 2009; Yesil & Kaya, 2013)
advised to use measures related to the employee behavior as proactivity and voice
behavior that may lead to different results.

(Yesil & Kaya, 2013) refused to jump to a fast conclusion that there is no direct
link between organizational culture and performance outcomes and advised for further
research area by linking specific organizational culture dimensions and related
characteristics to specific performance outcomes. As any conclusion will be consider
misled without thorough understanding and further investigations. Therefore, other
researches and investigation with different context and different measurements is needed
to reach to the right conclusion.