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IJQSS
10,1 The impact of strong and balanced
organizational cultures on
firm performance
16 Assessing moderated effects
Received 19 September 2016 Panagiotis Polychroniou
Revised 24 December 2016
21 April 2017
Department of Business Administration, University of Patras, Patras, Greece, and
Accepted 24 May 2017
Panagiotis Trivellas
Department of Logistics Management,
Technological Education Institute of Central Greece, Thiva, Greece

Abstract
Purpose – This study aims to investigate the relationship between organizational culture and performance.
It concerns the aspects of culture related to culture strength and unbalance and its impact on introvert and
extrovert firm performance, controlling for business environment and size.
Design/methodology/approach – Based on the competing values model (CVM), culture strength is
measured as the intensity of the culture values driving the company. The cultural unbalance is measured by
the sum of absolute deviations of organizational members’ culture perceptions across the four archetypes
(adhocracy, clan, hierarchy and market) imposed by CVM from the individual “average” shared cultural
value. Evidence is drawn upon a sample of 1,305 employees of 114 Greek firms.
Findings – The findings indicate a strong positive relationship between culture strength and internal
performance (innovation competence and human relations) as well as firm outcomes (profitability, growth and
reputational assets). On the contrary, culture unbalance exerts a negative influence to market position, growth
and innovation competence.
Practical implications – Understanding the nature of the association between culture strength,
unbalance and firm performance would enable academics and practitioners to reflect critically on the core
culture values which shape employee involvement and formulate leaders’ quality improvement decisions and
actions, so as to achieve sustainable competitive advantage at the organizational level.
Originality/value – This research provides supporting empirical evidence for the culture–
performance link by identifying the principle culture value characteristics (strength and unbalance),
which exert both direct and interaction effects on the introvert and extrovert aspects of firm
performance.
Keywords Performance, Organizational culture, Competing values framework, Culture balance,
Culture strength
Paper type Research paper

1. Introduction
The increasing theorist’ and practitioners’ interest into the topic of organizational culture
literature is caused because of the claim that culture is related to performance (Barney, 1986;
International Journal of Quality
and Service Sciences
Kotter and Heskett, 1992; Mallak et al., 2003; Foss et al., 2013, Do Nascimento Gambi et al.,
Vol. 10 No. 1, 2018
pp. 16-35
2015). Furthermore, organizational culture plays a significant role in understanding
© Emerald Publishing Limited organizational dynamics and it distinguishes the members of one organization from other
1756-669X
DOI 10.1108/IJQSS-09-2016-0065 people (Mom et al., 2009; Demir et al., 2011).
 In culture literature, it is suggested that culture may be represented as “successive skins Organizational
of an onion” (Schein, 1985a). These culture studies select the intermediate level of culture, cultures on
such as values and cultural traits, to generalize and draw conclusions (O’Reilly et al., 1991;
Hogan and Coote, 2014). The trait writers present culture as a tool guided by the whims of
firm
management, whereas a less extreme position that culture may be manipulated under performance
specific but rare organizational contingencies as organizational formation or leadership
turnover is more appealing and realistic (Martin, 1992). The opposite approach contend that
culture is an integral part of the organization, as it lies at the deepest level of human 17
cognition, and it cannot be managed or manipulated in any way, introducing some forms of
cultural purism (Harris and Ogbonna, 1999).
An organization, which is able to maintain a “strong” culture, is likely to enjoy introvert
and extrovert firm performance such as higher level of person–organization fit,
commitment, innovation, financial performance and competitive advantage (Demir et al.,
2011; Hogan and Coote, 2014; Destler, 2016).
Dahlgaard and Dahlgaard-Park (1999) suggested a model of organizational excellence,
called “the 4P” model, in which the “people” element emerges as the primary enabler. In
particular, Dahlgaard-Park and Dahlgaard (2010) stressed out that a “right” culture
emphasizing on customer care, creativity, innovation, organization learning and team
working shared also by all organizational members should be established to produce
organizational innovation and achieve sustainable competitive advantage at the
organizational level.
Building on the culture values perspective as the intermediate level, this study aims to
investigate the cultural strength–performance relationship, taking into account external and
internal organizational factors, such as environmental characteristics and organizational
size. Moreover, the impact of the culture unbalance role on the strength–performance
relationship is examined and analysed. A new index representing cultural unbalance,
evaluating the stress expressed on competing bipolar quadrants defined by the competing
values model (CVM), as deviation from the average corporate culture is also introduced. The
approaches used to study organizational culture, namely, strength and balance will be
presented as a basis for examining and advancing the existing empirical research on the
culture–performance relationship.
The following section describes the theoretical background of the study leading to
research hypotheses. Afterwards, research methodology is developed, findings are provided
and finally discussion of conclusions are drawn providing practitioners with insight into
organizational culture that they would have to take into account, when crafting the strategic
planning of their organization, as well as on its effect on their firm’s performance.

2. Literature review
Environmental changes have an immediate effect on organizational structures, making it
more and more difficult to master organizational challenges (Behmer et al., 2016). A number
of studies suggested that successful companies have strong cultures, defined in various
ways (Deal and Kennedy, 1982; Schein, 1985b; Mallak et al., 2003; Demir et al., 2011). The
term strength is used quite extensively in the literature to reflect the extent of agreement
among members of an organization about the importance of specific values or ideologies.
Some empirical studies have suggested that firms with strong cultures outperform firms
with weak ones (Kotter and Heskett, 1992; Denison, 1990; Gordon and DiTomaso, 1992;
Smith and Rupp, 2002).
Many researchers adopted and verified CVF as a model of culture (Cameron and Freeman,
1991; Quinn and Spreitzer, 1991; Howard, 1998; Mallak et al, 2003; Demir et al., 2011;
IJQSS Morais and Graca, 2013; Wiewiora et al., 2013; Cho et al., 2013; Kapetaneas et al., 2015;
10,1 Newton and Mazur, 2016). The competing values framework (CVF) approach to
organizational culture, that its origins emerged form organizational effectiveness field, met
all the aforementioned criteria as a device for mapping organizations’ culture profiles and
conducting comparative analysis (Quinn and Kimberly, 1984). Howard (1998) presented some
supporting evidence that CVF offers advantages in the investigation of culture as it specifies
18 a descriptive content of organizational culture and identifies dimensions, whereby
similarities and differences across cultures might be evaluated.
CVM consists of four quadrants created by the intersection of two axes, reflecting
preferences for either structural control and order or flexibility and focusing on either
internal or external constituents. Quinn (1988) labelled the quadrants as human relations,
internal process, rational goal model and open systems, corresponding to the four types of
organizational cultures, respectively (clan, hierarchy, market and adhocracy), mapping a
cultural profile for each organization. In clan culture type, flexibility values and internal
focus describe the dominant value orientation and the hierarchy culture type is permeated
by values in connection with stability, control and internal focus. The market culture type
reflects the values and norms associated with stability and control, combined with external
orientation. Finally, the adhocracy culture type is characterized by flexibility values and has
external focus.
As Quinn and Kimberly (1984) advocated, the CVM explore the deep structure of
organizational culture, the basic assumptions that are made about such things as the
means to compliance, motives, leadership, decision-making, effectiveness values and
organizational forms. These assumptions are related to debatable, overt and espoused
values, for which the term “values” is more applicable as Schein (1985a, 1985b) pointed
out, in contradiction to the ultimate, non-debatable, taken for granted values, for which
the term “assumptions” is more appropriate. Schein’s model offers a tractable
explanation of cultural processes that support organizational innovation, especially in
service firms (Hogan and Coote, 2014).

3. Hypotheses
Denison (1984, 1990) attempted to determine the influence of culture strength on firm
performance. The latter study provided some supporting but tentative evidence that cultural
strength, measured as the degree of agreement on cultural traits across respondents, is
correlated with ensuing financial performance. Furthermore, the results of Gordon and
DiTomaso’s (1992) study indicated that the strength of culture measured as consistency was
predictive of short-term performance supporting Denison’s (1990) findings. Strong cultures –
where a high consensus exists among members – can contribute to better financial
performance even in dynamic environments if norm content intensely emphasizes adaptability
(Chatman et al., 2014). Organizations should make a substantial effort to instil their desired
vision and norms among their members (Hofstetter and Harpaz, 2015). Moreover,
organizational climate may have a strong and positive impact on performance values (Destler,
2016).
Culture strength can be represented adequately by an appraisal made at one point in
time, depending on the degree of inertia in cultural systems and the pace of environmental
changes, supporting a common assumption in studies exploring the culture strength–
performance link (Denison, 1990; Kotter and Heskett, 1992; Gordon and DiTomaso, 1992;
Sorensen, 2002). Taking lead from these contributions, the following hypothesis has been
developed:
 H1. Culture strength is positively associated with organizational performance. Organizational
cultures on
Modern organizations possess all the four culture types, with some values more dominant
than others as the apparent antitheses are illusory (Quinn and Kimberly, 1984; Quinn et al., firm
1991; Quinn and Spreitzer, 1991). The values, norms and beliefs that play a role in creativity performance
and innovation can either support or inhibit creativity and innovation, depending on how
these influence the behaviour of individuals and groups (Martins and Terblanche, 2003).
Managers need to be actively aware of the cultural characteristics of their organization 19
before adopting quality techniques, to benefit most from the use of these techniques (Do
Nascimento Gambi et al., 2015). Organizational culture has a direct and also an indirect
effect on total quality management and performance (Valmohammadi and Roschanzamir,
2015).
Considering CVF as an approach of managing paradox (Quinn and Cameron, 1988),
each of the quadrants has a conceptual and diagonally positioned polar opposite and
each implies values that seem to be mutually exclusive (Cameron and Freeman, 1991;
Howard, 1998). This argument can be illustrated in Figure 1, which is adapted from
Quinn’s study (1988), reflecting this notion at the culture perspective. In the middle
circle or positive zone are the four types of culture based on the four sets of values
defined by CVF, and can be seen as polarities bounded by two intersectional axes
ranging from order to flexibility, and from internal orientation to external focus. Four
negative frames might emerge designated at the outer circle, characterizing an
organization as an irresponsible country club instead of a cohesive team or clan, a
frozen bureaucracy instead of a well-ordered hierarchy, an oppressive sweat shop
instead of an intensely market-focused firm and a tumultuous anarchy instead of a
responsive adhocracy. On the basis of previous contributions, we hypothesize the
following:

H2. Cultural unbalance is negatively related to organizational performance.

Figure 1.
The competing
values framework
(CVF)
IJQSS Balanced firms are more likely to engage in paradoxical thinking and promote a culture
10,1 oriented towards exploration and exploitation that enables an organization to adapt and
manage internal and external knowledge, leading to introvert and extrovert firm performance
(Mom et al., 2009; Asif et al., 2013; Foss et al., 2013). Learning orientation is a key motivator in
increasing service quality (Cho et al., 2013). Moreover, knowledge creation process plays a
mediating role in predicting the influence of the learning organization culture on the perceived
20 level of organizational financial performance improvement (Song and Kolb, 2012).
Organizational culture influences heavy investment and resource allocation decisions to
provide a strong appreciation of creativity, positive and proactive attitudes towards
changes, a high degree of flexibility aiming at business excellence (Che-Ha et al., 2012) and
continuous improvement engaging people (Milner and Savage, 2016). Organizational culture
has a direct and mainly indirect impact on organizational performance through the
mediation of employee’s organizational commitment (Nikpour, 2017). Furthermore, changes
in the organization creating flatter, decentralized and less complex structures will encourage
managers to nurture a leadership style needed for developing teams (Polychroniou, 2009)
and enhancing learning processes towards innovation (Gottfridsson and Stalhammar, 2014).
A culture of innovation is a crucial precursor to the types of innovative behaviours that can
sustain organizations and foster organizational renewal (Hogan and Coote, 2014).
Gordon and DiTomaso (1992) advocated that both a strong culture, from the standpoint
of consistency, and an appropriate culture, from the standpoint of content, will produce
positive results, but a combination of the two is most powerful.
Hence, it can be hypothesized that:
H3. Firms possessing strong and balanced cultures will have higher introvert
performance compared to the strong but less balanced culture values-espoused
firms. In other words, the less unbalance the organizational culture, the more
positive the effects of culture strength on introvert firm performance (innovation
competence and human relations).

4. Methodology
4.1 Sample and procedure
The empirical research was conducted by dispatching two structured questionnaires to
avoid common method bias. An executive officer answered the first general structured
questionnaire that was designed to measure external environment, firm’s size and
organizational performance. The second one contained only the organizational culture scale
based on CVF (Cameron and Quinn, 1999). Questionnaires were sent by mail, fax or
conducted personal interviews with the firm’s respondent. The first general questionnaires
(external environment and firm performance) were completed by personal interviews with
an executive manager (general manager or marketing manager) of the sample companies.
This ensures the reliability of the answers received and it is also indicative of firms’ high
appreciation on the content of the survey.
The firms included in the sampling framework have been selected from ICAP database
(the Greek Financial Directory), according to the following two main criteria:
(1) Each firm should employ more than 40 employees.
(2) Each firm should include a manufacturing unit.

From the population of 1,828 firms that satisfied the criteria, 248 industrial firms
participated in this research, resulting to 13.5 per cent response rate. The majority of firms’
capital was of Greek origin, although 17 per cent of sample firms comprised subsidiaries of Organizational
major multinational enterprises. An additional criterion applied on the above sample, to be cultures on
more coherent to the research objectives, was that questionnaire measuring organizational
culture (second questionnaire) should be thoroughly answered by at least seven members of
firm
each firm. The last criterion reduced the number of participation from 248 firms to 114 firms, performance
which comprised our final sample to test the research hypotheses. In this way, participants
represented a broad range of functions to ensure proper representation of cultural types
within organizational boundaries. Thus, the resulting sample of 114 firms was tested for
21
industry-biased effects, in order to be representative. Thus, the final response rate was
114/1,828 = 6.2 per cent. The average age of the managers who responded at the first
questionnaire was 39 years, 78 per cent were male, and had on average six years working
experience at the same position, and more than nine years in this company. The second
questionnaire was filled by 1,306 employees, resulting to an average of 11.5 per cent
employees per firm.

4.2 Measurement
At the present study, the cultural strength and unbalance indices were calculated via the
organization culture scale, which is based on CVF (Yeung et al., 1991). In particular, cultural
strength representing the intensity of the culture values driving the company
operationalized as the average of each participant’s rankings for the four culture types
attributed to each specific firm.
X
n
Cultural_Strengthj ¼ n1 ð Adhi þ Cli þ Hieri þ Mrti Þ
i¼1

i: from 1 to n, where i corresponds to the ith respondent of the jth firm;

n: the total number of respondents of the jth firm; and
Adh: adhocracy, Cl: clan, Hier: hierarchy, Mrt: market.
Cultural unbalance calculated as the absolute deviations of each culture type from the
respondents’ average culture score, for each specific firm:
X
n
Cultural_Unbalancej ¼ n1 ðjAdhi  xi j þ jCli  xi j þ jIPi  xi j þ jRMi  xi jÞ
i¼1

i: from 1 to n, where i corresponds to the ith respondent (member) of the jth firm;
n: the total number of respondents of the jth firm;
Adh: adhocracy, Cl: clan, Hier: hierarchy, Mrt: market; and
xi : Average corporate culture value of the ith respondent’s four culture types ðAdh þ Cl þ4Hier þ Mrt Þ.
i i i i

4.3 Firm performance

CEOs, owners or marketing managers are more inclined to provide subjective evaluation of
their firms’ performance by answering a structured questionnaire. It is worth noticing that
high correlations have been revealed between perceptual performance measures and
objective financial performance, supporting this argument (Venkatraman and Ramanujam,
1986; Hart and Banbury, 1994).
Thus, this field research relies on perceptual measures of organizational performance,
supported by high correlations (r = 0,615, p < 0.001, N = 82 referring to return on assets; r =
IJQSS 0,568, p < 0.001, N = 80 referring to net profits; and r = 0,560, p < 0.001, N = 80 referring to
10,1 return on sales) between perceptual and objective measures of the majority of respondents’
firms (about 70 per cent of the firms that participated in the survey and there were available
financial data for a three-year period).
In particular, respondents were asked to evaluate their firm’s performance compared to
their competitors at its main market. Senior executives were asked to assess various
22 performance indicators both extrovert, such as profitability, growth, market position and
reputational assets and quality, and introvert, such as innovation competence and human
capital (Table II). Several scholars have adopted and validated similar items (Venkatraman
and Ramanujam, 1986; Delaney and Huselid, 1996; Harel and Tzafrir, 1999; Hart and Quinn,
1993).

4.4 Control variables

Organizational size is included in statistical analyses as a control variable to reduce the
possibility of spurious results caused by its correlation with the constructs of interest.
Bureaucracies, increased specialization, complex procedures, in conjunction to a large
number of hierarchical levels, are usually assigned to large-sized organizations,
whereas small-sized firms are mainly focused on pursuing growth opportunities
(Lawler, 1997).
Business environment is considered as a multidimensional construct and it can be
described and conceptualized mainly by dynamism, complexity and munificence (Bluedorn,
1993; Van Egeren and O’Connor, 1998). Both dynamism and complexity are considered to be
the key components of environmental uncertainty and munificence referring to an
environment’s ability to support sustained growth of an organization and to facilitate the
generation of slack resources. Similar items of business environment dimensions have been
found in the studies of Miller (1988) and Achrol and Stern (1988). All items of this construct
are presented in Table I.

Items of business environment scale Complexity Dynamism Non-munificence

Differences in consumer standards 0.767 – –

Differences in competition 0.722 – –
Differences in market perspectives 0.755 – –
Differences in distribution 0.698 – –
Differences in production methods 0.696 – –
Implications of mergers and acquisitions – 0.552 –
Implications of new competitors’ entrance – 0.843 –
Implications of competitors’ new products – 0.854 –
Implications of changes in competitors’ strategies – 0.802 –
Dangerous environment – – 0.836
Hostile, demanding environment – – 0.817
Dominant environment – – 0.724
Table I. Eigenvalues 2.826 2.349 1.971
Principal Variance explained (%) 23.55 19.57 16.43
components analysis Cumulative variance explained (%) 23.55 43.13 59.55
Cronbach’s alpha 0.797 0.752 0.707
of measures of
N: 114
external
environment: factor Notes: aPrincipal components analysis with varimax normalized rotation, converging in five iterations (all
loadingsa loadings less than 0.5 suppressed)
All scales (firm performance, external environment and culture) are measured on a seven- Organizational
point Likert-type scale. cultures on
firm
5. Results performance
5.1 Principal component analysis
Principal component analysis (PCA; exploratory factor analysis) was conducted to identify
latent factors within business environment realized by enterprises. Three factors with
23
eigenvalues greater than one were extracted from the data, as shown in Table I. These
principal components accounted for approximately 60 per cent of the total variation. After
the application of varimax normalised rotation, a cut-off of 0.50 was used for item scale
selection. Following an inspection of items’ loadings on each factor, three extracted distinct
principal components corresponded to “complexity”, “dynamism” and “munificence”.
Cronbach’s coefficient alpha is calculated for each scale ranging approximately from 0.70
through 0.80 (Table I).
PCA was also conducted to identify latent factors within the different aspects of
organizational outcomes. The construct validity of each dimension was confirmed by using
both PCA and CFA. Four principal components were extracted from the data (Kaizer
criterion, Scree plot) explaining approximately 81 per cent of the overall variance for the
performance scale (Table II). Applying normalized varimax rotation, four dimensions of
organizational outcomes (profitability, reputational assets and quality, market position and
firms’ growth) were identified. The resulting inter-item reliability coefficients were over the
0.7 value threshold.
Firm’s intangible assets performance was measured by two sub-scales, namely, human
relations and innovation competence, validated by using PCA. Approximately 78 per cent of
the overall variance of the scale (Table III) was explained by the two principal components.

Reputational assets
Items of firms’ outcomes scale Profitability Growth and quality Market position

Profit margin 0.888 – – –

ROE 0.897 – – –
Net profits 0.898 – – –
Sales growth – 0.756 – –
Market share growth – 0.777 –
New market entrance – 0.837 – –
Firm’s reputation – – 0.720 –
Strong brand name – – 0.764 –
Product quality – – 0.789 –
Sales volume – – – 0.823
Market share – – – 0.857
Eigenvalues 2.680 2.221 2.080 1.944
Variance explained (%) 24.37 20.19 18.90 17.67 Table II.
Cumulative variance explained 24.37 44.56 63.46 81.14 Principal
(%) components analysis
Cronbach’s alpha 0.922 0.831 0.782 0.902
of firms’ outcomes
N: 114
(extrovert
Notes: aPrincipal components analysis with varimax normalized rotation, converging in five iterations (all performance): factor
loadings less than 0.5 suppressed) loadingsa
IJQSS Organizational culture strength and unbalance was assessed on the basis of the grouping of
10,1 company respondents among the four CVF profiles. Four interpretable factors with
eigenvalues greater than one emerged, explaining approximately 56 per cent of the overall
variance for the culture scale (Table IV). Applying normalized varimax rotation, the four
emerging dimensions of organizational culture (adhocracy, clan, hierarchy and market) were
used to calculate the cultural strength and unbalance indexes. Reliabilities of these factors
24 range from 0.74 to 0.90 (Table IV).

5.2 Multiple regression analysis

Four multiple regression analyses were conducted, testing the relationships among
organizational size, external environment, cultural strength, cultural unbalance and
organizational outcomes (profitability, market position, firms’ growth and reputational
assets and quality). No serious problems of multicollinearity exist between the independent
variables as variance inflation factor (VIF) is far below the arbitrary but common cut-off
criterion of 3.0 points. The results of each significant multiple regression model, including
standardized beta, VIF, R2 and significance levels are exhibited in Tables V, VI, VII and VIII.
Regression analyses indicate that the variance explained by the independent variables
range from 15 per cent to approximately 20 per cent (significant at 0.01 level). The values of
standardized betas coefficients reveal that culture strength exerts a strong positive

Items of firms’ intangible assets scale Innovation competence Human relations

New product development 0.805 –

Innovativeness 0.904 –
Operational/Organizational/Administrative innovation 0.812 –
Employee relations – 0.835
Maintenance or introduction of new job positions – 0.897
Table III. Eigenvalues 2.239 1.653
Principal Variance explained (%) 44.78 33.06
components analysis Cumulative Variance explained (%) 44.78 77.83
Cronbach’s alpha 0.836 0.755
of intangible assets
N: 114
(introvert)
performance: factor Notes: aPrincipal components analysis with varimax normalized rotation, converging in three iterations
loadingsa (all loadings less than 0.5 suppressed)

Market Clan Hierarchy Adhocracy

Number of items 7 9 9 4
Eigenvalues 6.596 6.215 4.792 1.938
Table IV. Variance explained (%) 18.85 17.76 13.69 5.54
Principal Cumulative variance explained (%) 18.85 36.60 50.30 55.83
Cronbach’s alpha: 0.887 0.901 0.900 0.740
components analysis
N: 1306
of measures of
organizational Notes: aPrincipal components analysis with varimax normalized rotation, converging in ten iterations (all
culturea loadings less than 0.5 suppressed)
association with profitability (stand. b = 0.301, p = 0.002), growth (stand. b = 0.193, p = Organizational
0.031) and reputational assets and quality (stand. b = 0.298, p = 0.001), whereas culture cultures on
unbalance is negatively related to market position (stand. b = 0.226, p = 0.011) and
firm
growth (stand. b = 0.171, p = 0.047) dimensions. Regarding organizational size, it was
positively and significantly associated with firms’ market position (stand. b = 0.278, p = performance
0.003), whereas it was negatively related to growth (stand. b = 0.224, p = 0.013).
Examining business environment impact on firm performance, dynamism exerts a negative 25
relationship with profitability (stand. b = 0.258, p = 0.012), as well as non-munificence
with growth (stand. b = 0.358, p = 0.000) and reputational assets and quality (stand. b =

Independent Significance of
variables Stand. b Significance VIF Dependent var. the model (p)

Log (size) 0.042 0.656 1.079 Profitability 0.009

Dynamism 0.258 0.012 1.247 R2 = 0.150
Complexity 0.138 0.164 1.177
Non-munificence 0.093 0.325 1.070
Cultural strength 0.301 0.002 1.053
Table V.
Cultural unbalance 0.095 0.300 1.026
Results of regression
Note: Italic data is significant at the 5% level, as presented at the corresponding column (significance) less analysis
than 0.05, p < 0.05 (profitability)

Independent Significance of
variables Stand. b Significance VIF Dependent var. the model (p)

Log (size) 0.278 0.003 1.077 Market position R2 = 0.200 0.000

Dynamism 0.088 0.363 1.253
Complexity 0.103 0.277 1.179
Non-munificence 0.144 0.110 1.072
Cultural strength 0.114 0.202 1.054
Table VI.
Cultural unbalance 0.226 0.011 1.026
Results of regression
Note: Italic data is significant at the 5% level, as presented at the corresponding column (significance) less analysis (market
than 0.05, p < 0.05 position)

Independent Significance of
variables Stand. b Significance VIF Dependent var. the model (p)

Log (size) 0.224 0.013 1.077 Growth R2 = 0.214 0.000

Dynamism 0.012 0.904 1.253
Complexity 0.110 0.242 1.179
Non-munificence 0.358 0.000 1.072
Cultural strength 0.193 0.031 1.054
Cultural unbalance 0.171 0.047 1.026
Table VII.
Note: Italic data is significant at the 5% level, as presented at the corresponding column (significance) less Results of regression
than 0.05, p < 0.05 analysis (growth)
IJQSS 0.275, p = 0.003), whereas complexity is positively connected to reputational assets and
10,1 quality (stand. b = 0.185, p = 0.046).
The last hypothesis advanced a moderating role for culture unbalance in the linkage of
culture strength on innovation competence and human relations because it suggests that the
relationship between culture strength and internal performance may be contingent on
culture unbalance. Moderated regression analysis seeks to determine the change in R2 that
26 results during a hierarchical test of two regression equations. The variables were entered in
the following order for each criterion: control variables, culture strength and unbalance
and the strength condition by unbalance interaction term. To encounter the risk of
multicollinearity resulting from the correlation between culture strength and unbalance, the
interaction term is made up of their mean centred version.
In the first regression, the dependent variable of innovation competence is regressed
on business environment and size, representing the control variables, as well as both
the culture strength and the moderator variable of culture unbalance. Results indicate
that this model provides a significant R2 of 0.283 (Table IX, HR 1). In the second

Independent Significance of
variables Stand. b Significance VIF Dependent var. the model (p)

Log (size) 0.062 0.493 1.077 Reputational assets and quality 0.000
Dynamism 0.130 0.181 1.253 R2 = 0.201
Complexity 0.185 0.046 1.179
Non-munificence 0.275 0.003 1.072
Cultural strength 0.298 0.001 1.054
Table VIII.
Cultural unbalance 0.076 0.386 1.026
Results of regression
analysis (corporate Note: Italic data is significant at the 5% level, as presented at the corresponding column (significance) less
image) than 0.05, p < 0.05

Independent variables Stand. b Significance VIF Dependent var. Significance of the model (p)

HR 1
Log (size) 0.093 0.275 1.077 Innovation 0.000
Dynamism 0.139 0.133 1.253 competence
Complexity 0.188 0.037 1.179 R2 = 0.283
Non-munificence 0.191 0.026 1.072 Adj. R2 = 0. 243
Cultural strength 0.440 0.000 1.054
Cultural unbalance 0.174 0.039 1.026

HR 2
Log (size) 0.091 0.284 1.078 Innovation 0.043
Dynamism 0.155 0.092 1.266 competence
Complexity 0.178 0.047 1.184 R2 = 0.324
Non-munificence 0.145 0.104 1.181 Adj. R2 = 0. 280
Table IX. Cultural strength 0.486 0.000 1.158 DR2 = 0.041
0.173
Results of moderated Cultural unbalance 0.038 1.026
Strength  unbalance 0.167 0.044 1.233
regression analysis
(innovation Note: Italic data is significant at the 5% level, as presented at the corresponding column (significance) less
competence) than 0.05, p < 0.05
regression model, in addition to the independent and moderator variables, their Organizational
interaction term is also included, resulting in an improved R2 to 0.324. Beta coefficients cultures on
indicate that there are both significant direct effects of culture strength (stand. b =
0.440, p = 0.000) and unbalance (stand. b = 0.174, p = 0.039) on innovation
firm
competence and a moderation effect of unbalance (stand. b = 0.167, p = 0.044). The performance
results provide support for the hypothesis of the study confirming direct antithetic
(antagonistic) relationships for culture strength and unbalance, as well as their
interaction (moderation) effect on innovation competence. 27
As indicated in Table X, results verified a significant moderator effect of culture
unbalance on the strength-human relations association, following almost the same pattern.
It confirmed the existence of both a strong main effect of culture strength (stand. b = 0.366,
p = 0.000) and a positive interaction effect (stand. b = 0.248, p = 0.011), but there is no
evidence for a culture unbalance direct relationship.
Culture strength is positively related to firm internal performance and firm
outcomes. However, the relationship between culture strength and performance
appears more complex than stated. To determine the nature of the interaction effects
among culture unbalance and strength, each relationship was plotted on a y-axis of
innovation competence or human relations and an x-axis of culture strength for high
and low levels of the moderator terms. The interaction effects are illustrated in
Figures 2 and 3. In particular, Figure 2 indicates that innovation competence increases
with culture strength but at a greater rate for those firms dominated by more
unbalanced cultures, albeit culture-balanced firms realise superior innovative
performance.
Figure 3 indicates that human relations increase with culture strength but at a greater
rate for those firms which possess more unbalanced cultures. Interestingly, the superior
human relation performance benefits of balanced cultures at weak cultural environment are
reversed when strong cultural values are espoused.

Independent variables Stand. b Significance VIF Dependent var. Significance of the model (p)

HR 1
Log (size) 0.106 0.250 1.081 Human 0.000
Dynamism 0.059 0.552 1.241 relations
Complexity 0.108 0.260 1.174 R2 = 0.176
Non-munificence 0.170 0.066 1.070 Adj. R2 = 0.130
Cultural strength 0.366 0.000 1.056
Cultural unbalance 0.005 0.952 1.026

HR 2
Log (size) 0.110 0.221 1.081 Human 0.011
Dynamism 0.084 0.384 1.255 relations
Complexity 0.093 0.322 1.179 R2 = 0.226
Non-munificence 0.096 0.304 1.178 Adj. R2 = 0.174
Cultural strength 0.437 0.000 1.159 DR2 = 0.050
Cultural unbalance 0.004 0.963 1.026
Table X.
Strength  unbalance 0.248 0.011 1.233
Results of moderated
Note: Italic data is significant at the 5% level, as presented at the corresponding column (significance) less regression analysis
than 0.05, p < 0.05 (human relations)
IJQSS
10,1

28

Figure 2.
Interaction of culture
strength and
unbalance on
innovation
competence

Figure 3.
Interaction of culture
strength and
unbalance on human
relations

6. Discussion
This study promotes the apparent existence of a consistent pattern of two culture
indices (i.e. culture strength and unbalance) significant contribution to organizational
performance aspects. Findings indicate that a strong and balanced culture, as measured
by the intensity and balance of perceptions of company values, is predictive of introvert
and extrovert organizational performance performance (financial, growth, market
position and innovative behaviour), controlling for business environment and firm
characteristics (company’s size). On the basis of CVF (Quinn, 1988), culture strength
was measured as the intensity of the culture values driving the company, whereas
culture unbalance index reflects the stress between competing bipolar quadrants
defined by CVF, and gauges the extremes of either over-emphasizing or under-
emphasizing values.
Regarding business environment dimensions, findings indicate negative implications
of dynamism and non-munificence on certain introvert and extrovert firm performance
dimensions, in contrast with complexity positive influence. In particular, environmental
dynamism is strongly and negatively associated with profitability, and non-munificence is Organizational
strongly and negatively related to some aspects of performance (growth, reputational assets cultures on
and quality and innovation competence).
Organizational culture strength as an index of a social control mechanism defines
firm
widespread agreement about corporate values, fostering behavioural consistency across performance
individuals in a firm (O’Reilly, 1989; O’Reilly and Chatman, 1996). Hence, it is implied for
improved organizational performance, based on the impact of consistency on execution, to
wit firm’s ability to execute organization strategies, practices, routines and activities 29
effectively and efficiently regardless of their excellence.
The results obtained from the field research confirm the contingent relationship between
the strength of cultural values with all aspects of organizational performance apart from
market position, providing a discerned pattern applicable to a wider sample of companies.
Several studies have claimed or merely supported the hypothesis of the link between culture
strength and profitability or growth (Gordon and DiTomaso, 1992), but at the same time,
these have included neither other dimensions of effectiveness (Fey and Denison, 2003;
Mavondo and Farell, 2003), namely, market position (Walker and Ruekert, 1987; Deshpande
and Webster, 1989; Kohli and Jaworski, 1990), reputational assets and quality (Olavarrietta
and Friedmann, 1999) and innovation competence (Atuahene-Gima, 1996) nor industry and
firms’ characteristics (Gordon, 1991; Gordon and DiTomaso, 1992; Kotter and Heskett, 1992;
Chatman and Jehn, 1994) in their analyses.
Findings point out that culture unbalance is negatively associated with market position,
growth and innovation competence. Growth-oriented firms attempt to exploit economies of
scope by spreading risks over a broader base and elicit benefits of an appropriate and
sufficient human capital by transferring technical and managerial skills. An organization
with growth and innovation orientations, culturally diverse and balanced benefits from its
employees when they are characterized by flexibility, spontaneity, innovative thinking and
creativity.
Top managers’ practices influence their ability to be open to experience, creative and
innovative and are expected to have a strong impact on an organization’s culture
facilitating innovation (O’Reilly et al., 2014). Furthermore, an organization that
achieves to introduce change with regard to balanced corporate values, incorporating
cultural insight, understanding and sensitivity critical to serving the needs of new
market segments, should be well-positioned to handle other types of change as well,
including market expansion, market dominance or new market entrance.
Much of the previous research claims that culture strength and balance will have
positive direct effects on effectiveness. However, this study provides supporting
empirical evidence that a more complex association exists, involving moderation
effects on internal performance dimensions (i.e. innovation competence and human
relations). In particular, balanced cultures can exploit better performance benefits of
strong cultures over firm’s innovation competence. Interestingly, the superior human
relations performance advantages of balanced cultures at weak cultural environment
are reversed when strong cultural values are espoused. In strong culture firms,
diversity and tolerance in unbalanced value orientations are perceived as advantageous
regarding internal human relations functioning.
Results support Gordon and DiTomaso’s (1992) suggestion that both a strong culture
referring to consistency and a “right” culture regarding its content will yield positive results,
but a combination of the two will be most effective. Indeed, balanced firms are more likely to
engage in paradoxical thinking and promote an ambidexterous culture oriented towards
exploration, exploitation, creativity, innovation and efficiency, that enables an organization
IJQSS to build a sustainable competitive advantage (Gibson and Birkinshaw, 2004; Mom et al.,
10,1 2009; Asif et al., 2013, Foss et al., 2013).
Following this rationale, culture balance would provide an internal environment
conducive to diverse teamwork thinking with a strong emphasis on morale, empowerment,
consensual problem-solving and decision-making and additionally would serve to further
support organizational excellence.
30
7. Conclusions
Culture balance not only facilitates a firm’s superior performance but also strengthens the
impact of culture strength on introvert and extrovert performance outcomes, confirming its
moderated effects especially on introvert firm performance. Culture balance charts firms’
ability to develop a range of employees’ skills and abilities supporting the four competing
models, as well as culture strength reckon their commitment towards organizational values.
Strong culture values that are espoused and integrated with a firm’s balanced culture profile
provide a better poise in management efforts for both short-term survival and long-term
success.
Results prove that firms possessing strong and balanced cultures have higher introvert
performance (innovation competence and human relations) compared to the strong but less-
balanced culture firms, controlling the effects of external environment and organizational
size. Innovation competence and orientation refers to an organization’s ability to develop
new ideas and to change through adopting new technologies, resources, skills, systems and
processes. Although the economic business environment in which the Greek companies
operate does not strongly support and promote innovation initiatives, it seems that small
and medium enterprises try to innovate (namely, product, process, market and
organizational innovation) in circumstances of economic turbulence and financial crisis
(Psomas and Kafetzopoulos, 2014). Our results have certain limitations preventing
conclusions’ generalization, given that the field research was cross-sectional, and it was also
conducted in Greece, a country suffering from intense debt crisis in EU periphery.

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About the authors

Panagiotis Polychroniou is an Assistant Professor of Organizational Behavior and Human
Resources Management at the University of Patras. He received his PhD degree from the Athens
University of Economics and Business. He has extensive teaching experience at both
undergraduate and postgraduate level. His research interests include conflict management,
emotional intelligence and leadership, teamwork, organizational culture, mentoring and careers,
crisis management and workplace bullying. He has published a number of papers that appear in
well-known international journals and is serving as Reviewer for major international scientific
journals and conferences. Panagiotis Polychroniou is the corresponding author and can be
contacted at: panpol@upatras.gr
Panagiotis Trivellas is a Professor of Strategic Human Resource Management in Technological
Education Institute (TEI) of Central Greece. He holds a PhD degree in strategic management
archetypes at the National Technical University of Athens. He has extensive teaching experience at
both undergraduate and postgraduate level. He has published more than 50 articles in academic
journals and conferences, and has served as Scientific Coordinator in EU-funded research projects in
the field of organizational behaviour, entrepreneurship, supply chain management and human
resources management. His core research interests focus on strategic management, knowledge
management, total quality management, innovation, organizational culture, leadership, skills and
competencies.

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