Journal of Management Development

Emerald Article: The influence of corporate culture and organisational

commitment on performance
Md. Zabid Abdul Rashid, Murali Sambasivan, Juliana Johari

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organisational commitment on performance", Journal of Management Development, Vol. 22 Iss: 8 pp. 708 - 728
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Md. Zabid Abdul Rashid, Murali Sambasivan, Juliana Johari, (2003),"The influence of corporate culture and organisational
commitment on performance", Journal of Management Development, Vol. 22 Iss: 8 pp. 708 - 728
http://dx.doi.org/10.1108/02621710310487873

Md. Zabid Abdul Rashid, Murali Sambasivan, Juliana Johari, (2003),"The influence of corporate culture and organisational
commitment on performance", Journal of Management Development, Vol. 22 Iss: 8 pp. 708 - 728
http://dx.doi.org/10.1108/02621710310487873

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JMD
22,8 The influence of corporate
culture and organisational
708
commitment on performance
Md. Zabid Abdul Rashid, Murali Sambasivan and
Received July 2002 Juliana Johari
Revised December 2002
Accepted January 2003
Graduate School of Management, Universiti Putra Malaysia, Serdang,
Selangor, Malaysia

Keywords Organizational culture, Performance levels, Malaysia

Abstract This paper examines the influence of corporate culture and organisational commitment
on financial performance in Malaysian companies. Based on the work of Deshpande and Farley on
corporate cultural types and Allen and Meyer on organisational commitment, a structured
questionnaire was developed and self-administered to managers in Malaysian companies. A total
of 202 managers in public listed companies participated in the study. The results show that there is
a significant correlation between corporate culture and organisational commitment. Both
corporate culture type and organisational commitment have an influence on the financial
performance of these companies. The implications of the study are also discussed.

Introduction
Corporate culture has received much attention in the last two decades due to its
effects and potential impact on organisational success. The pioneering work of
Deal and Kennedy (1982) incited the interest of researchers and consultants to
the concept of corporate culture, and how these values and philosophy guide
the employees’ behavior in the organisation towards greater success.
Consequently, several researches have been conducted to identify the nature
and type of corporate culture in organisations. The purpose was to elicit the
key values, beliefs, and norms in an organisation that has given much impetus
to the success and superior performance of the organisation. Kotter and Heskett
(1992), for example, believe that corporate culture has a long-term impact on the
performance of the organisation. Denison (1990) found that certain types of
culture could enhance organisational performance, while Van der Post et al.
(1998) found significant relationships between organisational culture and
performance. It is also believed that corporate culture is related to
organisational strategy, particularly in the implementation of a selected
strategy in an organisation (Schwartz and Davis, 1981; Scholz, 1987; Choe,
1993; Rashid and Anantharaman, 1997). Deshpande and Farley (1999) found
Journal of Management Development that the corporate culture of successful Indian and Japanese firms were quite
Vol. 22 No. 8, 2003
pp. 708-728
different in their marketing orientation.
q MCB UP Limited
0262-1711
The above studies suggest that corporate culture is an important component
DOI 10.1108/02621710310487873 in the field of organisational behavior, particularly in trying to better
JMD 59478—24/9/2003—MASSEYM—59478

understand the context of organisations and the people managing the The influence of
organisation. This implies that corporate culture could affect the success of corporate culture
organisations in trying to achieve its goals and objectives. While this may be
true, the commitment of the people in the organisation is also essential to
ensure the successful implementation of the organisational policies and plans.
It is argued, that while shaping the appropriate values or culture that is
important to the organisation, ensuring the necessary level of commitment
709
among employees or managers are unequivocally important so as to ensure
successful implementation of the organisational strategies and plans of actions.
Organisational commitment is a psychological state that characterizes the
employee’s relationship with the organisation. This has implications in terms
of continuing his or her membership in the organisation. A committed
employee is one who stays with the organisation under any favorable or
unfavorable circumstances affecting the organisation (Meyer and Allen, 1997).
Past research on commitment showed that it has an impact on job performance,
turnover (Mowday et al., 1982; Gregson, 1992), pro-social behavior (O’Reilly and
Chatman, 1986), and turnover intentions or likelihood (Porter et al., 1974, 1976;
Poznanski and Bline, 1997), and absenteeism (Angle and Perry, 1981). Cohen
(2000) found the relationship between Hofstede’s (1980) cultural dimensions
with organisational commitment, while Geiger (1998) found the impact of
cultural values on the escalation of commitment. These studies showed positive
relationships between commitment and performance while Steers (1977) found
a negative relationship.
From these studies, it is clear that corporate culture or organisational
commitment has a potential impact on organisational performance. Thus,
culture could enhance the level of organisational commitment and thereby
ensure organisational success. Further, these factors have important
implications to managers, who are the drivers of the organisation.
Consequently, these factors (corporate culture and organisational
commitment) could be related. As such, the basic questions guiding this
study are:
.
Is there a relationship between corporate culture and organisational
commitment?
.
What type of corporate culture matches with the managers’ type of
organisational commitment?
.
How do these factors (corporate culture and organisational commitment)
affect the performance of the organisation?
This research is particularly important, as past research did not identify the
precise relationship between the different types of organisational culture and
the varied types of organisational commitment, and its effects on
organisational performance. The earlier research work focused more on
independent relationships, such as culture and performance, or commitment
JMD 59478—24/9/2003—MASSEYM—59478

JMD and performance. Further, this research could clarify the association between
22,8 the different types of culture with the various type of commitment in the
organisation. These have practical implications for managers and consultants
in management development, and ultimately could enhance superior
performance of the managers in the organisation. In other words, the
findings could prescribe potential implications for managers to review their
710 management development programmes consistent with the training needs of
the employees in the organisation. This research also provides an important
contribution in better understanding the nature and type of organisational
culture, commitment and performance of organisations in a developing context,
which may be different from those in the more established western context.
Management development in such context may be different due to the
complexity and dynamism in unstable environments. For example, in one
Malaysian public listed company, it was found that the top management team
had great difficulty in implementing changes in the organisation as the
corporate culture was based on the company’s 75 year history. These values
were perceived to be different from the new top management team members
who were generally much younger than the majority of the employees. In
another public listed company, the top management team had difficulties in
their management development programmes, as the corporate culture did not
match with the expected commitment of the employees (interpersonal
communication between the researcher and the management team). In both
cases, there was a mismatch between corporate culture and organisational
commitment. While the plethora of literature on culture and commitment
addresses the issues in the developed context, this research is not inappropriate
as the issues raised are more important in the developing context, than
elsewhere.
Therefore, it is the purpose of this paper to determine the influence of
corporate culture and commitment on the financial performance of business
organisations in Malaysia. Specifically, the paper will analyse types of
corporate culture and the types of organisational commitment and their effects
on the financial performance of an organisation.

Literature review
Corporate culture
Corporate culture has been defined in many ways by various authors and
researchers. However, many would agree that corporate culture can be referred
to as a set of values, beliefs, and behavior patterns that form the core identity of
organisations, and help in shaping the employees’ behavior (Deal and Kennedy,
1982; Jones, 1983; Schein, 1992; Kotter and Heskett, 1992; Pheysey, 1993; Van
der Post, 1998; Deshpande and Farley, 1999). Corporate culture also acts as a
cognitive map that influences the way in which the context is defined, for it
provides the selection mechanisms or norms and values which people enact
JMD 59478—24/9/2003—MASSEYM—59478

events (Jones, 1983). It is also a pattern of beliefs, symbols, rituals, myths, and The influence of
practices that have evolved over time in an organisation (Pheysey, 1993). corporate culture
Corporate culture is also the dominant values espoused by an organisation or a
set of values and assumptions that underlie the statement: “this is how we do
things around here” (Deal and Kennedy, 1982; Quinn, 1988).
According to Van de Post et al. (1998), culture is, to the organisation, what
personality is to the individual. It is a hidden but unifying force that provides
711
meaning and direction. It is also a system of shared meanings, or systems of
beliefs and values that ultimately shapes employee behavior.
Schein (1992) defined organisational culture as a pattern of basic
assumptions invented, discovered or developed by a given group as it learns
to cope with its problem of external adaptation and internal integration. These
values are then taught to new members in the organisation as the correct way
to think and feel in relation to those problems. For Schein (1999), culture is the
sum total of all the shared, taken for granted assumptions that a group has
learned throughout its history. Also, culture is determined to be the residue of
success. Culture is also the structure and control system to generate behavioral
standards.
According to Scholz (1987), corporate culture has to be kept strictly apart
from similar looking concepts like the corporate identity, organisational climate
or the national culture. Corporate culture is the implicit, invisible, intrinsic, and
informal consciousness of the organisation which guides the behavior of the
individuals and which shapes itself out of the behavior.
In studying the organisational culture of Petronas, the national oil
corporation in Malaysia, Kamal (1988) believes that corporate cultures are real;
mostly taken for granted; extremely controlling and directing of our behavior;
and evolutionary in that they exhibit slow change under normal circumstances.
Research on corporate culture also showed that it has a relationship with
financial performance. Kotter and Heskett (1992) found that corporate culture
has a significant impact on a firm’s long-term economic performance. They
found that firms with cultures that emphasized all the key managerial
constituencies (customers, stockholders, and employees) and leadership from
managers at all levels, outperformed firms that did not have those cultural
traits by a huge margin. They also believed that corporate culture was
becoming more important in determining the success or failure of firms in the
next decade. According to Sadri and Lees (2001), a positive corporate culture
could provide immense benefits to the organisation, and thereby a leading
competitive edge over other firms in the industry. However, a negative culture
could have a negative impact on the organisational performance as it could
deter firms from adopting the required strategic or tactical changes. Such type
of culture could inhibit future changes in an organisation.
Denison (1990) examined the relationship between corporate culture and
performance. In that study, corporate culture was based on the perceptions of
JMD 59478—24/9/2003—MASSEYM—59478

JMD organisational practices and conditions, to characterize the organisational

22,8 culture. He found that the organisation with participative culture performed
better than other cultural types.
Van der Post et al. (1998) examined the relationship between organisational
culture and financial performance of organisations in South Africa. The results
showed that organisational culture has a positive relationship with the
712 financial performance of the firms. The results of the study also showed that
firms that are financially more effective differ from those firms that are not
effective with respect to the organisational culture dimensions used in the
study. Van der Post et al. (1998) used 15 dimensions to measure corporate
culture rather than a cultural typology.
Deshpande and Farley (1999) studied the relationship between corporate
culture and market orientation in Indian and Japanese firms. According to
Despande and Farley there were four types of corporate culture: competitive
culture, entrepreneurial culture, bureaucratic culture, and consensual culture.
In the competitive culture, values relating to demanding goals, competitive
advantage, marketing superiority, and profits were emphasized. In the
entrepreneurial culture, the emphasis was on innovation, risk taking, high
levels of dynamism, and creativity. In the bureaucratic culture, values like
formalization, rules, standard operating procedures, and hierarchical
coordination. The long-term concern of this culture was predictability,
efficiency and stability. In the consensual culture, elements of tradition, loyalty,
personal commitment, extensive socialization, teamwork, self-management,
and social influence are important in the organisational values. The results
showed that the most successful Indian firms had entrepreneurial culture,
while the Japanese firms had entrepreneurial and competitive cultures. The
consensual culture was also prevalent among the Japanese firms in that study.
They also found that entrepreneurial culture is a more important predictor of
good performance for Indian firms, while the competitive culture is more
important for the Japanese firms. The results of their study also showed that
entrepreneurial and competitive cultures perform better than consensual and
bureaucratic cultures. The latter were more inward looking and closed than the
former, which is more innovative and risk taker.
Corporate culture is also related to organisational strategy (Schwartz and
Davis, 1981; Scholtz, 1987). Choe (1993) found a strong relationship between
corporate strategy and culture. He found that firms pursuing the prospectors’
strategy tends to have developmental culture, and those with defensive
strategy tend to have hierarchical culture. Rashid and Anantharaman (1997)
also found that there was an association between organisational strategy and
culture which is consistent with the findings by Choe (1993).
Pool (2000) examined the relationship between organisational culture and
job stressors. He found that executives working in a constructive culture
reduced the role stressors in their working environment. There was also an
JMD 59478—24/9/2003—MASSEYM—59478

inverse relationship between role conflict and role ambiguity in a constructive The influence of
culture. However, the passive culture showed a positive relationship between corporate culture
role conflict and role ambiguity. He also believed that organisational culture
(passive or constructive) could hinder job performance, job commitment, and
job satisfaction.
From the above literature, it appears that organisational culture played an
important role in promoting organisational success, and this could only be 713
achieved by assuring an appropriate culture being developed or shaped in the
organisation that matches the managers values, attitudes and behavior.

Organisational commitment
The term “commitment” can be referred to as the willingness of social actors to
give their energy and loyalty to a social system or an effective attachment to an
organisation apart from the purely instrumental worth of the relationship
(Buchanan, 1974). It is also believed that commitment was developed through
the process of identification in which a person experiences something of some
ideas as an extension of the self (Iverson, 1996). Commitment has also been
defined in terms of:
.
a belief in, and acceptance of, the goals and values of the organisation
and/or profession;
.
a willingness to exert considerable effort on behalf of the organisation;
and
.
desire to attain membership in the organisation (Porter et al., 1974).
According to Meyer and Allen (1997), a committed employee is the one who
stays with the organisation through thick and thin, attends work regularly,
puts in a full day (and maybe more), protects company’s assets, shares
company goals and others. Thus, having a committed workforce would be an
added advantage to an organisation.
Research on organisational commitment has attracted much attention
among academics in the past decades. The interest in this concept is likely to be
as a result of its relationship with other important aspects of employee
behavior. For example, organisational commitment appeared to affect job
performance and turnover (Farrell and Rusbult, 1981; Gregson, 1992; Porter,
1974; Steers, 1977; William and Hazer, 1986; Porter et al., 1976; O’Reilly and
Chatman, 1986). Porter (1974) and Steers (1977) suggested that society as a
whole benefited from employees’ organisational commitment due to lower job
movement and higher national productivity.
Organisational commitment has been studied from various theoretical
perspectives, particularly in organisational behavior. For example,
organisational commitment was found to be related to job performance,
turnover (Mowday et al., 1982; Gregson, 1992), pro-social behavior (O’Reilly and
Chatman, 1986) and positively associated with motivation and involvement
JMD 59478—24/9/2003—MASSEYM—59478

JMD (Farrell and Rusbult, 1981). Poznanski and Bline (1997) described
22,8 organisational commitment and job satisfaction as the antecedents of
turnover intentions. However, some studies have suggested that commitment
was negatively related with potentially costly behaviors such as absenteeism
(Angle and Perry, 1981) and the likelihood of turnover (Porter et al., 1976, 1974).
These differences could be due to the different approaches in looking at
714 commitment. In trying to resolve the different ways of measuring commitment,
Allen and Meyer (1990) proposed a three-component model of commitment,
which integrates these various conceptualisations. They suggested that there
are three types of commitment:
(1) affective;
(2) continuance; and
(3) normative.
The affective commitment refers to employees’ emotional attachment to,
identification with, and involvement in, the organisation. In other words, it
refers to the extent of emotional attachment of a person to the organisation.
This attachment could be due to one’s role in relation to the organisational
goals and values, or to the organisation for its own sake. The continuance
commitment refers to commitment based on the costs the employees associate
with leaving the organisation. As such, in this type of commitment, the fewer
viable alternatives employees have, the stronger will be their continuance
commitment to their current employer. The normative commitment refers to
employees’ feelings of obligation to remain with the organisation. This type of
commitment will be influenced by an individual’s experiences both prior to
cultural socialization and following organisational socialization entry into the
organisation. For example, an employee would have strong normative
commitment if one friend or family member had been a long-term employee of
an organisation, and emphasized the importance of organisational loyalty.
Cohen (2000) studied the cultural socialization and tested whether
individualized measures of power distance, collectivism, uncertainty
avoidance, and masculinity were related to an employee’s level of
commitment. Combining Hofstede’s cultural model and Meyer and Allen’s
(1984) organisational commitment components, Cohen (2000) found that the
cultural dimensions were significant predictors of multiple bases and foci of
commitment. Power distance was related to normative commitment. The
uncertainty avoidance dimension was related to continuance commitment. It
was also found that the collectivism dimension was related to the three types of
commitment (affective, continuance and normative).
Van Vianen (2000) examined the match between newcomers’ and recruiters’
preference for organisational culture. The study first compared organisational
culture preferences for newcomers in the organisation with organisational
culture as perceived by others in the work setting (P-O fit). Second, they
JMD 59478—24/9/2003—MASSEYM—59478

compared organisational culture preferences for newcomers in the organisation The influence of
with organisational culture preferences of others in the work setting (P-P fit). corporate culture
As for the organisational culture, they adopted the framework of the different
facets of corporate culture done by Quinn (1988). Meanwhile, as far as
organisational commitment was concerned, affective commitment (Allen and
Meyer, 1990) was used as the measurement instrument. The culture
perceptions and preferences of the newcomers yielded two dimensions of
715
organisational culture, namely, concern for people and concern for goal
accomplishment. The results showed that newcomers’ concern for person
preference (P-P) fit with their supervisors was related to organisational
commitment (affective commitment) and turnover intentions. The person
organisation (P-O) fit measures for both dimensions of organisational culture
were not related to newcomers’ affective outcomes.
Geiger (1998) studied the impact of cultural values on the escalation of
commitment. The research study was based on the relationship between
escalating commitment and Hofstede’s (1980) value dimensions (power
distance, collectivism, uncertainty avoidance and masculinity). The results
showed that the relationship between exposure to an escalation situation
and escalation commitment was moderated by cultural values. It was also
found that the higher the level of masculinity and individualism in a
culture, the more likely that an escalation situation would lead to escalation
of commitment. On the other hand, the lower the level of power distance in
a culture, the more likely that an escalation situation would lead to
escalation of organisational commitment. Finally, the weaker the
uncertainty avoidance in a culture is, the more likely that an escalation
situation will lead to escalation of commitment.
Maignan and Ferrell (1999) did exploratory research on the nature of
corporate citizenship and its relevance for marketing practitioners and
academic researchers. The empirical investigation was conducted in two
independent samples to examine whether components of an organisational
culture affect the level of commitment to corporate citizenship and whether
corporate citizenship was conducive to business benefits. The results showed
that the market-oriented cultures as well as humanistic culture has led to
proactive corporate citizenship, which in turn was associated with improved
levels of employees’ commitment.
Generally, it was perceived that the higher commitment level would lead to
higher performance. However, Steers (1977) found that commitment was
generally unrelated to performance (weak relationship). This could be due to
many factors. First, it was found that the samples (two organisations) in the
study had difficulties in trying to reduce turnover rate and absenteeism. The
managers also tended to retain more security-minded “settlers” who were loyal,
but to whom high performance was not role relevant. The organisations also
ended up being more stable, but less productive or creative workforce. The
JMD 59478—24/9/2003—MASSEYM—59478

JMD managers in both organisations were strongly concerned about employee

22,8 retentions rather than about high performance.
On the other hand, Miller and Lee (1999) found that organisational
commitment was positively related to the return on asset (ROA). This implies
that organisational commitment could affect the organisational performance.
Conchas (2000) also found that the more committed the employees were, the
716 greater the return was to the shareholders.
From past studies, it appears that there is a relationship between corporate
culture, commitment and organisational performance. However, each of these
relationships had been viewed as an independent component rather than an
integrated one. As such, this has yet to be examined.

Theoretical framework
The theoretical framework of this study is shown in Figure 1. In this study, the
corporate culture was based on the work of Deshpande and Farley (1999), while
the organisational commitment concept was based on the work of Allen and
Meyer (1990). There are four types of corporate cultures:
(1) competitive;
(2) entrepreneurial;
(3) bureaucratic; and
(4) consensual culture.
There are three types of organisational commitments:
(1) affective;
(2) continuance; and
(3) normative.

Figure 1.
Theoretical framework
on the relationship
between corporate
culture, organisational
commitment and
financial performance
JMD 59478—24/9/2003—MASSEYM—59478

From Figure 1, it can be discerned that there is a relationship between The influence of
corporate culture and the organisational commitment. Corporate culture and corporate culture
organisational commitment also have an effect on the organisational
performance. The financial performance indicators used in the study are the
profitability and liquidity measures: return on assets (ROA), return on
investment (ROI), and the current ratio.
The conceptual model also suggested that each type of corporate culture and 717
type of commitment could be related to the financial performance of the
organisation.

Hypotheses
In the theoretical framework, the premise is that the control variables
(corporate culture and organisational commitment) were important
determinants of financial performance of organisations. As such, the
following hypotheses were advanced.
H1. There is a correlation between corporate culture and organisational
commitment of an organisation.
H2. Corporate culture has an influence on financial performance of the
organisation.
H3. Organisational commitment has an influence on financial performance
of the organisation.

Methodology
Based on the work of Deshpande and Farley (1999), and Allen and Meyer
(1990), a structured questionnaire was developed. The corporate culture
questions were measured on a five-point interval scale ranging from strongly
agree (1) to strongly disagree (5). There were 25 items measuring the corporate
culture. As for organisational commitment, there were 24 items, and the
respondents were asked to rate on a five-point interval scale ranging from
strongly agree (1) to strongly disagree (5). With respect to the three
performance measures (return on total assets, return on investment and current
ratio) the average of three annual values (1997-1999) for each were computed.
The data represents the pre-financial crises data. The survey was carried out in
the first quarter of the year 2001.
A total of 1,036 questionnaires were sent out to all the companies listed in
the Kuala Lumpur Stock Exchange. These companies were selected because
financial performance data are available to the public, while those not listed in
the stock exchange are not made available to the general public. A total of 202
questionnaires were returned and used for analysis. This represented a
response rate of 19.5 per cent, which is quite good in the mail survey. The
profile of the firms and the respondents are shown in Tables I and II
respectively.
JMD 59478—24/9/2003—MASSEYM—59478

JMD
Percentage
22,8
Type of business activities
Consumer products 19.8
Industrial products 9.9
Construction 17.8
718 Trading services 6.9
Finance 23.8
Hotels 5.9
Plantations 3.0
Mining 4.0
Trusts 6.9
Closed end fund 2.0
Years of establishment
Less than ten years 49.5
10-15 years 33.7
More than 15 years 16.8
Number of employees
Less than 300 37.6
Table I. 301 to 700 44.6
Profile of companies More than 701 17.8

The data were analysed in the SPSS programme. Descriptive statistics like
mean, standard deviation, and frequencies were requested. Pearson correlation
and multivariate analysis of variance (MANOVA) were also used in the data
analysis.
The reliability test for the corporate culture ranges from 0.7283 to 0.9172.
The Cronbach alpha coefficient for consensual culture was 0.8925, while the
coefficient for entrepreneurial and bureaucratic cultures were 0.9126 and
0.7283, respectively. The coefficient for competitive culture was 0.9172. The
Cronbach alpha scores for the three organisational commitment types, namely,
the affective, continuance and normative commitment were 0.9212, 0.9341 and
0.7188, respectively. These results suggest a fair level of internal consistency in
the responses.

Results and discussion

Types of corporate culture
Table III showed the types of corporate culture in the sample. Based on the a
priori definition of corporate cultural types, it was found that almost 43 per cent
of the total respondents have an entrepreneurial culture. This is not surprising
as the country has experienced high growth in the past two decades. Further,
this type of culture is appropriate and matches with the business environment
in the country. In this type of culture, members of the organisation value risk
taking and innovations. The entrepreneurial culture is generally associated
JMD 59478—24/9/2003—MASSEYM—59478

The influence of
Percentage
corporate culture
Age
Less than 40 74.8
41 to 50 24.8
More than 51 0.5
Gender
719
Female 12.4
Male 87.6
Job position
CEO 0.5
General manager 81.2
Manager 18.3
Educational qualification
Diploma or lower 12.4
Degree 51.5
Masters 33.7
Doctorate 2.5
Number of years in present company
Less than ten 56.4
11 to 15 38.1
More than 15 5.4
Number of years in present position
Less than four 44.1
Four to six 40.1
More than six 15.8
Responsibility area
Human resource management 33.7
Finance 20.8
Information technology 13.4
Management 18.8 Table II.
Marketing 13.4 Profile of respondents

Corporate culture Percentage

Consensual 23.8
Entrepreneurial 42.6 Table III.
Bureaucratic 3.0 Type of corporate
Competitive 30.7 culture

with small to middle-sized companies. In this study, almost 38 per cent of the
total respondents have less than 300 employees, suggesting that they were of
small and medium-sized organisations relative to others in the sample.
Bureaucratic culture was found to have the lowest percentage among the
respondents (3 per cent). This is not unusual as most public listed companies
JMD 59478—24/9/2003—MASSEYM—59478

JMD were privately owned, and abhor bureaucratic styles. In the bureaucratic
22,8 culture, values like high formalisation, standard rules and hierarchical
coordination were emphasized in this culture.
It was also found that almost 31 per cent of the total respondents have a
competitive culture. This culture valued achievement, demanding goals, and
market superiority. This type of culture is prevalent in Malaysia as the nature
720 of competition in the country is quite intense. As such, it is natural for some of
the respondents to have a competitive spirit as their survival can be at stake.
This could also be attributed to the short-term orientation of many managers in
the country. The short-term orientation has resulted in them pursuing gains in
the short-run aggressively.
Almost 24 per cent of the total sample has consensual culture. Tradition,
loyalty, teamwork, personal commitment and social influence have a role in
determining this type of culture. In this type of culture, the employees were
willing to trade-off their individual security in the job with personal
commitment. This is attributed to the collective values prevalent in the Asian
and Malaysian organisations.

Types of organisational commitment

Table IV showed types of organisational commitment in the sample. The
results showed that 62.4 per cent of the total respondents have continuance
commitment. This type of commitment refers to the commitment based on the
costs that employees associate with leaving the organisation. In other words,
employees would feel the need to remain in the organisation was higher due to
limited opportunity costs of the employee in alternative employment. This is
not unreasonable as the opportunities for job-hopping are not many, or the
choice for alternative careers may be limited. This could be due to
inconveniences in work dislocation or immobility of the employees. One
reason for this is that many Malaysian at an early age or career have long-term
financial and family commitments that left them with more constraints to
switch jobs or organisations. Further, the current economic scenario (sluggish
economic growth) also suggests the greater proportion of continuance
commitment, as potential alternative employment seems to have been limited
in the past few years. The greater proportion of continuance commitment also
suggest that greater attention could be focused on improving the employees’
morale and dedication to the job, and thus to become attached emotionally to
the organisation in the long run.

Organisational commitment Percentage

Table IV. Affective 31.7

Type of organisational Continuance 62.4
commitment Normative 5.9
JMD 59478—24/9/2003—MASSEYM—59478

It was also found that almost 32 per cent of the total respondents have affective The influence of
commitment. This is due to emotional, identification, or involvement in the corporate culture
organisation. This type of commitment is not unusual as the longer an
employee is attached to the organisation, the greater the potential to have such
an emotional commitment. Affective commitment also suggests that employees
may remain in the organisation longer because they would like to maintain
their relationship and organisational membership. In the study, slightly more
721
than 38 per cent of the total respondents had worked in their organisations for
11-15 years.
The results also showed that almost 6 per cent of the total respondents have
normative commitment. This type of employee remained in the organisation as
they felt obligated or that it is morally appropriate for them to do so, based on
their values and beliefs. This could also be due to the cultural background of
the employees in the study.

Corporate culture and organisational commitment

To test the first hypothesis, H1, the Pearson Correlation and regression
ANOVA statistical test was used. The results are shown in Tables V and VI
respectively.
Table V shows that the consensual culture is positively correlated with the
affective commitment (r ¼ 0:429, p , 0:01). This means that in the consensual
culture, affective commitment could be expected among the employees in the
organisation. This is not unusual as the values in the consensual culture like
loyalty, teamwork and personal commitment could have affected the emotional

Affective Continuance Normative

commitment commitment commitment

Consensual culture 0.429** 2 0.399** 2 0.156* Table V.

Entrepreneurial culture 2 0.273** 0.181* 0.114 Results of Pearson
Bureaucratic culture 0.081 2 0.126 0.061 correlation between
Competitive culture 2 0.151* 0.219** 0.018 corporate culture and
Notes: * Correlation is significant at the 0.05 level (2-tailed); ** correlation is significant at the organisational
0.01 level (2-tailed) commitment types

Table VI.
Results of regression
ANOVA between
Mean squares F Significance corporate culture and
organisational
Regression 6.418 22.842 0.000 commitment
JMD 59478—24/9/2003—MASSEYM—59478

JMD commitment of the employees in the organisation. As such, their attachment or

22,8 involvement with the organisation would be very high.
However, the consensual culture is negatively correlated to the continuance
and normative commitment (r ¼ 20:399, p , 0:01) and normative
commitment (r ¼ 20:156, p , 0:05). In other words, the greater the
consensual culture, the lower the continuance or normative type of
722 commitment. This is not unreasonable as the level of commitment were more
related with emotional attachment than the job or morally related values.
For the entrepreneurial culture, there is positive correlation with continuance
commitment (r ¼ 0:181, p , 0:05), but negative correlation with affective
commitment (r ¼ 20:273, p , 0:01). This means that people in this type of
culture would continue to remain in the organisation as a necessity (the need to
survive financially or profitably), and consequently emotional factors may be
of lesser concern. The risk-return tradeoff could be the motivator for this type
of employee in the organisation. The negative relationship suggests that the
enterprising culture was not driven by emotion or involvement with the jobs or
organisations.
As for the competitive culture, it has positive correlation with continuance
commitment (r ¼ 0:219, p , 0:01), but negatively correlated with affective
commitment (r ¼ 20:151, p , 0:05). This means that the values relating to
demanding goals and competitive marketing superiority motivates the
employees to remain in the organisation and seek success, while the same
type of culture may not enhance emotional attachment or involvement of
employees in the organisation. This is particularly true for employees in the
marketing functions (about 13.4 per cent of the total respondents) who were
generally driven by sales targets or explicit goals.
The bureaucratic culture is not correlated with any type of commitment.
This means that this type of culture could not induce the employees’ level of
commitment in the organisation.
A regression ANOVA test was done to examine the relationship of corporate
culture and organisational commitment as a whole. (See Table VI.)
From the results, it can be deduced that H1 is supported. As a whole, the
regression result was significant and there was a significant correlation between
corporate culture and organisational commitment. Since the significance value
of the F statistic was small, the corporate cultural types did a good job at
explaining the variation in the type of organisational commitment.
This result appears consistent with the findings by Cohen (2000) and Geiger
(1998) that suggested certain types of culture were related to certain types of
commitment in the organisation. More specifically, the findings of this study
showed that certain types of corporate culture have positive relationships with
certain types of organisational commitment type, and negative or no
relationship with other types of organisational commitment. This means that
the consensual culture was more appropriate with affective commitment, while
JMD 59478—24/9/2003—MASSEYM—59478

the entrepreneurial and competitive cultures were more appropriate with the The influence of
continuance commitment. corporate culture
Corporate culture and financial performance
The multivariate analysis of variance (MANOVA) test was done to determine
the influence of corporate culture on the financial performance (see Tables VII
and VIII).
723
Table VI showed that corporate culture has significantly influenced the
financial performance of the firms in the study, particularly on the profitability
ratios (significant at p , 0:01). However, corporate culture has no influence on
the liquidity ratio. As such H2 is partially supported.
The results of the return on assets and return on investments were further
analyzed to identify whether each of the four corporate cultural types had an
influence on the financial performance. The four corporate cultural types have
significant influence on both the return on assets and return on investments
(significant at p , 0:001 and p , 0:05 respectively) (see Table VIII).
These findings are consistent with previous research on corporate culture
and financial performance (Kotter and Heskett, 1992; Van der Post et al., 1998;
Jeena Ravendran, 1993). This suggests that cultural types have an effect on the
profitability measures of organisational performance, rather than other
measures (like liquidity). This reinforces the relationship between corporate
culture and organisational profitability (performance).

Organisational commitment and financial performance

The multivariate analysis of variance (MANOVA) statistical test was
performed to determine the influence of organisational commitment on the
financial performance (see Tables IX and X).

Independents variable (corporate culture) F-ratio

Table VII.
Return on assets 19.964* MANOVA –
Return on investments 9.724* multivariate F-tests on
Current ratio 1.090 corporate culture and
Notes: * Significant at the 0.01 level. Significant effect at the 0.05 level on the Pillai’s Trace test financial performance

Consensual Entrepreneurial Bureaucratic Competitive

Financial performance culture culture culture culture
Table VIII.
MANOVA –
ROA 6.977* 3.836* 2.188* 3.504*
multivariate F-tests on
ROI 5.548* 7.492* 1.520** 5.269*
four corporate cultural
Notes: * Significant at the 0.001 level; ** significant at the 0.05 level. R squared ¼ 0:825 types and financial
(Adjusted R squared ¼ 0:707) performance
JMD 59478—24/9/2003—MASSEYM—59478

JMD Table IX shows that organisational commitment has an influence on the

22,8 financial performance (profitability measures) of the organisation. However,
organisational commitment does not have an influence on the liquidity ratio
(performance). As such H3 is partially supported.
This result supports the earlier findings that organisational commitment
had significant influences on both the profitability measures (return on assets
724 and return investments). The overall results were consistent with the findings
of Miller and Lee (1999) and Conchas (2000). However the results were in
contrast with the findings by Steers (1977) who found that commitment was
unrelated to performance.

Conclusion
The results of this research show that there is a relationship between corporate
culture and organisational commitment. This finding has important
implications for management development, especially in relation to human
resource development and motivation for employees. For certain types of
corporate culture, certain types of organisational commitment model are
appropriate in the organisational setting than others. In other words, there is a
match or compatibility between the type of organisational culture and type of
organisational commitment required to motivate the employees in an
organisation. Thus, in order to motivate the employees, it may be necessary
to determine the cultural type first, and then prescribe the appropriate
commitment type to be emphasized in an organisation. For example, in the
consensual culture, top managers need to emphasize the affective commitment
in developing their key personnel so that they could perform effectively in their
managerial work or organisational work setting. It has also been suggested

Independents variable (organisational commitment) F-ratio

Table IX.
MANOVA – Return on assets 11.459*
multivariate F-tests on Return on investments 5.819**
organisational Current ratio 2.785
commitment and Notes: * Significant at the 0.01 level; ** significant at the 0.05 level. Significant effect at the 0.05
financial performance level on the Pillai’s Trace test.

Affective Continuance Normative

Table X.
Financial performance commitment commitment commitment
MANOVA –
multivariate F-tests on
three organisational ROA 6.728* 11.502* 4.342*
commitment types and ROI 6.665* 6.210* 3.842*
financial performance Note: * Significant at the 0.001 level. R squared ¼ 0:730 (Adjusted R squared ¼ 0:569)
JMD 59478—24/9/2003—MASSEYM—59478

that affectively-committed employees could contribute more to organisational The influence of

success than continuance or normative committed employees. In an corporate culture
entrepreneurial and competitive culture, a continuance type of commitment
is recommended for the organisation to succeed.
The present research also shows that corporate culture and organisational
commitments have an impact on performance. This means that the type of
corporate culture and organisational commitment could provide organisations
725
with superior performance or success. This finding could assist managers in
several ways. First, managers need to understand better the type of culture
prevalent in their organisation, and then assess the strengths and weaknesses
of such cultures in their organisational setting. As corporate culture seems to
have an impact on employees’ behavior, managers may need to shape and
develop corporate cultures that are more conducive to the employees and
organisational setting. Managers must also determine the fundamental core
values consistent with the organisational climate. Second, the managers could
then determine the type of person or employees required to match with the
organisational culture and are appropriate for the assigned managerial work.
Third, the managers could subsequently motivate the employees with the
appropriate type of commitment required to enhance superior performance in
the organisation. For example, if the organisation has a bureaucratic culture,
then there is a need to change the culture and select the appropriate
commitment type for the employees in the organisation. This is because such
type of culture could make it a challenging task for managers to enhance the
commitment level of the employees.
The results of the study also have provided important implications on the
relationship between corporate culture, organisational commitment and
performance. Previous studies have shown the relationship between
organisational commitment and corporate culture (Cohen, 2000; Geiger,
1998), or the effect of corporate culture on performance (Kotter and Heskett,
1992; Denison, 1990; Van der Post et al., 1998) but did not show the potential
relationships of these three factors (corporate culture, organisational
commitment and performance) in an integrated way. This study, therefore,
has shown the important relationships of these three factors in an
organisational setting, particularly in a developing country. The findings
also suggest the contingent relationship that has to be considered in developing
appropriate management development programmes in the organisation. For
example, in a bureaucratic culture, it may be difficult for managers to seek an
appropriate type of commitment to be instilled among the employees. However,
in the competitive culture, the management development programme should
focus on continuance type of commitment among employees so as to enhance
the performance of the organisation. This research has also provided us with a
better understanding of the relationships of these factors in order to enhance
managerial effectiveness and organisational success.
JMD 59478—24/9/2003—MASSEYM—59478

JMD While this may be true, further research is needed to examine the effects of
22,8 organisational factors (like age, size and activity or sectors), and managerial
factors like job involvement, job satisfaction, job motivation, and job
performance with corporate culture and organisational commitment.

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JMD 59478—24/9/2003—MASSEYM—59478

JMD Further reading

22,8 Billingsley, B.S. and Cross, L.H. (1992), “Predictors of commitment, job satisfaction, and intent to
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Education, Vol. 2 No. 4, pp. 453-72.
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correlation or misspecification?”, Strategic Management Journal, Vol. 21 No. 5, pp. 603-9.
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organisational commitment, job involvement and job satisfaction”, Journal of Applied
Psychology, Vol. 6, pp. 127-33.
Mathieu, J. and Zajac, D. (1990), “A review and meta-analysis of the antecedents, correlates, and
consequences of organisational commitment”, Psychological Bulletin, Vol. 108, pp. 171-94.
Morris, D. (1993), “Can commitment be managed? A longitudinal analysis of employees
commitment and human resource policies”, Human Resource Management Journal, Vol. 3,
pp. 21-42.
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Yousef, D.A. (1998), “Satisfaction with job security as a predictor of organisational commitment
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