PREMIUM COLLEGE

SCHOOLOF GRADUATE STUDIES

The Effect of Organizational Culture on Organizational Performance: A Case of

Ethiopian Tourist Trading Enterprise (ETTE)

MSc. Thesis

By

Nigussie Meketa

Advisor:

Research Proposal Submitted to PREMIUM COLLEGE in Partial Fulfillment of the

Requirements for the Degree of Master of Business Administration

August 2022

Addiss Ababa

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 TABLE OF CONTENTS

Abstract.......................................................................................................................................vi

List of Figures............................................................................................................................vii

List of Tables.............................................................................................................................viii

Abbreviations..............................................................................................................................ix

CHAPTER ONE...........................................................................................................................1

INTRODUCTION........................................................................................................................1

1.1 Background of the Study................................................................................................1

1.2 Statement of the Problem...............................................................................................5

1.3 Research Objective.............................................................................................................6

1.3.1 General objective.........................................................................................................6

1.3.2 Specific objective.........................................................................................................6

1.4 Research Questions........................................................................................................7

1.5 Significance of the Study...............................................................................................7

1.5.1 Significance to the Organization............................................................................7

1.5.2 Significance to Other Industry................................................................................7

1.5.3 Significance to Policy Makers................................................................................8

1.5.4 Researchers and Academicians...............................................................................8

1.6 Scope of the Study.........................................................................................................8

1.7 Definition of Terms........................................................................................................8

1.8 Chapter Summary..........................................................................................................9

CHAPTER TWO........................................................................................................................10

LITERATURE REVIEW...........................................................................................................10

2.1 Introduction..................................................................................................................10

2.2 Theoretical Concept.....................................................................................................10

2.2.1 Organizational Culture..........................................................................................10

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 2.2.2 The Components of Culture..................................................................................12

2.2.3 Levels of Organizational Culture..........................................................................13

2.2.4 Models of Organizational Culture........................................................................14

2.3 Organizational Performance........................................................................................18

2.3.1 Measurement of Organizational Performance......................................................19

2.4 The Effect of Organizational Culture on Organization Performance..........................21

2.4.1 Service-Profit Chain Theory.................................................................................22

2.4.2 Effect of Organization Culture on Customer Service...........................................22

2.5 Empirical Study............................................................................................................25

2.6 Conceptual Framework................................................................................................29

2.7 Chapter Summary........................................................................................................29

CHAPTER THREE....................................................................................................................30

RESEARCH METHODOLOGY...............................................................................................30

3.1 Introduction..................................................................................................................30

3.2 Research Design...........................................................................................................30

3.3 Population of the Study................................................................................................30

3.4 Sampling Design..........................................................................................................31

3.4.1 Sample Frame.......................................................................................................31

3.4.2 Sampling Technique.............................................................................................31

3.4.3 Sample Size..........................................................................................................31

3.4 Data Collection Method...............................................................................................32

3.5 Research Procedures....................................................................................................33

3.1 Data Analysis Methods....................................................................................................33

3.7 Chapter Summary........................................................................................................34

Reference.......................................................................................................................................i

Appendix......................................................................................................................................v

Time and Cost Schedule...............................................................................................................v

Tabel I. Time Schedule...............................................................................................................v

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Tabel II. Cost Schedule..............................................................................................................6

Appendix III: Questionnaire Prepared For Ethiopia Tourist Trading Enterprise Employee........7

Appendix IV: Interview Schedule for Higher Management Bodies..........................................13

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 Abstract

Organizational culture is a system of shared assumptions, values, and beliefs that governs how
an organization interacts both within the internal and external environments. It is the
indispensable constituent of an organization that has induced in various studies to decide and
establish its relationship with organizational performance. Organization culture has been
imitated to the superficial effect and importance on the various organizational process,
employees and its performance. Therefore it is important to know the effect of Organizational
cultures on organizational performance.

This study will make an assessment about the effect of organizational culture on organizational
performance at ETTE. The study will adopt a descriptive survey and primary data will collect
from employees who work at ETTE using questioner and interview, which will guided and
administered directly by the researcher. The study will use 223 sampled respondents selected
by a stratified sampling technique from 503 populations. Quantitative data that will collect
from respondents will analyze using descriptive and inferential statistics (correlation and
regression analysis). Statistical Package for Social Sciences (SPSS) software aided in data
analysis. Research findings will present using table and graphs.

Keywords: Organizational culture, Organizational performance.

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List of Figures

Figure 2. 1 Effect of organizational culture on organizational Performance..............................29

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List of Tables

Table 3. 1 Population and sample size distribution....................................................................32

viii
Abbreviations

ETTE Ethiopia Tourist Trade Enterprise

SPSS Statistical Package for Social Sciences

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 CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

In a competitive and globalized business world the important questions that raised around
it has been why organizations succeeded while others failed. To understand these issues
for profitable or non-profitable organization and keeping its attainment or take appropriate
measures of its failure, recognizing different factors will be the dominant of the
organization and members of the organization. In most organization organizational culture
has been identified as a one variable or factor that decided on the success or failure of
organization. The ability to develop and sustain an organizational culture essential for
organization performance, and it is not only necessary but important trait for
organizations. Because, organization shared values have a strong influence on
organization actors to interact ones with others within the working environment. As
Burnes (2004) states organizational culture is the attitudes, beliefs and way of doing
things. Stafford & Miles (2013) defined organizational culture as the system of shared
assumptions, values, and beliefs that governs how an organization interacts both with
internal and external environments. Hofstede and Hofstede (2010) speculates that
organizational culture is unique based on different parameters like achievement, fairness,
collaboration, teamwork, competitiveness, and rules among organizations.

Organizational culture has been argued to strongly influence the likelihood of success for
change strategies. As Schein (2007) stated organizations are more likely to embrace for
change when the organization’s culture is aligned with their mission and goals. In most
organizations, senior managers are relied upon to set of values and beliefs that defines, or
project organizational culture. However, Magee (2002) contends that members of the
organization perceive what is rewarded and what they believe to be the underlying
message that constitutes the “real,” culture. This can be implied, informal, underground
or even formalized culture (Argyris, 1991). In this regard, an analysis on the culture of an
organization is important to facilitate the planning and implementation of organizational
performance.

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The concept of organizational culture emerged in the United States in the mid 70’s and
write by different scholar’s like Ansoff (1987); Schein (2007); Rieley and Clarkson
(2001). These scholars define organizational culture in relation to the enhancement of
organization performance in the face of intense globalization.

As Stafford & Miles (2013) stated organizational performance is the ability for an
organization to accomplish its mission through sound management, strong governance
and a persistent commitment for achieving specific goals over a given period of time.
Performance is the equivalent achievement of financial and non-financial goals that
enables an organization to remain viable and sustainable in the short term and in the long
term run (Denison, Haaland, Goelzer &Yilmaz, 2008). When all the parts of an
organization work together to achieve desired results, the organizational achieved high
performance.

Most organizations in the developing countries started paying attention organizational

cultural in the 1990s when globalization picked in Asia, Africa, and South America
(Marcoulides & Heck, 1993; Magee, 2002). Organizations in the developing countries
had no choice but to undergo transformative change in the way their internal systems and
structures were designed. This was geared at adopting globalized cultures that were
imported by multinationals establishing shop within these countries, and competing for
similar customer base. Kamugisha, (2013) speculates that organizations that have good
performance are perceived to have effective and essential organizational culture.
Therefore, for organizations in the developing countries to compete effectively with
effects of globalized business environment, they had to adopt cultures that were
compatible with its sustainable performance development and those that enhanced
competitive advantage (Stafford & Miles, 2013).

Organizational performance encompasses ability of an organization to realize its potential

or targets overtime. Senior managers, usually take the responsibility or guiding and
directing their organizations through various goals to achieve specified or desired
performance (Minkov & Blagoev, 2011). Therefore, manager’s shape and set
performance and accountability measures by doing creative or perceived organizational

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culture, which in turn enhances better organizational performance (Rieley & Clarkson,
2001).

The highest concern of many organizations is improving its performance in a sustainable

way. This is largely anticipated by the organizations interaction with effective and
productive culture (Minkov & Blagoev, 2011). In order to increase the organization
culture and to be effective towards enhancing organizational performance, there is a need
to observe several interrelated aspects related to what employees do, and how they do,
the clarity of understanding on principles and organizational values, understanding the
locus between individual behavior and performance, and how effective planning impacts
performance (Mbuvi, 2010).

Burke and Litwin (2007) argue that organizational culture can sometimes be
uncontrollable and non-productive. For instance, as many organizations try to bring more
people into the corporate decision process, lack of a cohesive collective organizational
vision can reduce organizational effectiveness. This means that conflict between
perceived culture, desired culture, real culture, and informal culture can reduce an
organizations’ performance potential (Kamugisha, 2013).

The relationship between organizational culture and performance has been examined by
many researchers; however, most studies have mainly focused on western developed
nations and there exists very little research on developing countries like Ethiopia about
the effects of organizational culture on performance. Farashahi et al., (2005) and
Denison et al., (2008) have recommended the need of further research on the
phenomenon of organizational culture in different cultural context particularly in non-
western nations.

Ethiopian Tourist Trading Enterprise (ETTE) is established under the proclamation

no/1996 to accomplish the purpose of establishment that is operating duty free service,
duty paid service and Art & craft products for customers. ETTE is located in Addis
Ababa around 22 square. The company was started production in 1957 E.C with six
employees with the objectives of promoting Ethiopia through different local community
handicraft products and Souvenir items.

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Gradually, ETTE is become a public enterprise which which provides a duty free service
and selling product which found in the duty free and avail the product for local
customers. At these days, ETTE is one of the major profitable public enterprises in the
country with respect to duty free service. ETTE also plan to expand the overall business
thorough turnkey project in which converting the production center in to centre of
Excellence as well as planning to build duty free complex around Addis Ababa Airport.

The trade and production activities of Ethiopian Tourist Trading Enterprise is engaged in
in three trade sectors which are duty free merchandise trade sector, duty paid
merchandise trade sector and handicraft and fine arts products sales department with 20
shops. Imported products, spirits, cigarettes, tobacco, electronics and perfumes and
cosmetics, jewelry, garments and household goods are made available at duty free
merchandise trade sectors hops to diplomats and employees of international organizations
with duty free privileges and also to incoming and out-going passengers. Locally
produced and imported products such as electronics equipment, perfumes and cosmetics,
jewelry, garments, household goods, foodstuff, liquid gas etc. are sold in local and
foreign currencies at duty paid merchandise trade sector shops. In the handicraft and fine
arts products sales department shops handicraft and art works produced at the production
center and others purchased from similar centers are offered.

In general, the Ethiopian Tourist Trading Enterprise is providing sale of duty free
products to those with duty free privileges, in accordance with the international
convention which our country signed, to earn foreign currency. To produce for sale
handicraft and work of art reflecting the country's culture, history, natural resources, to
organize duty paid shops and provide sales and provide duty free service to international
organization, embassy duty free privileged stuffs, thereby contribute its due share to the
economic development of the country.

Just like any other business venture, ETTE has an organizational culture that influences
how the organization has been interacting with both the internal and external
environment. Changes at ETTE has to a significant extent, reshape both the
organizational culture and resultant performance. As Rieley and Clarkson (2001) stated,
coping with globalization, businesses need to understand the organizational culture both

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in times of transition, and in salient times. Such an understanding the effect of
organizational culture on organizational performance in ETTE will be important to
develop market strategies and to trigger the performance within its culture. Empirical
evidence for the impact of the organizational performance using organizational culture
practices was still limited. Therefore, there is a need to carry out more in-depth analyses
about the organizational cultures of ETTE and its employees to ascertain the true
reflection of ETTE performance.
1.2 Statement of the Problem

As organizations adopt new practice parallel to the way they execute their mandates or
functions, employees are obligated to change their states of mind and the way they
behave. New change brings the introduction of new technology, novel means of doing
things, new management structures, sometimes a feeling of absence of information, fear
of the unknown, drifts in efficiency levels in either direction, and changes in confidence
on the organization. These reflect shifts in organizational culture and if this cultural
change is not well managed it would lead to high employees’ turnovers (Stafford &
Miles, 2013).

At ETTE, major changes have been adopted overtime. Those changes have imposed to
the organization as a review of the management structure, addition of ETTE mandate and
functions and practices that increase the competition and new challenges devised by the
changing times and environment. As a result some important organizational cultural
changes will expected from the practice. But ETTE has not understand the impending
cultures and its effect on performance once it applied in the organizations. Stafford and
Miles, (2013) as stated that organizations need to understand its culture to be able to
improve and sustain its performance. Assessing organization culture allows the
organization to remain relevant, identify precipitous factors inherent within its culture that
are god or bad for performance. Making a comparison about the working structure, beliefs,
values, and assumptions of the changed cultural at ETTE to inform the organizations way
of doing things is important. This permits the ETTE to stay competitive and identify
thoughtful and non-thoughtful cultural practice for its performance improvement.

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On the other hand, Akpa, V. O., Asikhia, O. U., Nneji, N., E., (2021) stated a strong
corporate culture servedas a rooted form of social control that influences employee
decisions and behavior, an adhesive bond to link people together and makes them feel
part of the organizational experience, attract new staff and retain top performers. A
corporate culture assists the sense-making process i.e., it helps employees understand
organizational events enabling them to communicate more efficiently and effectively
thereby reaching higher levels of cooperation with each other because they share
common mental models of realities. Recognizing corporate cultural practice at ETTE and its importance to the
survival, maintaining and upgrading employee’s ability are also important. A study conducted by Schein (2007)
argues that when organization’s culture is associated with the mission and goals of the
company, employees are more likely to embrace the culture.

This study will seek to determine the relationship between components of organizational
culture and organizational performance. The study will investigate organizational culture
that implicitly explains the cultural traits of organizational performance. Therefore, the
study will provides relevant information about the effect of organizational culture to
ETTE management and will fill inadequate knowledge that exists about how organizational
culture effects on organizational performance.

1.3 Research Objective

1.3.1 General objective

The main objective of this study is to evaluate the effect of organizational culture on
organizational performance in case of Ethiopia Tourist Training Enterprise.

1.3.2 Specific objective

To realize the general objective the research will have the following specific objectives

 To identify the organization culture’s that prevails in ETTE.

 To analyze how organization culture affects organization performance at ETTE.
 To examine the relationship between organizational culture and organization
performance at ETTE.

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1.4 Research Questions

Research question is a key controller in a research process that directs the researcher to
its objectives. Therefore, This study will guided by the following research questions:

 Which organizational culture prevails at ETTE?

 How the prevailed organizational cultures affect the performance of ETTE?

 What are the relationship between organization culture and organizational

performance?

1.5 Significance of the Study

The result of this study will useful to an organization, the entire industry, researchers in
the area as well as policymakers. Below will brief discussion of how this study would be
useful to employees and management of Ethiopian Tourist Trading Enterprise, other
similar industry, policy makers and researchers and academicians.

1.5.1 Significance to the Organization

This included significance to employees as well as management of ETTE. To the

employees of ETTE, gaining knowledge and insight provides awareness of the extent to
which they are willing to accept change and thus derive as much benefits as possible
from the change initiatives that the organization is implementing. To management, an
assessment of the organizational culture will important in determining the base cause of
the problems that hindered better performance of employees. The top management of
ETTE as well as the human resource management department would be better informed
by the findings of the study in understanding the contribution of organizational.

1.5.2 Significance to Other Industry

The findings will provide useful information to other public organizations whether
currently undergoing changes in their organizational culture or intending to incorporate
organizational culture change in their strategic planning process, for better performance.

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1.5.3 Significance to Policy Makers

This study will provides useful insights for policy makers to adopt the findings as a basis
for providing advisory to other players in the financial and service sector on the
importance of organizational culture to performance.

1.5.4 Researchers and Academicians

The find of this study will provide findings that help to form hypothesis for further
research by academicians and researchers. Equally, the findings of this study can be used
as a citation of literature for future studies.

1.6 Scope of the Study

This study will conducts at ETTE offices Addis Ababa. The study will emphasize the
effect of organizational culture on performance at ETTE by taking selective
organizational cultural indicators related to customer service and others. Relevant data
will collect from ETTE using questionnaires and interviews one time once the suggested
proposal confirmed. Questioners will structure in such a way that it will captures data
related to organizational cultures that adopt in ETTE.

1.7 Definition of Terms

 Culture: is a way of life of a group of people the behaviors, beliefs, values, and
symbols that they accept, generally without thinking about them, and that are
passed along by communication and imitation from one generation to the next.

 Performance: The capability of the service-oriented systems to achieve its

functionality well, which can be measured by the throughput and the response
time.
 Organizational Culture: is a system of shared assumptions, values, and beliefs,
which governs how people behave in organizations. These shared values have a
strong influence on the people in the organization and dictate how they act and
perform their jobs. Organizational culture is argued to be unique to every
organization and is widely agreed to compose of seven key characteristics

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 commonly known as the organizational orientations. These include organizational
orientations to risk, precision, achievement, fairness, collaboration, teamwork,
competitiveness, and rules.
 Organizational Performance: as the ability of an organization to fulfill its
mission through sound management, strong governance and a persistent
rededication to achieving results, or the effectiveness of the organization in
fulfilling its purpose. Thus, it can refer to something either completed, or ongoing.
High organizational performance is achieved when all the parts of an organization
work together to achieve great results with results being measured in terms of the
value they deliver to customers. Since ETTE is a public institution with a policy
mandate, its results would be measured by market outcomes such as inflation.

1.8 Chapter Summary

This chapter provides a background to the problem outlining the relationship between
organizational culture and performance; define the problem to be studies in this research
work, clearly define the scope while at the same time providing an account of who the
study benefits are expected to benefit. Chapter two will review the theoretical and
empirical literature relevant to the study and chapter three propose the methodology will
adopts for the study.

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 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This chapter reviews the concept of organizational culture, organization performance and
the effect of organization culture on organizational performance in different perspectives.
The first section reviewed the theoretical foundation of organizational culture and
performance. The second section illustrates the effect of organizational cultures on
organizational performance. The third section shows empirical studies about
organizational culture and performance and the last section illustrate the conceptual
frame work of the study.

2.2 Theoretical Concept

2.2.1 Organizational Culture

The concept of organizational culture is vagueness and makes its definitions more
complex (Schein, 1990). The meaning and attribute of organization culture ranges from
behavioral to cognitive, explicitly stated to tacitly followed, from being consciously
enacted to being unconsciously felt and so on (Khanka, 2014).

Schein (2010) conduct a researcher in the investigation of organizational culture,

considers culture to be a case of key suppositions devised by a given group as it makes
sense of how to adjust organization to internal incorporation. This thought centered in
taking care of the organization’s issues. But, culture appears in feelings and suppositions,
qualities, attitudes and practices of its people and is a source of organization's high
standing in the market (Peteraf, 1993). Culture shapes definitive systems, unites various
capacities into a firm whole, gives answers for the issues firm’s go through and, along
these lines, enhances the firm's achievement of its goals (Yilmaz, 2008).

Kotter and Heskett (1992) defined organizational culture in relation to shared convictions
and values inside the firm that shapes the conduct of workers and improving
effectiveness.

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Strewart (2010) stated that firm’s standards and principles greatly affect the individuals
who are completely committed to the organization. Deal and Kennedy (1982) sees
culture as the focal ideals advocated by the organization and which shape the general
population's conduct. Schwartz and Davis (1981) consider culture as a guide of ideas and
prospects that produce standards that shape the conduct of people. Armstrong (2006)
describes hierarchical or corporate culture as feelings, qualities, norms, mind-sets and
suppositions that may not be expressed but strong shape employees behavior. Essentially,
organizational culture is not just an imperative component of a firm; it is additionally, the
crucial power which drives unrivaled business performance (Gallagher and Brown,
2008). Gallagher and Brown said that the way of life of a company impacts each action
which an organization performs. It is the center ofwhat the organization is defined, how it
does its things, what it concentrates on, and how it handles its clients, workers and
different partners. Like Gallagher and Brown, Armstrong (2006) views hierarchical
culture as influencing the way individuals and workers collaborate with each other, with
customers, and with partners. Denison (1990) sees authoritative culture as that gives the
basic traits, convictions and rule that serve as an establishment for an association's
administration framework. His definition seems to sum up what different authors have
said about organizational culture. Organizations with clear core values that are intensely
held and widely shared to the extent of similar behavior have strong cultures (Lussier,
2010). The level of sharediness is by two main considerations i.e. orientation and rewards
(Armstrong and Taylor, 2014). Culture is viewed as positive when it has standards that
add to the company’s effectiveness and efficiency while it is negative if it holds back
organizational effectiveness. In this regard,a strong and a positive culture is more
appropriate.

According to Pettigrew (1979) an organizations culture is based on the systems that help
to define how employees make decisions and think. Culture is based on a set of beliefs,
values and assumptions and it generally helps to define ways in which an organization
conducts its business. In fact, Nelson and Quick (2011) identified four roles that an
organization’s culture plays, including: providing a sense of identity to members,
enhancing the employee commitment, strengthening organizational values and shaping
behavior through a central mechanism.

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2.2.2 The Components of Culture

Organizational culture can be described in terms of values, norms, artifacts and

management style.

A. Values

Values are beliefs in what is best or good for the organization and what should or ought
to happen. The value set of an organization may only be recognized at top level, or it may
be shared throughout the business, in which case it could be described as value driven.
The stronger the value the more they will influence behavior. This does not depend upon
their having been articulated. Implicit values that are deeply embedded in the culture of
an organization and are reinforced by the behavior of management can be highly
Influential, while espoused values that are idealistic and are not reflected in managerial
behavior may have little or no effect. When values are acted on they are called ‘values in
use’.

Areas in which values may be expressed – explicitly or implicitly are care and
consideration for people, competence, competitiveness, innovation, performance, quality
and teamwork. Values are translated into reality through norms and artifacts. They may
also be expressed through the media of language (organizational jargon), rituals, stories
and myths.

B. Norms

Norms are the unwritten rules of behavior, the ‘rules of game’ that provide informal
guidelines on how to behave. Norms tell people what they are supposed to be doing,
saying, believing, and even wearing. They are never expressed in writing if they were,
they would be policies or procedures. They are passed on by word of mouth or behavior
and can be enforced by the reactions of people if they are violated. They can exert very
powerful pressure on behavior because of these reactions we control others by the way
we react to them.

Typical norm examples includes

 How managers treat the members of their teams (management style) and how the
latter relate to their managers.
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 Status – how much importance is attached to it; the existence or lack of obvious status
symbols.
 Ambition – naked ambition is expected and approved of, or a more subtle approach is
the norm.
 Performance – exacting performance standards are general, the highest praise that can
be given in the organization is to be referred to as ‘very professional’.
C. Artifacts

Artifacts are the visible and the tangible aspects of an organization that people hear, see
or feel and which contributes to their understanding of the organizations culture. Artifacts
can include such things as the working environment, the tone and language used in e-
mails, letters or memoranda, the manner in which people address each other at meetings,
in e-mails or over the telephone, the welcome (or lack of welcome) given to visitors and
the way in which telephonistsdeal with outside calls. Artifacts can be very revealing.

D. Management Style

Management style is the approach managers use to deal with people. It is also called as
‘leadership style’. Most managers adopt an approach somewhere between the extremes.
Some will vary it according to the situation or their feelings at the time; other will stick to
the same style whatever happens. Every manager has his or her own style but this will be
influenced by the organizational culture, which may produce a prevailing management
style that represents the behavioral norm for managers that is generally expected and
adopted.

2.2.3 Levels of Organizational Culture

Organizational culture consists of some aspects that are relatively more visible, as well as
aspects that may lie below ones conscious awareness. Organizational culture can be
thought of as consisting three interrelated levels. At the deepest level lie basic
assumptions. These assumptions are taken for granted and reflect beliefs about human
nature and reality. At second level, values exist. Values are shared principles, standards
and goals. Finally at the surface we have artifacts or visible, tangible aspects of
organizational culture.

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2.2.4 Models of Organizational Culture

Different researchers develop different models about organizational culture which

incorporate different traits or behaviors driven by beliefs and assumptions that create an
organizational culture. Dolan and Lingham (2012) précised the basic organizational
culture models as Deal and Kennedy Model, Charles Handy Concept Model, Edgar
Schein Model and Denison model.

A. Deal and Kennedy Model

It measured organization in respect of feedback or instant response. This model is

characterized by organization which responds feedback quickly and rewards high. This
often applies to fast moving financial activities such as brokerage and it is very stressful
culture in which to operate. Secondly, organization culture is characterized by few risks
being taken, all with rapid feedback. This is typical in large organizations, which strive
for high quality customer service. Thirdly, organization culture characterized by big
stakes decisions, but it may be years before the results are known. Typically, these might
involve development or exploration projects, which take years to come to completion,
such as oil prospecting or military aviation. Fourthly, organization culture is
characterized as a process culture which occurs in organizations where there is little or no
feedback. People become suspicious with how things are done not with what is to be
achieved. This is often associated with bureaucracies.

B. Charles Handy Concept Model

This classifies organization cultures based on organizational structure as Power Culture,

Role Culture, Task Culture and Person Culture Dolan and Lingham (2012). A Power
Culture in which power concentrates among a few and control radiate from the center
like a web. Power Cultures have few rules and little bureaucracy. A Role Culture
characterized by people has clearly delegated authorities within a highly defined
structure. Typically, these organizations form hierarchical bureaucracies thus, power
derives from a person's position and little scope exists for expert power. A Task Culture
in which teams are formed to solve particular problems. Power derives from expertise as
long as a team requires expertise. These cultures often feature the multiple reporting lines

14
of a matrix structure. A Person Culture exists where all individuals believe themselves
superior to the organization. Survival can become difficult for such organizations, since
the concept of an organization suggests that a group of like-minded individuals pursue
the organizational goals.

C. Edgar Schein Model

The organizational culture model that Dolan and Lingham (2012) tried to summarize is
Edgar Schein Model.This organizational culture model is described by three cognitive
levels of organizational culture. At the first and most cursory level of Schein's model is
organizational attributes that can be seen, felt and heard by the uninitiated observer.
These includes facilities, offices, furnishings, visible awards and recognition, the way
that its members dress, and how each person visibly interacts with each other and with
organizational outsiders.

The next level deals with the perceived culture of an organization's members. At this
level, company slogans, mission statements and other operational belief are often
expressed, and local and personal values are widely expressed within the organization.
Finally, the third and deepest level depicts the organization's tacit assumptions. These are
the elements of culture that are unseen and not cognitively identified in everyday
interactions between organizational members. Many of these unspoken rules' exist
without the conscious knowledge of the membership. The above three models
encompasses organizational culture traits from psychological or personality perspective
and mainly the third is designed and created within the academic environment which uses
non-business language.

D. Denison Organizational Culture Model

Denison organizational culture model is designed and created within the business
environment. And it is applicable to all levels of the organization in which business
language is used to examine business results. Denison and Neale (2011) identifies four
cultural traits Involvement, Consistency, Adaptability and Mission. These underlying
traits are expressed in terms of a set of managerial practices and measured using the
twelve indices that make up the model. (Denison & Neale, 2011). The below succeeding

15
paragraphs briefly discuss each of the four organizational culture traits and their
respective indices.

i. Involvement

Involvement is the first organizational trait which ensures the participation of employees
in decision making; it also relies on team effort to get work done and continual
investment in the development of employee’s skills. In other words, involvement is
building human capability, ownership, and responsibility. Thus, organizational cultures
characterized as "highly involved" strongly encourage employee involvement, and create
a sense of ownership and responsibility. They rely on informal, voluntary, and implied
control systems, rather than formal, explicit, bureaucratic control systems.

ii. Consistency

Consistency is the second trait which emphasizes on maintenance of the status quo by
being well coordinated and well integrated also the organization devises clear agreement
about the right way and the wrong way to do things. Furthermore, consistency deals with
defining the values and systems that are the basis of a strong culture. It also provides a
central source of integration, coordination and control. Consistent organizations develop
a mindset and a set of organizational systems that create an internal system of governance
based on consensual support also has clear set of do's and don'ts. Coordination and
integration, agreement and core values are indices of the consistency trait. Accordingly,
coordination and integration clarify ability of different functions and units of the
organization to work together well to achieve common goals. Organizational boundaries
do not interfere with getting work done. The second indices is agreement in which is
underlying level of agreement and the ability to reconcile differences when they occur.
The last one core values stress in which members of the organization share a set of values
that create a sense of identity and a clear set of expectations.

iii. Adaptability

The third trait, adaptability, depicts the ability of the organization in translating the
demands of the business environment into action through creating change, customer
focus and organizational learning environment. Adaptability deals with translating the

16
demands of the business environment into action. Organizations hold a system of norms
and beliefs that support the organization's capacity to receive, interpret, and translate
signals from its environment into internal behavioral changes that increase its chances for
survival, growth and development. The indices of the adaptability trait are: creating
change, customer focus and organizational learning. Creating change deals with the
ability of organization to create adaptive ways to meet changing needs. So organization
will be able to read the business environment, quickly react to current trends, and
anticipate future changes. Customer focus is the second indices which focus on the
organization understanding and reaction to its customer and anticipation to future needs.
Lastly, organizational learning reflected when on organization receives, translates, and
interprets

signals from the environment into opportunities for encouraging innovation, gaining
knowledge and developing capabilities.

iv. Mission

The last trait is mission whereby organizations devise meaningful long-term direction and

organization with this trait clearly defines Strategic direction, Vision, Goals and
Objectives of the company. Mission involves defining a meaningful long-term direction
for the organization. A mission provides purpose and meaning by defining a social role
and external goals for the organization. It provides a clear direction and goals that serve
to define an appropriate course of action for the organization and its members. A sense of
mission allows an organization to shape current behavior by envisioning a desired future
state. Strategic direction, vision and intent, goals and objectives are the indices of the
mission trait. Thus, strategic direction and intent deals with clear strategic intentions
convey the organization's purpose and make it clear how everyone can contribute. The
second indices, goals and objectives, stress on a clear set of goals and objectives can be
linked to the mission, vision, and strategy, and provide everyone with a clear direction in
their work. Finally, vision ensures that organization has a shared view of a desired future
state. It embodies core values and captures the hearts and minds of the organization's
people, while providing guidance and direction.

17
Denison (1990) also found that performance was a function of values and beliefs held by
the members of the organization. He postulated that an organization that had a strong
‘culture’ was defined to be of widely ‘strong shared values among its employees’.The
strength with which the cultural values were held among its employees was then taken to
be the predictor of future organizational performance.

2.3 Organizational Performance

Measuring, characterizing and conceptualizing performance have not been a simple task
to writers. Armstrong and Baron (1998) characterizes performance as the way of
assigning succeeded management to associations. This definition underpins the
possibility of giving powers to organization human faculty rather than to capital. As Per
Javier (2002) state the performance of an organization related to the economic, efficient,
and effectiveness of a particular program or development. Daft (2000) pointed out
performance as firms’ ability to accomplish its targets using available resources. Ricardo
(2001) depicted organizational performance as the capability of the company to attain its
goals and targets and differentiated from output, which describe an extent portraying the
volume of work completed in agiven measure of time. Performance is a more broad
concept that could combine output and moreover excellence, consistency and diverse
factors. The Ricardo expressionof performance was broader and focused on ampleness,
capability, economy, quality, consistency actions and institutionalizing measures.

Organization performance has been the most important consideration for every
organization, be it profit or non-profit organization. It has been very important for
managers to know which factors influence an organization’s performance in order for
them to take full advantage and appropriate steps to initiate them. Organizational
researchers among themselves have different opinions of performance as it continues to
be a contentious issue. According to Daft (2000), organizational performance is the
organization’s ability to attain its goals by using resources in an efficient and effective
manner. Richardo (2001) defined organizational performance as the ability of the
organization to achieve its goals and objectives. According to Cascio (2014)
organizational performance is the degree of attainment of work mission as measured in
terms of work outcome, intangible assets, customer link, and quality services. Kaplan and

18
Norton (2001) defined organizational performance as the organization’s capacity to
accomplish its goals effectively and efficiently using available human and physical
resources. This definition provides the justification for organizations to be guided by
objective performance criteria when evaluating employees‟ work based performance.
Although many studies have found that different companies in different countries tend to
emphasize on different objectives, literature suggests financial profitability and growth to
be the most common measures of organizational performance.

2.3.1 Measurement of Organizational Performance

The term performance was sometimes confused with productivity. As opined by Hofer
(1983), different fields of study will and should use different measures of organizational
performance because of the differences in their research questions. Ricardo (2001)
suggests the difference between performance and productivity. Productivity is a ratio
depicting the volume of work completed in a given amount of time while performance is
a broader indicator that can include productivity, quality, consistency, results, behaviors
(criterion-based) and relative (normative) measures, education and training concepts and
instruments, including management development and leadership training for building
necessary skills and attitudes of performance management Rehman (2012).

Many researchers have used managers‟ subjective perceptions to measure beneficial

outcomes for firms. Others have preferred objective data, such as return on assets.
Scholars have widely established that there is a high correlation and concurrent validity
between objective and subjective data on performance, which implies that both are valid
when calculating a firm’s performance (e.g., Dess & Robinson, 1984; Venkatraman &
Ramanujan, 1986). As seen in the literature on organizational performance, performance
is all about achieving the objectives that organizations/firms set for themselves. The
objectives of an organization/firm could be financial, that is to say, profit-making or non-
financial such as spreading awareness about a particular issue in a community.
Organizational performance could be categorized under two categories: financial and
non-financial. The profitability of an organization is an important financial indicator to
reflect the efficiency of the organization and the owners/managers ability to increase
sales while keeping the variable costs down (Davis et al., 2000). Profit margin, return on

19
assets, return on equity, return on investment, and return on sales are considered to be the
common measures of financial profitability (Robinson, 1982; Galbraith & Schendel,
1983). Non-financial measures include job satisfaction, organizational commitment, and
employee turnover (Mowday, Porter & Steers, 1982; Mayer & Schoorman, 1992;
Hosmer, 1995; Rich, 1997; Zulkifli & Jamaluddin, 2000). Although there is a range of
other behaviors that could be used for measuring performance, Borman and Schmit
(2012) emphasize judgmental and evaluative processes that take a great deal of action
when defining performance. According to Ittner and Larcker (2012) organization
performance is a broader concept whose indicators include productivity, quality,
consistency, efficiency as well as relative measures such as management development
and leadership training for building necessary skills and attitudes among the workers.
Organizational performance can also be conceptualized in terms of net income, revenue,
number of employees, physical expansion, increased market share and financial
sustainability (Kotter, 2012). According to Richard (2013) organizational performance
covers financial performance which includes profits, return on assets, return on
investment, sales volumes, market share and shareholder return. In fact, the
conceptualization of business performance in strategic management research usually
revolved around the use of financial indicators. Thus, indicators based on financial
measures such as sales growth, profitability, and earnings per share have been used by
researchers.

An organization’s performance depends on many factors, such as the efficiency of

business processes, employee productivity, how effectively organizations meet their
objectives, the alignment among business functions, as well as those functions’ alignment
with the organization’s strategy, and organizational culture and climate (Smith, 2019).
All of these contribute to how efficiently an organization operates and how well it
performs in the marketplace. Therefore, the organization’s performance is a function of
the potential return to the inculcation of strong culture into the organization’s systems
enabling it to execute its routines (Rehman, 2012).

Performance measures may address the type or level of program activities conducted
(process), the direct products and services delivered by a program (outputs), and/or the
results of those products and services (outcomes). A program may be any activity,
20
project, function, or policy that has an identifiable purpose or set of objectives.
Performance measures quantitatively tell us something important about our products,
services, and the processes that produce them. They are a tool to help us understand,
manage, and improve what our organizations do. Effective performance measures can let
an organization know: How well it is doing, if it is meeting its goals, if its customers are
satisfied, if its processes are in control, and if and where improvements are necessary.
The process provides the information necessary to make intelligent decisions about what
we do (PBM SIG, 2001).

2.4 The Effect of Organizational Culture on Organization Performance

A survey result by Muya et al., (2012) about the relationship between corporation
culture and organization performance in Kenyan State Corporations revealed that an
organization’s values and the resultant performance are strongly related. Organizational
culture measured by several indicators including: employee confidence on an
organization’s future, internal communication, the management getting to share its
business strategies and performance with all its employees and if applicable with its
clients. It is a highly discipline management, use of employees’ performance feedback
and appraisals and management encouraging and rewarding specific workplace behavior
and workplace harmony. They conclude that an institution’s culture could be made very
strong and cohesive by sticking to an explicit and clearly set-out principles and values.
They also argue that having an influential leader who establishes desirable values, and
possesses honest and desirable commitment to run an organization according to the
desirable values and expression of genuine concern for the well-being of an institution’s
stakeholders can positively and significantly influence an organization’s performance.

Njugi et al., (2014) found out that organizational culture has a great influence on the
organization’s performance. This is because it dictates how things are done, the
organization’s philosophy, available work environment, its performance targets and
stability of the organization. They mainly focused on competitive culture, entrepreneurial
culture, bureaucratic culture and consensual culture. Njugiet al concludes that most
employees prefer the entrepreneurial culture since it maximizes on their ability thus
exploiting their innovativeness, creativity and independence from being micro-managed.

21
In line with employee behavior, Oduol (2015) argues that a good organizational culture
encourages strong employee behavior, which provides a conductive environment for
formulation of good policies and implementation of strategies.

2.4.1 Service-Profit Chain Theory

The service-profit chain theory was fronted by Heskett & Schlesinger, (1994) and further
by Homburg, Wieseke and Hoyer (2009); the theory argues that organizational
performance is derived from customer satisfaction and loyalty created by employee
performance of service delivery, which in turn is influenced by employee satisfaction and
commitment (Heskett & Schlesinger, 1994). Employee job satisfaction and commitment
result primarily from high quality supports and practices from organizations. There are
further discussions on the role of organization culture on customer satisfaction. For
instance, Stewart (2010) stated that organizational norms and values as attributes of
culture have a strong effect on all stakeholders of an organization. He argues that norms
are invisible but if an organization wants to improve the performance of the employees
and profitability, the first consideration for review would be the existing norms.

In assessing the organizational culture, it is important to consider the role of forceful

managers or leaders. In fact, Kerr et al. (2005) argue that such types of managers or
leaders impart a counter culture with shared beliefs and values which in most cases are in
direct contrast to the values and beliefs of the broader organizational culture that is
known. The imparted culture may be adopted by a firm whenever it is positively
contributing to the improvement of the organizational performance. However, it is
considered as a danger for the original organizational culture.

2.4.2 Effect of Organization Culture on Customer Service

The meaning of the concept of “customer service” is different from one company to
another; moreover, suppliers and their customers have a different perception of this
concept. As Galpin, T.; Whitttington, J.L.; Bell, G. (2015) stated an increasing number of
specialists regard customer service as an interface between management and marketing.
In terms of sales, customer service can be considered a measure of the management’s
performance in relation to this interfacing activity between management and marketing,

22
which also includes after sales services. A competitive customer service retains
customers, repeatedly fosters businesses, and boosts customer purchases, creating a
climate of trust, credibility and satisfaction. As a factor, improving customer satisfaction
and loyalty can be associated with a successful marketing mix. The company that can
provide a high level of service provided to customers will find that it has a strong sales
advantage in the market Oloruntoba, R.; Gray, R. C. (2009). Customer service is
currently regarded as a basic instrument in improving customer satisfaction and in
securing a competitive advantage, taking into account the shifting of the emphasis from
the creation of the brand to the creation of efective customer relations, by means of
efective management and marketing services and by creating positive experiences with
them. Social exchange theory, Blau (1968); Sierra & McQuitty (2005) provides further
insights into how service culture may influence customer based service quality
evaluation. As they stated a supportive service culture encourages service employees to
go extra mile to serve the customers’ needs which in turn affect customers’ perception of
service quality. Customer service culture that affects organizational performance include
reliability, responsiveness, quality of service, assurance of service and tangibility (Meyer
et al., 2006; Gupta & Dev, 2012).

A. Reliability

Consuegra, Molina, and Esteban (2008) defines service reliability as the degree of
inconsistency between customers’ normative expectations for availability of service
when needed and the actual availability rates, when service is needed. This inconsistency
is usually elicited by the fact that organizations can promise customers given services;
however, the delivery of those services may not be certain. As such, Meyer et al., (2006)
notes that when services delivery is consistent and on time as promised to customers, the
services is supposed as reliable, however when service delivery is not consistent and on
times as promised to clients, the service is assumed as being unreliable.

B. Responsiveness

Gritti and Foss (2010) defines responsiveness as the coordinated reaction towards the
customers' needs that is timely, and within the expectation of the customer. Gupta and
Dev (2012) on the other hand defines responsiveness at the concerted efforts an
23
organization does in to ensure that customer needs are met within specified times. This
includes giving timely feedback, and ensuring clients’ queries and concerns are addressed
promptly. Responsiveness is an essential factor in determining organizational
performance and perception of value. In most organizations, responsiveness is a
functional factor in determining whether the organizations’ service is of quality or not
(Gupta & Dev, 2012). Organizations have to ensure that they have mechanisms in place
that not only attracts customers but also to ensure that customer needs are met
adequately.

C. Assurance

According to Jiang and Wang (2008), assurance is the trustworthiness and the ability for
to inspire trust and confidence in their customers. Most often assurance is measured by
the way an organization demonstrate competence in service provision. When an
organization has the right set of skill and knowledgeable to provide required service, they
inspire confidence in customers, which enhance the assurance customers have in the
organization (Arasli, Smadi & Katircioglu, 2009). On the other hand, Jiang and Wang
(2008) define assurance the art of being polite and friendly when dealing with customers.
It is the ability for the organization to provide friendly advice not only when a customer
needs it, but when the organization considers it appropriate to provide one. Such
friendliness enhances the assurance of customers in the organizations ability to put the
customers’ needs first (Liberati & Mariani, 2012).

D. Tangibility

According to Jayaraman, Shankar and Hor, (2010) tangibility refers to the physical
aspects of a product or service. Mostly, this refers to the physical attributes of the
organization and its services, such as the buildings, the office aesthetics, the waiting area,
the seats, and accessibility. Lymperopoulos and Chaniotakis (2008) argue that an
organizations‟ employees form part of organizational tangibles. In most cases bank
customers tend to remember employees’ interactions, experience, and appearance of
buildings. In other instances, employees are dressed code becomes the reference point for
professionalism. Equally, when organizations employees are not professionally nor
reflecting the ethics that is due to the services the organization is providing, they form
24
memorable tangibles through which customers perceive the organization (Gupta & Dev,
2012).

2.5 Empirical Study

Several empirical studies have supported the positive link between culture and
performance (Gordon & Di-Tomaso, 1992: Kotter & Heskett, 1992). Moreover, studies
done by Chatman &Jehn (1994), and Denison & Mishra (1995) have contributed
significantly to the field of culture and performance studies whereby culture has been
treated as variable for a specific research purpose. For example, Denison & Mishra
(1995), utilizing a more rigorous methodology, discovered that cultural strength was
significantly correlated with short-term financial performance. Schneider (1990) also
found that organizations that focus clearly on the culture are more successful. It is
because focused cultures provide better financial returns (which include higher return on
investment, higher return on assets and higher return on equity). The findings of a study
on the relationship between corporate culture and performance by Gordon & Christensen
(1993) have also reported that industry moderates the link between corporate culture and
performance. These findings have advanced understanding of the determinants and
performance effects of corporate culture. However, Chow, Kato & Merchant (1996)
observe that, there are some aspects of corporate culture that may enhance performance
in one national setting, but they may not be effective, and may in fact be dysfunctional, in
another. This implies that corporate cultures are not universal.

There are several empirical evidences on the effect of organizational culture on

performance. For instance, Kotter & Heskett (1992), who investigated the relationship
between long-term organizational performance and culture across more than 200
organizations, made the following contributions. First, that the relationship between
culture and performance established in many organizations is forceful. Second, the writer
gives an important combination of theoretical point of view regarding the nature & scope
of culture. Third, they sketch strong associations between culture, management practices
and performance. The claim that organizational culture is attached to performance is
initiated on the apparent role that culture can play in caused competitive advantage.

25
However, Rousseau (1990) and (Lim, 1995) in similar studies found that there is no
positive correlation between strong culture and employees’ performance. This was
against theoretical argument that there is a strong positive correlation between strong
culture and performance, whether organizational or employees’. Saa-Pere & Garcia
Falcon (2002), however argued that culture and performance have a relationship in the
sense that culture creates a sustainable competitive advantage arises from the formation
of organizational competencies which are both superior and incorrectly imitable by
competitors. As such, this provides the necessary advantage for better performance both
from employees‟ point of view and from the organizational (especially financial) point of
view. This is in line with arguments from several practitioners and scholars who
suggested that the performance of an organization is dependent on the degree to which
the values of the culture are comprehensively shared (Denison, 1990).

According to Barney (1991), a strong organizational culture provides sustainable

aggressive advantage. But he introduced three conditions; first, he suggests that culture
must be viable, second the culture must be rare and have attributes and third culture must
be imperfectly imitable. These can provide support to better organizational performance
in both short term and long term. Long term increase in organizational performance may
enhance the competitive advantage with direct benefits on financials. Kotter & Heskett
(1992), conduct a study and found that firms with that invested heavily in strengthening
their cultures increased organizational performance (reflected by increased incomes by
up to 765% between 1977 and 1988) as those that never invested significantly in
improving culture only increased their incomes by an average of 1%.

According to Saffold (1998), culture can shape organizational processes which again help
to create and modify the same culture. Moreover, they argue that strong organization
culture is very essential for business performance because of three important functions:
First, organizational culture is extremely fixed with the social control that may cause to
make influence on the employee’s decisions and behavior. Second, organizational culture
works as social glue to bond the employees together and make them feel a strong part of
the corporate experience, which is useful to attract new staff and retain the best
performers. Third, organizational culture is very useful in helping the employees to

26
understand the organizational events and objectives, which enhance the efficiency and
effectiveness of the employees. A strong culture self-confidence and commitment of
employees and reduces job stress and improves the ethical behavior of the employees,
thus is essential to improve their performance. The author further argues that culture has
a great impact on the organizational behavior, and in fact, in an organization with a
strong culture, employees‟ goals are aligned with those of the organization, and thus
culture can promote organizational performance.

A study conducted by Fonseca (2014) in Portuguese sought to determine whether

organizations service responsiveness contributed to performance. The study concludes
that there existed a significant relationship between responsiveness and customer
satisfaction. Another study by Ernst and Young (2014) on impact of organizational
culture on performance of an organization to customers was responsible for 25% increase
in customers’ commitment, and 38% increase in financial performance of the
organizations. For instance, the study found that customers in the USA, UK, and
Germany, valued time so much that they indicated responsiveness as a function of time.
Customers’ in this cultures need services done promptly, without having them line up for
rushing after services. However, in India, customers rated connection with the service
providers as their valued form of response. This finding was consistent with the study
that was conducted by Gupta and Dev (2012) that highlighted the important of talking to
clients as a way of showing responsiveness, care, and gratitude.

Wang, Lo, Chi, and Yang, 2014) study on the other hand, focused on perceptive elements
of customer satisfaction at the point of interaction with the organizations tangible aspects.
They noted that the customers’ concept of satisfaction is sealed, formed, or conformed, at
the point of interaction. Therefore, it is important for organizations to have attractive
physical attributes since they form part of customer interactions that enhances or
decreases satisfaction (Jayaraman et al., 2010).

A study conducted in South Africa by Wruuck (2013) indicated the existence of a

significant relationship between organizations tangibility of service and performance, r
(0.520); p ≤ 0.1 thus, is important for organizations to note the significant aspects of their
tangibility that makes customers satisfied with their services.

27
Customers like to know that they will get a given service an appropriate time. In a study
conducted by Tesfom and Birch (2011) suggested that there exists a positive relationship
between reliability of services and customer satisfaction; r (0.682); p ≤ 0.05. Respondents
within the study indicated that availability of services when needed by customers was
essential in establishing customer satisfaction. Thus when customers are satisfied, they
do provide an organization with return service, which in turn enhances an organizations
performance and bottom lines (Meyer, et al., 2006)

Consuegra et al., (2008) on the other hand argues that reliability of service a significant
impact on customer preference and performance. Further, they argued that in the financial
sector, a customer who is satisfied with services as provided is more likely to recommend
another customer to utilize same services at the bank. In this regard, it is beneficial for an
organization to ensure that it has processes in place that validates and enhances
customers‟ experiences by enhancing reliability of service to all consumers (Hoq&
Amin, 2010).

Equally, Meyer et al., (2006) posits one of the greatest challenges facing organizations
particularly in developing country is providing reliable online services due to
overcrowded queues for customers seeking services. In such instances customers are
demoralized, who in turn take their services elsewhere, making an organization to lose of
potential revenue and financial profitability. Therefore, measuring service reliability in an
organization is a sure way of enhancing customer service, and guaranteeing
organizational performance at the end of the day (Gupta & Dev, 2012).

28
2.6 Conceptual Framework

Job satisfaction
Involvement
Organization
Culture
Organizational
Adaptability Commitment

Organization
Consistency Performance
Employee
Turnover
Customer
Mission Service Customer
Satisfaction

Figure 2. 1 Effect of organizational culture on organizational Performance

2.7 Chapter Summary

This chapter reviews relevant literature on organizational culture and performance. While
it is clear the issue of organizational culture comprises a range of complex social
phenomenon, it has strong links to organizational performance. The reviewed literature
identifies some perspectives and measures of organizational culture. While an attempt is
made to observe the available information through the perspectives, the initial
conclusions made on the description of the ETTE organizational structure may not be
conclusive. There is need to carry out more in-depth analyses, based on data that will
collect from employees to ascertain the true reflection of the culture in the organization.
Chapter three will be covering the proposed study methodology, which comprises the
research design, population and sampling techniques, data collection techniques.

29
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter sets out the research methodology that will apply in the research process to
meet the research objectives. It is organized into 7 subsections namely: the research
design, data collection methods, target population, sampling design, method of data
collection, sampling technique, sample size determination, data analysis method, validity
and reliability testing mechanism, limitation of the study and operational definitions.

3.2 Research Design

The study will use quantitative research approach. This type of research approach
involves the generation of data in quantitative form which can be subjected to rigorous
quantitative analysis in a formal and rigid fashion (C.R. kothari, 1990). The study will
adopt a descriptive research type. This research premises on the fact that it sought to find
out what, where and how of a phenomenon. A descriptive research also describes the
state of affairs as it exists at present. Some aspects of the research will expect to be
qualitative nature in terms of the different components of culture. The study dependent
variable is organizational performance, while independent variables are organizational
culture related to customer service and internal business procedures.

3.3 Population of the Study

Population of the study defined as the total collection of elements about which a
researcher wishes to make some inferences (Cooper, 2006). The target population of this
study will compromise all of employees of ETTE which are presented in different levels
and professions. ETTE has around 503 employees in 8 different departments including
the General Manager i.e. Finance, Human Resources, Internal Audit, IT, Planning,
Design, Foreign purchase and local purchase. The respondents’ targets are from all levels
of employment i.e. from low level, middle level staff and top management staff that
works in each department.

30
3.4 Sampling Design

Sampling design defines the work plan that specifies the population frame, sample size,
sample selection, and estimation method in detail (Beri, 2000). The sampling design that
used in this study will discuss further in the section below.

3.4.1 Sample Frame

The sample frame is the source from which a sample is drawn. It is a list of all those
within a population who can be sampled. A list of all ETTE employees will obtain from
ETTE HR office as a sample frame.

3.4.2 Sampling Technique

A sample is a group from the population that will be representative of the largest
population. A sampling technique is a process of selecting representative variables from
the population that represent the whole population. Descriptive studies are best studied
through a probability sampling technique that ensures that all respondents (defined by the
department they work in and the level of service employment) have an equal probability
and chance of being selected. This study will adopt a stratified sampling technique to
select the sample. According to Cooper (2006), a stratified sampling technique is used
when a study seeks to examine a group that is not homogenous. This methods used for
developing stratums for different department including finance, HR, academic, projects
and procurement, and Business development. A representative sample will picked from
each of these stratified departments.

3.4.3 Sample Size

Sample size is a group of sampling units that include the entire set of sampling units from
the population. It enables a researcher to plan his research in a good time and assess the
financial implications before conducting the research. From the total population 223
employees are taken as a sample. This sample was determined by Yumane’s formula.
Yamane (1967) provides a simplified formula to calculate sample sizes. This formula was
used to calculate the sample sizes from a certain population at 95% confidence level.

31
Where = is the sample size; = is the population; is a constant

= is the estimates standard error which is 5% for 95% confidence level

N 503 503
N= 2 = 2 = 2 = 222.8 = 223
1+ N (e ) 1+ 503(0.05 ) 1+ 503(0.05 )

The sample size distribution of this study was determined and presents in table 3.1 below.

Table 3. 1 Population and sample size distribution

No Department Population Sample Size Distribution

1 G.Manager 1 1 0.45

2 Finance 41 18 8.07

3 ICT 23 10 4.48

4 Human Resources 74 33 14.80

5 Planning 41 18 8.07

6 Internal Audit 47 21 9.42

7 Foreign purchase 113 50 22.42

8 Arts and Design 106 47 21.08

9 Local Purchase 57 25 11.21

Total 503 223 100.00

Source: Human Resources Department, ETTE (2022)

3.4 Data Collection Method

Data collection is the process of gathering information from a list of respondents in order
to draw a conclusion. The study will use questionnaires and interviews to collect data
32
from the sampled population because questionnaires take less time to administer and
collect data as opposed to other research methods such as interviews. Both open-ended
and closed-ended questions will prepare to the respondent. A questionnaire was will
distributed to those employees who cannot be available for an interview for giving
feedback about the subject matter through answering the questionnaires. Secondary data
will collect from the internet, annual reports, and training reports. This data supplements
the primary data.

3.5 Research Procedures

Once the study tool for collecting data is completed, approvals will seek from the study
supervisor. After the permission is granted, a formal letter will draft and sent the director
at ETTE seeking permission to carry out the study. Once the permission is granted, the
researcher pilots the study tool with 10 respondents who are not taking part in the actual
study. Feedback from the questionnaire pilot will use to simplify the questionnaire
language. The questionnaires are printed and physically handed to the respondents.
Respondents are given one day to fill in the questionnaire, after which, the researcher
physically collects all the questionnaires. A phone call is made to departmental heads
asking them for assistance in ensuring that respondents from their departments answer
the questionnaire in time. This will to ensure a higher response rate, and also to ensure
that any missing answers are dealt with before the questionnaire is picked up. This also
ensures a check on completeness of the tool is done.

3.6 Data Analysis Methods

Before data analysis conducts, the questionnaires are also check for completeness. Data
cleaning and error checking was also conduct, and errors was fixed. The questionnaires
were coded for easy of analysis and counter checking. Data analysis was conduct using
SPSS (Vs.21) for descriptive data analysis and inferential data analysis. The descriptive
data were analyzed with percentages, frequencies and mean scores, while the inferential
statistics are analyzed with correlations, and regressions. Analyzed data was presented
using tables and graphs.

33
3.7 Reliability Analysis

A reliability analysis was also conducted to determine the validity and reliability of the
study instrument. According to Hair et al. (2006), one of the most common and popular
measures of validity and reliability is the Cronbach coefficient (alpha). The measure
examines how homogenous and reflective a tool is in relation to the underlying
constructs. A Cronbach Alpha has to be 0.70 and above for a study to be considered good
reliability. For this study, the Cronbach Alpha was (0.867), meaning the study tool was
highly reliable as indicated in table

Table 3.2 shows data validity and reliability

Variables Cronbach’s Alpha (α) No. of items

1.Organizational Culture 0.876 40

2.Organizational Performance 0.853 19

3.Customer service at ETTE 0.862 51

Overall 0.864 100

3.8 Chapter Summary

This chapter outlines the research methodology used, the target population, the sample
size and the methodology used to arrive at the sample. It also explains the methodology
for data collection, the tool of data collection and how the collected data will analyze.

34
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iv
Appendix

Time and Cost Schedule

Tabel I. Time Schedule

Month

July August September

n Activity
o

4 Preparing and
modifying questioners

5 Data collections

6 Data Entry and

Analysis

7 Report writing

8 Final paper
submission Presentation

9 Paper Presentation

v
Tabel II. Cost Schedule

No Expense Categories and Unit measure Quantity Unit price Total price
Items

1 Stationary material

1.1 Line paper Ream 2 180 360

1.2 Square paper Ream 1 240 240

1.3 A4 paper Ream 2 300 600

1.4 Stapler pieces 1 60 60

1.5 Writing pad pieces 1 340 340

1.6 correction fluid pieces 2 60 120

1.7 Flash disk(8gb) pieces 1 450 450

1.8 CDRW pieces 1 30 30

1.9 Pen pencil pieces 1 30 30

Sub total 2230

2 Secretory service

2.1 Typing Page 80 6 480

2.2 Photocopy Page 450 2 900

2.3 Print out from the internets Page 1000 1 1000

2.5 Internet service Hour 70 10 700

Sub total 2080

Grand total 4310

vi
Appendix III: Questionnaire Prepared For Ethiopia Tourist Trading Enterprise
Employee

The purpose of this questionnaire is to collect data regarding to assess the effect of
organizational culture on organizational performance in the case of Ethiopia Tourist
Trading Enterprise. The information obtained through this questionnaire will help to
assess the the effect of organizational culture on organizational performance Ethiopia
Tourist Trading Enterprise. Therefore, I kindly request you to provide me all possible
information. The information that will give me kept confidential.

Thank you for your cooperation.

I General Information
Please answer all the questions by ticking (✓) symbol in the boxes provided after
each question
1. Socio-Demographic Characteristics
1.1 Age; A) 18 – 29 [ ] B) 30 – 45 [ ] C) 46 – 55 [ ] D) Above 55 [ ]
1.2 Gender; A) Male [ ] B) Female [ ]
1.3 Department; A) Finance [ ] C) Human Resource [ ] D) Audit [ ] E) ICT
[]
F) Planning [ ] G) Local Purchase [ ] H) Foreign Purchase [ ]
1.4 Position : A) General Manager [ ] B) Team Leader [ ] D) Director [ ] E)
Employee [ ]
1.5 Experience ; A) Less Than 1 [ ] B) Between 1-3 [] C) Between 4-6 [ ]
D) Between 7-9 [] E) Above 9 Years [ ]
1.6 Level Of Education ; A) Primary Level [ ] B) Secondary [ ] C) Diploma
D) Degree [ ] E) Master and Above [ ]
II. Question that related to Organizational Cultural Practices and Organizational
Performance
2. Question that related to Organizational Cultural Practices
2.1 To what extent do you agree with the following statement about organizational
cultural practice in your organizations? Pleases (✓) the box with a number
from the scale below that best describes your opinion where 5 = Very large
extent, 4 = large extent, 3 = Fairly large extent, 2 = Small extent and 1 = very
small extent

vii
 Respondent opinion
No Organizational Cultural Practices 5 4 3 2 1

viii
I Involvement
Empowerment
Employees believes that they can have a positive impact
Most employees are engaged in their work
Information is widely shared so that employees can get the information they
need
Business planning is ongoing and involves everyone in the process to some
degree.
Team Orientation
Cooperation across different parts of the organization is encouraged
Work is organized so that each person can see the relationship between his or
her job and the goals of the organization.
People work like they are part of the team.
Teamwork is used to get work done, rather than hierarchy.
Capability Development
The capabilities of people are viewed as an important source of capability
development.
There is continuous investment in improving the skills of employees.
Authority is delegated so that people can act on their own.
The capabilities of employees are viewed as an important source of competitive
advantage
II Consistency
Core value
There is a clear and consistent set of values that governs the way business is
done.
Managers "practice what they preach"
There is an ethical code that guides behavior and that tells right from wrong.
Agreement
There is a ‘’strong culture’’ of doing things.
When disagreements occur, employee work hard to achieve a "winwin"
solutions
There is a clear agreement regarding the right way and the wrong way to do
things
It is easy to reach consensus, even on conflicting issues
Coordination and integration
There is a good alignment of goals across levels.
People from different parts of the organization share a common perspective.
Our approach to do business is very consistent and predictable.

Respondent opinion

ix
No
Organizational Cultural Practices 5 4 3 2 1
III Adaptability
Creating Changes
Improved ways to do work are continually adapted
Different parts of the organization cooperate to create change
ETTE respond to competitors actions and other changes in the business
Environment
Customer focus
Customers comment leads to changes and influences decision making
Employees understand customers wants and needs
Customers inputs directly influences company’s decisions
Organizational learning
Innovations are encouraged
Learning is an important objective in a day-to-day work of the company
ETTE view failures as an opportunity for learning and improvement
IV Mission
Strategic direction and intent
Our strategic direction is clear to me.
There is clear mission that gives meaning and direction to our work.
There is a long-term purpose and direction of the company
Goals and objective
There is wide spread agreement about goals.
Leaders set goals that are ambitious, but realistic.
We continuously track our progress against our stated goals.
Vision
Leaders have a long term view point.
Our vision creates excitement and motivation for our employees.
Employees have a shared vision of what the organization will look like in the
future

x
 2.2 Question that related to Customer Service
To what extent do you agree with the following statement about customer service
practice in your organizations? Pleases (✓) the box with a number from the scale
below that best describes your opinion where 5 = Very large extent, 4 = large
extent, 3 = Fairly large extent, 2 = Small extent and 1 = very small extent

Respondent opinion
No ETTE Customer Service 5 4 3 2 1
I Tangibles
The ETTE hall and shopping layout and amenities are high standards
Employees are formally dressed and presentable
Materials associated with the service i.e. computers, cash register machine and
others are available
II Reliability
Products offered by ETTE are of good quality and meet customers’ needs
Transactions are carried out within the specified service level agreement
Service offered at ETTE is dependable
When a customer has a problem, they show a sincere interest in solving it
Company performs the service right the first time
III Responsiveness
Employees are never too busy to respond to customers
Employees give prompt service to customers
Employees are always willing to help customers
Employees make information easily obtainable by customers
IV Assurance
The behavior of employees instills confidence in customers
Employees are polite and courteous with customers
ETTE employees are well knowledgeable about ETTE products and are able to
address Customers Queries appropriately
Customers feel safe in their transactions
V Empathy
Service is personalized at the customer’s level
ETTE has their customers' best interest at heart
ETTE operating hours are convenient to all their customers

2.3 Question that related to Organization Performance

xi
 To what extent do you agree with the following statement about customer service
practice in your organizations? Pleases (✓) the box with a number from the scale
below that best describes your opinion where 5 = Very large extent, 4 = large
extent, 3 = Fairly large extent, 2 = Small extent and 1 = very small extent
Respondent opinion
No Organization Performance 5 4 3 2 1
I Commitment
I will quit the job whenever i want
I make personal sacrifices to ETTE
I perform only required tasks
I accept increasingly challenging performance standards
I seek out development opportunities that enhance my own value to ETTE
I build contacts outside this firm that would enhance my career potential
I take ETTE concerns personally
I do only what I am paid to do
I adjust to changing performance demands due to business necessity
I build skills to improve my future employment opportunities else where
I plan to stay for the foreseable future
1 am under no obligation to remain in this organization
I commit myself personally to this organization
I am prepared to contribute ideas to help ETTE improve
I would be very happy to spend the rest of my career with this employer
I feel like "part of the family" at my current employer
II Employee Turn over
Continuous employee job satisfaction review is taken as seriously task in ETTE
ETTE employees do not leave the organization to look for more satisfying jobs
Compensation offered to ETTE employee is adequate
Peers evaluation of one’s job is meaningful both to the organization and to the
individual
Job motivation is evaluated frequently to ascertain employees need assistance
and the causes of non-motivation are analyzed and addressed

Respondent opinion

xii
No Organization Performance 5 4 3 2 1
Older employees do not often consider leaving the organization as compared to
the younger employees
The level of work related stress causes distress to employees who in turn leave
the organization in search for less stressful jobs
Social interactions at the work place are pleasant, professional or satisfactory;
this causes a comfort to employees who might in turn not leave the organization
Mechanisms to deal with employee work related stresses are in place, for
example, counseling, therapy and management interventions.
Rewards given to employees
Materials are available to employees for task performance
III Customer Satisfaction
The ETTE staff are friendly and willingness to help customers
ETTE have concerned and caring attitude to customers
ETTE providing prompt customer service
ETTE being capable and competent
ETTE gives undivided attention to customers
ETTE maintaining a professional appearance to customers
ETTE Never being too busy to respond requests from customer
ETTE Properly handling any problems as they arise from customer
IV Job satisfaction
Employee feels fairly compensation for their work.
Employee work in an environment where there is cooperation and respect.
Managers or supervisors care about employee personal needs.
Problems in the workplace are addressed quickly and adequately.
Managers or supervisor praises employee suggestions that aid in solving
organizational problems.
Senior management is aware of activities in each department.
Job performance evaluations done in fair and based on clear performance
standards.
There is open communication throughout the workplace.
There is a clear well written job description.
Employees are responsible for planning their work activities.
Employee feel motivated at work.
Employee not feel stressed at work
Employee use professional skills (education, training) regularly
Employee work in a safe and comfortable environment
Training for each employee is based on position, clear and helpful
Overall this organization is a good place to work

xiii
Appendix IV: Interview Schedule for Higher Management Bodies

The purpose of this questionnaire is to collect data regarding to assess the effect of
organizational culture on organizational performance in the case of Ethiopia Tourist
Trading Enterprise. The information obtained through this questionnaire will help to
assess the the effect of organizational culture on organizational performance Ethiopia
Tourist Trading Enterprise. Therefore, I kindly request you to provide me all possible
information and all your information will be kept confidential.

Thank you for your cooperation.

Fill in the blank spaces and tick the appropriate check boxes.

Rank ………………………………………

Department ……………………………….

1. What is your view of Organization culture?

………………………………………………………………………………………
2. On the basis of your view above, of what significance do you consider organization
culture in respect to ETTE?
…………………………………………………………………………………….
3. In your view, how does organization culture influence the performance of the
organization?
…………………………………………………………………………………………
4. How can the impact of organization culture on organizational performance be
measured in your opinion?
………………………………………………………………………………………….
5. What factors have contributed to the emergence of organization culture within ETTE
Service?
…………………………………………………………………………………………..
6. Do you consider ETTE Customer Service are successful?
………………………………………………………………………………………

Thank You!!!!

xiv
xv