Cultural Impact on Organizational Performance

Identification of the Problem Discussed in the Article

Previous articles on culture have failed to contribute to understanding the relationship between corporate culture and organizational performance. The lack of concrete research on the culture-performance relationship can be attributed to the lack of utilization of quantitative surveys and statistical analysis. Kim and Yu (2004) highlight the previous absence of cultural adaptation in defining the performance of organizations.

We will write a custom Cultural Impact on Organizational Performance specifically for you
for only $14.00 $11,90/page
308 certified writers online
Learn More

Until recently, most studies on culture-performance relationships have only paid attention to traits and value, and their contribution to superior organizational development. In this approach, various traits and values are deemed to directly translate to superior firm performance. However, this position fails to explain the fact that culture must be shared among employees for it to be deemed as “strong” and translatable to determinate performance. Another identifiable problem is the lack of a clear denotation on the impact of a strong culture on organizational performance both on a short-term and a long-term basis.

Hypotheses

The study proposes that climate research and cultural studies have similar manifestations and, thus, they possess related quantitative and qualitative methods that should be used to examine these topics. A strong organizational culture that is shared among all employees within the firm is a sturdy determinant and predictor of its performance. When organizational culture is defined by broad factor indicators such as return on investment, return on sales, and return on assets, it is predicted short-term performance.

This underpinning shows that an appropriate and strong culture is the most powerful tool in determining the performance of an organization. On a short-term basis, there exists a relationship between the strength of the organizational culture and its performance. However, this can be different on a long-term basis. To achieve long term performance, firms have to incorporate adaptive values that are appropriate to their current environment.

Methodology

To identify valuable cultural values, the researchers used the Q-sort profile comparison method as the primary research instrument. The respondents were issued with a large number of articles and were required to sort the articles based on the criterion given. The organizational culture profile was determined by selecting the top 54 valuable items. Various performance indicators were then selected based on the industry.

In this regard, manufacturing, financial, and health sectors were chosen. Similar criteria were used for companies in the same industry. The method used a stratified random sampling where 72 companies were selected from the three industries. Each company was required to choose seven participants at the top three management levels. The participants were then stratified based on their management level and experience.

The Need for the Study in the Article

Due to the lack of distinct operationalized and repeatable cultural definitions, more study needs to be done to validate the culture construct. Few studies have focused on the interrelation between culture and performance despite their evidence of existence. Therefore, through the study, Kim and Yu (2004) accentuate the importance of culture to an organization by elucidating the interrelationship between the two aspects. Through the study, the authors have also investigated the relationship between a strong culture and organizational performance from a short-term perspective and a long-term one. By evaluating the research findings, the study contextualized the impact of the adaptability of culture on an organization.

Get your
100% original paper on any topic done
in as little as 3 hours
Learn More

Literature Review

Despite the numerous researchers who have provided insights into the concept of culture, only a few of them have emphasized its contribution to organizational performance. One of the logics provided by Denison in Kim and Yu (2004) is the disbelief in the use of quantitative approaches in evaluating culture through survey and analytical methods; hence, limiting the scope for further research.

Even so, Denison and Mishra in Kim and Yu (2004) unearthed the significance of cultural strength with the short-term financial performance of organizations while Kotter and Heskett refined the framework between culture and performance. The framework illustrated that adaptive cultural values are strongly linked to the superior performance of an organization over a long period rather than a short one. This hypothesis weighs the value of adaptation in determining organizational performance. In this context, a strong culture is one with a strong adaptable mission and vision sensors. The framework also emphasizes that an organization’s culture can affect its performance if only it is strong (shared and internalized by all employees) and appropriate to its environment.

Previous researchers on a culture focused on the aspect of traits and their influence on performance. However, recent studies have indicated that for culture to act as a compelling prediction of organizational performance it has to be “strong” – strong in the sense that it is shared among all employees within the organization.

Further evidence has pointed out that when the performance of an organization is defined by broad indices such as return on investment, return on assets, and sales returns, the strength of organizational culture becomes predictive of its short term performance. Additionally, a strong culture needs to be complemented by an appropriate one to produce a powerful result.

Study Assumptions, Limitations, and Potential for Future Research

The authors assume that reliability tests and factor analysis methods revealed the existence of a distinct set of cultural dimensions aspects that was material across the sample. The findings also assumed that the sample organizations used were heterogeneous in their cultural aspects. Moreover, the study derives the assumption from the reviewed literature that the construct of culture is distinct, operationalized, and repeatable. Kim and Yu (2004) also believe that the degree of innovation, task orientation, team orientation, degree of supportiveness, and degree of human themes are the dominant themes in organizational cultures.

The researchers focus on the implications of future culture studies. The study could, therefore, become an instrumental prerequisite for further research involving an in-depth comparison of culture-performance relationships across organizations.

The conceptualists of the paper acknowledge several limitations experienced during the study. One was the lack of diversity of respondents (in regards to management level) which implied that the findings may not have fully represented all employees in the selected companies. Also, the researchers only captured culture-performance indices from three industries.

We will write a custom
Cultural Impact on Organizational Performance
specifically for you!
Get your first paper with 15% OFF
Learn More

Conclusion of the Research Finding

The authors assert certain cultural facets are recurrent elements in most organizations. This paves way for further research on the issue of comparability of the culture-performance relationship among various organizations and industries. The study also revealed the dynamics of the industries that led to the establishment of different cultural values that characterize the industries. The research findings also elucidate the impact of cultural strengths on the performance of an organization.

The paper concludes by affirming its essence of enhancing the comprehension and contextualization of culture and the impact of culture on various organizational processes. Furthermore, the writers believe that practitioners will gain a keen interest after knowing that culture can be a source of competitive advantage in some conditions. The researchers are also akin to the limitations of the study such as the lack of diversity among respondents and industries.

Student Team’s Critique on the Article

The study methodology focused on seven respondents who were chosen from top managerial positions, which posed a risk of nullifying the findings due to the lack of diversity in the representation of employees in various companies. Kim and Yu (2004) rightfully acknowledge this strategy as a limitation to the study. Based on the articles’ literature review, we find that employees are the cornerstone of a strong organizational culture.

For a culture to be regarded as strong it needs to be shared among all employees across the organization. This implies that any study used to access the strength of an organization culture has to be based on equal representation of all employees – that is from senior management to subordinate. Therefore, due to the lack of proper consideration of the factor of employee significance to the strength of culture, we find the research findings of this article to be quite unreliable.

Contemporary culture researchers have critiqued previous studies on culture asserting their limitation to methodology and analysis. They, therefore, recommend that current researchers use both a qualitative and quantitative approach during data collection and analysis. This is because the organizational culture has a similar manifestation to climate and other statistical paradigms. In this regard, the article has considered these important recommendations through the use of a survey and a statistical approach.

The paper has surveyed the organization’s culture profiles of various companies in the hospital, manufacturing, and insurance industries. Moreover, the authors have used a statistical approach to analyze their findings. For instance, in evaluating performance, the paper has used statistical analysis methods such as factor analysis, Q-factor analysis, and correlation analysis.

The authors’ claim that reliability tests and factor analysis of study results supported the hypothesis that a unique set of cultural aspects was applicable across a heterogeneous sample is flawed. The sample lacks any form of heterogeneity. This critique is derived from the study’s concession that it was limited about diversity. This is because the researchers only selected three industries as study samples. Moreover, the employees from various companies selected were not heterogeneous since they only constituted the top management and, thus, failed to represent subordinate staff members.

Not sure if you can write
Cultural Impact on Organizational Performance by yourself?
We can help you
for only $14.00 $11,90/page
Learn More

The article observes that dominant themes in organizational cultures were team orientation, level of novelty, humanism, and supportiveness. This is in line with the theory of adaption which states that firms have to adopt adaptive values to record high performance over a long term basis. Adaption is essential to a firm as it provides a distinct, operationalized, and repeatable culture giving it a competitive advantage over other companies. Therefore, adaptive cultural themes help to strengthen the organizational cultures of the sample companies to influence their performance.

The article achieves its objective of validating the construct of culture and determining the relationship between organizational culture and performance. According to the paper, culture is a recurrent or repeatable element of organizations since all organizations sampled revealed certain aspects of culture. Additionally, the cultures also indicated an element of distinctiveness in regards to their industrial space. For instance, the paper denotes an aspect of industry dynamism in culture dimension. Besides, the paper highlights that hospitals were found to be more team-oriented, insurance companies more task-oriented while manufacturing firms more humanistic. The paper also relates various cultures to performances of organizations using relevant performance indicators.

Reference

Kim, S., & Yu, K. (2004). Corporate culture and organizational performance. Journal of managerial psychology, 19(4), 340-359.

Check the price of your paper