Literature Review Organization Culture And Firm Performance Management Essay

Organizational culture is defined broadly as “a collection of values, beliefs and norms shared by its members and reflected in organizational practices and goals” (Hofstede et al., 1990). The application of this definition provide the culture that facilitate the innovation in order to trigger the expectations for member creativeness, experimentation and risk taking. Another definition of organization culture is that the ” shared values, beliefs and perceptions held by employees within an organization or the organization unit. Because the employees of the organization used the values, beliefs and behavioral norms which are originated by the organization culture in order to influence the behavior and attitude of the employees.” (Tsai, 2011)

Organization Culture

Researcher explore the notion that the theories of organization culture are based on the factors including (1) development of firm’s procedures, (Jarnagin and Slocum, 2007), (2) unite the competencies of the organization as a whole, (Day, 1994) (3) give solution in order to solve the complexities of the organization, (Schein, 1984, and (4) assisting or impede the accomplishment of the organization objectives.(Denison and Spreitzer, 1991) the key objectives of this study is to enhance the understanding regarding the linkage between the firm effectiveness and the organization culture. Prior studies demonstrate that in order to compete successfully, all companies endure a numerous opposing confrontation. More significantly, companies require to concurrently harmonize the internal amalgamation and cooperation with the external flexibility towards change in order to accomplish the objective of the organization and create the elements of adaptability and firmness in the firm’s processes.

Researchers explore that culture is characterized with the different notions that persuade the behavior of the individual employees which are behaved in diverse culture and their expectations are associated with the unclear rules (Bose, 2004). Researchers argue that the development of the organization culture is based on the entire organization external aspects as well as the organization environment external factors.(Lu et al., 2008).

Schein (1990) demonstrate that the studies regarding the firm’s culture must adopt the methodological way in order to assist the scholars and management professionals to recognize and apply all the antecedents and variables appropriate for the empirical investigation. (Schein, 1985), the goal of this study is develop a macanahism that provide promising relationships regarding the organization culture variables and their relative impacts towards productivity of the firm in order to achieve the sustainable competitave position in the market.

Researcher explore the notion that culture of the organization play focal part towards the effectiveness and productivity of the organization which is essential to create competitive edge in the challenging global commercial world. The main intention of the management of the organization is towards to enhance the financial productivity of the firm. in today’s industrial environment, the culture of the organizations seen as the most focal aspect in order to trigger the performance of the organization.

Researchers argue that there are four types of focal cultural hallmarks including flexibility, stability, mission and participation that pinpoint the key problems and confrontations that the contemporary firms face in order to effectively perform their business operations.(Denison et al., 2003). Prior studies depicts that the theories regarding organization culture exert how organization productivity and culture are align with each other and it also mention the wide array of hallmarks and values in order to recognize the relationship between organization effectiveness and its culture. .( (Yilmaz et al., 2005)

Researcher explores the notion that the culture is focal component towards adaptation of firm’s practices that specify that hallmarks of culture are the important indicators of productivity and performance. Researchers depicts regarding the notion of “clan” organization (Wilkins and Ouchi, 1983) and find the each “clan” would lead toward progressively productive and fruitful outcomes.

(Denison, 1984) argue that the perception regarding organization members participation and involvement indicate both the existing and future organization financial performance. Research about managerial level practices and values organize by the French theorists align with the pattern of escalation and growth.

Firm Performance

(Denison, 1996) argue that “culture” “refers to the deep structure of organizations”, whereas “climate” mainly concerned with the “those aspects of the social environment that are consciously perceived by organizational members”. Studies regarding organization culture reveal that experiences of employees about the core organization procedures and values have been the promising indicators of performance of the firm. Researcher investigate the four kinds of performances including (1) financial performance, (2) technological performance, (3) business performance and (4) social performance. Researchers explore the notion that corporate culture influence towards the efficiency of the firms via “cognitive and affective states “and “salient organizational behaviors”. The earlier conditions concerned with the employees feelings regarding satisfaction of job and work motivation. ( Kopelman, Brief, and Guzzo 1990). Researchers also establish a model having the hallmarks of “person-organization fit and employees’ psychological contract”. The notion of the psychological contract is based on integrated “mental, emotional and attitudinal states” and “salient organizational behaviors” by (Sparrow, 2001). The psychological contract is concerned with the alignment between culture of the organization and prospective organization and person fit associated with the key behaviors of employees and organization performance level. These situations includes perceive organization assistance and justice, and feelings regarding job participation, dedication , trust and satisfaction.

Prior studies also depict that the perception regarding organization emphasis towards accomplishments, attachment, autonomy, and understanding associated with the satisfaction with the aspects of organization culture. Moreover, at the personal level, the organization cultural aspects contribute towards the productivity of the firm via shared forms of affect. Studies depicts that many hallmarks of organization culture exert the processes of conflict and collaboration. Such societal behaviors or mutually dependent intentions persuade the organizational and group productivity at the supra- personal level, operating via societal norms and shared reinforcement. This procedure is also examine via the notion of “group affective tone” (George and Jones, 1997) – constant emotions experienced by the work team members. These hallmarks of groups are thought to persuade the mental models of members, consequences and procedures regarding decision making, withdrawal and shared behavior like staff spillover and absenteeism. (Patterson et al., 2004).

Researchers shown that organization culture plays a vibrant role regarding innovation management.(Jassawalla and Sashittal, 2002) defines an organization culture that facilitate innovation in such a way that ”social and cognitive environment, the shared view of reality, and the collective belief and value systems rejected in a consistent pattern of behaviors among participants”. They depicts that organization culture give a strong frame of reference, facilitate and align behavior of the employees and firm’s innovation goals to meet the requirements of adaptability and control.

Innovation plays a focal role in order to achieve sustainable competitive advantage. in reality,(Patterson et al., 2004) depicts that it is the responsibility of the contemporary managers to manage the innovation in order to attain sustainable competitive advantage. Innovation management facilitates the organizations to meet the requirements of turbulent markets. Similarly, the innovation process encompasses from to create or enhance the operations of administrations. Successful innovation process improves the productivity and responsiveness of the organization. The efforts regarding innovation may be varying the relationships across professional and functional limits or needs alterations regarding structure and culture of the firms. (Black et al., 2004).

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Values are the focal element of the cultural aspects (Quinn and Rohrbaugh, 1983). Studies depicts that the culture that facilitate innovation originated from values, which describe a fundamental belief regarding the organization structure. (McAllister, 2003). (Detert et al., 2000) explore the notion that values are the most crucial aspects of culture that accelerate the process of innovation in order to enhance the productivity of the organization and attain the sustainable competitive position in the market. . (Khazanchi et al., 2007).

In order to increase the awareness and bring adaptation in organization processes, a deriving forces of change should investigate the association between core values and structure of the organization. Researchers explore the four kinds of culture orientations including (1) Group culture, this type of culture persuades towards adaptability and emphasize on internal matters of the company. The focal goal of those firms that emphasize towards team culture is the protection of the group, association, collaboration, trust, adaptation of the focal values, affection, and cohesiveness. Leaders of those organization that peruse group culture are tend to be more adaptive to change, facilitator, and assist the communication in mutual manner in order to bring effectiveness, productivity and employees commitment in organization. (2) Developmental culture, this kind of culture also promote the adaptability and change, but the focal goal of this type of culture is towards the adaptation of external environment of the organization. This type of culture brings expansion, attainment of recourses, flexibility, adaptation and creativity towards the external environment of the firm. The crucial motivating aspects associated with the development culture include development, creativeness, and diversity and motivation. Leaders of those organization that pursue the developmental culture are tend to be more visible, legitimate, and facilitator toward the external environment in order to develop the new markets, and bring productivity in organization to achieve sustainable competitive advantage. (3) Rational culture, this type of culture characterized with the effectiveness, productivity, enhancement in performance, achievement of goals and accomplishments. The driving forces of this type of culture are the pressure of the competitors and fruitfully attainment of programmed objectives. The leaders of those organizations that peruse the rational culture tend to be more directive, helpful, practical and oriented towards objectives in order to enhance organization performance. (4) Hierarchal culture, this type of culture characterized with the internal effectiveness, standardization, harmonization and assessment. The focal objective of hierarchal culture organization is the implementation of the policies. The driving forces of that type of culture are the safety, order, policies, and laws. The leaders of hierarchal culture firms are tend to be more conventional, vigilant, and give more significance to technical issues in order to bring control, constancy and productivity in organization.

An essential assumption of the framework regarding the cultural value is that each kind of culture is a perfect culture. The culture of an organization is form through the collaboration of distinct cultural orientation, though one kind of cultural orientation is more crucial relative to the others cultural orientation. “A high rating of one dimension, e.g. internal orientation, does not exclude high rating at the other end, e.g., external orientation”. (Prajogo and McDermott, 2005).

Moreover, (Denison and Spreitzer, 1991) depicts that there is decrease in productivity of the organization if the organization overemphasize any kind of cultural orientation. While there is harmony among the researches that culture of the organization is focal to derive change processes, but there is no consensus among scholars to identify what type of cultural orientation is best be able to facilitate the transformation of the business processes. (Prajogo and McDermott, 2005) explore the association between various kinds of cultural orientation and assured the practices regarding the total quality management. The results indicate that various types of cultures facilitate the different subsets of the practices regarding total quality management. The results also depict the notion that the firms even apply distinct, even contrary types of culture, with the consensus. This scenario derive the question that which type of cultural orientation combination is most feasible in order to bring change in organization processes.(Skerlavaj et al., 2007).

All of the four type of cultural orientation has a glacial opposition. the culture of group is concerned with the adaptability and internal focus which is distinct to the rational culture that is concerned with the external focus and adaptability. the culture regarding development is refer to the notion of external focus and adaptability which is opposite to the hierarchal culture that emphasize towards internal focus and control. (Denison and Spreitzer, 1991)

Researcher explores the notion that culture is based upon focal values, explanation and approaches that form an organization. The framework regarding competing values of culture is facilitate to explain and organize a broad diversity regarding organization facts. There are four types of that emerge in in framework of competing values including (1) hierarchy, this type of culture is concerned with the formal and organized work process. The focal objectives of this type of culture are to bring consistency, productivity and effectiveness in organization in order to attain sustainable competitive advantage. The key hallmarks of this type of cultural orientation are swiftness, reliability, efficiency and smoothly flowing production processes. (2) Market culture is based on the dealings with the external environment including suppliers, customers, regulators and so forth. The focal ingredients of market culture are the effectiveness, competiveness and productivity in organization processes. In order to bring competitiveness and productivity in organization, the organizations should emphasize into the control and positioning towards external environment. The focal assumptions regarding the market culture are depicts that the external environment of the organization is not being but antagonistic, customers are fastidious and fascinated towards values and the business organizations expand their competitiveness in market. (3) Clan culture is characterized with the notions of group work, employee’s participation, and organization dedication towards employees. The focal assumptions associated with this type of culture are the management of environment via development of employees and group work, consumers are best be seen as partners, (McGregor, 1960; Likert, 1970;). The focal values of this type of culture is associated with the tradition and devotion.(4) adhocracy culture, the key objective of those organizations that peruse adhocracy culture in their organization tend to be more adaptable, flexible, and innovative in their policies in order to mitigate ambiguity and uncertainty. The originations that characterized with the culture of adhocracy are tend to be more adaptable to change and new opportunities in order to mitigate the challenges of global commercial world and achieve the sustainable comparative advantage. The most vibrant ingriedents of culture of adhocracy are the tendency towards individuality, risk taking and forecasting the future requirements by involving with research and development activities. Cameron and Quinn (1998),

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According to prior researches, social responsibility is seen as an focal aspect of firm culture and a value in the environment of the firm culture. In order to engender the social responsibility, it is require to alter the values orientation, whose function is the formation of attitude, alteration of the individual position in order to align the public and personal interests. Findings reveal that clan, hierarchy and adhocracy indicate regarding the two aspects of social responsibility of organization _ the performance of the firm is concerned with the social matter and the organization respect to the benefits of the agents. majority of the researchers that depicts that culture of the organization is an efficient tool in order to influence the longer term productivity and performance of the organization. (Denison, 1990)

Researchers recognize the two kinds of aspects that exert influence towards the dedication and motivation of the employees. The first aspect is the “contextual”, which refers to the performance and attitude of the employees are exaggerated by the culture of the firm. The second aspect is “perceptual”. (Collier and Esteban, 2007). Scholars argue that culture is the most crucial aspect of the external environment of the firm, align with the political, financial, technological and societal issues that exert influence towards the effectives and productivity of the firms in order to attain sustainable competitive advantage. (Žitkus and Junevi ius, 2007)

Researchers demonstrate that the pattern of the firm’s culture is based on the assumptions that a group of people has established and developed in knowledge in order to overcome the obstacles associated with the fundamental incorporation and adaptability towards the external environment.( Schein (1992). Researchers also investigate regarding the alignment between environment and the organization culture. (Trice and Beyer, 1993) argue that the culture of the firm is concerned with the shared responses towards the ambiguity and confusion. (Gagliardi, 1986) depicts that key strategy of all firms is to secure the firm’s distinctiveness and development and maintenance of the organization values. (Kotter and Heskett, 1992) explore the notion that the firm culture is considerably affect the performance of the firm in order to improve the organization ability to forecast and compliance with the changes associated with the environment.(Übius and Alas, 2009).

Majority of the research studies explore the notion that the successful organization are those that characterized with the environment of high level of financial gains and sustainability in profitability. In order to attain these characteristics, the organization should be (1) establish the entrance obstacles, (2) development of products that are non- substitutable, (3) a large number of market share, (4) consumer, which are characterized with the low level bargaining power,(5) suppliers, which are characterized with the low level of bargaining power, (6) competition between the competitors. (Cameron et al., 2003)

The swift changes towards technology and businesses intimidating the sustainability of the organization and create many obstacles for the organization management. (Drucker, 1999). Companies are constantly face pressure of the competitors and induce to reassess their models of the business and core organization processes. the emphasize of the management operations towards the cautious administration of the internal process along with the supply chain process in order to enhance the productivity of the organization that leads towards sustainable competitive advantage. (Hammer, 2004)

Studies demonstrate that firms can enhance their overall productivity in order to opt innovative procedures in their business processes. Researcher argues that the culture of the organization is very focal in order to enhance the performance of the organization by altering the businesses processes. Researcher also explore the notion that the organization learning culture that defined as ” a set of norms and values about the functioning of an organization”. This culture is based on collaboration of various cultural kinds along with the cultural framework of competing values. (Denison and Spreitzer, 1991)

Researchers explore the notion that the process of the organizations takes numerous forms, ranging from constant enhancements along with the total quality management to essential reengineering of businesses processes. The plan regarding identifying the focal businesses process success factors changed emerged as a reply to the low level of business process reengineering projects success rate. One hallmark is common in majority of critical success factor is that the culture of the organization is critical to execute the change process.

Majority of the diverse people used the word “culture” to clarify the diversity of phenomenon. As every person tends to opt slightly distinct view, there is no globally acceptable definition of culture (Rollinson and Broadfield 2002). Schein(1992) explore the notion that organization culture is characterized with the focal assumptions invented or established by the given group which is learn to overcome the obstacles associated with the adaptation of external environment as well integration with the internal processes.

Researchers argue that the firms that establish a strong learning culture are best be able to create, acquire, and communicate knowledge as well as altering behavior in order imitate innovative knowledge. (Huber 1991). Therefore, the organizations that emphasize towards learning oriented culture that initially attain information and then understand it and then convert into knowledge. Studies demonstrate that the organization culture that characterized with the learning can enhance the performance of the organization and improve the past knowledge from various viewpoint.

(Prajogo and Macdermot 2005) explore the notion that which is facilitate the pluralist perspective that depicts regarding the ” existence of multidimensional culture”. In this way, one can recognize the firm’s learning culture that characterized with the collaboration of norms and values that facilitate the developmental, group and also facilitate to some degree of rational and hierarchal culture associated with the framework of cultural orientation.

The organization that characterized with the strong learning culture place focal importance towards the attainment of strategic, operational and tactical information. The employees of those organizations that characterized with the strong learning culture feel the sense of empowerment which leads to the adaptability towards changing in the organization external as well as internal environment. Therefore, this should exert positive consequences in the sense of dedication , trust, employees effectiveness and their retention.

At the same time, the organization characterized with the strong learning couture are better be able to deal with the consumers regarding the attraction of new customers and retention of old clients. The cultures of those organizations that emphasize towards learning values are better in position to develop successful relationships with suppliers. Most likely, the organizations who peruse learning culture tend to be more productive in financial gain. ( meha skarlevaj 2007).

In relation to the cultural values, it is essential to differentiate between the personal values of individuals and the adopted values that are the hallmark of the firm’s culture. While, the individual values characterized are consistent and profoundly embedded within the structures that exist. (Enz 1998), adopted values are ” articulated, publically announced principals, and the values that the group claims to be trying to achieve, such as product quality(Schein, 2010). These aspects of culture demonstrate the collaborative insight and orientation towards the particular line of work, which are comparatively complex and responsive towards the influences of external environment. (Yair Berson 227).

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The majority of research scholars establish an incorporated company’s culture framework. ( Hatch 1993), although, a little bit harmony prevail with respect to a common theory regarding the culture of the organization. Prior studies give the model regarding culture of the firm that characterized with the four focal aspects. (1) Involvement, this term reveals that the productive firm’s empower their employees, systematize in grouped, and enhance their strengths in order to accomplish sustainable competitive advantage. (Katzenbach 1993, Spreitzer 1995). (2) Consistency, this notion is based on “strong” culture that is extremely stable, well harmonized and integrated. (Davenport 1993). Consistency is characterized with the common mindset which leads towards the internal amalgamation and consistency. (Senge 1990).) (3) Adaptability, paradoxically, the firm’s that are well incorporated are probably the less responsive. (Kanter 1983) the organization external. Researchers explore the notion that the firm’s adaptability towards external environment and the integration of internal framework can frequently be at odds. The firm’s which are adaptable to change are determined by their consumers, learn from their oversight, take risks, are best be able to bring change in organization. (4) Mission, this refers to the firm’s that have an apparent sense of direction and goal , defining objectives and strategic goal and provide a vision of the future. (Mintzberg ,1987, 1994;). (Carl F. Fey 2003).


The work regarding describe the influence of cultural hallmarks towards the organization performance continue. The present research gives addition to this emerging study in order to investigate the influence of Denison’s four critical firm’s culture hallmarks including involvement, consistency, adaptability and mission towards the various perspectives of effectiveness of the firm. the hallmarks of mission trait contains the value perspectives, e.g. strategic track and intention, shared purposes and goals, and vision for the longer term. these dimensions place great importance towards the effectiveness and the linkage between the objectives of the organization, which are usually evident towards such behavioral direction of the members of the firm that emphasis towards consistency and awareness regarding external incidents. Therefore, it is the harmonies empirical consensus regarding the mission trait of the cultural orientation is that this trait is the most crucial cultural factor in order to improve the effective functioning of the firm’s.

Future Research direction:

Much of the research is needed to pinpoint the correct nature of the variables that highlight in this study. The lack of clear theory regarding the consequences of imbalances collaboration of the cultural hallmarks also gives various methodological obstacles and complexities regarding interpretations. Particularly, due to the severe lack in prior research providing directions as to which particular imbalances are crucial.


in general, the findings regarding each of the cultural hallmarks including consistency, involvement, adaptability and mission exert the impact towards the effectiveness of the organization. The practitioners aiming to enhance the wide spectrum regarding the productivity measures. The research study also develops insight about balanced cultural hypotheses.

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