THE IMPACT OF ORGANIZATIONAL CULTURE ON ORGANIZATION PERFORMANCE
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
There are different types of organizations which exist to serve different purposes and to satisfy the variety needs of stakeholders of the organization. The type of organization is dependent on its ownership, shapes and sizes. For example, firm of accountants, schools, retail shops, local authorities, airports, vehicle manufacturers, hospitals, hotels and many others. These organizations are categorized into two, that is, public and private organizations. Whatever type or category an organization is found, it exist to perform certain functions to achieve set objectives and to provide the desired satisfaction of its owners and customers. The set objectives are enabled and require the collective efforts of people to achieve the objectives that cannot be achieved by individuals on their own. Through collective efforts and actions, members and employees of an organization can provide a concerted and synergistic effect. Gibson, Ivancevich, Donelly, and Konopaske (2005) stated that organizations have distinct personalities and that these personalities are shaped largely by its top executives, for example, a tyrannical and autocratic executive team is able to create a culture that is filled with fear. Therefore, the way a leader or top executives manage his or her employees will determine how the employees will react to work to achieve the goal of the business of profit making. Organizational performance is the ability for an organization to fulfill its mission through sound management, strong governance and a persistent dedication to achieving specific goals over a given period of time (Stafford & Miles, 2013). Performance is equally defined as the achievement of financial and non-financial goals that enables an organization to remain viable and sustainable both in the short term and in the long run (Denison, Haaland, Goelzer & Yilmaz, 2008. High organizational performance is achieved when all the parts of an organization work together to achieve desired results (Ansoff, 1987). The concept of organizational culture emerged in the United States in the mid 70‟s with the writings of scholar‟s like Ansoff (1987); Schein (2007); Rieley and Clarkson (2001) among others. These scholars argued that organizational culture defines the parameters that propelled fortune 500 companies in the US, UK, and other developed countries to enhance performance and remain competitive even in the face of intense globalization.Management theorists, therefore, over the years have agreed among other variables that corporate culture and
organizational performance have a very close relationship. Following Mullins (1999) “…there is a relationship
between an organization‟s culture and its performance.” Flamholtz and Kannan-Narasimhan (2005) said “that the
impact of organizational culture on the bottom line is of critical importance as a basis for influencing managerial
practice and in turn financial performance.” McShane and Von Glinow (2005) in line with the above views of the
relationship between organizational culture and organizational performance had a little different view, that “can
companies with strong cultures have higher performance? Not necessarily! Studies have found only a modestly
positive relationship between culture strength and success.” With the above views and statements of management
theorists, one could easily conclude that organizational culture has a relationship with job performance of organization
and in turn have positive impact on the overall performance of an organization. Researchers who have studied the
impact of organizational culture on employees also indicate that it provides and encourages a form of stability. Gibson
et al (2003) identified two major aspects of culture, which are strong culture and weak culture. Gibson stated that
strong culture is characterized by employees sharing core values; the more employees share and accept the core
values the stronger the culture is and the more influential it is on behavior and the more employees do not share and
accept the core values the weaker the culture is and the less influential it is on behavior. Mc Shane et al (2005) also
supports the argument of Gibson et al and went further so say that weak culture is when the dominant values are
short lived and held mainly by a few people at the top of the organization
THE IMPACT OF ORGANIZATIONAL CULTURE ON ORGANIZATION PERFORMANCE