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Corporate Culture Enhance Organisational Performance Business Essay

1441 words (6 pages) Essay in Business

5/12/16 Business Reference this

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Organization culture is a source of sustained competitive advantage; corporate culture plays a very important role in organisational performance. By reviewing existing documents of the organizational culture research, we make a study of the theoretic elements of organizational culture and analyse its effect on firm’s performance. The study in this paper gives us a better understanding on how enterprises get better performance and establish the foundation of the successful corporations. The Hewlett Packard case analysis from Kotter and Heskett (1992) had confirmed that strong corporate culture enhances organisational performance

Key words

Organizational behaviour, organizational culture, firm performance

Competitive advantage, resources, synergistic effect


A recent study (Fun Yun et al. 2003) has investigated that the development of modern management science has been through three stages: Classical Management Theory, Behavioural Science Management Theory, and Management Theory Jungle (Harold Koonty 1961).

In early 1980s the fourth stage — organizational culture has began, this phase focuses on how to apply the cultural research results to the enterprise management. Organizational culture as a modern enterprise management theory and management strategy are more and more sought after from the business community and the academic circles from whole world. Some scholars believe that the enterprise competitive advantage not only can be relied on its capacity also with its ability in the organizational culture.

However, many studies have shown that, when determining unique characteristics of a company, culture can even be decided for which strategic to choose. According to the view of Barney’s (1986), culture is the continuous strategy for enterprises to give them a competitive advantage of the resources. Achieve competitive advantage at least in part rely on capacity. Therefore, the enterprises research extends to the key ability and resources such as culture is meaning very important.

This literature review is revolve around cooperate culture and to discuss the basic theory of organizational culture and corporate culture for the influence of enterprise performance.

Literature Review

1 Organizational culture theory research evolution process of a brief review

The concept of organization culture is acknowledged by Pettigrew (1979) in the article “organizational culture research” , and in 1982 attracted the attention of academic and business management circles mainly due to few books published: Ouchi (1981) “theory z”; Pascale and Athos (1981) “the Japanese management art ” L6; Deal Kennedy(1982) “corporate culture ” , Peters Waterman(1982) “search of excellence”. Since then, organization of culture has opened a new page and a lot of organizational culture research paper is constantly emerging by group of distinguished researchers as Ouchi, Hofstede, Sehein, Wilkins etc, they are excellent at the area of organizational culture in their respective areas of expertise and conducted successful research.

After the 80s the academics and businesses were mainly studying the organization culture management that were based on the following elements, comparative management culture, factual study of the culture and management of the cooperate culture and other relative elements of the culture.

Hofstede (1980) points out variation of manage practices, similarity or dissimilarity due to different culture or countries, and hance finding out the effect of culture on organizational performance. As Lincoln and Kalleberg (1990) In their reseach of the United States and Japanese enterprises explored the work attitude with emphasis on the culture, and they visualize culture as a management tool for the organization control. This is also further illustrated by Sekaran and Snodgrass (1989) with four counties (United States, Japan, Sweden, Yugoslavia) showing the effect of culture on the organization’s efficiency difference.

Some culture researcher like Schein (1990) and Kotter and Heskett (1992) were using questionnaire or empirical data as research method. They are studying aims to determine if there is a correlation between organization culture and enterprise’s long term business performance. Considerable attention has been given to leadership and organization culture.

Also there are other researcher consider effectiveness between coalition of culture and other factor during the organization management. Ogbonna et al. (2000) claims that when the enterprise face to pressures from external environment, the leader style impact organization culture and then further impact to organisation performance. Leadership style cannot be directly affect organizational performance and can only through the organizational culture as a media to indirect influence performance. Corresponding is that competitive and innovation of Cultural characteristics directly affect performance.

2 Influence corporate cultures on enterprise performance

According to Kilman et al (1985) comment, there is three degree of impacts: (1) Cultural orientation, meaning that Cultural influence organization’s operational direction correctively; (2) the permeability of culture, means the degree of consensus in the members of the organization for the culture. (3) Cultural strength means the degree of loyalty to culture by organization’s members.

Strong cultures have greater influence that means it has a wide range of permeability and far reaching impact on the strength of the entity. If the team member are provided with consistent targets and shared the same values, they will be satisfied with what they are doing and will be more focused with their tasks. However even if the culture of the organization is pointed in right direction but the members cannot understand or achieve it or be loyal to it, then this will be a weak culture with negative impact on the performance of the entity.

Trice (1993) also indicates that a strong organizational culture also can reduce the cost of decision- making and make work specialization. Strong organizational culture has been recommended by Akin and Hopelain (1986) to the entire managers who wish to enhance their productivity or performance.

The organization will receive great return from investments or marketing if they propagate culture and using it as the decision making tool. The organizations that do not propagate culture always get less return; it has been confirmed by Denison (1990).

Regardless of companies strategy or culture being people or reliability or productivity orientated they all still compete for great profit and productivity.

IBM CEO Tom Watson in 1962 delivered a speech at Columbia University, he said: “related business operating performance, enterprise’s management thoughts, spirit and goals are much more important than technical resources, economic resources, enterprise structure, invention and random Decision. Of course, all these factors also greatly affect the performance of the business. But I think, all those factors are sourced from employees and how they extent of basic beliefs of enterprise’s ideas” (Jack E. S. 2012).

But at many enterprises, organizational culture has been viewed as subordinate, even they described it as “company’s slogan”, they deem the organization culture is creating needless official documents and procedures, and organization culture cannot bring any value to the enterprise. Kets deVries and Miller (1986) argued that when the business face hardship due to factors that is beyond their control even the culture is not helpful and may affect the company ‘s performance negatively.

Some scholars have began to try or test the construction of culture-performance causal relationships, such as Peters and Waterman (1982) of excellent companies , all emphasize positive effect of organizational culture on organizational performance .

All in all, comprehensive enterprise practices and scholar’s research results shows organizational culture is positive factor for enterprise to obtain the best performance, to make right decisions and also face and deal with external factors.

Therefore, all the attention and practice researchers been that cultural pattern is commodity and culture and organizational performance are coupled (Peters&Waterman 1982).


To sum up, in the 20 years of organizational culture research, great achievements have been made. Culture can be regarded not only as a Relative special management field; it can also create influence and change cultural reality. Although some scholars believe that thotre of lack of the organization turn the research category too widely, as if from soup to nuts (Alvesson, 1993) ¼ŒThis is mainly due to the organizational culture research lack of a clear Analysis framework and theory foundation for culture research orientation, which led to the blind man feels like results (Mirvis & Sales, 1990). Therefore, this paper is based on the organizational culture of the evolution process. I have briefly reviewed and analysed the theoretical basis of organizational culture, and it link to enterprise performance. this paper discusses the organizational culture for the influence of so as to further study on culture as the foundation.

The organizations of the future culture research must be around the competitive advantage it creates and maintains in wider and deeper level and strategic change, other factors such as technology innovation behaviour by combining research, for enterprises in the fierce competition process on top is a positive.

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