Impact Of Organizational Culture Commerce Essay

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Continues improvement in financial performance is the fundamental goal of any business. To achieve this goal organizations have to manage their processes and develop a culture which supports the change in processes continuously according to the changing business environment. However development and learning of human beings and IT system is very tricky and difficult process so organizations can get performance breakthroughs only by creating a balance between development and learning process of IT system and people working in organization. (Bolk, Elswijk, Melis, & praag, 1997).

In today's dynamic business environment those organizations can achieve their goals of attaining competitive advantage and better financial performance as compare to its competitors which have the ability to change its processes continuously as (Neill & Sohal, 1999) suggests that business environment is changing very rapidly and now organizations have to compete on the basses of flexibility in process and ability to response according to this ever changing business environment and this can only be done through the help of managing processes of the organizations through BPR likewise changing economic environment has led to an increasing interest in improving organizational processes to boost business performance (Ranganathan & Dhaliwal, 2000).

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Prior studies focused on the relationship between organizational culture and performance as (Flamholtz & Narasimhan, 2005) concluded that cultural aspect in the organization can improve and increase organizations financial performance and management of organizational culture is the critical factor for the improvement of financial performance (Flamholtz, 2001) analyzed the effects of corporate culture on the financial performance of the different divisions of a single firm and found that 46% of the EBIT (Earnings before Interest and Taxes) was explained by the variable of ''corporate culture.'' however different type of culture have different type of impact on performance of the company (Zu, Robbins & Fredendall, 2010) but due to competitive pressure organizations are force to reconsider their business models and underlying business processes along with the culture (Skerlavaj, Stemberger, Skrinjar & Dimovski, 2006).

In this paper we examine the one-dimensional affect of culture on financial performance of the organization. We hypothesize that culture as a whole have positive impact on the financial performance of the organization. We also test the moderating effect of enterprises perception about business process reengineering on the relationship between culture and financial performance of the organization as previous researches already suggested that those organizations can gain more performance improvement which are able to learn and response to the changing business environment as according to (Skerlavaj, Stemberger, Skrinjar & Dimovski, 2006) if organization develop a culture which can cope up with the ever changing internal and external business environment then it can achieve both competitive advantage and increased performance and if organizations invest its resources in developing a culture which promotes learning of new processes can benefit the organization not only in relationships inside and outside but also in monetary figures.

This continues change can affect the perception of the employees working in the organization and if perception of the employees get changed it can affect positively in changing culture of the organization in a way that it promotes and enhance the learning culture (Zu, Robbins & Fredendall, 2010) which could in return improves the overall financial performance of the organization as (Iivari, 2006) finds out that if the efforts of implementing changes in the organization are well-matched with the culture of the organization then it can achieve improvement in both performance and profitability.

Objectives of the study

This paper has two main objectives:

To examine the one dimensional effect of culture on financial performance of the organization

To examine the moderating role of enterprises perception about business process reengineering on the relationship between culture and financial performance

Significance of the study

This study examines the affect of culture on financial performance so organizations which want to improve financial performance can have better idea that changing culture of the organization can affect their financial performance.

Also moderating role of enterprises perception is checked in this study so it will guide the organizations that by aligning the perception of the organization about any BPR project with the culture can better improve the financial performance of these organizations.

EMPIRICAL LITERATURE & HYPOTHESES

Organizational culture and Financial performance

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Literature shows that organizations supportive culture can affect organizations financial performance. When organizations culture managed carefully it can affect many aspects of organizational performance and financial performance is one of them however different types of culture can impact differently on financial performance but the culture which is open can improve financial performance significantly (Deshpande & Farley, 2003).

Organizational culture has a direct impact on organizations performance as (Xenikou & Simosi, 2006) concluded that culture of the organization can impact the performance in a direct and significant way. Another study carried out by (Zehir, Ertosun, Zehir & Muceldili, 2011) also finds out that culture of the organization is the basic key for success of the organization and financial performance of the organization they also finds out that there is a direct and strong relationship between culture and financial performance.

So on the basis of above studies first hypothesis of the this study is

The moderating Effect of Enterprises perception about Business process reengineering

Concept of business process reengineering was introduced in 1990's by Michel Hammer in article of Harvard business review and since then many authors give different definitions of BPR. (Anjard, 1996) defined BPR as the radically redesigning the central process of the organization and also systems of the organization to achieve better results. However the definition we are using in this paper was the one given by (Hammer and Champy, 1993) they define BPR as rethinking from the basic level and redesigning the processes from the clean slate in order to achieve striking improvement in performance.

Enterprises perception about BPR can be defined as the beliefs, attitudes, and intention of employees of any organization toward redesigning program.

Although the relationship between organizational culture and performance in significant however this relationship can be further highlighted if perception of the organization about any change program is taken into account.

Many studies (Flamholtz, 2001; Flamholtz & Narasimhan, 2009; Zehir, Ertosun, Zehir & Muceldili, 2011) are carried out and finds out that successful implementation of BPR programs can increase organizations financial performance and if perception of the employees working in the organizations is managed carefully they can better understand the importance of these programs for the organization. However to the best of our knowledge there is no study carried out to examine the effect of enterprise perception about BPR on the relationship between culture and financial performance. So this study fills this research gap.

As according to (Hung, Yang, Lien, Mclean & Kuo, 2010) organizations learning culture affects the performance of the organization but this learning culture can better developed through the individuals working in the organization and these individuals act as means between this relationship of culture and performance. So if organizations wants to achieve performance breakthroughs they must align the perception of its employees about any BPR project that they freeze the habits of the old culture and learn the new ways and processes so that this learning develop a desired culture.