The Antecedents And Consequences Of Organizational Culture


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IMPACT OF ORGANIZATIONAL VALUES ON ORGANIZATIONAL CULTURAL PRACTICES AND ITS IMPACT
ON ORGANIZATIONAL PERFORMANCE
BY CHENG WEI HIN
UNIVERSITI SAINS MALAYSIA
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IMPACT OF ORGANIZATIONAL VALUES ON ORGANIZATIONAL CULTURAL PRACTICES AND ITS IMPACT
ON ORGANIZATIONAL PERFORMANCE
CHENG WEI HIN
Research report in partial fulfillment of the requirements for the degree of Doctor of Business Administration 2007
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Dedicated to: The Loving Memory of my Beloved Father
Mr Cheng Chye Foo
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ACKNOWLEDGEMENT
First of all, I would like to express my most sincere gratitude and a very special thanks to Professor Hasnah Haron and my co-supervisor Associate Professor Dr Yuserrie Zainuddin for their invaluable support, guidance, assistance and kindness especially during the most critical and final part in completing my thesis. Their readiness to help students, including me is very commendable. I also wish to extent my heartfelt appreciation to Associate Professor Dr Intan Osman for her encouragement to complete this thesis, Associate Professor T. Ramayah, Associate Professor Dr Aizzat Nasurdin and Dr Azura for their invaluable inputs into the thesis and not forgetting my sincere appreciation to my supervisor, Professor Dr Mohamed Sulaiman for his guidance, patience and time in supervising me. A special note of thanks also goes to all the lecturers in the School of Management who have directly or indirectly helped me in this research. I would also like to record my gratitude and thanks to Universiti Utara Malaysia for sponsoring my studies and enable me to pursuer my DBA in USM.
Apart from this, a special note of thanks to all respondents, companies and friends who have rendered their help in this research. Last but not least, to my niece Yong Shio Fang, my family members, especially my mother, sister Wei Leng and my friends, Associate Professor Dr Ang Chooi Leng, Ms Chong Poh Su, Zamrie Mohd, Filzah Md Isa, I
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TABLE OF CONTENTS

TITLE DEDICATION ACKNOWLEDGEMENT TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES ABSTRAK ABSTRACT

Chapter 1

INTRODUCTION 1.1 Background of the Study 1.2 Problem Statement 1.3 Research Objectives 1.4 Research Questions 1.5 Significance of the Study 1.6 Definitions of Key Terms 1.7 Organization of Research Report

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v
ix
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1 4 4 5 5 6 8

Chapter 2 LITERATURE REVIEW

2.1 Introduction

9

2.1.1 An Overview of Organizational Culture

9

2.2 Differences Between Practice & Values

12

2.2.1 Are Values and Practices Mutually Exclusive? 14

2.2.2 Dimensions of Organizational Culture

15

2.2.1.1 Schein’s Organizational Cultural

15

Dimensions

2.2.1.2 Hofstede’s Cultural Dimensions

18

2.2.1.3 Can Hofstede’s national culture

21

dimension be used to measure

organizational culture?

2.3 The GLOBE Study

22

2.3.1 Future Orientation

23

2.3.2 Humane Orientation

24

2.3.3 Assertiveness

25

2.3.4 Performance Orientation

26

2.3.5 Dimensions of Organizational Culture (Practice) 28

2.4 Theories Associated with Organizational Culture

31

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2.4.1 Theories Associated with Antecedents of

31

Organizational Culture

2.4.1.1 Influence of values of the organizational 31

founders

2.4.1.2 Influence of the industry

32

2.4.1.3 Influence of National or Societal Culture 32

2.4.2 Summary and Review of Organizational Culture 32

Theory

2.4.3 How Culture Works and Other Antecedents

33

2.4.4 Theories Associated with Organizational cultural 34

Practice

2.4.4.1 Bureaucratic Theory

34

2.4.4.2 Mechanistic and Organic Organizations 35

Theory

2.4.5 Theories Associated with Consequences of

35

Organizational Culture (Organizational

Performance)

2.4.5.1 The Resource-Based Theory

36

2.4.5.2 The Traits Theory

36

2.4.5.3 Strong Culture Theory

37

2.4.5.4 Adaptive Cultures Theory

38

2.5 Studies of Organizational Culture as a Predictor of

38

Organizational Performance

2.6 Studies on Organization Characteristics

45

2.7 Studies on Organizational Culture by Local Researchers 46

2.8 Studies on the Consequences of Organizational Culture: 50

Organizational Performance

2.9 Summary of Review

53

2.10 Studies on Local versus Foreign Companies

55

2.11 Studies on Organizational Values and Organizational

57

Practice

2.12 Summary of Studies on Organizational Values

59

Chapter 3 METHODOLOGY

3.1 Introduction

60

3.2 Research Site

60

3.3 Research Design

60

3.3.1 Population

60

3.3.2 Sample

61

3.4 Time Horizon

63

3.5 Questionnaire Design

63

3.5.1 Variables and Measurements

63

3.5.2 Organizational Culture Values

64

3.5.3 Organizational Culture Practice

65

3.5.4 Organizational Performance

65

3.5.5 Demographic Items

65

3.5.6 Company’s Profile

66

3.5.7 Computation of Index for Each Firm

66

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3.6 Theoretical Framework

67

3.7 Hypotheses Development and Research Framework

67

3.7.1 Power Distance

67

3.7.2 Masculinity/ Femininity

69

3.7.3 Individualism/ Collectivism

70

3.7.4 Uncertainty Avoidance

71

3.7.5 Performance Orientation

73

3.7.6 Future Orientation

75

3.7.7 Assertiveness

76

3.7.8 Humane Orientation

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3.8 The Relationship between Organizational Cultural

78

(Practice) and Organizational Performance

3.8.1 Process versus Result Oriented

78

3.8.2 Employee Related versus Job or Task Related

79

3.8.3 Parochial versus Professional

80

3.8.4 Open System versus Closed System

80

3.8.5 Loose and Tight Control

81

3.8.6 Normative versus Pragmatic

81

3.9 Data Collection Technique

82

3.9.1 Data Analysis Technique

82

3.9.1.1 Descriptive Statistics

82

3.9.1.2 Factor Analysis

83

3.9.1.3 Reliability Test

83

3.9.1.4 Hierarchical Regression Analysis

84

3.10 Summary

84

Chapter 4

ANALYSES AND RESULTS

4.1 Introduction

85

4.2 Overview of Data Collected

85

4.3 Profiles of Respondents

85

4.4 Analysis

89

4.4.1 Factor Analysis

90

4.4.1.1 Factor Analysis of Organizational

90

Culture Practice

4.4.1.2 Factor Analysis of the Organizational

93

Values

4.4.1.3 Factor Analysis of Organizational

96

Performance

4.4.2 Reliability Analysis

96

4.4.3 The new Theoretical Framework and Hypotheses 98

4.4.4 Descriptive Statistics

101

4.4.5 Analysis

102

4.4.5.1 Control Variables

102

4.4.6 Test for Hypotheses 1

103

4.4.6.1 Regression Analysis for Hypothesis

104

Values and Culture

Professionalism Practice:

(H1a, H1d, H1g and H1j)

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4.4.6.2 Regression Analysis for Hypothesis

106

Values and Culture Quality Practice

(H1c, H1f, H1i and H1l)

4.4.6.3 Regression Analysis for Hypothesis

107

Values and Culture Task Orientation

Practice (H1b, H1e, H1h

and H1k)

4.4.7 Test for Hypothesis 2

108

4.4.8 Test for Hypothesis 3

111

4.5 Summary

113

Chapter 5 DISCUSSION AND CONCLUSION

5.1 Introduction

114

5.2 Recapitulation of the Study

114

5.3 Discussion of Study Findings

115

5.4 Implications

125

5.4.1 Implications to Theory

125

5.4.2 Implications to Managers

126

5.5 Limitations

132

5.6 Suggestions for Future Research

133

5.7 Conclusion

133

REFERENCES

135

APPENDICES

147

Appendix A Sample of Survey Questionnaire

148

Appendix B SPSS Output

155

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Table 1.1
Table 2.1 Table 2.2 Table 2.3
Table 2.4
Table 2.5
Table 2.6
Table 2.7 Table 2.8
Table 2.9
Table 3.1 Table 3.2 Table 3.3 Table 4.1 Table 4.2

LIST OF TABLES
Productivity Level and Growth for (Manufacturing Sector) in Selected Countries, 2005 Organizational Culture Definitions Differences between Values and Practices Seven Dimensions of Organizational Culture According to Schein Four Values Dimensions According to Hofstede and Their Organizational Consequences Higher Future Orientation versus Lower Future Orientation Value Summary of Major Connotations and Variation of the Humane Orientation Values Differences in Terms of Organizational Practices and Values Higher Assertiveness versus Lower Assertiveness Values Higher Performance Orientation versus Lower Performance Orientation Values Some Empirical Studies on Organizational Culture and Performance (1990-2006) Sample Distribution Items in the Questionnaire Computation of Index for Each Firm Summary of Demographic Profile of Respondents Profile of Organization

Page 2
10 14 16
20
24
25
26 27
40
63 64 66 86 88

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Table 4.3 Country of Origin

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Table 4.4 Number of Respondents and Number of Company which

89

Responded

Table 4.5 Factor Loadings of Organizational Culture Practice

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Table 4.6 Factor Loadings of Organizational Values

94

Table 4.7 Factor Loadings for Organizational Performance

96

Table 4.8 Reliability Analysis

97

Table 4.9 Descriptive Statistics of The Variables

101

Table 4.10 Control Variables Description and Dummy Coded Variables

103

Table 4.11 Regression Analysis for (H1a, H1d, H1g and H1j)

105

Table 4.12 Regression Analysis for (H1c, H1f, H1i and H1l)

106

Table 4.13 Regression Analysis for (H1b, H1e, H1h and H1k)

108

Table 4.14 Regression Analysis for Hypothesis Organizational Culture

110

Practice and Organizational Performance

Table 4.15 T-test of Organizational Culture Variable for Local

112

and Foreign Firms

Table 4.16 T-test of Organizational Culture Variables for Local and

112

Western-owned Firms

Table 4.17 T-test of Organizational Culture Variables for Local and

113

Eastern-owned Firms

Table 4.18 Summary of Findings

113

Table 5.1 Relative Country Ranking on Hofstede’s Four Dimensions

116

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The Antecedents And Consequences Of Organizational Culture