Culture-performance research: challenges and future directions.

Author:Weinzimmer, Laurence G.
 
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  1. CULTURE-PERFORMANCE RESEARCH: CHALLENGES AND FUTURE DIRECTIONS

While numerous studies have attempted to empirically demonstrate a link between organizational culture and performance, findings have yielded disparate results. Therefore, an investigation of potential causes for these inconsistencies may provide researchers and practitioners insights to develop broader, more cohesive models of the corporate culture and performance link. Specifically, researchers in the strategy literature have examined organizational culture using inconsistent operationalizations (c.f., Denison and Mishra, 1995; Schein, 1985; Siehl and Martin, 1988; 1990; and Wallach, 1983). At this level of analysis, culture has been commonly defined as a complex set of values, beliefs, philosophies, and symbols that define the way in which a firm conducts its business (Barney, 1986; Sorensen, 2002; Goll and Sambharya, 1995; Denison, 1984). Strategy researchers assume that organizational culture is shared across all employees within an organization and that this shared culture is transmitted through behaviors and actions of employees within an organization (Wilkins and Ouchi, 1983).

In this paper, we complete an exhaustive review of the culture-performance literature in an attempt to understand inconsistencies across empirical studies. Our paper begins with a review of the strategy research that has attempted to link culture to firm-level performance. We then compare findings from the strategy literature to organizational-behavior (OB) research that has empirically related culture to individual and meso-level performance. After addressing several limitations that directly contributes to the lack of generalizability in the culture-performance research, we develop a model of content validity by aggregating previous cultural dimensions from the strategy literature.

TRATEGY VERSUS ORGANIZATIONAL-BEHAVIOR CULTURE STUDIES

Strategic Management Literature

From a strategy perspective, numerous researchers have studied the relationship between organizational culture and firm-level performance. These studies have yielded ambiguous and sometime competing results.

For example, Christensen and Gordon (1999) measured culture as consistency within organizational practices. They collected longitudinal data that demonstrated the positive link between consistency in organizational practices, as the cultural dimension, and revenue growth. Goll and Sambharya (1995) also assessed the relationship between culture and performance. In this study, they measured culture as strategic orientation and found a positive link between strategic orientation and return on investment (ROI). Calori and Sarnin (1991) found empirical support for the relationship between cultural dimensions, which they defined as management practices, symbols, and different strategies, and revenue growth. Fey and Denison's (2003) survey of senior managers in 179 foreign-owned firms operating in Russia found that adaptability and involvement appeared to be the most predictive culture components of firm-level effectiveness. Hartog and Verburg (2004) surveyed 175 CEOs, revealing that innovative, support, and goal/strategy cultural dimensions related positively to perceived firm performance.

ORGANIZATIONAL-BEHAVIOR LITERATURE

Much of the organizational-behavior (OB) research on the culture-performance relationship examines culture in terms of perceptions of organizational climate, the surface representation of organizational culture. Unlike the strategy literature, this research has consistently reported a positive link between culture and performance, both at the micro- and meso-levels of analysis (cf., Carr, Schmidt, Ford, and DeShon, 2003). Moreover, a second stream of OB research operationalizes culture in terms of personorganization fit, the degree to which employees and organizations share common values, goals, and beliefs, to empirically demonstrate the culture-performance relationship at the organizational-behavior-level. In a comprehensive meta-analysis, Kristof-Brown, Zimmerman, and Johnson (2005) reported an overall positive relationship between culture and performance. Specifically, the consistencies (and generalizability) across organizational-behavior studies are due, in part, to a consistent measure of culture. The Organizational Culture Profile (OCP) was developed by O'Reilly, Chatman, and Caldwell (1991) and its dimensions have been used repeatedly in most organizational-behavior-level studies. Thus, the OB literature has established some level of criterion-related validity, which gives OB researchers a better understanding of the overall construct validity of organizational culture. Strategy researchers can learn from the organizational-behavior literature in terms of developing consistent measures and methods to develop consistencies across studies.

INCONSISTENCIES WITH STRATEGY CULTURE-PERFORMANCE RESEARCH

According to Reichers and Schneider (1990), while culture researchers have devoted numerous articles to the nature and definitions of culture, relatively fewer articles have studied the link between culture and performance. Unfortunately, establishing criterion-related validity by explicitly linking organizational culture to performance has been nearly impossible as researchers have typically explored this relationship utilizing different measures of both organizational culture and performance (Denison and Mishra, 1995; Wiley and Brooks, 2000; Wilderom, Glunk, and Maslowski, 2000). Thus, strategy-culture researchers have yet to fully establish construct validity of many organizational culture measures. We present an exhaustive review of the strategy literature that has attempted to empirically test the relationship between culture and firm performance, starting with the seminal work of Denison (1984) to present. This stream of research has yielded several significant inconsistencies resulting from three areas of concern--content validity, research design, and firm performance.

Content Validity Inconsistencies

While it is commonly believed that culture directly impacts performance (Barney, 1986; Denison, 1984; Goll and Sambharya, 1995), results across studies vary, in part, due to lack of a consistent measure of culture. Lack of replication, and thus validation, has yielded ambiguous criterion validity-related results, consequently confusing a direct relationship between culture and performance. Unlike the OCP used in OB studies, strategy researchers have used different constructs, operationalizations and methods to assess culture. Some studies use different methods of research, such as Denison and Mishra (1995), who have used both qualitative and quantitative studies to determine different variables: mission, involvement, and consistency. Applying both quantitative and qualitative research methods to the study of culture (Calori and Sarnin, 1991; Denison, 1984; and Denison and Mishra, 1995) potentially minimizes culture as simply another variable in existing models of organizational performance. Other studies choose single or multi-dimensional measures unrelated to previous research and then attempt to link the measures to performance (see Table 1).

One possible explanation for the lack of consensus among studies attempting to establish criterion-related validity between culture and performance at the strategy level is that researchers use inconsistent definitions of corporate culture, resulting in different (and sometime competing) research frameworks adopted by the various authors (Lee and Yu, 2004). Some of these authors warrant the use of alternative measures, arguing that culture is unique to each organization, therefore limiting the generalizability of research in terms of the predictive validity of...

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