Organizational Culture and Organizational Performance

Introduction

Recent literature proved that management of human resource in company has become an increasingly important for organizational performance and business vision attainment. Employees are considered as valuable assets to an organization, which require effective management of these employees in firms. A lot of research in organizational theory has focused on developed countries; 95% and whereas only 5% of the studies testing organizational theories are found to be done in developing countries (Farashahi et al., 2005) in spite of the highly dynamic environment.

Organizational culture has been an important factor that powerfully influences the performance of any organization. Within the past decades, an analysis has been done on the relationship between the organizational culture and performance (Anne & Maaja, 2007; Ogbonna & Harris, 2000; Murugan, 2010; Rousseau, 1991). The organizational culture is a complex phenomenon, which is characterized by many dimensions (Marcoulides & Heck, 1993).

Organizational culture is that the assortment of operational principles that verify how people behave among the context of the company (Khan, 2005). Organizational culture is considered a vital theme in management and business research for the past few decades as results of its potential impact on the preferred and expected outcomes organizationally and individually such as commitment and loyalty (Chow et al., 2001). Organizational culture research can be divided into three groups. The first group embraces scientific works, in which culture is only described (Schein, 1992; Nahav & Malekzadeh, 1993; and Spivak, 2001). The second one includes works, in which dimensions are picked out (Van der et al., 1997; Veiga et al., 2000; and Sarros et al., 2005). Their influence on success is validated theoretically or empirically in the third group of works (Ogbonna & Harris, 2000; Child, 1974; Olie, 1994; Denison and Mishra, 1995; Larson and Finkelstein, 1999; Kangis et al., 2000; Howitz et al., 2002; and Nahm et al., 2004). The further dimensions of the analyzed phenomenon will be disclosed, the more clearly it will be perceived (Ginevicius & Vaitkunaite, 2006).

Scholars, who analyze organizational culture, present a different number of dimensions. Furthermore, some of them are very similar by their content (meaning), i.e. they are components of each other. Not all researchers examine the link between dimensions and organizational outcomes (Ginevicius & Vaitkunaite, 2006).

People are the most vital resource of an organization, and that the management of people makes a difference to firm performance (Patterson, West, Lawthom & Nickell, 1997). Many studies have been brought up to study the effectiveness of people management and business performance, but very few studies were conducted on the cultural impact on performance management. Every nation has a varying effect of cultural dimensions in organizations and the employees working over there. It is important to consider the cultural dimensions before creating strategies and objectives in organizations as this helps he management in effective performance (Patterson et al., 1997).