Executive Insights:Corporate Culture and Market Orientation:Comparing Indian and Japanese Firms

The authors examine how organizational dimensions, includingcorporate culture and market orientation, affect performance inmajor Indian firms. The research uses a framework (the univer-sal high performance model] developed in the United Statesand first tested in Japan to assess Indian organizational busi-ness-to-business relationships. Although there are some intu-itively obvious substantive differences between Indian andJapanese companies, the general pattern of how various factorsdrive business performance is similar in both countries despitethe different economic environments in India and Japan.

As the world economy globalizes, scholarship on manage-ment issues is sharing in the process of globalization. Theo-ries and concepts drawn primarily from the industrialized,market-organized (often Western) economies frequently areadapted in various degrees for use elsewhere. At this time,special interest focuses on the extent to which such ap-proaches to management are relevant to the many economiesthat are in the process of replacing some elements of com-mand structures with more market-oriented ones. This arti-cle deals with how various elements of a research programon organizational culture and market orientation transferfrom one environment to another. We contrast results of stud-ies in Japan and India.

A cross-cultural comparison of factors that affect corporateperformance requires a reasonable theoretical basis for mea-surement, including some a priori evidence of conceptual ro-bustness. This article uses such a framework, which wasdeveloped on the basis of theories primarily drawn fromWestern industrial countries with the support of the Market-ing Science Institute, a major industry-supported U.S. re-search organization. In this framework, high-performancefirms are hypothesized to share four key characteristics:

1. A high degree of market orientation,2. Innovativeness,3. Organizational climates of openness and trust, and4. An externally oriented organizational culture.

The first application of the framework was in Japan (Desh-pande, Farley, and Webster 1993). Research in several other

ABSTRACT

Rohit Deshpande andJohn U. Farley

THEORETICAL FRAMEWORKFOR THE COMPARISON

Submitted February 1999Revised June 1999

© Journal of International MarketingVol. 7, No. 4, 1999, pp. 111-127ISSN 1069-031X

111

highly industrialized triad couutries (Deshpande, Farley, andWebster 1997) indicates that, relative to their national peers,successful firms share these characteristics. This "universalhigh performance model" has proven itself robust enoughthat it deserves tests in other environments as well. In this ar-ticle, we survey major Indian firms so that we can compareresults from two Asian countries that are very different—India and Japan—using exactly the same data-collectionmethodology as first was applied in the latter country (Desh-pande, Farley, and Webster 1993). Because the framework isdescribed in intricate detail in this previous article, we indi-cate only the bare nature and history of the elements here.

Market orientation is the central element of the managementphilosophy based on the marketing concept (Drucker 1954;Levitt 1960; Webster 1988), in which it is presumed to con-tribute to long-term profitability. Market orientation (also re-ferred to as "customer orientation" or "customer focus") is"the set of cross-functional processes and activities directedat creating and satisfying customers through continuousneeds assessment" (Deshpande and Farley 1998, p. 213). Inthis research program, we measure the market orientation ofsuppliers from their own point of view and that of their sup-pliers, a unique feature in the now substantial empiricalbody of work on market orientation (Deshpande 1999).

Organization innovativeness has importance for aggregateeconomic growth that many economists have noted (Mans-field 1977). Others have linked organizational structure,strategy, and innovativeness together with performance(Capon et al. 1992) and suggested that a firm must be innova-tive to gain a competitive advantage in order to survive andgrow.

Organizational climate is an enduring characteristic of theinternal decision-making environment of the firm experi-enced by its members. It has a long tradition in organiza-tional research (Taguiri and Litwin 1968). Climates thatencourage innovativeness, communication, participation,decentralization, friendliness, and trust have been related tohigher performance (Capon, Farley and Hoenig 1997; Caponet al. 1991).

Organizational culture is the pattern of shared beliefs andvalues that help individuals understand an organization andprovide them with norms for behavior (Deshpande and Web-ster 1989; Weick 1985). We use the following four classifica-tions developed by Quinn and others (Quinn 1988; Quinnand Rohrbaugh 1983):

• Competitive culture is characterized by an emphasison competitive advantage and market superiority;

112 Rohit Deshpande and John U. Earley

• Entrepreneurial culture emphasizes innovation andrisk taking;

• Binreaucratic cultinre is characterized by internal regu-lations and formal structures; and

• Consensual culture emphasizes loyalty, tradition, andinternal focus.

In practice, employees view their organizations as having amixture of these four types of culture but with emphasis onparticular types. Deshpande, Farley, and Webster (1993), forexample, find that large Japanese firms were both highly con-sensual and highly competitive, average in terms of bureau-cracy, but very low on elements of entreprenevirial culture.

Hypotheses pertaining to performance follow from the gen-eral nature of the theoretical constructs (as per our previousdiscussion of the universal high performance model). Perfor-mance is

1. related positively to market orientation;2. related positively to innovativeness;3. related positively to an organizational climate of open-

ness and trust; and4. related positively to external orientation in organiza-

tional cultinre—that is, to the extent of entrepreneurialand competitive cultures—and related negatively tothe extent of consensual and bureaucratic cultvu-es.

In setting the context for this article, we are interested in dif-ferences in national culture generally and in the nature of theeconomic systems as they affect managers. The differencesbetween Japan and India on both of these dimensions hardlycould be more striking, even though both are ancient Asiancultures. Japanese per capita income is 100 times that of In-dia, and historical and cultural characteristics such as reli-gion and education are also in sharp contrast. It is exactly theextent of this contrast that makes it important to engage incomparative research to determine whether empirical resultsobtained in one country are generalizable to others.

Cross-cultural research on management usually requires aconceptual foundation to position the national cultvires un-der comparison. This problem is not an easy one. Fortu-nately, on the basis of a quarter century of research, GeertHofstede (1980, 1991, 1994) has developed four dimensionsof differences in values that constitute elements of nationalcultures that are especially relevant to research on manage-ment. These four dimensions conceptualize "the collectiveprogramming of the mind, which distinguishes members ofone group from those of another" (Hofstede 1994, p. 4). This

THE ENVIRONMENTSW E ARE COMPARING

Hofstede andNational Cultures

Executive Insights: Corporate Culture and Market Orientation 113

The ManagementEnvironments

Table 1.Position of National Cultures

of India and Japan on theHofstede (1980) Dimensions

collective programming affects how people organize as bothleaders and followers in terms of AATitten or unwritten rules.The means of scores reported by Hofstede for organizationsin Japan and India are shown in Table 1, along with a briefdescription of each dimension.

It is evident that (1) there is considerable variability in thescores between the two countries; more specifically, (2) Indiashows relatively high power distance, which may imply theprevalence of relatively bureaucratic organizations, and rela-tively low uncertainty avoidance, which may imply rela-tively entrepreneurial organizations. In contrast, Japanesefirms have very high scores on uncertainty avoidance, whichmay indicate a tendency to avoid entrepreneurial forms of or-ganizations; (3) there is no clear "Asian" model of nationalculture, at least in the sense that the two Asian countries donot cluster consistently at either end of the spectrum on thefour dimensions.

Despite the major differences in income levels and distribu-tion between Japan and India, it is a mistake to think of Indiaas preindustrial; India has one of the world's ten largest in-dustrial intrastructiu-es (Bhagwati 1993). However, the envi-ronments in which firms have operated during the past halfcentury in the two countries are quite different. In Japan, pri-vate firms have made up the vast majority of the post-WorldWas II industrial base, and they have operated in an environ-ment that consistently encourages the use of market forcesand prices to allocate resources and make Japanese exportscompetitive in the world market. In contrast, India, since itsindependence from England in 1947, has stressed state-owned industries through a rather unique structure of centralplanning and import substitution, with complex controls onboth prices and quantities in the private sector. India has not

Country Average and (Rank Among 39 Countries) on Each Dimension

IndiaJapan

Averagevalue for39 coimtries

PowerDistance

(The degree ofinequalityamong peoplethat is consid-ered "normal.")

77(4)54 (21)

52

UncertaintyAvoidance

(The degree towhich peopleprefer structuredsituations inwhich the rulesabout how theyshould hehaveare clear.)

40 (33)92(4)

64

Individualism

(The degree towhich peopleprefer to act asindividuals, of-ten expectingpersonal ratherthan groupawards.)

48 [22)46 (23)

50

Masculinity

(The degree towhich valuesseparate roles ofmen and womenin the society.)

56 (19)95(1)

50

114 Rohit Deshpande and John JJ. Farley

shared the explosive real economic growth experienced inthe past quarter century by much of industrializing Asia;from 1965 to 1990, Indian gross domestic product per capitawas approximately stable, whereas that of China, for exam-ple, doubled. By the late 1980s, it became clear that changeswere needed in the Indian economy, which by then was mar-ginalized in comparison with the increasingly global econ-omy. The 1990s have seen some changes in both the nature ofthe control systems and the industries covered (Bhagwati1993), with the goal of freeing certain aspects of the economyand partially removing structmal impediments that stifle ini-tiative and hinder development. India is joining the growinglist of countries that are replacing elements of commandeconomies with structures more governed by market forces[The Economist 1997; Lakshmanan 1997).

The cultural and managerial environments of Japan and In-dia are thus quite different. It is precisely these differencesthat raise the issue of whether research results from one envi-ronment are generalizable to another.

Each observation in both the Indian and Japanese samples ac- = ^ = ^ = ^ ^ = ^ = : ^ ^ = = ^ ^ = ^tually is composed of four interviews. We have coined the METHOD AND SAMPLEterm "quadrad" for oiu: sampling unit, because it is a doubledyad of pairs of executives on each of the buyer and sellersides of a single business-to-business marketing relationship.Although this data collection method is complex and expen-sive, it enables us to focus on such methodological issues asthe validity of measures and reliability of scales.

Interviewing first was carried out with a pair of executives ina business unit (or a single business in nondivisionalizedfirms) in a random sample of firms whose stock is traded, re-spectively, on the Tokyo and Bombay stock exchanges. Theinterviews were conducted in the respondents' offices byprofessional interviewers from a commercial market researchfirm. Both executives were asked the same siurvey questionsin the context of the same product market situation. Each re-spondent also was asked to name up to three important busi-ness customers, and one of these was chosen at random. Twoexecutives from the chosen customer firms who were famil-iar with the supplier and the same product market situationthen were interviewed. The sampling technique is cumber-some and, by economic necessity, constrains both the geo-graphic area of the study to the commercial hubs in eachcountry and the total number of observations (224 inter-views, or 56 quadrads, in Japan; 116 interviews, or 29quadrads, in India.) The design is also consistent with twomajor conclusions of the substantive literature on the appro-priate units of analysis in organizational buyer behavior, inthat (1) we interviewed more than one key informant withina key organizational unit to calibrate reliability of the mea-

Executive Insights: Corporate Culture and Market Orientation 115

sures of organizational constructs (Moriarty and Bateson1982) and (2) measurement on both buyer and seller sides en-ables us to explore the extent of agreement (Anderson andNarus 1990; Weitz 1981), which is particularly salient in ourstudy because both manufacturer- and customer-assessedperceptions of market orientation are elements of our study.

We should note that our measurement perspective is an ex-plicitly etic one, but we recognize its shortcomings. As Berry(1969) observes, both emic and etic measurement perspec-tives have their own advantages and disadvantages, andhopefully our research will encourage those trained in emicmethodology to complement it, because this is how greaterknowledge accretion in marketing theory and practice willoccur (Deshpande 1983). We were careful to establish dataequivalence across Japanese and Indian samples. To establishconstruct equivalence, we conducted qualitative interviewswith both senior managers and professional market re-searchers in India to ensure that the concepts served the samefunction in both Japan and India (functional equivalence),that the way the concepts were expressed in both countrieswas the same (conceptual equivalence), and that the sameclassification scheme was usable across both countries (cate-gory equivalence). We then pretested the survey question-naire, working with local market research suppliers to ensurethat all scaling and measurement units were usable (metricand calibration equivalence) and, through back-translation,that translation equivalence existed. Finally, we were carefulto establish that there was sampling equivalence, in that thefirms from both India and Japan were similar and identicallysampled (as described subsequently). The operationaliza-tions of the dependent and independent constructs use theitems shown in the Appendix. The organizational culturescale was adapted from Quinn (1988). The market orientationscale was developed by Deshpande, Farley, and Webster(1993), with extensive modification of other scales developedby Kohli and Jaworski (1990) and Narver and Slater (1990).Deshpand§ and Farley (1999) have shown that the resultsfrom the three scales are highly correlated when measuredusing the same respondents. The organizational climate scalewas adopted using factor analysis on a larger battery of 54items used by Capon, Farley, and Hulbert (1988) to measurehow organizational climate relates to corporate planning. Theinnovativeness scale was based on a canonical correlationstudy of innovativeness and performance by Capon and col-leagues (1992). Performance was measured with a four-itemscale based on the work of Buzzell and Cale (1987).

^^^=^^=^=^=^=^=^=^= \\JQ report the results on the extent to which the substantiveRESULTS results are similar between Japan and India with regard to

how these factors relate to performance, prefaced by a shortdescription of the reliabilities of the scales used.

116 Rohit Deshpande and John U. Farley

In Table 2, we show the values of the Cronbach's alpha coef-ficients for all variables from the Japanese sample, as re-ported in Deshpande, Farley, and Webster (1993), as well asthose for the Indian sample. The values for market orienta-tion, organizational climate, and performance are above thegenerally accepted levels in both samples. The value for theinnovativeness scale is lower in India, which indicates thatthis scale is usable but probably should undergo further de-velopment, particularly in view of its importance in explain-ing performance of the Japanese firms in Deshpande, Farley,and Webster's (1993) work.

The organizational culture scales play an important role inthis research, and in both countries, three of the four scalesclear generally accepted standards, but the fourth (which isdifferent in the two countries) does not. On balance, they ap-pear functional (especially because, as shown in the Appen-dix, the four scales are part of one overall constant summeasurement), but further replication is recommended. Un-like the scales with more consistent reliability indices, theorganizational culture scales have not been subjected to test-ing in a wide series of applications.

Organizational Cultures. The means of the Japanese and In-dian organizational culture scales are quite different (Table3). The Japanese firms are highly consensual (consistent withthe consensual nature of Japanese society), but they are alsoquite competitive. In contrast, the Indian firms are highly en-trepreneurial but relatively low on consensual culture.

The entrepreneurial culture, which is most associated withrisk taking, has the highest score in India and the lowest inJapan, which is a far bigger difference than on any other di-mension. This result adds an element of face validity to ourresults because our expectation, based on Hofstede's (1994)work, was that national culture would affect organizationalculture.

Reliabilities

Substantive Comparisons

Organizational cultureConsensualEntrepreneurialBureaucraticCompetitive

Market orientationEvaluated by supplierEvaluated by customer

InnovativenessOrganizational climatePerformance

Cronbach'sIndia

.62

.74

.75

.45

.62

.72

.53

.69

.78

a for ScaleJapan

.42

.66

.71

.82

.69

.83

.85

.69

.71

Table 2.Reliabilities of ScalesMeasuring Indian and JapaneseOrganizational Culture andClimate, Jnnovativeness,Market Orientation,and Performance

Executive Insights: Corporate Culture and Market Orientation 117

Table 3.Mean Values of Scales

in India and Japan Organizational cultureConsensual**Entrepreneurial* *BureaucraticCompetitive**

Organizational climateMarket orientation

Evaluated by supplierEvaluated by customer**

Innovativeness

India*

91.6124.189.794.628.9

31.028.917.7

Japan*

119.377.699.9

103.327.2

32.532.117.5

•Significant overall difference between countries based on multivariate t-test.••Significant difference between countries based on item-by-item ANOVA.

The Generalizability ofthe Universal High

Performance Model118

Organizational Climate and Innovativeness. There are no sig-nificant differences in the means of the climate or innova-tiveness scores in the Indian versus the Japanese samples.This is interesting becanse we were proceeding with an im-plicit assumption that macroeconomic differences betweenthe countries would produce differences in the means of di-mensions that affect performance. Intuitively, however, thereis no reason to believe that such macroeconomic differenceswill affect such things as organizational climate or how inno-vative a firm might be.

Market Orientation. There is a consistent pattern of differ-ences in market orientation between Indian and Japanesefirms with the latter having higher scores, significantly so inthe case of the customer-assessed measuLres of market orienta-tion. This by itself might not be interesting, but as we notesubsequently, these results take on greater importance whenwe consider their impact on firm performance.

In summary, the story of substantive differences between In-dian and Japanese companies lies in their corporate cultviresand market orientations, rather than in their climates or in-novativeness. The most prevalent organizational culturestend to be what we might expect intuitively, based on our un-derstanding of the differences in the two national cultures.And that Japanese firms on average are more market orientedthan Indian firms probably also will not come as much of asurprise, because the customer focns of Japanese companiessuch as Sony and Toyota is legendary. But the most interest-ing part of the story lies not in the differences in the averageIndian or Japanese firms, but in whether the universal highperformance model plays out, that is, in the relationship be-tween the independent variables and organizational success.

The substantive comparisons also involve four hypothesesabout how the independent constructs should relate to corpo-rate performance. To make comparisons easier, the same ana-

Rohit Deshpande and John U. Farley

lytical approach is used for the Indian data as was used for theJapanese data (Deshpande, Farley, and Webster 1993), inwhich discriminant functions were used to distinguishgroups of more and less successful firms. The results appearin Table 4, which shows the correlations of pooled discrimi-nating variables and the discriminant functions in each coun-try (i.e., multivariate measures of relative partial effects). Ineach case, the mean centroid score of the function was posi-tive for the high-performing firms and negative for the low-performing firms. Thus, a positive sign in Table 4 indicates apositive relationship of that variable with performance.

As a set, the signs of the coefficients relating all eight variablesto performance in both countries correspond to the hypothe-sized signs, which is significant (a = .05) based on a sign test.The overall discriminant function is also significant at a = .05.

H^: Higher levels of market orientation, particularly asperceived by the customer, should be associatedwith higher levels of performance. Correlations arepositive in both countries for the market orienta-tion measures from the suppliers themselves andon customers. The market orientation effect ismuch stronger in India than in Japan. This may in-dicate that effective marketing is more important inindustrializing countries where attention to mar-keting often has been weak and in situations inwhich command structures (primarily centralizedgovernment planning) have held back marketing ef-forts even further.

H :̂ Innovativeness and performance are correlatedpositively. Both correlations are positive, but the In-dian coefficient is not significant. This may be re-lated to reliability, but it also may reflect the

Hypothesized Sign

Correlations of Pooled Within-GroupDiscriminating Variables andDiscriminant Function with Performance

India Japan

Organizational cultureConsensualEntrepreneurialBureaucraticCompetitive

Organizational climate

Innovativeness

Market orientationBy supplierBy customer

-.18.41

-.23.09

.51

.19

-.37.29

-.21.24

.47

.76

.72

.8067% correct

.22

.0865% correct

Table 4.The Determinants ofPerformance inIndia and Japan

Executive Insights: Corporate Culture and Market Orientation 119

opposite of the preceding India-Japan comparisonbecause of India's more recent history as an econ-omy of relative scarcity and, thus, lesser emphasison organizational innovation as a means to securecompetitive advantage.

Hj.- Positive organizational climates are related to bet-ter performance. Correlations are, in both cases,positive and significant. This represents an exten-sion of the results reported by Deshpande, Farley,and Webster (1993), which did not include mea-sures of organizational climate explicitly. Positiveaspects of organizational climate include openness,trust, decentralization, and participativeness.

H4: Organizational cultures that are relatively open tothe external environments of new ideas and cus-tomers (entrepreneurial and competitive cultures)perform better than those that are more closed andinward-looking (consensual and bureaucratic cul-tures). All the signs of the individual coefficientsare consistent with H4, but the pattern of magni-tudes is again different. Entrepreneurial cultures aremore important predictors of good performance forIndian firms, whereas competitive cultures are moreimportant for Japanese firms. Face validity of the re-sults is supported because, as expected on the basisof our discussion of general cultviral norms, consen-sual culture is more important for Japanese firms.

We are interested here in the generalizability of a high-per-DlSCUSSION formance organizational profile from a highly industrialized

context to an industrializing context. Firms in industrializingcountries, particularly those emerging from centrallyplanned and/or otherwise heavily controlled economies intoeconomies more dependent on market forces, are likely to be-come the subjects of considerable organizational research.Some of this research probably will be aimed at determiningwhether accepted beliefs about "good" management prac-tices, which have been developed primarily in the industrialmarket economies, generalize to industrializing countries,particularly to those in the process of being opened more tomarket forces. If this type of research is lacking in the emerg-ing economies, the firms still are likely to be advised on thebasis of knowledge developed elsewhere about "good" prac-tices of marketing in particular and management in general.

We leverage the relatively rare case of multicountry, multi-respondent methodological research on samples of majorfirms involving multiple respondents in a sample of pairs ofbuyer-seller relationships. It is important to stress that thisstudy is based on relatively small sample sizes, which in

120 Rohit Deshpande and John U. Farley

large part is dictated by the economic reality that each obser-vation is composed of four long interviews with senior man-agers of supplier and customer firms.

The results are in general encouraging, as follows:

1. The universal high performance model appears to gen-eralize from an industrialized to industrializing coun-try context. Market orientation and corporate cultureare key determinants of organizational success. Mar-ket orientation might be an even more important influ-ence on performance in India than in Japan or otherindustrial countries.

2. There is not a single "Asian business model" butrather a great deal of variation between Indian andJapanese firms. This seems consistent with their sepa-rate national cultures and economic histories.

3. The most successful Indian firms have entreprenevu-ialcultures, which is also the most prevalent type of or-ganizational culture among major Indian organiza-tions studied here. In Japan, however, the mostsuccessful firms are both entreprenemial and compet-itive, though the most prevalent organizational cultureis consensual among the Japanese firms studied.

In terms of further substantive research, we note that ourwork has focused on relatively large firms in relatively largecities of each country. These firms, for example, are often notthe major producers of new jobs in economies such as thoseunder study; we need more work on smaller and medium-sized firms, which are job producers. At the other end of thespectrum, we have not studied foreign customers of multina-tional firms; these may display quite different results fromthose reported here.

Methodologically, it would be useful to develop a researchdesign that offers some of the benefits of our quadrad inter-views, involving multiple respondents and customer-sup-plier validity checks, without imposing the high cost ofexecution experienced in this study.

This Appendix describes the measurement and operational-ization of scales for market orientation, innovativeness, orga-nizational climate, organizational cultiure, and performance.

Scale Content1. Market orientation was measured as by Deshpande,

Farley, and Webster 1993. These items were used withcustomers, with the first-person pronoun replaced by"the supplier," which was identified at the beginningof the interview (scale was formed by adding items):

THE AUTHORS

Rohit Deshpande is Sebastian S.Kresge professor of marketing atHarvard Business School.

John U. Farley is Henkel profes-sor of industrial marketing atChina-Europe InternationalBusiness School, Shanghai,China, and C.V Starr seniorresearch fellow at DartmouthCollege.

ACKNOWLEDGMENTS

The authors are indebted to theCenter for Advanced Studies ofIndia, the Emerging EconomiesCenter of the University ofPennsylvania, and the Division ofResearch, Harvard Business School,for support of this study.

APPENDIX

Measures andOperationalizations ofOrganizational Culture Scales

Executive Insights: Corporate Culture and Market Orientation 121

The statements below describe norms that operate in busi-ness. Please indicate yovir extent of agreement about how wellthe statements describe the actual norms in your business.

Instruction: Answer in the context of your specific prod-uct/market or sendee/market business. (Circle one numberfor each line.)

Strongly Neither Agree StronglyDisagree Disagree Nor Disagree Agree Agree

1. We have routine orregular measures ofcustomer service. 1 2 3 4 5

2. Our product andservice developmentis based on good marketand customer information. 1 2 3 4 5

3. We know ourcompetitors well. 1 2 3 4 5

4. We have a good sense ofhow our customers valueour products and services. 1 2 3 4 5

5. We are more customerfocused than our competitors. 1 2 3 4 5

6. We compete primarilyhased on product orservice differentiation. 1 2 3 4 5

7. The customer's interestshould always come first,ahead of the owners. 1 2 3 4 5

8. Our products/servicesare the hest in the husiness. 1 2 3 4 5

9. I believe this businessexists primarily toserve customers. 1 2 3 4 5

2. Organizational culture also was measured as by Desh-pande, Farley, and Webster (1993) and as adaptedfrom Quinn (1988)

These questions relate to what your operation is like. Each ofthese items contains four descriptions of organizations.Please distribute 100 points among the four descriptions de-pending on how similar the description is to your business.None of the descriptions is any better than any other; they arejust different. For each question, please use all 100 points.You may divide the points in any way you wish. Most busi-nesses will be some mixture of those described.

1. Kind of Organization (Please distribute 100 points)

122 Rohit Deshpande and John U. Earley

Points for A: (A) My organization is a very personal place. Itis like an extended family. People seem to share a lot of them-selves.Points for B: (B) My organization is a very djmamic and en-trepreneurial place. People are willing to stick their necksout and take risks.

Points for C: (C) My organization is a very formalized andstructural place. Established procedures generally governwhat people do.

Points for D: (D) My organization is very production ori-ented. A major concern is with getting the job done, withoutmuch personal involvement.

2. Leadership (Please distribute 100 points)Points for A: (A) The head of my organization is generallyconsidered to be a mentor, sage, or a father or mother f[gin*e.

Points for B: (B) The head of my organization is generallyconsidered to be an entrepreneur, and innovator, or a risktaker

Points for C: (C) The head of my organization is generallyconsidered to be coordinator, an organizer, or an adminis-trator

Points for D: (D) The head of my organization is generallyconsidered to be a producer, a technician, or a hard-driver.

3. What Holds the Organization Together (Please distrib-ute 100 points)

Points for A: (A) The glue that holds my organization to-gether is loyalty and tradition. Commitment to this firm runshigh.

Points for B: (B) The glue that holds my organization to-gether is a commitment to innovation and development.These is an emphasis on being first.

Points for C: (C) The glue that holds my organization to-gether is formal rules and policies. Maintaining a smooth-running institution is important here.

Points for D: (D) The glue that holds my organization to-gether is the emphasis on tasks and goal accomplishment. Aproduction orientation is commonly shared.

4. What Is Important (Please distribute 100 points)Points for A: (A) My organization emphasizes human re-sources. High cohesion and morale in the firm are important.

Executive Insights: Corporate Culture and Market Orientation 123

Points for B: (B) My organization emphasizes growth andacquiring new resources. Readiness to meet new challengesis important.Points for C: (C) My organization emphasizes permanenceand stability. Efficient, smooth operations are important.

Points for D: (D) My organization emphasizes competitiveactions and achievement. Measurable goals are important.

The four organizational culture scores were computed byadding all four values of the A items for consensual, the Bitems for entrepreneurial, the C items for bureaucratic, and theD items for competitive. If total values from a given respon-dent did not add up to 400, they were normalized to do so.

3. Innovativeness was constructed from the items usedby Capon, Farley, and Hulbert (1988) to describe orga-nizational innovativeness and later used by Caponand colleagues (1992) to study innovativeness.

In a new product and service introduction, how often is yourcompany

NEVER ALWAYS• First-to-market

with new products and services 1 2 3 4 5

• Later entrant in established

but still growing markets* 1 2 3 4 5

• Entrant in mature, stable markets* 1 2 3 4 5

• At the cutting edge oftechnological innovation 1 2 3 4 5

'Reverse scored in forming the scale.

4. Performance was measured on items grounded inPIMS (Buzzell and Gale 1987; Kotabe et al. 1991)

Relative to our business' largest competitor, we are:

(a)

(b)

(c)

(d)

(1)

Less profitable.

Larger.

Have a largermarket share.

Grovifingmore slowly.

(2)

About equallyprofitable.

About the same size.

About the samemarket share.

Growing at aboutthe same rate.

(3)

More profitable.

Smaller.*

Have a smallermarket share.*

Growing faster.

*Reverse scored in construction of the scale.

124 Rohit Deshpande and John U. Farley

5. Organizational climate was measured with a subset offive scales indicated in a factor analysis of 51 items byCapon, Farley, and Hulbert (1988) and used for across-country comparison of U.S. and Australian firmsby Capon and Farley (1993).

We are also interested in your opinions about your organiza-tion's decision-making style. We would like to know whetheryou agree or disagree with the following statements.

stronglyDisagree

• In our organization, thereis excellent commimicationbetween line manager andstaff people. 1

• People trust each otherin this organization. 1

• Decision making in ourorganization is participative. 1

• A friendly atmosphereprevails among people inour organization. 1

Disagree

2

2

2

2

Neither AgreeNor Disagree

3

3

3

3

Agree

4

4

4

4

StronglyAgree

5

5

5

5

In oiu' organization,people feel they are theirown bosses in most matters. 1

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