impact of organisational size on the relationship between organisational culture and organisational...

Organizational CulturesAn International Journal

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Impact of Organisational Size on the Relationship between Organisational Culture and Organisational Effectiveness

ALIREZA NAZARIAN, PETER ATKINSON, AND LYN GREAVES

The Case of Small and Medium-sized Organisations in Iran

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First published in 2015 in Champaign, Illinois, USA by Common Ground Publishing LLC www.commongroundpublishing.com

ISSN: 2327-8013

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Impact of Organisational Size on the Relationship between Organisational Culture and

Organisational Effectiveness in Iranian Small and Medium-sized Organisations

Alireza Nazarian, University of West London, UK Peter Atkinson, Brunel University, UK

Lyn Greaves, University of West London, UK

Abstract: This paper investigates the relationship between organizational culture and organizational effectiveness in small and medium-sized organisations in Iran. Using the Competing Values Framework this study investigates to what extent the influence of organisational culture on organisational effectiveness, for a given national culture, is impacted on by organisational size. The authors have designed a model which helps to show the impact of size on the organisational culture and organisational effectiveness relationship. In order to test our model a convenience sample of 1000 respondents from different management levels from 40 Iranian private sector organisations were gathered. The results of this study confirm the relationship between organisational culture and organisational effectiveness in small and medium-sized organisations, apart from the adhocracy culture type. Furthermore, the results of this study confirm the moderating impact of organisational size on the culture–effectiveness relationship. Implications of this study for managers who are overseeing rapid changes in organizational size are discussed.

Keywords: Organisational Culture, Organisational Effectiveness, Organisational Size, Competing Values Framework, Iran

Introduction

mall and medium-sized organisations have become increasingly significant to the world economy and particularly economies of developing countries. The studies of relationship between organisational culture and organisational effectiveness have tended to focus

mostly on large organisations in developed countries. In this paper, the relationship between organisational culture and organisational effectiveness in small and medium-sized organisations is investigated in the context of a developing country.

Since culture became a significant topic in the study of organisations in the 1980s there has been a persistent interest among organisation scholars in the relationship between organisational culture and organisational effectiveness. For example, an early and highly influential study was that of Peters and Waterman (1982) who evaluated the relationship between culture and effectiveness for a number of large companies in their book In Search of Excellence.

Organisational culture has come to be seen by many scholars, and practitioners, as a key to understanding organisations and problems associated with effectiveness. This view of culture has been confirmed by research which has demonstrated that participatory decision-making improves the performance of the organisation (Denison and Mishra 1995; Denison et al., 2004). Furthermore, organisational culture has been perceived as a phenomenon that impacts organisational strengths, adaptability to new environments and the ability to respond appropriately to changes which consequently have an influence on organisational performance (Gordon and DiTomaso 1992; Kotter and Heskett, 1992; Lejeune and Vas 2009; Demir et al. 2011).

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ORGANIZATIONAL CULTURES: AN INTERNATIONAL JOURNAL

Literature Review

The aim of this section is to explore the literature of organisational culture and organisational effectiveness as well as the relationship between these two constructs to discover what is already known about their application to small and medium-sized organisations. Special attention is given to the use of Cameron and Quinn’s Competing Values Framework (CVF) (Cameron and Quinn, 2011).

Organisational Culture

The concept of organisational culture was first introduced to the management and business literature in 1960-70s and Burns and Stalker (1961) are considered to be pioneers in its study. They divided organisations into two main types: mechanistic and organic according to whether their environments are stable or unstable. Generally speaking, the mechanistic type resembles a traditional bureaucratic form and is suitable for a stable environment whereas the organic type, with its emphasis on specialist knowledge, is suitable for unstable environments. Though this typology has not been taken up by later scholars the notion of organisational culture has been an influential one.

Culture has been defined in a number of different ways. For example, Deal and Kennedy (1982) define culture as a set of values of the organisation that are used in dealing with structures, people and factors which affect the behaviour of individuals within the organisation and, consequently, influence organisational performance and success. Frost (1985) identifies organisational culture as the glue holding together several crucial organisational components and he defines culture as the way in which activities are carried out in organisations including decision-making. However, there have been some general points of agreement among scholars on what organisational culture is. Schein (2010) provides a comprehensive definition for organisational culture by defining it as the shared values, beliefs, norms, expectations and assumptions which hold employees and an organisation’s systems in a cohesive unity.

Schein’s view of culture is based on the perception that culture derives from an underlying pattern of assumptions that is a result of people working in the same organisation. He further argues that organisational culture stimulates employees’ performance and commitment to the organisation (Alvesson 2010; Smircich 1983). According to him (Schein 2010, 16), the concept of culture implies structural stability, depth, breadth and patterning of integration. Also culture is the deepest, often unconscious, part of what makes group coherence and is, therefore, mostly intangible and invisible but culture lends some level of structural stability to the group. He argues that culture is hard to change since group member’s value stability because it provides meaning and predictability (p.16).

Contrary to Schein, Alvesson (2010, 2012) has argued that the view of organisations as typically unitary, unique and characterised by a set of stable meanings, so that they can be seen as mini-societies, can be problematic. He argues that this view can be challenged in two ways. Firstly, by looking inside the organisation, it can be challenged because different groups in the organisation develop their own subcultures. On the other hand, it can be challenged by looking outwards from the organisation because of the power of ideas, values and symbols shared by wider social groups, such as nations, industries and professions (Alvesson 2010, 15).

Organisational culture gives organisation members an identity, facilitates collective commitment, promotes system stability, provides direction, and shapes behaviour (Kreitner and Kinicki 1998). The types of people who are employed, their careers and aspirations, their position in society, mobility, and education levels are all considered by scholars to be cultural indicators. Scholars such as Van Maanen and Barley (1984) view organisational culture as a set of unwritten and unspoken rules and regulations that affect meaning in the organisational context and also the behaviour of employees. Denison (1990) mentions that organisational culture

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NAZARIAN ET AL.: IMPACT OF ORGANISATIONAL SIZE ON RELATIONSHIP BETWEEN CULTURE & EFFECTIVENESS

consists of the underlying values and beliefs that provide a foundation to help management to develop practices and behaviours that enforce the organisation’s basic principles. Schein (2010) states that even what members wear (which he refers to as ‘battle dress’) reflect the organisational culture in which they work.

Cultural strength according to Luthans (1995) depends on two main factors, sharedness, and intensity. Sharedness is generally related to the extent to which all members of the organisation share the same core values. On the other hand, intensity is related to organisation members’ commitment to those values and a connection can be observed between an intense culture and the organisation’s effectiveness. Schein (2010) proposes that the organisation’s culture is the place to find the solution for many organisational issues and, therefore, newcomers need to be educated in the organisational culture so that they can fit into the existing methods and style of problem solving.

Approaches to Organisational Culture

Scholars such as Smircich (1983), Cameron and Ettington (1988), and Cameron and Quinn (2011) argue that organisational culture has been investigated from two different perspectives: an anthropological perspective and a sociological one. See Table 1 for details:

Table 1: Anthropology vs. Sociology

The anthropological approach looks at organisational culture as something that organisations are, whereas the sociological approach sees organisational culture as something that organisations have. In other words, the fundamental distinction between these two roots, as Smircich (1983) and Cameron and Quinn (2011) argue, is that one defines culture as an attribute and the other defines culture as a metaphor.

Within each of these two roots, two main approaches have been developed: a Functionalist approach, based on collective behaviour and a Semiotic approach based on individual interpretations and cognitions. Cameron and Ettington (1988) suggest that the anthropological perspective looks at culture as a dependent variable, whereas the sociological perspective looks at culture as an independent variable. The Functionalist approach was adopted by scholars like Ouchi (1981), Peters and Waterman (1982), and Deal and Kennedy (1982), in order to identify which culture would obtain the best results for a particular organisation. The Semiotic approach, in contrast, has gained popularity among the majority of academics, for example: Gregory (1983), Smircich (1983), Morgan et al. (1983), Anthony (1994), and Meek (1988). Their studies have explored how employees experience culture in an organisation and how this affects their behaviour (Broadfield et al. 1998; Acar 2012).

Approaches to Organisational Effectiveness

There is a general sense of agreement among scholars that “efficiency” refers to input-output ratios, whereas effectiveness refers to organisational goal attainment (Pennings and Goodman

Organisational Culture Anthropology Sociology

Organisation is culture Culture is a dependent variable

in an organisation Culture as a metaphor Treats culture as something

Organisation has culture Culture is an Independent variable in

organisation Culture as an attribute Treats culture as being for something

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1977; Denison 1990). Organisational effectiveness has also been defined as the ability to create high performance and growth by increasing sales and manpower to generate higher profit margins.

Organisational effectiveness or, in other words being effective, has always been researchers’ main concern and interest over a long period of time. Researchers in organisational studies have defined organisational effectiveness in different ways such as: in terms of generating a higher profit margin; in terms of output (Etzioni 1964; Cummings and Worley, 2005) in terms of resource acquisition and organisation performance (Yutchman and Seashore 1967; Kontoghiorghes et al. 2005; Lee and Brower 2006) in terms of productivity, flexibility (Georgopoulous and Tannebaum 1957; Cummings and Worley 2005; Sayareh 2007) or in terms of customer satisfaction and loyalty (Chang and Huang 2010). According to scholars such as Taylor (1911), Fayol (1931), and Mayo (1949) effectiveness is the extent to which an organisation maximises production, minimises costs and achieves technological excellence through clear authority and discipline. Thus, effectiveness is the extent to which an organisation achieves its goals such as production maximisation, cost minimisation, technological excellence with having clear authority, and discipline. Penning and Goodman (cited in Steers 1977) argue that organisations are effective if they satisfy their constituencies. In this paper, it has been decided to define efficiency as a measure of speed and cost, whereas effectiveness is a measure of overall organisational goal attainment, employees’ satisfaction, and quality.

Organisational effectiveness models, which can be deduced from the definitions mentioned above, are limitless. The majority of the modern effectiveness models used by organisations measure effectiveness in terms of several criteria such as productivity, flexibility and stability since many organisations in the 21st century normally have multiple objectives. A single criterion as a measure of organisational effectiveness such as profitability is still widely used in many organisations. Steers (1977), by looking at similar models of effectiveness introduced by researchers since 1957 to 1975 and grouping them together, summarised seventeen models, or criteria, of effectiveness. These are very similar in scope to the thirty criteria described by Campbell (1977). Similar to Campbell’s findings, Steer’s seventeen criteria also became the foundation for further development by other theorists such as Cameron and Quinn.

Scholars such as Cameron and Quinn (2011) and Robbins (1990) argue that so as to understand organisational effectiveness better, researchers need to have a good understanding of multiple models. Robbins (1990) categorised effectiveness approaches into four types:

• Based on how well organisations’ goals and objectives can be achieved (Hermanand Renz 1997, 2004; Baruch and Ramalho 2006 )

• Based on measuring inputs and outputs (system approach) according to external andinternal environments (Cummings and Worley 2005)

• Strategic constituencies approach based on how well organisations’ constituents aresatisfied (Papadimitriou and Taylor 2000; Papadimitriou 2007)

• CVF approach, which is the most comprehensive, based on three factors:flexibility-stability; internal-external and ends and means (Quinn and Rohrbaugh1983; Cameron and Quinn 2011)

Each of these models has its own problems such as the goal attainment approach has a goal multiplicity problem or the system approach has a measuring validity and reliability problem not to mention that this approach concentrates on effectiveness itself rather than on organisational effectiveness (Robbins, 1990). The strategic-constituencies approach according to Robbins (1990) has two major problems: firstly, to separate strategic constituencies from the environment and, secondly, it is difficult to understand what to expect from organisations’ strategic constituencies.

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The ultimate goal of researchers in organisational studies is to improve organisational effectiveness. However, measuring organisational effectiveness is a difficult task, since organisations differ in size, are diverse, and perform a variety of activities at the same time. Therefore, in recent years researchers have preferred to use contingency and multiple approaches rather than a single approach to increase validity and accuracy. CVF is the most appropriate model because it looks at the matter from several angles simultaneously. CVF has been used by many researchers in a variety of organisational research areas such as organisational culture and leadership style.

It may be predicted that organisational structure is the main factor that influences organisational effectiveness. But, since organisational structure is itself influenced by other factors such as culture (national, organisational, occupational, and individual), it could be argued that organisational culture can also have a huge impact on organisational effectiveness (Denison 1990; Denison and Mishra 1995; Cameron et al. 2006). According to Schein (2010), changing the structure of an organisation without adjusting its culture would not lead to successful change.

Organisational Culture and Effectiveness Using CVF

CVF is a frequently used tool for identifying features of culture that affect organisational performance (Cameron et al. 2006; Cameron and Quinn 2011; Hartnell et al., 2011). Research shows that different features of the organisational culture create a significant impact on organisational effectiveness; therefore, these features are given particular importance by the management of the organization in order to enhance and measure the organisational effectiveness (Yeung et al. 1999; Denison et al. 2004; Demir et al. 2011).

For analysing organisational culture and organisational effectiveness, Hatch (1997) introduces two perspectives, namely, interpretivist and modernist. Researchers in the interpretivist perspective, by using ethnographic observation, study artefacts and symbols in the situation in which they occur and let organisational members use them in their own way. The modernist perspective, on the other hand, has a different view. Researchers in the modernist perspective have an aim to provide general knowledge that can be applied across cultures, which in their view, would be more efficient and practical than the interpretivist perspective (Hatch 1997: 232). Quinn and Rohrbaugh’s (1983) CVF also follows the modernist prescription, by saying that organisational effectiveness is subjective, and that goals preference is based on personal values and interests (Cameron et al. 2006; Cameron and Quinn 2011). They identified the basic sets of competing values as: 1- Flexibility vs. Control, 2- People vs. Organisation, and 3- Means vs. Ends.

The organisational culture types used in this study are taken from the CVF (Cameron and Quinn 2011) and are: clan culture, adhocracy culture, hierarchy culture and market culture. CVF uses two axes to draw a quadrant thus giving the four culture types. One axis is the degree to which the organisation is internally or externally focused and the other is the degree to which it is perceived that it is important to control employees or to have the flexibility to give them discretion to make their own decisions. Clan culture has an internal focus and values employees having discretion to make decisions. This culture type is friendly, people orientated and values flexibility. Adhocracy culture has an external focus and values employees having discretion to make decisions. This culture type is entrepreneurial and values innovation. Market culture type has an external focus and values order and stability. This culture type has a competitive attitude towards its market and values market share and customer focus. Hierarchical culture has an internal focus and values order and stability. This culture type is orientated towards control of employees and values standardisation and consistency. Moreover, the organisational effectiveness criteria used in this study are also taken from the CVF (Cameron and Quinn, 2011) and Cameron (1986) study.

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This study adopts the methodology of CVF because CVF provides the researcher with the means to investigate organisational culture and organisational effectiveness from multiple perspectives, rather than from only one perspective such as productivity or goal achievement.

Furthermore, the CVF was developed based on the perspective of functionalist-sociology which considers culture as something that an organisation has rather than what it is. The CVF offers an integrative perspective (Quinn and Rohrbaugh 1981, 1983) which gained its popularity and validity among organisational studies scholars through addressing three main issues: how to describe organisational culture, how to identify dimensions of organisational culture by looking at similarities and differences across cultures, and how to measure organisational culture (Cameron et al. 2006).

According to the theory of CVF, the effectiveness of an organisation is dependent on the organisation’s ability to achieve its desired results in all four of the cultural types (Cameron et al. 2006). Satisfactory performance in every cultural type shows that the organisation is performing effectively (Christensen and Overdorf 2000; Kokt and Merwe 2009, a, b). A diagnostic model is required when developing an organisational intervention to identify where the CVF can be used to evaluate the effect of the organisation’s culture on its effectiveness (Kwan and Walker 2004; Fazli and Alishahi 2012). By using this framework, organisational values and beliefs that are connected to the effectiveness of the organisation can be identified while developing strategies based on the culture types identified by the model (Hartnell et al. 2011). CVF also discovers stakeholders’ views about the organisation’s effectiveness because without satisfying its stakeholders the organisation cannot achieve effectiveness (Fedor et al. 2001).

Therefore, based on this literature review, the current study fulfils the aim of exploring the relationship between organisational culture and organisational effectiveness by hypothesizing the following statements for testing:

• Hypothesis 1: There is a strong relationship between organisational culture (clan,adhocracy, market and hierarchy) and organisational effectiveness

• Hypothesis 2: Organisational size will serve as a significant moderator of theassociation between organisational culture, and organisational effectiveness.

• Hypothesis 3: The controls of education and position will serve as substantialcontrol measures on the relationship between organizational culture andorganisational effectiveness.

Research Methodology

In order to investigate organisational effectiveness, a variety of questions from technical, non-technical and moral perspectives were prepared. Questions about the attitude of the organisation towards change, management control, decision making, clarity of mission statement, communication, trust, and being part of the organisation have been asked to measure effectiveness as well as the consistency of respondents’ answers.

The researcher aimed to design research questions which were narrowly focused enough to guide the research to reach its desired outcome and broad enough to allow for flexibility. It was also considered important to find the appropriate research methods to collect data to answer the research questions, and after due consideration, it was decided that it would be most appropriate if the research used a quantitative methodology.

The deductive approach seems to be the most suitable one for the examination of the relationships between theoretical and research concepts (Bryman and Bell 2011). This research is deductive in nature, and based on a theory-then-research approach in which hypotheses are set and developed, and then tested through empirical research. The deductive approach starts with a very general and broad idea which is narrowed down into more specific hypotheses in a ‘top-down’ approach. In order to either reject or accept the hypotheses, specific data must be collected

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from observations that address the hypotheses. Generally, (though not necessarily) this approach generates quantitative data.

Therefore, this research is based on quantitative methods. Quantitative data were collected using a questionnaire, which was designed by the researcher based on the CVF for both organisational culture and organisational effectiveness. For the purposes of this study, a self-administrative questionnaire was developed which was mostly borrowed from existing literatures and questionnaires such as Cameron and Quinn (2011) OCAI on organisational culture, Cameron (1978, 1986) and CVF on organisational effectiveness. The main reason for choosing a questionnaire was that this study needed a large number of respondents who were geographically dispersed. Additionally, a questionnaire is much less expensive than semi-structured interviews. Also, in general, questionnaires can be distributed and collected all together whereas interviews cannot.

In total, 620 questionnaires were distributed among managers of small and medium-sized organisations in Iran and 236 were returned, which provided a response rate of 38.1%. Each questionnaire was accompanied by a covering letter which clearly explained the aims and objectives of this research as well as an assurance of confidentiality and anonymity of respondents. In general, the average response rate of 38.1% can be considered to be a good response rate for a mail survey (Pearce and Zahara 1991; Wiess and Anderson 1992). Furthermore, compared with similar studies in the same field such as Zheng et al. (2010), Gregory et al. (2009), Mehr et al. (2012), Gholamzaded and Yazadanfar (2012), Tojari et al. (2011) and Xenikou and Simosi (2006) the response rate for this study could be considered as acceptable since the response rate of studies in this field are range from 23 % to 41%.

Results

Descriptive Statistics

The descriptive statistics of the data collected for this study are shown in Table-2. The results indicate that the percentage of male participation in this study was slightly higher than female participation at 52.6% and 47.4% respectively. The results also indicate that the majority of participants (around 70%) are between 35 and 54 years old. Furthermore, the data show that almost all participants have university degrees which could indicate the importance of education in Iranian culture. As it was expected the data shows that the participation of middle and senior managers in this study was very high.

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Table 2: Descriptive Statistics Variable Percentage

Gender Male Female

52.6 47.4

Age Under 25 25-34 35-44 45-54 55-64 > 65

0.4 9.5 35

35.8 16.6 2.7

Education Level PhD Post-Graduate Under-Graduate

Pre-University

5.8 54.8 38.9 0.5

Position Chief Executive Senior Management Middle Management Junior Management

6.1 31.3 44.3 18.3

Reliability of the Constructs

The reliability of the constructs was measured using Cronbach’s Alpha values. Malthotra (1999) and Malhotra and Birks (2006) explained that Cronbach’s Alpha measures the internal consistency of each item. Table-3 shows the reliability of the dimensions of the organisational culture and organisational effectiveness constructs. Results show that all the dimensions of organisational culture and organisational effectiveness were highly reliable and their values were above 0.6. The dimension of organisational culture values ranges from 0.756 to 0.878, while the reliability coefficient for organisational effectiveness is 0.824.

Table 3: Reliability of Constructs

Hypothesis Testing

Regression analysis was employed in order to test the hypotheses. The regression analysis results for hypothesis-1 that claim ‘there is a relationship between organisational culture (clan, adhocracy, market and hierarchy) and organisational effectiveness’ show that all organisational culture types, apart from adhocracy, positively contribute to organisational effectiveness. The R-

Construct No. of Items Cronbach’s Alpha Coefficients Organisational Effectiveness (OE) 41 0.804 Clan Culture (CC) 6 0.758 Adhocracy Culture(AC) 6 0.766 Market Culture (MC) 6 0.848 Hierarchal Culture (HC) 6 0.809

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Squared value indicates that 37.9% of the variance in organisational effectiveness (the dependent variable) is explained by the organisational culture dimensions (the independent variables) which implies that organisational culture is a good predictor of organisational effectiveness.

Table 4: Pearson’s Correlation CC AC MC HC OE

CC 1 AC .157** 1 MC .368** -.029 1 HC .428** .027 .436** 1 OE .471** -.214** .374** .423** 1

The value for clan culture (B = 0.206, p < 0.05); adhocracy culture (B = -0.086, p > 0.05), market culture (B = 0.480, p < 0.01) and hierarchal culture (B = 0.385, p < 0.01) indicate that all dimensions of organisational culture positively contribute to organisational effectiveness with the exception of adhocracy culture, which has a negative impact upon organisational effectiveness. Furthermore, a series of correlation coefficients were also conducted between organisational culture types and organisational effectiveness in which significant correlations were found (Table 4).

Table 5: Regression for organisational culture relationship with organisational effectiveness Variable Standard Beta Coefficients

Clan 0.208* Adhocracy -0.086 Market 0.480** Hierarchy 0.385** R-Square 0.379 Adjusted R-Square 0.361 F- Statistics 33.609**

**P< 0.01, *P<0.05

To test Hypothesis-2 a series of regressions were conducted. Specifically, this consisted of a series of regression analyses incorporating interaction effects between organisational culture and size to determine whether organisational size serves as a significant moderator of the association between organisational culture and organisational effectiveness. The results of regression analysis indicate that the interaction between organisational effectiveness types and size were found to achieve statistical significance in the regressions conducted on all organisational culture types.

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Table 6: Regression analysis – organisation size as moderator

To test hypothesis-3 further regression analyses were conducted. The regression analysis presented in Table-7 focuses upon whether education and position serve as substantial controls with regard to the association between organisational culture and organisational effectiveness. The results show that position was found to be significant in all four analyses while education was not found to be a significant control in any of the four analyses. These results indicate that position could serve as a substantial control with regard to organisational effectiveness, whereas education is not.

Table 7: Regression analysis – education and position Variable Stand. Coefs. Model Fit

Beta R2 ANOVA OE and Clan Culture .210 F (3, 349) = 17.454**

Clan Culture -.051

Education .046

Position -.343** OE and Adhocracy Culture .311 F (3, 349) = 18.520**

Adhocracy .060 Education .010 Position -.437**

OE and Market Culture .434 F (3, 349) = 24.143** Market Culture .258**

Education .019 Position -.515**

OE and Hierarchy Culture .443 F (3, 349) = 27.345** Hierarchy Culture .282**

Education .040 Position -.395**

**P< 0.01, *P< 0.05

Discussion and Conclusion

This study aimed to test the impact of organisational culture on organisational effectiveness in the private sector of Iran. Hypotheses were tested using organisational culture as an independent variable and organisational effectiveness as a dependent variable.

The results of this study proved that there is a relationship between organisational culture and organisational effectiveness. Although the adhocracy culture does not show any significant impact on organisational effectiveness, in general it could be concluded that organisational

Item Relationships R2 F-statistics Interaction term

Interaction term (β)

Supported/Not Supported

1 CC -> OE .428 56.66** 10.527** .776** Supported 2 AC-> OE .132 13.835** 3.394** .634** Supported 3 MC-> OE .303 29.682** 6.923* .462* Supported 4 HC-> OE .398 49.414** 9.961** .744** Supported

Dependent variable: Organisational Effectiveness **p< 0.01 , *p< 0.05

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culture plays an important role in organisational effectiveness. The insignificant relationship between adhocracy culture and organisational effectiveness could be the result of other factors such as data collection and that the participants of this study did not belong to organisations that are based on innovation, or could be as a result of severe sanctions imposed on Iran which have forced Iranian managers to avoid risk.

Finding a positive correlation and significant relationship between organisational culture and organisational effectiveness was not surprising as previous studies had proved it; however, what was surprising for the researcher was the relationship between adhocracy and organisational effectiveness. To further investigate this anomalous result the researchers searched in the literature to find an explanation for this unexpected result, however unfortunately, no good parallel that might throw light on the case of Iran could be found. In fact, as there are very few cases or countries that have experienced a similar situation to Iran, studies of those countries are very limited or do not exist.

However, the researchers used anecdotal evidence and conversation with experts on organisational studies and experts familiar with the Iranian situation to develop a theory. Possibly there are three reasons why the results do not show any significant relationship between adhocracy culture, and organisational effectiveness which are due to 1-the nature of adhocracy culture and 2-data collected from organisations for this study, 3- and, more importantly, the external factors. Adhocracy culture is strongly based on innovation and creativity and organisations that are involved in high-tech and innovation are often dominated by this culture and the absence of these organisations from the sample might be a reason for a negative correlation between adhocracy, leadership style and organisational effectiveness. Furthermore, in adhocracy culture leaders are creative risk takers, where subordinates follow them in making developmental initiatives. In the case of Iran as a result of international pressure in the form of economic sanctions, including restrictions on joint ventures and banking, it could be deduced that organisational cultures in Iran might discourage leaders from taking risks. Being risk averse has a negative impact on implementing adhocracy culture which is based on change, uncertainty and taking risks. Therefore, finding negative correlation or even no significant relationship, in regression analysis, between adhocracy with leadership style and organisational effectiveness could be explained in the case of this study.

In order to test Hypothesis-2 a series of regression analyses was conducted. The results of these analyses show that organisational size is an important moderating factor that influences the relationship between organisational culture and organisational effectiveness. However, the extent of the moderation impact of organisational size varies from one organisational culture type to another. Overall, the results indicate that organisational size is an important and significant moderator of association between organisational culture and organisational effectiveness.

Although, there are very few studies that investigate the impact of organisational size, and the results are mixed, it could be concluded that organisational size has a major impact on the nature of organisational culture either directly or indirectly through the structure or values of organisations. The findings of this study are consistent with Cameron and Quinn’s (2011) argument that organisational culture changes as organisations move through their life cycle. Organisations in the early stage of life, like most of those small organisations which participated in study, are dominated by clan culture as they need to establish a firm relationship with employees and make sure employees feel that they are part of the organisation. On the other hand, Cameron and Quinn argue that as organisations grow they need to establish new rules and regulations in which sometimes employees feel that the organisation has lost its sense of family and community. In this case organisations moving toward implementing market or hierarchy culture, which the data collected for this study suggest are dominant among medium-sized organisations. Therefore, it could be concluded that the organisational culture type implemented

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would be affected by organisational size and would not be the same as the organisation requirements and objectives change as the organisation grows or diminishes in size.

Furthermore, to test Hypothesis-3 a series of regression analyses were conducted in which the results indicate that position serves as a significant control of the association between organisational culture and organisational effectiveness. However, to the surprise of the authors, education shows no significant influence on this relationship. Hofstede (1980) argues that social conditions are necessary for culture. If culture supplies the initial social conditions under which organisational culture emerges, then the behavioural and practices that constitute current notion of organisational culture should be expected fit the values of the culture that generated and shaped the phenomenon of Islamisation in Iran.

This paper makes two significant contributions, firstly to understanding the relationship between organisational culture and organisational effectiveness and, secondly, to understanding the current business conditions in Iran. It makes a contribution to understanding the relationship between organisational culture and organisational effectiveness by examining the nature of this relationship for small and medium-sized organisations and showing that size has a moderating effect on this relationship which is different for different organisational culture types. It also makes a contribution to the understanding of current business conditions in Iran because of an anomalous finding about the relationship between adhocracy culture and effectiveness. This finding suggests that further study is needed in this area.

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ABOUT THE AUTHORS

Dr. Alireza Nazarian: MIBM Program Leader, International Business School, University of West London, UK

Peter Atkinson: PhD Student, Business School, Brunel University, UK

Lyn Greaves: Deputy Director of the Business School, International Business School, University of West London, UK

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Organizational Cultures: An International Journal is one of four thematically focused journals in the collection of journals that support The Organization knowledge community—its journals, book series, conference and online community.

The journal explores success factors in the management of organizational culture in responsive, productive and respected organizations.

As well as papers of a traditional scholarly type, this journal invites case studies that take the form of presentations of management practice—including documentation of organizational practices and exegeses analyzing the effects of those practices.

Organizational Cultures: An International Journal is a peer-reviewed scholarly journal.

ISSN 2327-8013

impact of organisational size on the relationship between organisational culture and organisational...

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