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EFFECT OF ORGANIZATIONAL CULTURE ON ORGANIZATIONAL

PERFORMANCE

The purpose of any enterprise, business or organization is to have earnings. In the precedingstage of these earnings, culture carries a vital role. Schein (1990) explains the concept of

organizational culture, which has received increasing attention in recent years both from

academics and practitioners. Culture brings the norms, values and attributes that govern a place.

George (1993) elucidates that intensification of research on culture and organizational

performance has led to the formulation of theories about factors within an organization that can

make a huge impact on the outputs and a common hypothesis about this role suggests that if an

organization possesses strong culture by exhibiting a well-integrated and effective set of

specific values, beliefs and patterns, then it will perform at a higher level of productivity.

Charles (1991) highlights in his study that the notion of organizational culture has beenimportant in the study of organizational behavior of the past decade. In spite of disagreements

over some elements of definition and measurement, researchers seem to agree that culture may

be an important factor in determining how well an individual fit in an organizational context,

whereas George (1992) investigates the relationships of culture strength and two substantive

cultural values with corporate performance. Culture strength is measured by the consistency of

responses to survey items across people and the two cultural values are measured by items on the

survey that relate to either adaptability or stability. The data, from management surveys of 11 US

insurance companies in 1981, were correlated with asset and premium growth rates from 1982 to

1987. Results indicate that both a strong culture regardless of content and a substantive value

placed on adaptability are associated with better performance for two to three subsequent yearson both criterion measures. The results support the findings of Denison (1990) that strength of

culture is predictive of short-term performance.

Bernard (1995) examines organizational culture and organizational performance via a discussion

of the models of culture and the empirical research conducted to investigate the causal

relationship between them. Despite claims of a causal relationship, the culture-performance link

remains unclear. There is a need to improve on the application of the concepts involved.

Methodological issues as well as the influence of moderator variables are suggested for

consideration in future research. Abraham (2004) has researched that despite the growing

awareness of the importance of researching core strategic resources and activities, the work thathas been done to date has largely taken the form of anecdotal reports and case study analysis. We

have yet to see large-sample studies demonstrating how organizational elements, independently,

complementarily and interactively, may or may not enhance the organization's performance.

Moreover, little attention has been given to researching this topic in public sector organizations.

The present study aims to bridge this gap by examining the impact of a set of independent

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intangible organizational elements and the interactions among them on a set of objective

organizational performance measures in a sample of local government authorities in Israel.

References:

Abraham, C. (2004). The Relationships Between Intangible Organizational Elements and

Organizational Performance. Strategic Management Journal, 1257-1278.

Bernard, L. (1995). Examining the organizational culture and organizational performance link.

Leadership & Organization Development Journal, 16-21.

Charles, A. O. (1991). People and Organizational Culture: A Profile Comparison Approach to

Assessing Person-Organization Fit. The Academy of Management Journal, 487-516.

George, A. M. (1993). Organizational Culture and Performance: Proposing and Testing a Model.

Organizational Science, 209-225.

George, G. G. (1992). Predicting Corporate Performance from Organizational Culture. Journal

of Management Studies, 783-798.

Schein, E. H. (1990). Organizational Culture.American Psychologist, 109-119.