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Organizational Culture and Organizational Performance: A Review of

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Article · November 2021

DOI: 10.35629/5252-0301361372
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International Journal of Advances in Engineering and Management (IJAEM)
Volume 3, Issue 1 Jan-Feb 2021, pp: 361-372 www.ijaem.net ISSN: 2395-5252
Organizational Culture and Organizational Performance:

A Review of Literature
1
Akpa, Victoria O., 2 Asikhia, Olalekan U., 3 Nneji, Ngozi Evangeline
1
Senior Lecturer, Department of Business Administration and Marketing, Babcock University, Ilishan Remo
Ogun State, Nigeria
2
Professor, Department of Business Administration and Marketing, Babcock University, Ilishan Remo Ogun
State, Nigeria
3
Ph.D Student, Department of Business Administration, Babcock University, Ilishan Remo, Ogun State, Nigeria
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Submitted: 15-01-2021 Revised: 27-01-2021 Accepted: 30-01-2021
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ABSTRACT: Organizational culture is an Alshamari, (2017). Organizational culture can be

essential component of an organization that has defined by its aspects (Nahavandi & Malekzadeh
evoked various studies to determine and establish 1993), dimensions (Van der Post, et al. 1997; Lee,
its‟ relationship with organizational performance & Yu 2004; Quinn & Cameron 1983), traits
and sustainability. It has always been considered to (Denison & Mishra 1995), elements (Quinn &
have deep impact and importance on the variety of Cameron 1983; Weber & Camerer 2003) as cited in
organizational process, employees and its Tandonet al, (2018). The word culture has been
performance and an important element to unify derived from idea of cultivation which means the
various company cultures in the corporate group patterns of development. Sometimes known as
structure (Kenny, 2012). The purpose of this “corporate culture” (Childress, 2013), corporate
review article is to establish the relationship culture is used to denote the more commercialized
between organizational culture and organizational meaning of organizational culture (Deal &
performance. The objective is to determine the Kennedy, 1982).
influence of organizational culture on A focus on organizational culture over the
organizational performance focusing on Schein's decade has increasingly become a major
theory of organizational culture, Denison component of everyday organizational functioning
organizational culture model and theory of because performance has been perceived to depend
organizational excellence by Thomas Peters and on the organization‟s culture. The performance
Robert Waterman. Research shows that if management challenge has equally attracted
employee are committed and have the same norms attention of researchers in management. A study of
and value as the organizations, it could increase culture within the organization shows that workers
performance towards achieving the overall think the same way and are guided by the same
organization goals. The review includes syntheses ideas about the business (Racelis, 2010). There has
of the relevant literature relating to the role of been significant research in the literature to explore
organizational culture in enhancing performance the impact of organizational culture on employee
and productivity in the organization. The review performance and productivity. For instance,
concludes that organizations employees have clear scholars (Hofstede, 1980; Ouchi, 1981; Hofstede &
spelt out work ethics, are like-minded and hold Bond, 1988; Kotter and Heskett, 1992; Magee,
similar beliefs and values, guided by values of 2002) claim that organizational culture could be
consistency, adaptability and effective used for measuring economic performance of an
communication system, gives employees a sense of organization. Stewart (2007) opined that to ensure
identity which increases their commitment to work profitability is the goal of any organization, and
and ultimately leads to better performance. one of the best places to start improvements is with
Keywords: Organizational culture, Corporate an examination of the organization's work culture.
culture and Organizational performance. He states that the strongest component of the work
culture is the beliefs and attitudes of the employees.
I. INTRODUCTION An organization's cultural norms are assumed to
Organizational culture, as a concept, has affect all who are involved with the organization.
been studied in various different disciplines Those norms are almost invisible, but if
ranging from social anthropology to industrial- performance and profitability are to be improved,
organizational psychology (Schein, 2010) cited in
DOI: 10.35629/5252-0301361372 Impact Factor value 7.429 | ISO 9001: 2008 Certified Journal Page 361
norms are one of the first places to consider more responsive to the social force of peer group
(Stewart, 2010). than to the incentives and control of managers
(Mayo, 1945).
Many business managers struggle to Schein's theory of organizational culture
survive in a competitive global market because of focuses on the basic underlying organizational
challenging characteristics in business (Bolboli & assumptions, espoused values and artifacts and how
Reiche, 2014). The challenges include increasing their linkages can influence performance (James &
global price competition and satisfying demands of Jones, 2005). Schein (1985) proposed that
different stakeholders (Bolboli & Reiche, 2013). organizational culture serves the dual roles of
Over the last few decades, there have been adaptation to changes in the environment external
phenomenal changes in organizational management to the firm and enabling internal integration.
in the world (Schein, 2011). This has been Denison‟s (1990) culture identified four
attributed to new aggressive competition in the elements of organizational culture model as
marketplace alongside the growing diverse involvement, consistency, adaptability, and
employees in many organizations (Rhine & mission. He posited that the four organizational
Christen, 2012). The complexity of business culture model elements are essential in developing
environment has also forced organizations to and maintaining an effective organizational culture
search for more efficient management strategies. in the organization (Kotrba et al., 2012). The theory
As a result, a focus on organizational culture is of organizational excellence by Thomas Peters and
getting great prominence in the business sector. Robert Waterman (2014) states that a good
According to Kotter (2012) organizational culture organization is characterized by a preconceived
has a direct impact on a variety of organizational notion leaning toward its accomplishment, being
variables. Research also shows that if employees focused on the customer, self-sufficiency and skills
are guided by the same norms and values in their of doing business. The theory also considers
organization, their performance would improve culture as a component of an integrated social
(Hofstede, 2007). The success stories of reputed system serving the common good, thereby
organizations reveal that sustained competitive promoting organizational performance and the
advantage could be attributed to continued internal well-being of all its stakeholders (Smelser, 2005).
innovation through a set of beliefs, values and
shared norms in the organization. These beliefs, II. LITERATURE REVIEW
values and principles symbolize the culture of an Organizational Culture
organization (Morgan, 1997) and function as a Culture has been called “the way of life
source of management practices for the for an entire society.” The culture of a group can be
organization. It heavily influences decision making, defined as: “A pattern of shared basic assumptions
policy formulation, leadership style and overall that the group learned as it solved its problems of
working environment within an organization external adaptation and internal integration, that
(Hofstede & Hofstede, 2005). Strong cultural has worked well enough to be considered valid and
values are said to promote innovation, internal therefore, to be taught to new members as the
flexibility, better utilization of human capital correct way to perceive, think, and feel in relation
(Robbins, Judge, & Sanghi, 1994) and enduring to those problems” (Schein, 1990). In other words,
strategic goals in an enterprise. as groups evolve over time, they face two basic
The first systemic attempt to describe challenges: integrating individuals into an effective
working environment in terms of culture is whole, and adapting effectively to the external
considered in the study by Hawthorne at the environment in order to survive. As groups find
Western Electric Company in the early 1930s. solutions to these problems over time, they engage
The aim of the study was to examine if factory in a kind of collective learning that creates the set
employees would become more productive in of shared assumptions and beliefs that are called
response to the fact that they know they are being “culture.” It is the set of shared values, beliefs, and
studied. Worker‟s productivity was measured in norms that influence the way employees think, feel,
different level of illumination, clean work stations and behave in the workplace (Schein, 2011).
and floors without obstacles. The results obtained Culture is the social glue that keeps organizations
showed positive correlation between productivity integrated and controlled through informal, non-
and work environment. Mayo and Warner‟s study, structural means – shared values, beliefs,
between 1931-1932, revealed the formation of understandings and norms. Culture in this sense
cliques with informal rules of behaviour and contributes to the avoidance of fragmentation,
internal support. Employees were found to be conflict and tension. Culture serves as a sense-
making and control-gaining mechanism that can Evolution of Organizational Culture Concept
guide and shape attitudes and behaviors (Alvesson, The concept of organization culture
2002). It has also been described as a set of values, received attention in the late 1980s and early 1990s
beliefs, and behavior patterns that differentiate one as management scholars were exploring how and
organization from other organizations (Ortega- why the American companies failed to compete
Parra & Sastre-Castillo, 2013). King (2012) with their Japanese counterparts. The concept of a
defined organizational cultures as a system of national culture was not a sufficient explanation to
values that subconsciously and silently drive this phenomenon. Instead, a model was needed that
people to make each choice and decision in the allowed for differentiation between organizations
organization. Organizational culture includes the within a culture (Schein, 1990). This ultimately
norms that the members of an organization resulted to the concept of organizational culture.
experience and describe as their work settings According to Brooks the current fascination with
(Schneider et al., 2013). Such norms shape how organizational culture began in the 1970s and early
members behave and adapt to get results in the 1980s with the works of Peters and Waterman
organization. It has been describes as how the (1982), Deal and Kennedy (1982) among others. In
members of an organization interact with each 1952, Jacques referred to culture of a factory as „its
other and other stakeholders (Simoneaux & Stroud, customary and traditional way of thinking and of
2014). Another successful –and perhaps more doing things which is shared and which new
specific definition of organizational culture has members must learn‟ (Jacques, 1952, cited in Ojo
been given by Claver, et al (2001), which states (2014). He argued that culture comprised
that “organizational culture is a set of values, behaviours, attitudes, customs, values, beliefs, and
symbols and rituals, shared by the members of a the less conscious conventions and taboos.
specific firm, which describes the way things are According to Baker (2002) organizational
done in an organization in order to solve both culture became a business phenomenon in the early
internal management problems and those related to 1980s, triggered by four influential books which
customers, suppliers and environment”. includes that of Ouchi (1981) Theory Z: How
Although there is no consensus on the American Business Can Meet the Japanese
definition of organizational culture, a cursory look Challenge, Pascale and Athos (1982) The Art of
at most of the definitions indicated that Japanese Management: Applications for American
organizational culture definitions share a number of Executives, Deal and Kennedy (1982) Corporate
specific characteristics. First of all, they all include Cultures: The Rites and Rituals of Corporate Life
the concept of sharing, indicating that and Peters and Waterman (1982) In Search of
organizational culture is only developed within Excellence: Lessons from America‟s Best Run
groups. Secondly, organizational culture is Companies. All these books suggested that
considered to be a social construction, related to corporate culture is a key to organizational
each organizations and employees‟ location, performance and that corporate culture could be
history, working environment and specific events. managed to improve a company‟s competitive
Thirdly, many definitions imply that organizational advantage. Attention to organizational culture lost
culture is multidimensional and multileveled and ground as organizational science, and social
includes many cognitive and symbolic strata. science in general, became increasingly
Finally, most authors also agreed that quantitative. To the extent that research on
organizational/corporate culture referred to organizational culture survived, its focus shifted to
something that is holistic, historically determined its more measurable aspects, particularly employee
(by founders or leaders), related to things attitudes and perceptions and/or observable
anthropologists study (like rituals and symbols), organizational conditions thought to correspond to
socially constructed (created and preserved by the employee perceptions.
group of people who together form the
organization), soft, and difficult to change. The Organizational Performance
definitions by Schein (1990) and Claver et al Organization performance has been the
(2001) for instance, seem to share some similarities most important consideration for every
in terms of the artifact but differ in that Schein organization, be it profit or non-profit organization.
emphasized that culture is a dynamic evolving It has been very important for managers to know
process while Claver et al assumed the mechanical which factors influence an organization‟s
existence of culture. performance in order for them to take full
advantage and appropriate steps to initiate them.
Organizational researchers among themselves have
different opinions of performance as it continues to measures of organizational performance because of

be a contentious issue. (Barney, 1997). According the differences in their research questions. Ricardo
to Daft (2000), organizational performance is the (2001) suggests that there is a difference between
organization‟s ability to attain its goals by using performance and productivity. Productivity is a
resources in an efficient and effective manner. ratio depicting the volume of work completed in a
Quite similar to Daft (2000), Richardo (2001) given amount of time while performance is a
defined organizational performance as the ability of broader indicator that can include productivity,
the organization to achieve its goals and objectives. quality, consistency, results, behaviors (criterion-
According to Cascio (2014) organizational based) and relative (normative) measures,
performance is the degree of attainment of work education and training concepts and instruments,
mission as measured in terms of work outcome, including management development and leadership
intangible assets, customer link, and quality training for building necessary skills and attitudes
services. Kaplan and Norton (2001) defined of performance management (Richard, 2002) as
organizational performance as the organization‟s cited in Rehman (2012).
capacity to accomplish its goals effectively and Many researchers have used managers‟
efficiently using available human and physical subjective perceptions to measure beneficial
resources. This definition provides the justification outcomes for firms. Others have preferred objective
for organizations to be guided by objective data, such as return on assets. Scholars have widely
performance criteria when evaluating employees‟ established that there is a high correlation and
work based performance. This is also helpful in concurrent validity between objective and
evaluating the achievement of the organizational subjective data on performance, which implies that
goals as well as when developing strategic plans both are valid when calculating a firm‟s
for the organizations‟ future performance (Ittner & performance (e.g., Dess & Robinson, 1984;
Larcker, 2012). Venkatraman & Ramanujan, 1986). As seen in the
Although many studies have found that literature on organizational performance,
different companies in different countries tend to performance is all about achieving the objectives
emphasize on different objectives, literature that organizations/firms set for themselves. The
suggests financial profitability and growth to be the objectives of an organization/firm could be
most common measures of organizational financial, that is to say, profit-making or non-
performance. Conversely, researchers have argued financial such as spreading awareness about a
that no one definition is inherently superior to particular issue in a community.
another and the definition that a researcher adopts Organizational performance could be
should be based on the disciplinary framework categorized under two categories: financial and
adopted for the study (Cameron & Whetten, 1983). non-financial. The profitability of an organization
is an important financial indicator to reflect the
Measurement of Organizational Performance efficiency of the organization and the
The purpose of performance measurement owners/managers ability to increase sales while
is to assist in decision making and to understand keeping the variable costs down (Davis et al.,
progress towards meeting the outcomes of the 2000). Profit margin, return on assets, return on
Strategic Plan and Action Plans. Strategic Plans equity, return on investment, and return on sales
and Action Plans typically have associated are considered to be the common measures of
objectives. One of the more difficult tasks for financial profitability (Robinson, 1982; Galbraith
managers is identifying indicators that demonstrate & Schendel, 1983). Non-financial measures
progress towards achieving objectives. Moving include job satisfaction, organizational
towards this outcomes-based approach is no easy commitment, and employee turnover (Mowday,
task. Organizational performance has suffered Porter & Steers, 1982; Mayer & Schoorman, 1992;
from not only a definition problem, but also from a Hosmer, 1995; Rich, 1997; Zulkifli & Jamaluddin,
conceptual problem as stated by Hefferman and 2000).
Flood (2000). They stated that as a concept in Although there is a range of other
modern management, organizational performance behaviors that could be used for measuring
suffered from problems of conceptual clarity in a performance, Borman and Schmit (2012)
number of areas. The first was the area of definition emphasize judgmental and evaluative processes
while the second was that of measurement. The that take a great deal of action when defining
term performance was sometimes confused with performance. According to Ittner and Larcker
productivity. As opined by Hofer (1983), different (2012) organization performance is a broader
fields of study will and should use different concept whose indicators include productivity,
quality, consistency, efficiency as well as relative suggests that if an organization‟s culture is to

measures such as management development and contribute to or enhance performance, it must be
leadership training for building necessary skills and both “strong” and possess distinctive “traits”:
attitudes among the workers. Organizational particular values, beliefs, and shared behaviour
performance can also be conceptualized in terms of patterns. Some scholars have claimed that positive
net income, revenue, number of employees, cultural traits boost performance in proportion to
physical expansion, increased market share and the strength of their manifestation. This view has
financial sustainability (Kotter, 2012). According been called the strong culture hypothesis. (Denison,
to Richard (2013) organizational performance 1984) cited in Saffold (1988).
covers financial performance which includes Strong, powerful cultures have been hailed
profits, return on assets, return on investment, sales as keys to improved performance and as almost
volumes, market share and shareholder return. In always being the driving force behind continued
fact, the conceptualization of business performance success in businesses. Firms with strong culture are
in strategic management research usually revolved said to generate an almost tangible social force
around the use of financial indicators. Thus, field of energy that empowers employees and
indicators based on financial measures such as drives the organization toward superior
sales growth, profitability, and earnings per share performance. Several management researchers
have been used by researchers. have connected strongly shared values with
An organization‟s performance depends commitment, self-confidence, ethical behaviour,
on many factors, such as the efficiency of business and reduced job stress (Saffold, 1988).
processes, employee productivity, how effectively
organizations meet their objectives, the alignment It could be deduced from the above
among business functions, as well as those explanations that some firms may obtain sustained
functions‟ alignment with the organization‟s superior financial performance from their
strategy, and organizational culture and climate organizational cultures; firms without such cultures
(Smith, 2019). All of these contribute to how cannot expect to engage in managerial activities
efficiently an organization operates and how well it that generate such performance. According to
performs in the marketplace. Therefore, the Barney (1986) in order for a firm‟s culture to
organization‟s performance is a function of the provide sustained competitive advantages, and
potential return to the inculcation of strong culture thus, by implication, be a source of sustained
into the organization‟s systems enabling it to superior financial performance, three conditions
execute its routines (Rehman, 2012). must be met. First, the culture must be valuable; it
must enable a firm to do things and behave in ways
Organizational Culture and Performance that lead to high sales, low costs, high margins, or
Several writers argue that a strong in other ways add financial value to the firm.
corporate culture is good for business because it Because superior financial performance is an
serves three important functions. First, corporate economic concept, culture, to generate such
culture is a deeply embedded form of social control performance, must have positive economic
that influences employee decisions and behaviour. consequences. Second, the culture must be rare; it
Second, corporate culture is the social glue that must have attributes and characteristics that are not
bonds people together and makes them feel part of common to the cultures of a large number of other
the organizational experience. This social glue is firms. Finally, such a culture must be imperfectly
increasingly important as a way to attract new staff imitable; firms without these cultures cannot
and retain top performers. Finally, corporate engage in activities that will change their cultures
culture assists the sense-making process i.e., it to include the required characteristics, and if they
helps employees understand organizational events try to imitate these cultures, they will be at some
enabling them to communicate more efficiently and disadvantage (reputational, experience, etc).
effectively thereby reaching higher levels of Deal and Kennedy (1982) state that
cooperation with each other because they share cultures, both weak and strong, have powerful
common mental models of realities (McShane and influence on organisational behaviour. However,
Glinow, 2005). in strong cultures “everyone knows the goals and
The powerful, pervasive role culture plays strategic vision of the corporation, and they are
in shaping organizational life lends credibility to working together towards achieving them. Thus, in
speculations that cultural factors may be linked a strong culture employees‟ goals are aligned with
with exceptional levels of organizational management‟s goals while in a weak culture,
performance. A commonly hypothesized link
members‟ goals differ from management‟s strategic Hellriegel & Slocum, 2011). First, knowing the
direction. culture of an organization allows employees to
It could be drawn from all the understand both the organization‟s history and
explanations above that firms with sustained current methods of operation. This insight provides
superior financial performance typically are guidance about expected future behaviors. Second,
characterized by a strong set of core managerial organizational culture can foster commitment to the
values that define the ways they conduct business. organization‟s philosophy and values. This
It is these core values (about how to treat commitment generates shared feelings of working
employees, customers, suppliers, and others) that toward common goals. That is, organizations can
foster innovativeness and flexibility in firms; when achieve effectiveness only when employees share
they are linked with management control, they are values. Third, organizational culture, through its
thought to lead to sustained superior financial norms, serves as a control mechanism to channel
performance. Furthermore, Saffold (1988) behaviors toward desired and accepted behaviors.
identifies two relevant facts relating to This can also be accomplished by recruiting,
organizational culture and performance. First, selecting, and retaining employees whose values
culture can shape organizational processes, but best fit the values of the organization. Finally,
processes also act to create and modify culture. certain types of organizational cultures may be
Culture‟s contribution to performance is a related directly to greater effectiveness and
consequence of this ever-evolving interaction. productivity than others.
Secondly, it is likely that culture‟s link to
performance is considerably less straightforward Theoretical Foundation
than many studies imply. Several theories have been formulated to
According to McShane and Glinow show the inherent connection between
(2005), when a firm‟s strong culture is misaligned organizational practices and performance. For the
with its environment, it is unable to effectively purpose of this article, Schein‟s theory of
serve customers and other dominant stakeholders. organizational culture, Denison organization
Hence, a large amount of empirical evidence culture model and Theory of organizational
suggests that there are positive correlations excellence will be examined.
between organizational culture and market
performance (Homburg & Pflesser 2000), financial Schein's Theory of Organizational Culture
performance (Homburg & Pflesser 2000), The theory consists of three domains:
employee attitudes (Gregory et al. 2009), basic underlying assumptions, espoused values, and
knowledge management and organizational artifacts. Artifacts are the surface level of an
effectiveness (Zheng, Yang & Mclean 2010) as organizational culture, tangible, easily seen and felt
cited in Cui et al, (2018). which are manifested in the products, physical
environment, language, technology, clothing,
Effect of Organizational Culture on myths and stories, published values, rituals and
Organizational Performance ceremonies of the organization (James & Jones,
Organizational culture has the potential to 2005). Espoused beliefs and values include
enhance organizational performance, employee job strategies, goals, shared perceptions, shared
satisfaction, and the sense of certainty about assumptions, norms, beliefs and values instilled by
problem solving (Kotter, 2012). If an founders and leaders. According to James and
organizational culture becomes incongruent with Jones (2005) basic underlying assumptions are the
the changing expectations of its‟ internal and/or base level of organizational culture, and are the
external stakeholders, the organization‟s deeply-embedded, unconscious, taken for granted
effectiveness can decline (Ernst, 2001). assumptions that are shared with others Any
Organizational culture and performance clearly are challenge of these assumptions will result in
related (Kopelman, Brief, & Guzzo, 1990), anxiety and defensiveness which will affect the
although the evidence regarding the exact nature of stability that is necessary for good performance.
this relationship is mixed. Studies show that the Strong values in terms of clear goals and strategies
relationship between many cultural attributes and is undeniably required for good performance while
high performance has not been consistent over time and organization lacking in this aspect, manifest
(Denison, 1990; Sorenson, 2002). The effects of poor performance attributes. This theory suggests
organizational culture on employee behavior and that the basic artifacts, espoused values and
performance can be summarized based on four key underlying assumptions should be reflected in an
ideas (Bulach, Lunenburg, & Potter, 2012;
organizational culture so as to promote (Schein, 2010). This implies that business

organizational performance. managers are passionate and responsive to internal
and external factors and have the ability to modify
Denison Organizational Culture Model the existing organizational culture to accommodate
Denison (1990) identified four elements of necessary changes. The change includes improving
organizational culture model (a) involvement, (b) and modernizing internal departments and products
consistency, (c) adaptability, and (d) mission. in response to external competitions (Mousavi et
(Denison, 1990; Denison & Mishra, 1995; Gordon al., 2015). An effective organizational culture
& Di Tomaso, 1992; Kotter & Heskett, 1992). The includes a set of fundamental assumptions that the
four organizational culture model elements are members of the organization are exposed and
essential in developing and maintaining an developed in dealing with external adaptation
effective organizational culture in the organization problems (Cian & Cervai, 2014). In the adaptability
(Kotrba et al., 2012). Denison posits that principle, employees are susceptible to adapt,
involvement and consistency are internal factors in restructure, and reinstitute internal processes,
developing an effective organizational culture behaviors, and attitudes in response to external
while adaptability and mission are the external forces and demands (Denison, 1990). Adaptability
factors. Mousavi, Hosseini, and Hassanpour is a critical organizational cultural element in
(2015) noted involvement as a critical factor for promoting business performance (O‟Reilly et al.,
organizational culture effectiveness. Involvement 2014).
includes transparent communication, employee- Finally, in an effective organizational
focused leadership, and strong interpersonal culture, business managers define the organization
relationships in the organization (Engelen et al., mission by providing purpose and meaning to
2014). In an effective organizational culture, every major part of the organization‟s mission
business managers encourage high employee (Givens, 2012). The mission contains (a) clear
involvement and participation of members in major direction and vision, (b) strategic decision and
organizational activities (O‟Reilly et al., 2014). intent, and (c) goals and objectives of the
When employees participate in the organizational organization that members use to guide the
decision-making process, they develop a sense of activities of the organization (Mousavi et al.,
ownership, trust, and loyalty for the organization 2015). Business managers use the organization‟s
and become more responsible and accountable for mission and vision to determining the organization
their actions (Denison, 1990). A sense of short and long-term goals (Nongo & Ikyanyon1,
ownership and responsibility are part of the 2012). Organization mission is used to provide
effective organizational culture elements. Sense of appropriate direction to internal and external
ownership, trust, and loyalty are important factors stakeholders (Raza et al., 2014).
to motivating employees in the organization
(Kotrba et al.,2012). The study findings in the area The Theory of Organizational Excellence
of organizational culture show the existence of a The theory of organizational excellence
positive relationship between high employee was developed by Thomas Peters and Robert
involvement in decision-making process and Waterman (2014). The theory postulates that the
performance (Hacker, 2015). However, Givens culture that an organization adopts is directly
(2012) argued that a high level of involvement in linked to its success. Therefore, successful
various activities creates a lack of specialization, companies are characterized by cultural practices
where difficulty exists to identify the responsible which put emphasis on action, closeness to
person for the particular assignment. Research has customers, entrepreneurship, productivity, value
also shown that the existence of consistency in the based effort, simplicity, lean staff and economic
organization is a reflection of the organizational utilization of resources. This implies that
culture effectiveness (Givens, 2012). Givens (2012) organizations are likely to stay in businesses if their
agreed that consistency is one of the primary cultural values provide individuals associated with
factors to create a strong organizational culture and the organization room to perform. This also
improve employees‟ performance in the involves listening to and adopting employees and
organization. However, Nongo and Ikyanyon customers‟ suggestions, paying attention to their
(2012) argued that a high level of consistency in cultural variables and promoting and clarifying the
the organization does not directly affect employees‟ core values of the organization to the workers
commitment and performance in the organization. (Anis, 2011). In addition, strong cultural values in
Adaptability is the ability of business managers to an organization that emphasizes high achievement
perceive and respond to external environments levels for employees can provide individuals
throughout the organization room to operate in a backgrounds, workers appeared to have imbibed
manner that impacts on performance. the industrial way of life. The study further
indicated a strong association between the cultural
Empirical Support variables and level of commitment, staff attrition,
Some studies have been conducted in and positive attitude towards work. But these
relation to organizational culture and employee cultural variables did not translate directly to
performance in different organizations. Perters and improved organizational performance.
Waterman (1982) claimed that high performance In another study, Mba, Okechukwu and
firms could be distinguished from low performance Agwu (2013) investigated the effect of
firms because they possessed certain cultural traits organizational culture on employees‟ performance
and „strong culture‟. Similarly, Deal and Kennedy in the National Agency for Food and Drugs
(1982) suggested that organizational performance Administration and Control in Nigeria, and
can be enhanced by strong shared values. These reported that there was a significant relationship
suggestions were not accepted by Carrol (1982), between organizational culture and increased
Reyonds (1986), and Saffold (1988) as they felt the employees‟ commitment and productivity.
suggestions were to simple a model to relate In Mogadishu-Somalia, Abdulkadir,
organizational culture to performance. They Takow, Abdifitah and Osman (2014) studied the
opined that a more sophisticated understanding of effect of organizational culture on organizational
the tie between culture and performance must be performance at Telecommunication Firms. Using
developed. correlation coefficient, the study found that
Further studies carried out by Denison academic achievement had significant positive
(1990), Kotter and Heskett (1992) and Lee (2006), influence on competitive culture, entrepreneurial
cited in Asif & Sajjid (2010), found inconsistent culture and consensual culture. In another study by
results on the link between culture strengths and Fakhar, Iqbal and Gulzar (2014) on the impact of
organizational performance. Denison and Mishra organizational culture on employees‟ job
(1995) and the Strong Culture Theory were also performance in Software Houses in Pakistan,
criticized by other scholars. customer service, risk-taking and communication
Shakil (2012) studied the impact of system, participation, reward system and
organizational culture on management practices in innovation were found to have a positively
Pakistan with the aim of expanding understanding significant impact on organizational job
and testing the relationship between the performance.
components of organizational culture and In Kenya, Njugi and Agusioma (2014)
performance. Using regression and correlation studied the effect of organization culture on
analysis, the study found out that consistency and organizational performance in non-financial
adaptability were some of the cultural attributes institutions with a specific focus on World Vision
which significantly influenced management Kenya. Using a linear regression analysis to find
practices. Lorraine, Dorai and Zubair (2011) out how organizational culture correlated with
investigated the influence of organizational culture organizational performance, the study established
on performance management in insurance industry. that organizational culture significantly influenced
The study focused on five variables namely performance by enhancing organizational
adaptive perspective, communal, network, philosophy, work atmosphere, performance targets
mercenary and fragmented culture. The study and organizations stability.
established a link between organizational cultures Wairimu (2013) investigated the effect of
and management practices. However, the study organizational culture on organizational
reported that different types of organizational performance based on a case study of Wartsila-
cultures had varied acceptance levels of Kipevu II Power Plant in Kenya. The study
performance management. concluded that organizational ideals had a more
In Nigeria, Aluko (2004) sought to significant influence on organizational job
establish how culture influenced organizational performance, than the organization organizational
performance in textile companies. The study also performance as was hypothesized. Although the
attempted to determine the nature of the study established an overly positive relationship
relationship, the determinants of performance and between organization culture and organizational
the ways in which culture interacted with other performance, the effect differed in terms of work
factors within the companies. Using both procedures and systems having a significant impact
qualitative and quantitative methodologies, the on employees‟ performance.
study found out that irrespective of their cultural
The study by Muya, Ng‟ang‟a, Wesonga performance in commercial banks in Uasin Gishu
and Nyongesa (2011) on the impact of County reported that organizational culture as one
organizational culture on performance in learning of the many explanations for human behavior
institutions reported that every organization had a including job performance. The study also
culture which influenced people‟s attitudes and suggested that organizational culture was related to
behavior at work. employees‟ felt duty of helping the organization
A study by Byrne and Hochwarter (2012) but the responsibility was superior among
on the factors influencing employees‟ belief in the employees who approved the tradition of
care by their organization in Canada reported that reciprocity in employee-employer relationship.
employees‟ felt that their organization cared about Wamalwa‟s (2011) study on the effect of
their success and this increases their commitment organizational culture on work outcomes in
to the organization, help the organization selected commercial banks in Bungoma County
accomplish its goals and make them to be more demonstrated the need for financial institutions to
loyal to their organizations. Hence, they felt support employees. The study also found that
organizational culture is seen in job enrichment, employee response to organizational culture
organizational rewards, promotions, appreciation depended on the levels of employee commitment,
and involvement in policy formulation. professional needs and attitudes.
Another study by Noruzy (2013) From the above, the result of studies
investigated the link between workplace justice and carried out in the 80s and 90s showed inconsistent
organizational performance in Pakistan and results on the link between culture strengths and
revealed that organizational culture significantly organizational performance whereas the studies
influenced the organizational citizen behaviour and carried out later reported a positive interrelation
had meditating role between organizational justice between organization culture and organizational
and organizational citizenship behaviour. However, performance. This could be due to the developed
Eisenberger (2002) meta-analysis revealed a small interest shown in organisational culture as a result
association between organizational culture and of globalization. Managers are discovering ways to
employee work performance. achieve and maintain good operational
Yang (2010) examined the influence of performances which strong culture helps
job satisfaction on employee work performance in organizations to achieve. Several researchers have
commercial banks in India revealing minimal described organizational culture and organizational
influence of salary on job satisfaction. However, performance from other wider dimensions in other
the study exposed a strong link between job countries such as Nigeria, Pakistan and Somalia
satisfaction and happiness in comparison to (Shakil, 2012; Lorraine, 2011; Aluko, 2004; Mba,
salaries. This relationship suggested that rank was a 2013; Abdulkadir, 2014; Fakhar, 2014).
stronger predictor of employees‟ professional
achievements. In another study conducted among III. CONCLUSIONS
bank employees in Brazil by Nicanor (2014) The literature on organizational culture
established that employees‟ performance was and performance revealed that companies that
influenced by income and job satisfaction. A study know how to develop their cultures in an effective
by Dorman (2010) on the factors influencing way most probably have the benefit of
employee performance in Britain revealed that advancement in productivity and the quality of
organizational culture that embraced job work life among the employees. Indeed the study
satisfaction often declined with increase in of organizational culture and performance is
employees‟ level of education. This suggests that advantageous since cultural values are observable
employees‟ level of education negatively impacted and measurable. Thus in studying the effect of
on job satisfaction. culture on performance, it is vital that both
Wanyoike (2014) studied about the financial and non financial (cultural values, norms)
determinants of employee performance in banks in measures are used to get more comprehensive
Kenya, psychological empowerment and results. Indeed, employees must absorb the
organizational learning were found to have organizational culture at the maximum strength and
significant influence. The study recommended that top management should provide a precise guideline
bank‟s managers needed to understand the and direction to motivate the employees to leverage
motivations of their employees, their on the organizations culture to achieve the
commitment‟s level to the organization and ways company‟s objectives (Rehman, 2012).
of improving job performance. A study by Korir The review concludes that organizations
(2012) about the factors determining employee where culture determines how things are done,
where employees had a clear spelt out work ethics, Science Vol. 1 No. 3; December 2010,
were like-minded employees hold similar beliefs Researchgate, pp 26-46.
and values, guided by values of consistency, [6]. Belias, d., Koustelios, A., (2014).
adaptability and effective communication system, Organisational Culture and Job Satisfaction:
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that in organizations with strong cultural values, pp 132-149. ISSN 2146-4405
employees practice acceptable personal habits,
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strategic plan, in carrying out and completing work (2012). Creating a culture for high-
assigned to employees with regards to the desired performing schools: A comprehensive
standards, and committing maximum efforts to the approach to school reform (2nd ed.).
work leading to improved performance. Lanham, MD: Rowman & Littlefield
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organizational culture be enhanced in organizations line version vol.21 n.1 Pretoria 2018ISSN22
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Organizational Culture and Organizational Performance: A Review of

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Ngozi Evangeline Nneji Professor Olalekan Asikhia

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Organizational Culture and Organizational Performance:

ABSTRACT: Organizational culture is an Alshamari, (2017). Organizational culture can be

different opinions of performance as it continues to measures of organizational performance because of

quality, consistency, efficiency as well as relative suggests that if an organization‟s culture is to

organizational culture so as to promote (Schein, 2010). This implies that business

[47]. Robbins, S.P (1986), Organizational

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