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Linking Organizational Culture with Performance: The Mediator and the Moderator

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Linking Organizational Culture with Performance: The Mediator and the Moderator Authors: ZHANG Mian, YANG Baiyin, & LI Hai Reporter: LI Hai 2011-7-1, Budapest – PowerPoint PPT presentation

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Title: Linking Organizational Culture with Performance: The Mediator and the Moderator


1
Linking Organizational Culture with Performance
The Mediator and the Moderator
  • Authors ZHANG Mian, YANG Baiyin, LI Hai
  • Reporter LI Hai
  • 2011-7-1, Budapest

2
INTRODUCTION Gap and Problem
?
Organizational Culture
Performance
3
The purpose of this study
  • is to investigate the relationship between
    organizational cultures two functions (i.e.,
    external adaptation and internal integration) and
    firm performance
  • while centering on possible mediator and
    moderator.

4
MODEL
5
THEORIES
  • Why?
  • resource-based view (Barney 1986 1996)
  • dynamic capabilities theory (Teece et al. 1997
    Teece 2007)

6
resource-based view
  • This view posits that an organizations sustained
    competitive advantage derives from unique bundles
    of resources that are valuable, rare, imperfectly
    imitable and not substitutable (Barney 1991
    1996).

7
  • Internal integration comes from firm-specific
    bundles of cultural traits that are difficult if
    not impossible to imitate.
  • H1 Internal integration associates positively
    with firm performance.

8
dynamic capabilities theory
  • dynamic capabilities theory proposes that an
    organizations ability to integrate, build and
    reconfigure internal and external competences is
    critical to achieve congruence with the changing
    business environment (Teece 2007).

9
  • Organizations with adaptive culture can develop
    their human resources capability through
    absorbing new knowledge and experience from
    external environment.
  • In turn, the developed human resources capability
    will ultimately enhance a firms performance.
  • H2 Human resource capability mediates the
    positive association between external adaptation
    and firm performance.

10
The Moderating Role of Environmental Uncertainty
  • An organization with clear vision, mission and
    values is more likely to focus on its core
    resources and less distracted, thus usually has
    superior performance compared to its rival.
  • H3 Perceived environmental uncertainty
    moderates the positive relationship between
    internal integration and performance. The
    relationship between internal integration and
    performance in high level of environmental
    uncertainty is stronger than that in low level of
    environmental uncertainty.

11
  • In highly uncertain environment, an
    organizations adaptive culture is beneficial
    more to attract and retain talents as well as
    motivate its member.
  • H4 Perceived environmental uncertainty
    moderates the positive relationship between
    external adaptation and human resource
    capability. The relationship between external
    adaptation and performance in high level of
    environmental uncertainty is stronger than that
    in low level of environmental uncertainty.

12
METHOD Sample
  • top managers attending the courses of Executive
    Development Program (EDP) in a university located
    in a north metropolis, China.
  • 362 valid surveys
  • a valid response rate of 86.2 percent.

13
  • Among 362 sample organizations
  • the average number of employees was 5,430
    (SD16,999).
  • The average length of company history was 25.5
    years (SD27.5) and the average annual sales
    volume was 2.35 billion RMB (about 300 million US
    dollars SD7.36 billion RMB).
  • 52 percent were state-owned enterprises (SOEs),
    30 percent were private-owned companies, and 15
    percent were joint ventures or foreign-invested
    companies.

14
Measures
  • Five variables (perceived financial performance,
    human resource capability, internal integration,
    external adaptation, and perceived environmental
    uncertainty) were measured with well-established
    instruments.
  • Respondents reported their subjective perceptions
    for each of variables regarding to their
    organizations.

15
Testing Hypotheses
  • We assessed the hypothesized model with
    structural equation modeling technique using
    Jöreskog and Sörboms (1999) LISREL program.

16
  • We tested Hypotheses 1 and 2 with total sample.
    And compared hypothesized model with three
    alternative models.
  • As for Hypotheses 3 and 4, we conducted two-group
    comparisons with the SEM methodology (Williams,
    Edward, Vandenberg 2003 Williams, Vandenberg,
    Edwards 2009).
  • We divided the whole sample into two groups (high
    and low environmental uncertainty). Next, we
    estimated and compared the path coefficients in
    two groups.

17
RESULTS
Means, standard deviations and simple
correlations in the study
Variables M SD 1 2 3 4 5 6 7 8 9
1 Total employment 6.6 1.97
2 Company's history 26.6 27.49 0.32
3 Ownership type State-owned 0.5 0.50 0.23 0.38
4 Ownership type JV/foreign invested 0.2 0.36 0.04 -0.16 -0.42
5 Perceived environmental uncertainty 3.6 1.25 -0.07 -0.12 -0.16 0.00 (0.86)
6 Internal integration 3.0 0.81 0.12 0.02 0.06 -0.06 0.19 (0.87)
7 External adaptation 3.5 0.80 -0.14 -0.14 -0.19 -0.03 0.35 0.40 (0.83)
8 Human resource capability 3.1 0.86 -0.11 -0.15 -0.14 -0.09 0.09 0.37 0.56 (0.85)
9 Perceived financial performance 3.2 0.94 0.02 -0.10 -0.09 -0.11 0.18 0.26 0.41 0.57 (0.86)
Reliability coefficient alphas are presented in
diagonal in parentheses. p lt 0.05 p lt
0.01 p lt 0.001
18
Fit indices of structural models in the study
Structural models Description ?2 df ?2/df CFI NFI IFI RMSEA
Hypothesized model Figure 1 371.26 98 3.80 0.97 0.97 0.96 0.09
Alternative model 1 Figure 1 plus a path from internal integration ? human resource capability 368.20 97 3.80 0.97 0.97 0.96 0.09
Alternative model 2 Figure 1 plus a path from external adaptation ? performance 370.69 97 3.82 0.97 0.97 0.96 0.09
Alternative model 3 Figure 1 plus two paths internal integration ? human resource capability and external adaptation ? performance 367.48 96 3.83 0.97 0.97 0.96 0.09
19
Parameter estimates in structural model
Paths in Structural Model Samples Samples Samples
Paths in Structural Model Overall Sample Low PEU High PEU
Direct effects
Internal integration ? Firm performance 0.14(3.01) 0.08(.99) 0.29(4.57)
External adaptation ? Human resource capability 0.69(10.88) 0.72(8.38) 0.66(7.05)
Human resource capability ? Firm performance 0.64(9.85) 0.55(5.62) 0.66(7.61)
Correlation b/w internal integration external adaptation 0.52(11.67) 0.61(11.16) 0.45(6.26)
Testing Moderator of Environmental Uncertainty
Internal integration ? Performance c2(1) 4.49
External adaptation ? Human resource capability c2(1) 0.60 (n.s.)
20
H3
H1
H4
H2
H2
  • H4 not supported

21
  • Thanks
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