1 How Cultural Factors Influence Organizational Performance: A Case Study of a Scientific Equipment Trading Company in Thailand Chayanoot Pungcharoenpong* National Institution of Development Administration [email protected]Gary N. McLean McLean Global Consulting, Inc. [email protected]*Corresponding Author: Graduate School of Human Resource Development National Institution of Development Administration 118 Moo3 Seri Thai Rd. Klongjan Bangkapi Bangkok 10240 Thailand Words: 4,764 Working Paper Stream: OD and Organizational Learning
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How Cultural Factors Influence Organizational Performance:
A Case Study of a Scientific Equipment Trading Company in Thailand
Chayanoot Pungcharoenpong*
National Institution of Development Administration
Organizational culture is an important factor that affects organizational performance.
Organizational culture is perceived as a way to get things done or common characteristics
of organizations shaping organizational members’ behaviors and enhanced (or impeded)
strategic achievement and performance. The purpose of this paper is to: 1) define the
organizational culture through employees’ perceptions and 2) explore how family-like
cultural factors impact on employee performance. Analysis was based on an explorative
case study approach from six in-depth interviews. All participants were selected based on
theoretical selection. The selection of participants depended on the diversity of employees’
positions and years of experience. As a result, the six interviewees ranged from top
executives to entry-level employees. The findings show that the way employees believed
the organization to be their home and perceived their colleagues as family members.
According to this value embedded in the organization, a family culture plays an important
role in creating attitudes and behaviors that can influence organizational performance.
Keywords: organizational culture, performance, family culture, Thailand
ORGANIZATIONAL CULTURE AND PERFORMANCE 3
How Cultural Factors Influence Organizational Performance:
A Case Study of a Scientific Equipment Trading Company in Thailand
For more than thirty years, organizational culture has been important due to an
increasingly competitive environment. Given the broad array of studies on this subject, the
concept is confusing due to differences in research foci, semantics, and methodologies
(Kotter & Heskett 1992, p. 9). Schein (1984, p. 3) provided a fundamental definition of
organizational culture:
Organizational culture is the pattern of basic assumptions that a given group has invented, discovered, or developed in learning to cope with its problems of external adaptation and internal integration, and that have worked well enough to be considered valid and, therefore, to be taught to new members as the collect way to perceive, think, and feel in relation to those problems.
As all cultural levels (i.e., visible artifacts, espoused values, and basic underlying
assumptions) are spontaneously interrelated, organizational culture is widely accepted as
core values and beliefs that guide and shape behaviors and practices (Kotter & Heskett
1992, p. 4; Schein 2009, p. 21). Organizational culture, therefore, is ‘the key to
organizational excellence’ (Schein 1984, p. 3). It is one of the most effective ways to
empower employees, attain legitimate strategies, and create vital behaviors in striving for
behaviors. Therefore, organizational culture is recognized as a key component to employee
motivation and customer satisfaction. For example, the significant relationship between job
ORGANIZATIONAL CULTURE AND PERFORMANCE 7
satisfaction and organizational performance is often synergistic with employee motivation
and organizational culture (Roos & Van Eeden 2008). This finding supports the results of
the work of Pantouvakis and Bouranta (2013) that organizational culture (i.e.,
organizational learning culture) indirectly creates a strong effect on customer satisfaction
via employee job satisfaction, when employees have a high level of educational
background.
Research Methodology and Methods
Based on a postmodernist epistemology, this study employed an exploratory case
study to provide an in-depth understanding of organizational culture and performance.
Research Strategy
A case study is used for various purposes—a thick description, theory testing, and
theory building (Eisenhardt, 1989, p.535). This methodological approach was appropriate
to choose as a case study allowed a combination of research methods to bolster
understanding of a phenomenon within a particular setting (Eisenhardt, 1989, p. 538).
Although there are several types of case studies (Yin 2014), in this study, an
exploratory case study explored possible causal links between organizational culture and
performance through dynamics presented in the context of a Thai scientific trading
company. A case study was useful in developing a nuanced view of reality. Human
behaviors could not be as clearly understood through rules-governed acts and theory as
human behaviors could be better to understand through real-life situations and the multiple
wealth of details provided through a case study (Flyvbjerg 2011, p. 303).
Research Methods
In this section the research setting, the data collection, and the data analysis methods
are reviewed.
ORGANIZATIONAL CULTURE AND PERFORMANCE 8
Research setting
Permission for the research and the necessary interviews was obtained from the
organization’s owners and its human resource offices. Participants were identified from the
employee database provided by the human resource office. This database provided full
information on all employees in the organization regarding names, positions, job titles, and
positions. It was important for this study to maintain confidentiality related to personal
information and anonymity of all participants’ interviews. This study, therefore, will refer
to the participants using a pseudonym in order to respect anonymity.
Selection
The participants were selected based on theoretical selection in order to generate
insight into how participants perceived the organizational culture to influence performance.
Therefore, the selection of participants was based on a diversity of positions and years of
experiences. The resulting six interviewees consisted of two top executives, one manager,
two supervisors, and one entry-level employee; there were four females and two males (see
Table 1).
ORGANIZATIONAL CULTURE AND PERFORMANCE 9
Table 1
A Brief Description of Each Participant
Name Gender Years of Experience Position
Anurak Male 33 Top Executive
Prapadsorn Female 28 Top Executive
Prapaporn Female 17 Manager
Rodjana Female 12 Supervisor
Prapod Male 14 Supervisor
Prapai Female 4 Entry-Level
Methods of data collection
As the main purpose of this study was to gain a rich descriptive insight into how
organizational culture influences organizational performance, an in-depth interview was
used.
Two open-ended questions were used as the main data collection method:
How do you describe your organizational culture?
How does this organizational culture affect performance?
Probing questions were used to develop deeper understanding about the perceived
relationship. The interviews were recorded with the permission of the interviewees in order
to ensure precise transcription.
ORGANIZATIONAL CULTURE AND PERFORMANCE 10
Methods of data analysis
This study followed the five-step process of content analysis suggested by Yin (2011,
p.177), which consequently highlighted the thick description of the meaning of
organizational culture in this context and an insight into how organizational culture had an
impact on performance within the organization. The first step was to organize the data
collection file. The second step was to immerse myself in the texts, reading and re-reading
them, and then applying open coding. The codes were then combined into categories and
built into themes. The fourth step was to use the analytical results developed from previous
step to create a new narrative. According to Yin (2011, p. 179), this step was considered as
initial interpretations that might lead to reassemble the data in some novel ways and later
became the critical analytic part of the draft manuscript. Lastly, the data were interpreted
and summarized in the findings. Meaning units reported in this paper were translated into
English.
Findings
Two aspects, consistent with the two questions asked, related to the impact of
organizational culture on organizational performance emerged. First is the meaning of
organizational culture, grounded in the context of a scientific equipment trading company.
Second is the process of how organizational culture was perceived to influence employees’
performance.
Meaning of Organizational Culture
All participants in this study described their organizational culture as being like a
family. They felt that their organization was their home, and their colleagues were their
brothers and sisters. The drive towards the sense of being a family was something they
could not explain; however, it was a sense of a strong relationship among employees and a
commitment to the organization. Prapod asserted: ‘The way of this organization is like
ORGANIZATIONAL CULTURE AND PERFORMANCE 11
being brothers and sisters. People are willing to help each other. This creates a unity within
an organization.
The Impact of Organizational Culture on Performance
The participants did not only explain what the family culture was to them, but they
also described positive consequences of the family culture. The four aspects of this
organizational culture impacting organizational performance were identified as: a)
developing a sense of ownership, b) encouraging a sense of service mind, c) developing
good teamwork, and d) fostering open communication within the organization.
Developing a sense of ownership
A sense of ownership was described as a commitment of employees to drive for
organizational success. The family culture provided a powerful effect that encouraged the
participants who had different backgrounds to share the same values and goals. Anurak
discussed his view of organizational values and performance: ‘This organization
encourages its employees to feel as the owner of the organization.’ Rodjana also explained
how she felt that the family culture affected organizational performance:
It is like we are family. It is important to pay attention to the organization in order to survive. If everyone thought this organization was their home, they had to do their best to look after their home. If everyone loved their home, they would do everything for their home.
Others, such as Prapadsorn, expressed her observation about her organizational
culture in this way:
Employees feel that they are part of the organization. It means that they are a key stakeholder who will benefit from organizational performance. This encourages employees to feel that they are the organization’s owners…we have employees who love and are loyal to the organization. These people have been working for the organization for a long time. They work hard to bring the bright future to this organization.
ORGANIZATIONAL CULTURE AND PERFORMANCE 12
Encouraging a sense of service mindedness
The participants spoke about the family culture as cultivating a sense of friendship
within the organization. Many participants described that a sense of friendship was rooted
in the family culture. It helped them love each other as brothers and sisters, and this was
expressed as a sense of willingness to help each other. Prapaporn spoke about the power of
the family culture, and she felt that the culture nurtured a sense of service in her
organization:
Here, we teach employees to be service minded. It is because we love each other, and we are brothers and sisters. This is how a sense of friendship is developed. We are, therefore, willing to service our internal and external customers. …Our way here is to provide excellent service. We were taught that we had to provide good service. Because we are a trading company, we have been taught to deal with customers' satisfaction by providing excellent service to both external customers and friends. It seems like our organizational culture is very helpful in this way.
Others, such as Rodjana, asserted that her good service was a key to organizational
excellence:
Having a service mind is important to lead our business successfully. If someone services us badly… if they do not talk to us nicely (not having a service mind), those services are not in our minds in a positive way. The customers will not want to remember or recommend our products/brands (or will talk about our products or brands negatively).
Developing good teamwork
Most participants agreed that the family culture was one important factor to develop
good teamwork. All positive components of a family culture (i.e., friendship, being service
minded, and unity) played a major role in creating excellent teamwork. Prapod expressed
himself as:
If the work flow stops, customers have to wait. If everyone understands each other, a job will run smoothly. If everybody understands the working process and has a service mind, … work will run quite smoothly.
Prapai also provided an example of her working experience, describing the power of
teamwork:
ORGANIZATIONAL CULTURE AND PERFORMANCE 13
We are able to work as a team because there is solidarity, and we know each other well and like to help each other. In my department, when people request help, we support each other step by step. For example, my position is a purchaser. After we purchase products, we transfer jobs to other teams. Everyone gives good cooperation, working as a team, so we succeed.
Many participants spoke of a sense of being brothers and sisters; they felt that this
relationship helped to unite people in the organization. It created powerful consequences
and was a key to organizational success. Prapod described his opinion towards this issue in
this way:
We are sisters and brothers, so we must help each other. Using good teamwork will strengthen organizational performance. For example, if we have disunity (i.e., the same as our country condition), it is hard to work together. In my opinion, if we have unity, and if we face small problems or big problems, we are able to go forward...to have a strong organization.
Fostering open communication within the organization
The participants explained that the family culture helped them to be able to
communicate their ideas openly. As the family culture cultivates a sense of ownership
within the organization, they felt that they were encouraged to give suggestions. A sense of
being a family encourages employees to feel like a part of the organization in order to
improve their organizational performance. Prapaporn explained open communication
within this organization in this way:
Our organizational culture is being like brothers and sisters. We have a clear organizational structure and positions, but we are more like a family…This culture encourages employees to help each other…It does not matter that employee position is only a message, but he is older than us. This organizational tradition is to respect elders. We communicate like an older brother talking to a younger sister, not a position.
Prapadsorn shared her experience that a sense of being brothers and sisters
motivated employees to point out organizational weaknesses:
If employees think we are the same family, they say what they see as problems even though those employees are from different departments. For example, there is someone telling me that someone forgets to turn the light off.
ORGANIZATIONAL CULTURE AND PERFORMANCE 14
Discussion
This study suggests that, at least for these employees in this context, organizational
culture (e.g., the family culture) is an effective tool to influence organizational
performance. According to Bay (1986), organizational culture can be a source to sustain
competitive advantage if firms’ cultures are ‘valuable, rare, and imperfectly imitable’ (p.
663). Organizational culture, therefore, is potentially a valuable resource for an
organization (Chan, Shaffer, & Snape 2004, p. 17).
Based on previous studies about organizational culture and performance (e.g.,