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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

[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

Copyright © 2014 Chayanoot Pungcharoenpong & Gary N. McLean

ORGANIZATIONAL CULTURE AND PERFORMANCE 2

Abstract

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


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

organizational success (Narver & Slater 1990, p. 21; O’Reilly & Chatman 1996, p.187).

The Importance and Purpose of Study

Many studies (e.g., Denison & Mishra 1995; Flamholtz 2001; Gordon & DiTomaso

1992) have focused on the relationship between organizational culture and performance.

However, there are few studies that have provided an in-depth understanding of how this

relationship influences organizational performance, especially in Thailand. Given the

assumption of postmodernist paradigms that emphasize ‘the impossibility of an ultimate

basic of knowledge’ (Hill 2008, p. 89), contextualization plays an important role in research


(Müller 2006, p. 312). Thus, to gain knowledge about the relationship between

organizational culture and performance, there is a need, within Thailand:

1. To define organizational culture with a focus on a Thai scientific equipment

trading company.

2. To investigate how cultural factors impact employee performance within the

selected scientific equipment trading company.

The Context of the Study

To study the impact of organizational cultural on organizational performance,

specifically in the context of Thailand, this study was conducted in the case of a scientific

equipment trading company. The organization has been successfully operating in this

industrial sector for over thirty years and employed more than two hundred employees. It

offered a great opportunity to understand the role of its organizational culture in influencing

its organizational performance, as well as to understand how this relationship exists in

Thailand.

Theoretical Framework

Most definitions of organizational culture emphasize shared assumptions that

influence employee behaviors (Schein 1984, pp. 3-4). However, Schein asserted that the

definition of organizational culture is more complex as it is a key to organizational success.

According to Schein, organizational culture is dynamic and evolutionary; it can be learned,

passed on, and changed over time. The structural model of organizational culture (the

iceberg or onion model) consists of three different domains, including: a) basic underlying

assumptions, b) espoused values, and c) visible artifacts. At the visible level, culture is seen

as symbolic but less decipherable as descriptive of the organizational culture. In contrast,

culture at the least visible level underlies the true reasons for latent behaviors and taken-for-

granted values and assumptions. This becomes a pattern that ties organizational members’


values and behaviors together. Organizational culture, therefore, is viewed as a social

control mechanism that determines patterns of organizational members’ values, thoughts,

and actions (O’Reilly & Chatman 1996, p. 160). This notion is supported by McGregor’s

Theory X, which assumes that employees need to be controlled in order for them to

perform (Carson 2005).

Based on Schein’s (1984) model, Homburg and Pflesser (2000) took a step in

theoretical development to address organizational culture and performance outcomes. They

found that visible artifacts play a critical role in determining employees’ behaviors in

satisfying customers’ needs and wants, as well as in the financial performance of

organizations. The theoretical model of Denison and Mishra (1995) agreed that

organizational culture has an important impact on organizational effectiveness, as there are

positive associations of each cultural trait with both subjective and objective measures of

profitability, quality, sales growth, satisfaction, and overall effectiveness.

Although it is clear that organizational culture has an important impact on

organizational outcomes, a good theory often incorporates multiple research approaches for

theorizing (Lynham 2000, p. 164). This leaves a window for this paper to use a qualitative

approach to enhance and extend an understanding of the relationship between

organizational culture and performance, specifically highlighting impact of possible latent

variables on organizational performance in the context of Thailand. Therefore, the research

question for this study was: How are organizational cultural factors perceived to influence

organizational performance in one organization in Thailand?

Literature Review

Although the culture-performance link seems to be obscure due to the lack of a

consensual definition (O’Reilly & Chatman 1996, p. 159), most investigations have focused

on measuring the power of organizational culture through economic performance,


management practices, and an ability to motivate employees and satisfy customers. This

section therefore discusses the literature on these topics.

Effect of Organizational Culture on the Bottom Line

There have been many studies (e.g., Calori & Sarnin 1991; Denison 1984;

Flamholtz 2001; Gordon & DoTomaso 1992; Kotter & Hesket, 1992) exploring the impact

of organizational culture. Most studies have suggested the existence of a strong connection

between culture and performance. However, the studies of Calori and Sarnin (1991) and

Kotter and Heskett (1992, pp. 15-57) argued that there are only some circumstances

supporting the conclusion that a strong culture can achieve a relatively high growth in

performance. In short, organizational cultures can affect long-term economic performance

if culture appropriately fits with the business environment and enhance corporate strategies

and alignment among organizational members.

Impact of Organizational Culture on Management Practices

A vast array of studies (e.g., Baird, Hu, & Reeve 2011; Ehtesham, Mahammad, &

Mahammad 2011; Prajogo & McDermott 2005) has supported the importance of managing

organizational culture and the impact of organizational culture on quality management

programs. Also, organizational culture is recognized as ‘a significant input to effective

knowledge management and organizational learning’ (Janz & Prasarnphanich 2003, p.

353), especially when organizational values are aligned with knowledge management

behaviors and outcomes (Alavi, Kayworth, & Leidner 2005-6, p. 197).

Impact of Organizational Culture on Employee Motivation and Customer Satisfaction

According to Alvesson (2002, pp. 3-6), organizational culture is viewed as

providing implicit organizational guidelines influencing organizational members’

behaviors. Therefore, organizational culture is recognized as a key component to employee

motivation and customer satisfaction. For example, the significant relationship between job


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.


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).


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.


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


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.


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:


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.


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.,

Alavi, Kayworth, & Leidner 2005; Baird, Hu, & Reeve,2011; Kotter & Heskett,1992;

Pantouvakis & Bouranta 2013), organizational culture can have a powerful impact on an

organization’s bottom line, management practices, employees’ motivation, and customers’

satisfaction. The findings of this study further highlight latent elements that influence

organizational performance, such as a sense of ownership, service mindedness, teamwork,

and open communication. Kim and Bang (2013) asserted that these attributes are key

characteristics of high-performance organizations.

Research Limitations

This study was grounded in a qualitative research approach. The findings in this

study are, therefore, limited in the scope of a scientific trading company in Thailand. The

intent of this study was to determine if the experiences of the employees in one

organization in this context support the relationship of organizational culture with

performance (Denison & Mishra 1995; Homburg & Pflesser 2000). Also, because a

postmodernist epistemology was used, knowledge produced in this study will be difficult

for positivists to accept because of their presumption of an independent role between

researchers and objects (Guba & Lincoln 1994, p. 112). The insights of this study are

interpreted according to a subjective view of researchers (Grbich 2013, p. 8). While we


view this as a strength, others may not. Finally, although Schein (1984, p. 3) recommended

interviews as an effective way to understand employees’ behaviors, this study did not

incorporate other methods, such as observation, to delve more deeply into Schein’s iceberg

model, such as basic underlying assumptions

Future Research

Future research may include:

Replicating the study in Thai high-performance organizations operating in a

variety of industries in order to gain in-depth understanding the impact of

cultural elements on organizational performance.

Replicating the study on family businesses, as family controlled-businesses

seem to have long-term success (Miller & Le Breton-Miller 2005, p. 13).

Studying the relationship of cultural elements and performance using a

quantitative method in order to suggest possible generalizations.

Developing a Thai-based theory of organizational culture and performance, as

all studies on this topic appear to have been grounded in a western context.

Practical Implications

Because this study employed an exploratory case study approach, no generalizations

are possible. Therefore, the knowledge from this study may be useful in helping the study

organization and other organizations to reflect on the findings to determine the relevance of

the experiences expressed by these employees. Such reflection might underscore how

important organizational culture is to organizations in Thailand and may help them to

identify other factors of culture that might influence organizational performance.

Social Implications

While the findings of this study cannot be generalized, this study may be fruitful in

the Thai society as:


This study can be used as an example of how organizational culture might

influence organizational performance. This may encourage Thai organizations to

understand the value of organizational culture. It is hoped that, by adopting an

appropriate culture, organizations will potentially gain competitive advantage.

Organizational culture may be a principle factor that may contribute to

organizational success because it can influence employees’ behaviors. For

example, this research pointed out that culture can create a sense of ownership,

service mindedness, teamwork, and open communication in workplace. These

latent variables can therefore stimulate organizational performance and affect

national economic growth (Bergheim 2008, p. 35).

As organizational culture is generally accepted as a key to organizational

excellence, it is possible to think that organizations with a positive

organizational culture are more likely to act ethically.

Originality/Value

Given strong evidence in the literature of the relationship between organizational

culture and performance, this study extends our understanding of this relationship by

highlighting the impact of cultural elements on organizational performance in the context of

Thailand. Through an exploratory case study, we have illustrated that the family culture

can enhance organizational performance through developing a sense of ownership,

teamwork, service mindedness, and open commination in the workplace.

Organizational culture can create powerful consequences for an organization. This

study illustrates an example of the family culture cultivated in the context of a Thai

scientific trading organization. In this context, the family culture was a pervasive pattern of

behaviors that employees perceived in their organization as a home, viewing their

colleagues as their own brothers and sisters. In this regard, the family culture plays an


important role in enhancing organizational performance in several ways, including

cultivating a sense of ownership, teamwork, service mindedness, and open communication

in workplace.


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Denison, D - UFHRD Web viewImpact of Organizational Culture on Employee Motivation ... A sense of ownership was described as a commitment of employees to drive for organizational