Organizational Culture, Competitive Strategy, and Performance in Ghana

Abstract

The influence of competitive strategy on the organizational culture and performance relationship in Ghana is examined in this study using structural equation modeling. Results suggest evidence of both direct and indirect effects of organizational culture on firm performance. Firms with a predominantly clan or market culture were more likely to be directly associated with performance, whereas firms with adhocracy or hierarchy cultures were more likely to be indirectly associated with performance, depending on their alignment with a differentiation strategy or cost leadership strategy. However, only the link with differentiation strategy resulted in market performance. Managerial and theoretical implications are discussed.

Key words:

• competitive strategy
• Ghana
• organizational culture
• performance

Notes

*Not significant at p < .5 level.

Note. MKTPERF, Market performance; DIFFER, Differentiation Strategy; LOWCOST, Cost Leadership Strategy; CLAN, Clan culture; ADHO, Advocacy Culture; HIER, Hierarchy culture; MKTC, Market Culture; DOMEST = Domestic or foreign firm; SIZE, Size as measured by total number of employees in the organization.

^a Based on a 5 point Likert-type scale with never/strongly disagree = 1 to always/strongly agree = 5.

Note. C.R., Composite Reliability; AVE, Average Variance Reliability; S.V., Shared Variance.

I_DS-1: competitive advantage through superior products/services; I_DS-2: new product/service development; I_DS-3: building up a premium product/service or brand image; I_DS-4: building corporate reputation; I_DS-5: integrating branding with the overall strategy.

I_LS-1: pursuing operating efficiencies; I_LS-2: pursuing cost advantages in procurement; I_LS-3: pursuing economies of scale; I_LS-4: gaining market share through aggressive pricing of your products.

I_MP-1: new customers; I_MP-2: securing desired market share; I_MP-3: retaining current customers; I_MP-4: achieving customer satisfaction.

*Based on a 5-point Likert-type scale with never = 1 to always = 5.

VIF: variance inflation factor.

Note. For specific items, see the Appendix.

Cl_-1: the head of my division is very personal. People seem to share a lot of themselves; cl_-2: the head of division is generally considered to be a mentor, age or a father or mother figure; Cl-₃: the glue that holds my division together is loyalty and tradition. Commitment to firm runs high; Cl_-4: my division emphasizes high cohesion and moral in the firm.

Adh_-1: my division is very dynamic and entrepreneurial. People are willing to stick their necks out and take risks; Adh_-2: the head of my division is generally considered to be an entrepreneur, an innovator or a risk taker; Adh-₃: the glue that holds my division together is a commitment to innovation and development. There is an emphasis on being first; Adh_-4: my division emphasizes growth and acquiring new resources. Readiness to meet new challenges is important.

Mkt_-1: my division emphasizes procedures that govern employee activity; Mkt_-2: the head of my division is a producer, a technician, or a hard-driver. Mkt_-3: the glue that holds my division together is an emphasis on tasks and goal accomplishment. A production orientation is shared. Mkt_-4: my division emphasizes competitive actions and achievement. Measurable goals are important.

Hier_-1: my division is very formalized. Established procedures govern the employee activity; Mkt_-2: the head of y division is generally considered to be a coordinator, an organizer, or an administrator; Hier_-3: the glue that holds my division together is formal rules and policies; Mkt_-4: my division emphasizes permanence and stability, efficient, smooth operations are very important.

Source: Deshpande, R., J.U. Farley and F. E. Webster, Jr. (1993). Corporate culture, customer orientation and innovativeness. Journal of Marketing, 57 (Winter), 23–38.

***p < .001, **p < .01, *p < .05.

Note: Partial mediation is the mediation of competitive strategy to the influence of culture on market performance.

AIC: Akaike Information Criterion; BCAIC: Bozogan CAIC; SBC: Schwartz Bayesian Criterion.