Organizational culture, diversity of performance measures and organizational performance

Abstract

This study aims to examine the relationship between the three variables namely, organizational culture, diversity of performance measures used and organizational performance. A total list (2122) of firms registered with the Federation of Malaysian Manufacturers Directory in the year 2006 was used as the sample for this study. Out of this list, 230 questionnaires were received back, that is equal to 10.8% of the targeted respondents. A survey was done using questionnaires to gather data from the respondents. The respondents were chief executive officers, chief financial controllers, managers or executives. The study proposed that there will be a direct relationship between organizational culture and diversity of performance measures used, between organizational culture and organizational performance; and an indirect relationship between organizational culture and organizational performance acting through diversity of performance measures used by organizations. Between the two types of organizational culture values i.e. flexibility culture values and control culture values; it was expected that flexibility culture values gave a dominant influence on the diversity of performance measures used and organizational performance rather than control culture values. The results of direct and indirect effects from this study indicated that there is a relationship between all the three variables. However, the results suggested that in Malaysia, having control culture values as dominant culture of an organization, supplemented by flexibility culture values gave higher contribution to the diversity of performance measures used and organizational performance. Diverse performance measures used that included financial and non financial measures were also found to have a relationship with better organizational performance. This study contributed by adding to the performance measurement system literature on the effect of organizational culture on diversity of performance measures and organizational performance in the context of developing countries.