Corporate culture and perceived business performance: A study of the relationship between the culture of an organization and perceptions of its financial and qualitative performance

While "corporate culture" has been touted as essential to business success in this turbulent time, until recently there was little proof of the link between the culture of a company and its performance.; Goals of this study were as follow: (a) to confirm the Denison Theory of Organizational Culture and Effectiveness; (b) to understand more about how specific culture traits affect specific performance factors; (c) to clarify how organization-wide agreement about culture (culture strength) relates to organizational performance; and (d) to judge the validity of using perceived qualitative corporate performance to predict perceived financial corporate performance.; The study utilized survey methodology to examine the culture-performance link in sixty companies of various industries, sizes, and sectors. Secondary data was utilized. The culture of each company was measured through ratings given by employees on four traits--involvement, consistency, adaptability, and mission. Performance was measured through perceptions of top managers in each company regarding profitability/return-on-assets (ROA), sales/revenue growth, market share, quality of products and services, product development/innovation, and employee satisfaction.; Findings showed the following: (a) There is a relationship between an organization's culture and its perceived performance; (b) It is unclear if there is a relationship between an organization's culture strength and its perceived performance; (c) Perceived qualitative performance factors in an organization serve to predict its perceived financial performance factors. The Denison theory was confirmed and the use of perceptions of top managers to measure actual corporate perfonnance was validated.; Quality and employee satisfaction were the performance factors most heavily impacted by culture traits; however, post hoc analysis showed that each of these "soft" measures were correlated with the "hard" factors of profitability/ROA and sales/revenue growth. These findings offer a strong argument for business leaders to improve financial performance, such as profitability and sales/revenue growth, by focusing on improvement of qualitative performance factors, such as quality and employee satisfaction.; Post hoc analysis showed that higher levels of the mission trait in an organization predicted to some degree higher performance in five of six performance areas; the involvement trait predicted performance in four of six areas; the adaptability trait predicted performance in three of six areas; the consistency trait predicted performance in two of six areas. It is therefore clear that business leaders setting out to improve their company's performance might be best served by first focusing on mission and involvement. To improve performance in all indicated areas, however, development in all four culture trait areas must ultimately occur.