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Organizational culture and firm effectiveness: An examination of relative effects of culture traits and the balanced culture hypothesis in an emerging economy

By Cengiz Yilmaz and Ercan Ergun

Abstract

Efforts to delineate the performance implications of organizational culture elements continue. The study examines the effects of four major organizational culture traits, involvement, consistency, adaptability, and mission, on measures of firm effectiveness, using data collected from manufacturing firms in Turkey. It is hypothesized that each cultural trait will exert positive effects on overall firm performance and a wide variety of effectiveness measures, independently from the effects of others. In addition, the view that a balanced combination of the four traits yields superior firm performance than an imbalanced combination is subjected to empirical testing. The results indicate that the mission trait is the most prominent of the four traits in terms of fostering overall firm performance, sales growth, market share growth, and ROA. In addition, a firm's ability to develop successful new products is influenced primarily by the adaptability and consistency traits. Employee satisfaction is determined for the most part by the involvement trait. Finally, while imbalanced combinations of certain pairs of cultural traits exert the expected negative effects on performance indicators, others seem to have positive effects.Adaptability Balanced culture Consistency Hypothesis Involvement Mission Organizational culture Organizational performance

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