Firm Culture and Leadership as Firm Performance Predictors: a Resource-Based Perspective

Abstract

In this study, we tested part of the resource-based view of the firm by examining two 'soft' resources, firm culture and top leadership, as predictors of 'hard' or bottom-line firm performance.Transformational top leadership was found to predict firm performance directly while the link between firm culture and firm performance was indirect: via transformational top leadership.Firm culture was operationalized as the employees' views about the degree of optimization of four organizational practices (job autonomy, external orientational, interdepartmental orientation, and human resource orientation).We conclude that, rather than strong cultures, firms need best organizational practices and transformational leadership.Organizational culture;Leadership firm performance;Resource-based theory of the firm