The relationship between multidimensional organizational culture and performance

This paper aims to examine the relationship between the four cultural dimensions of the competing values framework (CVF) (group, developmental, hierarchical, and rational cultures) and four types of performance: product quality, process quality, product innovation, and process innovation. Theoretically, this represents the contrasts among the four quadrants of CVF in terms of their respective outcomes, with quality and innovation reflecting the contrast between control and flexibility orientations, and product and process reflecting the contrast between external and internal orientations.

Data were collected from 194 middle and senior managers of Australian firms who had knowledge of past and present organizational practices relating to quality and innovation‐related aspects in the organization.

Developmental culture was found to be the strongest predictor among the four cultural dimensions, as it shows relationships with three of the performance measures: product quality, product innovation, and process innovation. Rational culture shows a relationship with product quality, and along with group and hierarchical cultures, it also plays a role in predicting process quality.

The results provide key insights for managers to appropriately understand the fit between the culture and the strategic direction of the firm. The findings also encourage firms to appreciate the balanced view on what seems to be multiple cultural characteristics within the same organization.

By simultaneously examining the relationships between different cultural dimensions and different types of performance, this paper extends the previous empirical studies which linked CVF with a specific measure of performance.