Firm culture and performance: intensity's effects and limits

Abstract

Purpose

The aim of this paper is to clarify distinct aspects of firm culture, delineate its effects on performance outcomes, and to examine culture intensity on theoretic grounds with attention to its effects and limits.

Design/methodology/approach

The study analyzes a data set of 2,657 individual cases that are empirically aggregated into 302 organizational units. Its operationalization of culture intensity derives from distinct culture theory. Hypothesized relations are examined via structural equation modeling and hierarchical regression analysis.

Findings

Structural equation modeling results show culture relates positively to cooperation, coordination, and performance. Hierarchical regression analysis results show intensity influences cooperation and coordination directly and does not moderate culture's relations with those outcomes.

Research limitations/implications

The large scale empirical study of a broad diversity of firms has advantages over smaller and more targeted studies of lesser generalizability.

Practical implications

Firms with cultures of higher intensity can enhance performance indirectly by driving cooperation and coordination directly.

Social implications

Culture entails shared values and touches the human side of a firm. Managers can promote a firm's culture to enhance cooperation and coordination outcomes within that firm which, in turn, influence firm performance.

Originality/value

This study distinguishes culture from climate on conceptual grounds. Climate strength, an analog of culture intensity, is known to moderate climate's relations with outcomes. By contrast, this study shows that culture intensity has a main effect on outcomes, in line with culture's distinct theoretic bases.

Citation

Murphy, P.J., Cooke, R.A. and Lopez, Y. (2013), "Firm culture and performance: intensity's effects and limits", Management Decision, Vol. 51 No. 3, pp. 661-679. https://doi.org/10.1108/00251741311309715