ORGANIZATIONAL CULTURE AND PERFORMANCE - PROPOSING AND TESTING A MODEL

The purpose of this article is twofold: first, to propose and test a m odel concerning how an organization's culture affects organizational p erformance; and second, to demonstrate the application of LISREL model ing methodology to estimate and test this model. Organizational cultur e is hypothesized to consist of three interrelated dimensions: a socio cultural system of the perceived functioning of the organization's str ategies and practices, an organizational value system, and the collect ive beliefs of the individuals working within the organization. Organi zational culture is operationalized by several latent variables: organ izational structure and purpose, organizational values, task organizat ion, climate, and individual values and beliefs. These variables, in t urn, are hypothesized to affect organizational performance. Analysis o f data from 392 respondents who participated in the study confirms the fit of the proposed model to the data. The model presented in the stu dy represents an initial attempt to describe and evaluate the effects of various dimensions of organizational culture. It appears that the c omparison of visible aspects of culture across and within organization s can provide useful information for guiding the directions of organiz ations. By investigating the variables defined in this study further, it may eventually be possible to explain why some organizations are no t performing at desired levels of productivity. A methodological tool has also been presented in this article. It is clear that the applicat ion of structural equation modeling techniques can provide organizatio nal scientists with powerful analytic tools for furthering theory test ing and development. Structural modeling can be used to construct, est imate, and test a variety of models in organization science.