aritcles

Article

Global Business Review 18(3) 691–702

© 2017 IMI SAGE Publications

sagepub.in/home.nav DOI: 10.1177/0972150917692185

http://gbr.sagepub.com

1 Research Scholar, Department of Humanities and Social Sciences, Indian Institute of Technology Kharagpur, Kharagpur, West Bengal, India. 2 Professor, Department of Humanities and Social Sciences, Indian Institute of Technology Kharagpur, Kharagpur, West Bengal, India.

Corresponding author: Jyotiranjan Gochhayat, Research Scholar, Department of Humanities and Social Sciences, Indian Institute of Technology Kharagpur, Kharagpur 721302, West Bengal, India. E-mail: [email protected]

Influence of Organizational Culture on Organizational Effectiveness: The Mediating Role of Organizational Communication

Jyotiranjan Gochhayat1

Vijai N. Giri2

Damodar Suar2

Abstract

Cultures have been found to predict the organizational effectiveness (OE). This article explores how a strong or weak organizational culture (OCL), irrespective of its taxonomy, affects OE in Indian techni- cal education. It also examines the mediating role of organizational communication (OCM). Data were collected from 167 heads of engineering and management schools on OCL and OE and 334 of their subordinates on OCM through a questionnaire survey. Results indicate that organizations with a strong and deep-rooted culture perform more effectively than organizations with a weak culture. The effect of OCL passes to institutional effectiveness through OCM. Hence, higher educational institutions need to focus on strengthening OCL and OCM in order to improve their effectiveness.

Keywords

Communication, higher educational institutions, organizational effectiveness, strength of culture

Introduction

Culture is expressed in fundamental beliefs, assumptions, attitudes, values, artefacts and behaviours of organizational members. Different types of cultures have predicted organizational effectiveness (OE) differently (Carmeli & Tishler, 2004; Denison & Mishra, 1995; Powell & Dent-Micallef, 1997). Along with possessing distinctive attributes, values, beliefs and behaviour patterns, it is essential that the culture be ‘strong’ in order to achieve higher OE (Smart & St. John, 1996). While different cultural dimensions

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have been found to affect OE, this article explores how a strong or a weak organizational culture (OCL) affects OE in the Indian technical education.

The next section critically reviews the substantive literature, derives the objectives, rationale and states the conceptual model. Subsequent sections deal with the method, results and discussion. The final part of the discussion section contains limitations and conclusion.

Review of Literature

Organizational Culture

Organizational culture is all about the values (Broms & Gahmberg, 1983), beliefs, shared meanings (Davis, 1984), assumptions (Schein, 1992), codes of behaviour, practices, procedures and rituals in an organization (Ghosh & Srivastava, 2014; Martin, 1992; Nguyen & Aoyama, 2014). It is reflected in vision and mission statements, the attitudes and behaviours of employees, and the organization’s manner of functioning. It is the glue that holds the members of the organization together, leading to higher performance (Goffee & Jones, 1996; Wilkins & Ouchi, 1983) and effectiveness.

The building of a culture is never instantaneous. The founder’s vision and mission reflect his/her values and beliefs and lead to formation of the early culture of the organization. During the selection process, recruiters prefer individuals who have values similar to those the organization preaches and practices (Adkins, Russell & Werbel, 1994). After joining, the organizational values are inculcated in newcomers through training, mentoring, counselling, interaction with seniors, participation in organiza- tional events and encounters with organizational issues and problems (Suar & Khuntia, 2010). The new hires are socialized in the organization. Thus, the culture transmits to the newcomers and grows through- out the organization.

Culture has been categorized as clans, markets and bureaucracies (Ouchi, 1980) and as material or objective and ideational or subjective (Buono, Bowditch & Lewis, 1985). Based on values, cultures have also been classified as individualistic or collectivist, masculine or feminine, high or low power distance, high or low uncertainty avoidance, long-term or short-term orientation (Hofstede, 1980), universalism or particularism, neutral or affective and achievement- or ascription-oriented (Trompenaars, 1993). Triandis (1998) classified the culture of people in the globe into four species, juxtaposing absence (horizontal) or presence (vertical) of power distance against individualism and collectivism. In the absence (presence) of power distance, people were horizontal (vertical) individualists and collectivists. Cultures are further classified on the basis of visible organizational processes, espoused values, and underlying assumptions (Schein, 1992). Sinha (1990) has classified Indian work culture as soft, technocratic and work-centric nurturant culture. These classifications are based on the dominant cultural dimensions present within the organization. Evidence suggests that OE is associated with a dominant culture type (Ogbonna & Harris, 2000; Ouchi, 1980). Furthermore, some culture types are better predictor of OE than others (Wilkins & Ouchi, 1983). However, these different cultures can be weak or strong (Deal & Kennedy, 1982; Peters & Waterman, 1982). A strong (weak) culture can be associated positively (negatively) with OE (Duke II & Edet, 2012), irrespective of the relationship between the cultural dimensions and OE.

A culture can be called strong or weak based on the degree of employees’ agreement with, commitment towards and congruence with organizational values, norms, artefacts and practices (DelCampo, 2006; O’Reilly & Chatman, 1996; Smart & St. John, 1996; Sorensen, 2002). The more the organizational members agree on, widely share and remain committed to a set of common values and practices, the stronger the culture tends to be (Gordon & DiTomaso, 1992; Kotter & Heskett, 1992; O’Reilly, 1989).

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Wide involvement of the organizational members in procedures, customs and practices make the culture even stronger. A strong culture has values and practices which are followed and shared by organizational members (DelCampo, 2006). It provides guidance about what is important and what needs to be done in the best interest of the organization.

Organizational Culture and Organizational Effectiveness

Broad agreement on certain behaviours aids in faster detection and correction of violations of norms, practices and procedures (Sorensen, 2002). Employees face less uncertainty about the proper course of action and can react more appropriately and quickly in unexpected situations (Burt et al., 1994). Wide agreement on norms, practices and procedures among organizational members enhances goal alignment and establishes clarity about goals and practices (Sorensen, 2002). Goal alignment facilitates coordination among employees’ efforts, goals and practices, leaving less scope for diversion of different views about the organization’s best interests (Cremer, 1993; Hermalin, 2001). When there is a wide consensus on values, norms, practices and goals, employees tend to act more consistently with these beliefs.

New members are socialized faster and can quickly be brought into coordination with older employees due to a wider consensus of beliefs, greater normative pressure and non-conflicting nature of the firm’s goals and practices (Burt et al., 1994; Harrison & Carroll, 1991). Alignment of core values and beliefs obtains a high degree of integration and coordination (Denison, 1990). Such an alignment between espoused beliefs and actual practices enhances organizational performance. A shared sense of purpose, direction and strategy can foster organizational identification and strengthen organizational members’ actions towards organizational vision enhancing OE. Therefore, a stronger OCL will propel for higher OE.

Organizational Culture and Organizational Communication

Literature suggests that organizational communication (OCM) tends to play an important role in the relationship between OCL and OE. Organizational communication—including managerial, interpersonal and other forms of communication—carries policies, strategies, instructions and information across the organization. In a strong OCL, there is a consensus on values and practices. Frequent discussion, interaction among organizational members and the use of social media to reach consensus and eliminate divergences are very likely to enhance the communication climate in the organization. Congruence between beliefs and practices facilitates the exchange of information, and the ability to carry out coordinated actions (Denison, 1990) across all levels. Precise information related to organizational goals, policies, strategies, values and practices improves OCM. Similarly, clearly set and strongly held values and practices facilitate feedback on organizational and individual activities as well as quick responses to any deviations. Hence, it is more likely that a strong OCL will positively associate with better OCM.

Organizational Communication and Organizational Effectiveness

Organizational communication provides direction to the organization and its members. It provides answers to all questions, clears up confusion, provides guidance and motivates all for the attainment of organizational goals. It builds professional relations, minimizes conflicts and fosters cooperation.

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It helps the organization to enforce rules, regulations and norms, and maintain discipline. Furthermore, leadership works through communication. Communication helps the leaders to reach the followers and motivate them for the attainment of the vision, mission and goals of the organization. The vision and mission of an organization may not yield that result if these are not communicated properly within the organization. Stimulating and inspiring communication helps organizational members to realize values and mission statements rather than being compelled to follow them. Media channels, such as publications, memos, meetings and notices, play an important role in communicating a precise and clear message. Furthermore, the availability of information about the organization, its goals and its performance will help to the employees follow the policies and practices of the organization, resulting in better coordination and higher effectiveness. Similarly, a feedback process in which everyone receives knowledge of results, comments and suggestions over their performance in the organization will minimize the chances of any deviation from standard practices and goals, thus contributing to OE (Raina, 2010). Therefore, it is more likely that improved OCM among employees will further OE.

Mediation of Organizational Communication

From the above discussion, it is clear that a strong OCL paves the way for better OCM, and in turn, OCM influences OE. It is plausible that the effect of a strong culture can pass through OCM to predict OE.

To examine such mediating/intervening effects of OCM between OCL and OE, Baron and Kenny (1986) suggested four steps. First, the independent variable of OCL would predict the dependent variable of OE. Second, the independent variable would predict the mediating variables of OCM. Third, the mediator would predict the dependent variable. In the fourth step, when the independent variable and the mediator would jointly explain the OE, the effect of the independent variable explaining OE will decrease (partial mediation) or nullify (full mediation) compared to the first step. The last step rationalizes that the mediating variable explains fully or partly the relation between independent and dependent variables. The extent of mediation would be estimated by multiplying the two indirect standardized path coefficients between OCL-OCM and OCM-OE and dividing that by the total effect of OCL on OE found in the first step. Such an analysis will specify whether OCM is a vehicle through which the effects of OCL are carried over to OE.

Objectives and Rationale

Based on the above discussion, there are two objectives of the study. The first objective is to test the direct effect of OCL on OE, and the second one, as contrasting to the first one, is to examine the indirect effect of OCL on OE via OCM.

In contemporary situations, Indian higher educational institutions have a culturally diverse population of students, teachers and non-teaching staff, with different work values, attitudes and practices. The varied facets of sociocultural aspects are deeply rooted in Indians and form their work-related cognition, affects (Biswas, 2009; Rao & Abraham, 2003), perceptions, attitudes and behaviours (Sengupta & Sinha, 2005). Employees and students, after joining a higher educational institute, may deviate from their sociocultural values and build consensus on some common values and practices for the organization. However, the difference in these shared values and actual practices makes the OCL weak and are likely to predict OE poorly. Contrarily, the congruency in shared values and practices will make the OCL strong and will predict OE highly. Accordingly, this study intends to examine the direct strength of OCL

Gochhayat et al. 695

on OE as well as the indirect strength of OCL via OCM on OE in higher educational institutions in India. The conceptual models describing the two objectives are shown in Figure 1.

Method

Sample

Data were collected from the heads of selected technical and management institutions (directors, principals and deans) in India and two of their subordinates (department heads and professors) through a questionnaire survey in person and online using a Google form. Of the 1,220 higher technical institutes in Odisha, West Bengal, Uttar Pradesh and Delhi, the researcher approached the heads of 190 randomly selected institutions in Bhubaneswar, Odisha; Kolkata, West Bengal; Greater Noida, Uttar Pradesh; and in Delhi, and 540 subordinates therein who were professors or associate/assistant professors. They were briefed on the purpose of the study, given the questionnaire and asked to return the completed questionnaire in a 2-week period. The heads of 49 colleges and 130 professors or associate/assistant professors returned completed questionnaires after repeated requests.

Because of inadequate responses, emails were sent to the heads and subordinates of different engineering and management institutes selected randomly from 4,160 institutes in the states of Andhra Pradesh, Karnataka, Kerala, Madhya Pradesh, Tamil Nadu and Uttar Pradesh in India. With a cover letter, 633 heads and 1,899 professors and associate/assistant professors of the same institutes were approached to complete the questionnaire in an online form. Finally, 131 heads’ responses and 339 subordinates’ responses were received.

Out of 180 (131 + 49) responses from the heads of the institutes and 469 (339 + 130) responses from the subordinates, 167 responses from the heads—whose respective 334 subordinate responses were available and complete—were considered. The total sample consisted of 167 leaders and 334 subordinates

Figure 1. Conceptual Models with Objectives

Source: Prepared by the authors.

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from those colleges. The indexes of inter-rater agreement (rwg) and inter-rater reliability (ICC(1)) were calculated for OCM items. The median rwg values ranged from 0.85 to 0.89, indicating good agreement between raters. The values for ICC(1) ranged from 0.87 to 0.91, suggesting good inter-rater reliability. Accordingly, the responses of two subordinates of a leader from each institute were averaged to form a single response to be analyzed along with the responses from the head of the institution because the organization was the unit of the sample.

Of the respondents, 154 (92.21 per cent) heads of the institutions and 261 (78.14 per cent) subordinates were men. The leaders’ average age was 52.53 years, and the subordinates’ average age was 40.59 years. For the leaders, the average years of professional experience in teaching and years of education in formal educational institutions were 27.46 years and 19.41 years, respectively. For subordinates, the average years of professional experience in teaching and years of education were 17.89 and 18.79 years, respectively.

Measures

The survey instrument was developed in two parts. The first part was for the head of the institution, and it contained inventories to assess OCL and OE. The second part of the survey was for the subordinates who worked under the head, and it assessed OCM.

OE

Mott’s effectiveness questionnaire (1972) was adapted. It was modified before use to suit the educational sector. A sample item includes, ‘Do the people in your institution seem to get maximum output from the resources (money, people, equipment, etc.) available? That is, how efficiently do they do their work?’ Two more items were added to the quality of teaching and research. The inventory had 10 items. The responses ranged from ‘very low (1)’ to ‘very high (5)’. When responses to 10 items were analyzed using confirmatory factor analysis, all items loaded significantly on one factor (standardized loading range = 0.33 (p < 0.001) to 0.67). One poorly performing item in the inventory that had standardized loading below 0.40 was dropped. When the analysis was rerun with the responses to the remaining nine items, all items loaded significantly on one factor (standardized loading range = 0.43 (p < 0.001) to 0.72), and the average variance extracted was 0.33. The one-factor model had acceptable fit indices (χ2/df = 2.49, CFI = 0.92, GFI = 0.93, RMSEA = 0.09). The items had low convergent validity but high construct reliability (0.82).

Organizational Culture

This was measured in terms of the involvement of organizational members in organizational practices and processes, consistency in behaviour and clarity in values. Accordingly, items on involvement, consistency and mission were adopted from Dension’s OCL survey instrument (Dension & Neale, 1999). To suit the Indian context, the items were given to three experts. Twenty-seven out of 45 items agreed upon by the experts were retained on three dimensions. A sample item includes, ‘There is a clear and consistent set of values that governs the way we run our organization.’ The responses ranged from ‘strongly disagree (1)’ to ‘strongly agree (5)’. When the 27 items were analyzed using confirmatory factor analysis, all items except three loaded significantly on respective factors (standardized loading range = 0.20 [p < 0.03] to 0.78 [0.001]). Seven poorly performing items in the inventory that had standardized loadings below 0.40—including the earlier three insignificantly loaded items—were dropped. When the analysis was rerun with the responses to the remaining 20 items on three dimensions,

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all items loaded significantly on respective factors (standardized loading range = 0.43 [p < 0.001] to 0.75). The average variances extracted for involvement, consistency and mission were 0.45, 0.29 and 0.39, respectively. The square root of the average variance extracted of each dimension was larger than their correlations with other dimensions suggesting its discriminant validity, but the dimensions had low convergent validity as the average variances extracted for each dimension was below 0.5. The construct reliability of three dimensions ranged from 0.74 to 0.85. The three-factor model had acceptable fit indices (χ2/df = 2.91, CFI = 0.78, GFI = 0.78, RMSEA = 0.11). The average scores of the items on each dimension were used as indicators of the latent variable of OCL.

Organizational Communication

The communication satisfaction questionnaire (Downs & Hazen, 1977) was used to measure the organization’s communication process. It contained 32 items on 8 dimensions: (i) organizational integration, (ii) organizational perspective, (iii) personal feedback, (iv) media quality, (v) horizontal and informal communication, (vi) communication climate, (vii) relationship with subordinates and (viii) relationship with superiors. A sample item includes, ‘Extent to which conflicts are handled appropriately through proper communication channels’. The responses ranged from ‘highly dissatisfied (1)’ to ‘highly satisfied (5)’. When the scores of 32 items were analyzed using confirmatory factor analysis, all items except one loaded significantly on respective factors (standardized loading range = 0.22 (p < 0.002) to 0.81 (p < 0.001)). Six poorly performing items in the inventory that had standardized loadings below 0.40 were dropped. When the analysis was rerun with the responses to the remaining 26 items on eight dimensions, all items loaded significantly on respective factors (standardized loading range = 0.43 [p < 0.001] to 0.75). The average variances extracted for eight dimensions were between 0.28 and 0.44. The square root of the average variance extracted of each factor was larger than their correlations with other factors. The dimensions had high discriminant validity but had low convergent validity. The construct reliability of the eight dimensions ranged from 0.53 to 0.70. The eight-factor model had acceptable fit indices (χ2/df = 1.63, CFI = 0.77, GFI = 0.83, RMSEA = 0.06). The average scores of the items on each dimension were used as indicators for the latent variable OCM.

Results and Discussion

The descriptive statistics and Pearson correlations of the dimensions of the studied variables are reported in Table 1. All dimensions of OCL related positively with seven dimensions of OCM except organizational perspective. Organizational perspective, being a dimension of OCM, directly correlated only with consistency and did not relate to the involvement and mission of OCL. Barring an exception, the dimensions of a construct were interrelated. All dimensions of OCL and OCM related with OE.

Because correlations did not reveal the antecedent–consequent relationships, a hybrid path analysis was carried out using AMOS 20. Organizational effectiveness was the endogenous observed variable, and the other two were latent constructs.

OCL positively predicted OE and OCM, and OCM in turn positively predicted OE. These results for the first three steps of mediator analysis are reported in Table 2. In the full model (Figure 1), when OCM and OCL were explanatory variables, the strength of OCL predicting OE decreased compared to the first step. Therefore, it is concluded that OCM partially mediated the relations of OCL with OE. The mediating effect of OCM was found to be 53.40 per cent. The findings derived from the structural regression model had acceptable fit indices (χ2/df = 1.57, GFI = 0.93, CFI = 0.94, RMSEA = 0.06).

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Gochhayat et al. 699

This study examined the effect of OCL on OE with the mediating effect of OCM in higher technical institutions. Results suggest that the stronger the OCL, the higher the OE. Strong culture paves the way for better communication in the organization, and better communication enhances OE, implying that OCL impacts OE through OCM.

Organizational culture leads to increased employee participation and consensus on strategic matters, which provide aligned perspectives between organizational and individual objectives (Peters & Waterman, 1982). Wider agreement on values, practices, mission and goals are crucial for a culture to lead to effectiveness. When the culture is widely shared and practiced, it provides a collaborative and free-standing environment making individual and organizational abilities useful. In a culture with both intensity and consensus, organizational members come to know and share a common set of beliefs and expectations that are consistently valued and followed across the institution. This consistency in values and their reinforcement contributes to OE. Hence, a few core values, accepted, shared and practiced can form a strong culture (O’Reilly, 1989), contributing to OE.

Free flow of information on organizational values, beliefs, practices and goals enhances an environment of free communication in the organization. Interactions, discussions and arguments to reach consensus on issues tend to minimize differences and promote communication in the organization. The involvement of members in organizational customs and practices contributes to better professional relationship among all, irrespective of departments and levels, contributing to a healthier communication in the organization.

Better communication establishes a clear set of rules and regulations for all stakeholders of the organization. It leads to clear expectations that convey what is expected from them, what they can expect from the organization and how their performance will impact the organization. Free and open feedback enables them to realize their potential, to remove their shortcomings, and it provides them with guidelines to follow and often motivates for better performance. Open channels of communication often lead to new ideas, unconventional thinking and innovation. Employees understand what is needed for their organization’s success, find opportunities and make improvements. When ideas and feedback are appreciated, everyone tries to contribute more ideas and productive feedback. Effective OCM stimulates teamwork and cooperation among organizational members. It provides the students, teachers and support staff with the knowledge, structure and positive work environment they need to deal with a wide range of issues, resulting in higher OE.

Furthermore, a better communication process carries the effect of involvement, consistency and mission of the culture to make the organization more effective. Organizational effectiveness is triggered by culture and passes through OCM to make the educational institutes more effective. An organization

Table 2. OCL Predicting OE and the Mediating Role of OCM

Step Path B SEB b CR Probability Inference

1 OCL→OE 0.63 0.11 0.52 5.97 0.001 Positive relationship 2 OCL→OCM 0.56 0.11 0.63 5.07 0.001 Positive relationship 3 OCM→OE 0.83 0.15 0.59 5.45 0.001 Positive relationship 4 OCL→OE 0.31 0.13 0.25 2.31 0.021 Mediation

effect supported

OCL→OCM 0.58 0.11 0.64 5.10 0.001 OCM→OE 0.58 0.16 0.43 3.58 0.001

Source: Prepared by the authors. Notes: B is un-standardized beta; SEB is the standard error of beta; b is standardized beta; CR is critical ratio; OCL is

organizational cultures; OE is organizational effectiveness and OCM is organizational communication.

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develops its culture, shares its understanding (Chatman, 1988) and inculcates a set of beliefs, values and norms amongst its members through a communication system, in which signals mean the same thing to everyone (Schein, 1985). Clarity in communication, the free flow of information, professional relation- ships among members across levels and a climate promoting effective communication in tandem ensure that a strong culture prevails that contributes to OE.

In Tata Group, the culture of trust, volunteering and commitment to ethics have been developed among its employees through listening to top-management communicating policies, norms and practices. Instead of enforcing, Tata encourages its employees through communication to follow its norms and practices to achieve ethical business practices. Infosys, another culturally diverse organization, tried to preserve the attributes of a small company and worked in small groups, even after growing to be a multinational company. Managers played the role of mentors and used their experience and communication skills to guide their team members to adhere to the cultural norms and practices leading to its effectiveness in a competitive market. This supports the role of communication as a mediator between the strength of culture and OE.

Conclusion

In understanding the interplay among OCL, OCM and OE in higher educational institutions in India, this study provides the first empirical evidence that a stronger OCL indirectly predicts OE through OCM. Higher technical institutions may improve OCM through computer networking, meetings and group discussions to get the optimum effects of culture on OE.

Limitations

This study is not free from limitations. First, the self-reported responses to a questionnaire may not be free from social desirable responding. However, the common method bias was arrested procedurally by collecting responses on OCL and OE from directors/principals/deans and OCM from associate/assistant professors in two different sittings. Second, although culture develops over a period of time, the strength of culture has only been assessed at one point of time. Assessing OCL, OE and OCM at multiple times would have longitudinally validated the findings.

Acknowledgements

We are grateful to the anonymous referees of the journal for their useful suggestions to improve the quality of the article. Usual disclaimers apply.

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