In search of the link between organizational culture and performance

Abstract

PurposeThe organizational culture–performance link is fundamental to organization development and building a high-performance culture is a responsibility of leaders. The claim of a culture–performance link is most visible in the 1980s (e.g. In Search of Excellence) but is replaced by skepticism by the 1990s. Using conclusion validity as the framework, the purpose of this paper is to synthesize cross-disciplinary literature in organization studies and the emerging sub-field of organizational economics to lay a foundation to establish the link rigorously.Design/methodology/approachThe drivers of conclusion validity – internal validity, external validity and construct validity – guided the literature search and review. The author began with the concepts of organizational culture and performance, examined the organizational economic literature for the causal culture–performance link (internal validity), reviewed the organization studies literature on the debates in the measurement of organizational culture (external and construct validity) and examined the debate if organizational culture can be managed (internal validity).FindingsOrganizational economics (which conceptualizes organizational culture as shared beliefs) shows that cultures that are more homogeneous, encourage teamwork and have a clear mission, enhance organizational performance. In measuring culture, survey instruments using the process-oriented approach can rely on these results to strengthen their construct validity. In the search for the organizational culture–performance link, non-cultural factors affecting performance have to be included as control variables.Practical implicationsThe weaknesses of early research on the organizational culture–performance link become clear when examined with the conclusion validity framework. This clearness shows the way toward a rigorous empirical analysis.Originality/valueThis review provides guidance for researchers to evaluate published studies on the organizational culture–performance link. It also helps researchers to design new studies with stronger conclusion validity.