The Effect of Organizational Culture’s Dimension, Total Quality Management and Entrepreneurial Orientation towards the Performance of Herbal Enterprises in Indonesia

Abstract

This study aims to determine the effect of the dimension of organization culture (clan, adhocratic, hierarchy, market) on total quality management, the effect of the dimension of organization culture on entrepreneurial orientation, and the effect of the dimension of organization culture, total quality management and entrepreneurial orientation on the performance of herbal enterprises in Indonesian. The study uses quantitative approaches and deductive methods. The sample consists of 400 selected herbal entrepreneurs registered with the Asosiasi Pengusaha Herbal Indonesia using a simple random sampling method. Data is collected by using questionnaires and analysed by using structural equation modelling. The findings show that seven out of the 14 hypotheses tested were supported. Specifically, market culture is the only cultural factor that significantly and positively affects total quality management. Adhocratic and market culture are cultural factors that significantly influence entrepreneurial orientation positively. The subsequent findings show that clan culture, total quality management and entrepreneurial orientation are significant and positive determinants of the organisation performance, while market culture affects organizational performance significantly but negatively. In conclusion, the performance of the enterprises can be increased through clan culture, total quality management and entrepreneurial orientation; total quality management practices can be enhanced through market culture and entrepreneurial orientation can be enhanced through adhocratic and market culture. In implication, to improve the performance of herbal enterprises, organizational culture, particularly clan culture, total quality management and entrepreneurial orientation needs to be practiced intensively.