The Mediating Effect of Innovation on the Relationship Between Organizational Culture and Performance of Large Manufacturing Firms in Pakistan

Abstract

The purpose of this paper is to examine the mediating role of innovation on the relationship between organisational culture and performance of large manufacturing firms in Pakistan. Data for the study was collected through a survey from 320 large manufacturing firms operating in Pakistan and responses were analyzed to assess the relationships between organisational culture, innovation, and firm performance. The results indicate that organisational culture is positively related to firm performance, and its positive relationship is mediated by innovation. These findings provide useful insights for organizations, particularly in the manufacturing industry, seeking to be competitive and responsive to environmental changes by successfully introducing innovations. Conclusions emphasize that mechanisms to encourage and foster an innovative culture in the organization are likely to facilitate the introduction, adoption, and diffusion of innovations which, in turn, is likely to result in the achievement of superior firm performance. In addition, a few scholars have considered innovation as a key driver of firm performance besides that, fewer researchers have studied innovations as being impacted by organisational culture. This paper makes a significant contribution to the prevailing literature by empirically examining the relationship between organisational culture, innovation, and firm performance.