The Climate, Culture and Effectiveness of Work Organizations: a Study of Organizational Behavior and Financial Performance.

Abstract

An integrative approach to the study of organizational climate and organizational culture suggests that both are system-level domains with a focus on the importance of values, beliefs, norms and patterns of behavior to the form and functioning of work organizations. The differences between the two are primarily differences of epistemology and methodology, rather than content or substance. Climate research appears to favor a nomothetic approach, while culture research generally makes more idiographic assumptions. The choice of the culture or climate metaphor thus seems to depend largely upon the goals and objectives of the research process--climate favors generalization, while culture favors detail. The goal of the analytic portion of this thesis is generalization about the system-level behavior characteristics of organizations and their relationship to effectiveness. Preliminary analyses focus on the validity of the climate measures as system-level attributes: they are distinct from the sub-system attributes, exhibit greater homogeneity within site, and show a basic relationship to performance that is generally in the expected direction. Behavioral and financial data from a sample of 34 large firms are then used to test a number of hypotheses derived from the literature on organizational climate and organizational culture. The financial data consist primarily of three measures of return; income/sales, income/equity and income/investment, as well as their equivalents, st and ardized by both industry and year. Behavioral data include measures of system-wide characteristics (organization of work, communication flow, emphasis on human resources, decision-making practices, influence and control, absence of bureaucracy and coordination), as well as sub-system characteristics such as job design, supervisory and peer leadership, group functioning, satisfaction and goal integration. The results indicate that one-third to one-half of the variance among firms in the performance measures may be predicted by both the system-level and sub-system behavioral data. System-level behavioral data are better predictors of long-term performance (5 years) while the sub-system behavioral data are better predictors of concurrent, short, and medium-term financial performance.