Organizational Culture and Performance of a Firm

MM2021-Individual Essay

Topic: Organizational culture and performance of a firm: knowledge management and environmental uncertainty as factors related to the above two variables.

Name: Lee Man Ho

Student ID: 13086927D

Date of submission: 31 Oct 2014

1. Introduction

Organizational culture refers to common practices, values and beliefs that an organization follows (Chen & Huang, 2007). It is a source of sustained competitive advantage (Barney, 1991) since it is an explanatory variable that differentiates one company from others (Sathe, 1985). As employees have their own values and beliefs, it may be difficult for leaders to manage them well as a whole if the company does not have methods to direct them into the same path. Therefore, the existence of organizational culture could be one of the outcomes resulted from this. Among different types of culture and performance, I particularly have interest in the relationship between adhocracy organizational culture and financial performance of a company since there is only little research discussing their relationship and it is essential to an organization. In this essay, I will examine how financial performance of a firm is affected by knowledge management under adhocracy organizational culture and how will environmental uncertainty affect the operation of the culture and financial success of the company. First, I will briefly illustrate the meaning of Adhocracy culture and propose the method I use for examination in depth. Then, I will discuss the relationship between different variables one by one and will reach to conclusion and recommendation finally.

2. What is Adhocracy organizational culture?

Adhocracy culture emphasizes on high level of flexibility on employees and provides a lot of opportunities to workers to express and develop in their own way in accordance with the organizational goals (Aktaş, Çiçek & Kıyak, 2011). The purpose of this culture is to boost the adaptability, flexibility and creativity of employees (Cameron and Quinn, 2006). Under Adhocracy culture, activities always increase the commitment of employees since they are actively involved in decision making process and able to express their ideas freely (Curry et al., 2010). Since adhocracy culture encourages the flow of innovative ideas among the organization, it might be risky for implementation.

3. Research method

The method I adopted is testing the relationship between four variables, namely adhocracy organizational culture, knowledge management, environmental uncertainty and financial performance of a firm. Specifically, I will discuss the relationship between adhocracy culture and financial performance of a firm, adhocracy culture and knowledge management, knowledge management and financial performance of a firm, adhocracy culture and environmental uncertainty and environmental uncertainty and financial performance of a firm.