The effects of leadership styles & organizational culture over firm performance

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Information about The effects of leadership styles & organizational culture over firm...
Business & Mgmt

Published on February 15, 2014

Author: omershahzad91


THE EFFECTS OF LEADERSHIP STYLES & ORGANIZATIONAL CULTURE OVER FIRM PERFORMANCE Multi National Companies in Istanbul, Turkey By:Cemal Zehira , Öznur Gülen Ertosunb , Songül Zehirc, Bü ra Müceldilid,

THE MAIN QUESTIONS ADDRESSED IN THIS PAPER ARE:  a) Does organizational culture affect organizational performance ?  b) Is there a significant relationship between organizational culture and leadership styles?  c) Does leadership affect organizational performance?  d) Mediating effect of organizational culture between leadership and performance.

WHAT IS ORGANIZATION CULTURE?  Behavior of humans who are part of an organization and the meanings that the people attach to their action  Organizational culture includes:  organization values, visions, norms, working language, systems, symbols, beliefs and habits.  Organizational culture affects the way people and groups interact with each other, with clients, and with stakeholders.

CULTURE & ORGANIZATIONAL PERFORMANCE  In the fields of management and organizational theory, organizational culture is one of the most popular concepts.  There’s a significant relationship between organizational culture and organizational outcomes such as financial performance, competitive advantage , firm effectiveness

CULTURE & ORGANIZATIONAL PERFORMANCE  McDonalds, IBM, P&G and HP these firms have superior financial performance .  Their focus on culture and leadership fit  Culture will remain linked with superior performance only if the culture is able to adapt to changes in environmental conditions and it must have unique qualities which cannot be imitated.

LEADERSHIP & PERFORMANCE  Leaders interacting with employees from different backgrounds produce different types of leadership styles .  Leadership styles divided into two major categories: Mechanistic based leadership style  Humanistic based leadership style 

MODELS OF LEADERSHIP STYLES  Mechanistic based model practiced in organizations that operate in a stable market environment  Focus on internal organizational environments and give less emphasis to high commitment human resource practices  Humanistic model operate in a dynamic market environment  Focusing on external competitiveness and emphasizing high performing human resource practices

LEADERSHIP STYLES  Research paper has mentioned 3 leadership styles • Transactional Supportive Participative • •

LEADERSHIP STYLES  Transactional leaders are more focus on performance.  Supportive leaders are focus on emotional, informational, instrumental and appraisal support to followers.  Participative leaders are often work more closely with their followers and involve all levels of followers in making decisions  H1: There is a relationship between leadership types and organizational performance

CULTURE & LEADERSHIP & PERFORMANCE  Leadership is crucial because, as organizational cultures develop and change, they also need to be managed and controlled.  Leaders create mechanisms for cultural development  Cultural norms arise and change due to its leaders focus  Good leaders develop their skills to alter the culture in order to improve organizational performance.

PERSPECTIVES Functionalist perspective  Attribution perspective  Contingency perspective   These Perspectives lightening the relationship between organizational culture and leadership behavior.

CULTURE & LEADERSHIP & PERFORMANCE  All these perspectives states that there is a positive relationship between culture and leadership but in certain conditions organizational outcomes affected by leaders’ behavior  H2: There is a relationship between culture dimensions and leadership types  H3: There is mediating effect of culture of organizations on the relationship between leadership types and organizational performance.

TYPES OF CULTURE  Community Culture(based on loyalty and commitment to a strong leader )  Competitive Culture(concentrate on achieving goals under aggressive and competitive leaders and focus to gain competitive advantage)  Bureaucratic Culture(governed by formal procedures, policies and value longevity, predictability, efficiency, and stability.)

IMPACT OF CULTURE TYPES ON ORGANIZATION PERFORMANCE  A close connection between organizational culture and organizational performance  H4: There is a relationship between culture types and organizational performance.


RESEARCH DESIGN Data collected through face-to-face questionnaire technique  Manufacturing and service sector companies.  All most 62% of companies are global  25%of them are international  12% are national.  Almost 12% of companies are small  30% are medium-sized  58% are big companies 

RESEARCH DESIGN  Valid questionnaires were 295.  Questionnaires were allocated as hard copy.  Gathered data have been analyzed in SPSS software  Correlation and regression analysis used

RESULTS  These results imply that, organizational culture and leadership are vital components of firm performance.  Mechanistic-based leadership and humanisticbased leadership are significantly related to organizational culture.  Associations between the leadership styles and organizational performance are Mediated by organizational culture.

RESULTS  Humanistic-based leadership bureaucratic and competitive culture are partial mediator on this relationship, Community culture is not significant.  If firms have to achieve positive firm performance in the competitive business environment; firms need to give importance to organizational culture and leadership.

LIMITATIONS & SUGGESTIONS  Only three leadership styles have been studied.  Use different leadership types.  Study only focused on the link between culture, leadership and performance.  Should include individual outcomes.  Study was conducted in Turkey.  Focus on different national cultures and across different types of organizations.

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