American University in Dubai
School of Business Administration
The Effect of Organizational Culture and Leadership Style on Organizational Performance
MGMT 601 - MANAGING ORGANIZATIONS AND LEADING PEOPLE
Dr. Evangellos Dedoussis
June 17th, 2013
Table of Contents
In management and organizational studies and leadership style and organizational culture are considered to be the most important concepts and key resources of strength for any firm that can derive, control and combine people, processes and organizational behavior and performance. The main reason of importance is the significant relationship between leadership style and organizational performance from one side and organizational culture and organizational performance from the other side. There many studies indicates the impact the organizational culture has on the organization outcomes such as financial performance, gaining competitive advantage, and enhancing firm effectiveness. The firms such as McDonalds, IBM and HP have focused on the managerial values and beliefs form in their organizational cultures. In the recent days, the growth in the mentioned firms has increased drastically lead researchers to take attention to their success, they then found a strong relationship between their culture and their leadership style. They are still world lead firms in their respective area, for them leadership-culture fit has not happened by a chance. The key point is that culture will remain linked with management performance only the culture is able to adapt to the changes in environmental conditions. Equally, the relationship between leadership and organizational performance is an important topic. In a competitive business environment, organizations rely on upon their leaders to facilitate the changes and creativeness required to maintain competitive advantage. Leadership has been changed overtime by the change in employee’s requirements which resulted in a demand for change in the relationship between a leader and his subordinates. Leaders have found to influence supporters in many different ways and methods, including coordinating, communicating, training, motivating and rewarding. Many leadership theories have been suggested in the previous 10 or more years which declares the influence of leadership on organizational effectiveness and therefore on overall organizational performance. The main purpose of this research is to explore in details and wide aspects the relationship between organizational culture and organizational performance and Leadership style and organizational performance and to find out the relationship between leadership and culture that could influence the organizational performance together.
Culture – Performance Relationship
Culture – Definition and Dimensions:
Culture has been identified as a pattern of shared assumptions, beliefs and expectations that influence employee’s behavior within an organization. Shared nature of culture is the key element of this definition (Chatman et al, 2011). Culture is inherited by employees by means of socialization and training, communication network and symbols. There are four basic functions for organizational culture: provide employees with a sense of identity, increase their commitments in an organization, reinforces organizational standards and values, and serves as a control mechanism for shaping employees behavior. Leaders has always played an important role in shaping and reinforcing culture by how they behave, how they allocate rewards and how they hire and fire employees (Lunenburg, 2011). Hofstede (1980) has identified four dimensions of culture that highlights the most important culture differences in a multinational company. The four dimensions are: individualism versus collectivism, power distance, uncertainty avoidance and masculinity and femininity. These dimensions were first discovered from...
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