THE EFFECT OF ORGANIZATIONAL CULTURE ON ORGANIZATIONAL COMMITMENT AND PERFORMANCE: EVIDENCE FROM TOURISM AND HOSPITALITY INDUSTRY
Alkistis Papaioannou1, Konstantinos Marinakos2, Maria-Irini Vamvoukaki3 & Anthoula Dimaki4
1School of Social Sciences, University of West Attica, Athens, Greece
2 Department of Tourism Management, University of West Attica, Athens, Greece
3Department of Sport Management, University of Peloponnese, E.&S. Valiotis Av. & Plateon Str. Sparti, Greece
4Department of Tourism Management, University of West Attica, Ag. Spyridonos str, Athens, Greece
ABSTRACT
Research has suggested that organizational culture has a positive relationship with the desired workplace outcomes and performance (Chatterjee et al., 2018). Moreover, many studies have explored the relationship between organizational culture and organizational commitment in the service sector and revealed that there is a positive relationship between organizational culture and organizational commitment (Acar, 2012; Brewer & Clippard, 2002). According to the literature organizational commitment is vital to any organization, because it is a good predictor of organizational goals, absenteeism, turnover and productivity, while a number of studies have shown a positive relationship between organizational commitment and performance (Bushra et al., 2011; Chi et al., 2007; Meyer et al., 2002; Suliman & Iles, 2000). Given that organizational culture has described as an outstanding business practice in managing the service organizations and achieving excellence (as suggested by the literature) the present study intends to identify the influence of organizational culture on organizational commitment and performance in the context of Luxury hotels of Greece. Seven dimensions and 45 item statements of organizational culture, organizational commitment and performance have been adopted from the literature to undertake this study (Meyer & Allen, 1997; Allen & Meyer 1990; Sashkin & Rosenbach, 1996; Terzoudis, 2011). Also, the particular research used the subjective way of measuring performance. Each of the items was arranged in a 5 point Likert type scale. The proposed relationships were examined using empirical data from 246 managers of 246 Luxury hotels (from a total sample of 317 Luxury hotels, which recognized by Hellenic chamber of hotels) with a 77.6% response rate. Structural equation modelling analysis was used to examine variables relationship using SPSS and EQS6 software. The results indicated that the proposed scales had a satisfactory validity and reliability indexes and (b) four out of the five organizational culture dimensions, significantly predicted organizational commitment and performance for Luxury hotels. Finally, the results showed that organizational commitment has an impact on performance. Practical implications for Luxury hotels managers are discussed.
Key words: Organizational culture, Organizational commitment, Performance, Tourism and Hospitality Industry
1 INTRODUCTION
Most of the Organizations nowadays are confronting many challenges and opportunities due to the rapidly changes in the turbulent environment of business. The current changes contain technological advances and changing economic trends in the market (Manetze & Martins, 2009). Moreover, many organizations in the service sector make an effort to accomplish continuous improvement, rapid growth, profitability and top situation in their activities in globalized economy. (Salajegheh, Chamanifard, Chamanifard, & Nikpour, 2015).
Many researchers have investigated the process and factors that have positive relationship among organizational culture (OC), organizational commitment and performance (e.g. Acar, 2012; Brewer & Clippard, 2002; Dima et al, 2019; Manetze & Martins, 2009; Dedi, 2017). Moreover, organizational commitment is essential to any organization, because it is a good predictor of organizational goals achievement, turnover and productivity, while a number of studies have shown a positive relationship between organizational commitment and performance (Papaioannou, 2019; Bushra et al., 2011; Suliman & Iles, 2000; Meyer et al., 2002; Chi et al., 2007).
A number of Studies have highlighted that organizational culture and organizational commitment are the factors that affect organizational performance (Denision & Mishra, 1995; Irefin & Mechanic, 2014). Therefore, it can be argued that organizational culture in addition to direct influence on organizational performance, it can indirectly affect the organizational performance through employee’s organizational commitment as suggested by the literature (Nikpour, 2017).
2 Theoretical background
2.1 Organizational Culture
The beliefs as well as the symbols and the behavioral patterns that are perceived, learnt produced or reproduced by people consist an organizational culture that characterize the energy and the labour in an organization (Walter de Gruyter, 1992). Schein (1985) claimed that kind of culture is based on a pattern of shared assumptions. These assumptions are actually learnt by the group through the resolution of the difficulties and the troubles faced. That culture is a collection on values system which is followed and of course believed by the group that sets an organization and differs from other organizations (Robbins (2006).
Anthropologists as well as many authors have focused on the culture for many years so to comprehend the different groups. Nevertheless, a link between the organizational culture, the behavioral pattern of the group of people and the performance of a firm recently occurred (Warrick, 2017). This organizational culture makes the common perception of firm’s employees specific and indicative (Ahmady, Nikooravesh, & Mehrpour, 2016).
2.2 Influence of Organizational Culture on Organizational Commitment and Performance
There is a great deal of research regarding the Organizational culture and the organizational commitment (Siverthorne, 2004; Huey Yiing & Zaman Bin Ahmad, 2009). How much an employee connects to the goals, the hopes of the organization so to maintain membership is actually the Organizational commitment (Robbins, 2006).
Earlier studies showed that there is a positive connection between the organizational culture and the organizational commitment specifically affective commitment, continuance commitment, and normative commitment with regards to bureaucratic culture, innovative culture, supportive culture and employee empowerment (Dima, Taghrid & Rateb 2019).Thus, organizations need to go the extra mile to enhance a strong organizational culture by improving the employees’ commitment.
One recent study has pointed out the importance role of organizational culture (OC) and organizational commitment on organizational performance in the public services. The specific study contributed to the culture and commitment of the public service. The object was the government organizations of Indonesia concerning 187 employees at random sampling. The analysis of the data used structural modeling with partial least squares. The results showed a significant influence of OC and commitment in the public service. This suggests that policy by the local government could improve the OC and the commitment for the public service to run optimally (Dedi, 2017).
Sunarsih and Mashithoh (2016) argued that the OC adaptability effects the organizational commitment positively and significantly regarding the University staff. This showed that the stronger the adaptability the higher the commitment. Specifically the organizational culture indicated a positive and significant impact on the employees’ commitment at the education sector (Manetje & Martins, 2009).
2.3 Organizational Culture – Performance Link
There is literature that suggests that employee performance is linked to organizational culture. The concept of the organizational performance is associated with the survival and the flourishing of an organization (Ahmed & Shafiq, 2014). Organizational performance is regarded as the result of efforts achieved by all departments and business. These achievements entail organizational goal in a certain period of time. The goal can refer to a specific stage or an overall extent (Lee & Huang, 2012).
Previous studies have shown a correlation between the organizational culture concerning employees’ performance at the Hotel industry. The culture seems to have a significantly positive effect on the performance of the employees. (Achmad, 2016).
In earlier research, Nikpour (2017) claimed that organizational culture has a significantly positive impact on the organizational performance regarding the education sector. The findings indicated that the model had the appropriate fit and organizational culture which apart from its direct impact it also employed indirect impact on the performance by means of the mediation of employee’s organizational commitment that the rate or the indirect impact was significantly higher than the direct one.
Observers and scholars acknowledge that the organizational culture has an important long term impact on the performance. Homogeneity in the efforts, focus and high performance are linked to the strong culture where common vision and unity are key requirements (Cameron & Quinn, 2005). Many authors argue that OC is the key to organizational excellence (Schein, 1984). Organizations make efforts to improve the performance and the OC is regarded as one of the main elements (Uzkurt et al., 2013). It seems that organizational culture has a more important effect than the national culture regarding the performance (Naor et al., 2010).
Some studies on the culture- performance relation showed a specific culture orientations and types are encouraging to performance. They consider performance as a multidimensional factor (e.g., Jacobs et al., 2013; Tseng, 2010) and some others study the effect of OC on performance regarding specific financial indicators.
2.4 Influence of Organizational Commitment on Performance
There is a lot of discussion about the positive features of the organizational commitment and also its effects on turnover intention, absenteeism, productivity and motivation as it is a powerful element for both employees and organizations in order to improve the productivity as well as the effectiveness (Kuvaas, 2006; Genevičiūtė-Janonienė&Endriulaitienė, 2014).
Apart from job satisfaction, organizational commitment has been studied to a great extend the last thirty years (Kontoghiorphes & Bryant, 2004). Bartlett (2001) claimed that reports on positive consequences on employee bahaviour and work outcome are linked to organizational commitment. Nowadays, the organizational commitment has become more important as it is regarded to be the main element which is behind the performance (Kamarul & Raida, 2003). Moreover, interest in work commitment has triggered by its potential benefits to both individuals and organizations (Somers and Birbaum, 2000). It is additional variable to explain work related behavior and performance (Benkoff, 1997).
Organizational commitment could also be regarded as a dimension of effectiveness concerning the work performance and the reducing turnover (McDermontt, Laschinger & Shamian, 1996). Previous studies found a positive link between organizational commitment and performance in work (Arnett, Laverie & McLane 2002; Suliman & Iles, 2000; McNeese-Smith, 1997).
2.5 Hypotheses development
According to the previous discussion the model of the present study includes seven concealed factors: achieving goals, managing change, customer orientation, cultural strength, coordinating teamwork, organizational commitment and performance. Following the work of Dima, Taghrid and Rateb (2019), Sunarsih and Mashithoh (2016) and Acar, (2012) who sound evidence concerning the importance of the organizational culture and commitment, there are hypotheses about: H1 the five dimensions of OC (achieving goals, managing change, customer orientation, coordinating teamwork, cultural strength) will have a positive effect on organizational commitment. Also, based on previous results (Achmad, 2016; Nikpour, 2017) there is hypothesis about: H2 managing change, customer orientation, achieving goals, cultural strength, coordinating teamwork will have a positive impact on performance. Finally, the link between the organizational commitment and the performance is well acknowledged in the field of tourism management and service (Dedi, 2017; Bushra et al., 2011; Suliman & Iles, 2000; Meyer et al., 2002; Chi et al., 2007). Thus, the hypothesis may be that; H3 organizational commitment has an impact on performance. Hypothesis model in Figure1.
Figure 1: The hypothesized model.
3 METHOD
3.1 Sample Profile
Empirical data from 246 managers of 246 Luxury hotels (from a total sample of 317 Luxury hotels, which recognized by Hellenic chamber of hotels) participated in the survey. The sample consisted of 60.8% males and 39.2% females with a mean age of 34 years (SD = 7.65). The distribution of the educational level of the sample was: 60% (n= 147) were holders of graduate degree (university education), 12% (n= 30) were holders of a postgraduate academic title (postgraduate education) and 28% (n = 69) were graduates of High-school education. By reference to the work experience of the research participants, 52% (n =128) had over 7 years, 32% (n = 79) had three to seven years and 16% (n =39) had one to three years work experience. In relation to the position of responsibility that managing research respondents of the Luxury hotels occupied, the 27% of the total population (n =66 research respondents) were hotel reservations managers. In addition, the 10% (n =25) of the total sample were FNB Managers and 14% (n =35) were Human Resources Managers. Moreover, the 16% (n =39) of the total sample held upper managerial positions in the Luxury hotels (General Managers), while the rest percentage 33% (n =81) was Accounting Managers. The socio-demographic profile of participants is presented on Table 1.
Table 1 Characteristics of the Research Sample
3.2 Measures
Organizational culture scale
The Greek rate of the Organizational Culture Assessment Questionnaire (OCAQ) scale (Sashkin & Rosenbach, 1996) was employed to evaluate the employees’ perceptions concerning their hotel’s organizational culture. Explanatory analysis was used for the organizational factors regarding the dimensionality of the elements through the use of the principal component analysis methodology. Exploratory factor analysis of 30 items was statistically significant (χ2 (116) = 9,248, p<0.001), with KMO = 0.75 and produced a five-factor solution with eigenvalues greater than one. The five factors explained 76 percent of the variability of the data while the Cronbach coefficient for all the scales was over 0.74. The five factors were titled: managing change (5 items, eigenvalue of 5.3, 34% of variance, α = 0.82), achieving goals (4 items eigenvalue of 2.4, 19 % of variance, α = 0.85), coordinating teamwork (10 items, eigenvalue of 1.4, 10 % of variance, α = 0.79), customer orientation (5 items, eigenvalue of 1.2, 7% of variance, α = 0.81) and cultural strength (6 items, eigenvalue of 1.1, % of variance, 6% of variance, α = 0.83).
Organizational commitment
According to Meyer and Allen (1991), organizational commitment consists of three dimensions: normative commitment, affective commitment and continuance commitment. Continuous commitment relates to employees' feeling as it concerns their obligation to stay with the organization. Normative commitment refers to the cost incurred by employees when they leave the organization. Nevertheless, affective commitment is a more important element. Furthermore, it seems to be of great benefit to organizations (Meyer & Allen, 1997). Additionally, affective commitment has been of a greater interest in studies (Mathieu & Zajac, 1990; Meyer et al., 2002). Meyer and Allen (1997) argued that affectively committed employees are bound to have positive reactions and behaviours in the work and the willingness to offer to the organization’s goals. This study, organizational commitment is interested in the affective commitment. For the measurement of affective commitment to the organization it was used a six-item scale taken from Allen and Meyer (1990).
Performance
Performance of Luxury hotels was measured using three items adapted from the literature (Terzoudis, 2011). Researchers from a variety of service, sport and tourism settings have used similar items to measure organizational performance (Verhage and Waarts, 1988; Hooley, Lynch & Shepherd, 1990; Brooksbank, Kirby & Wright, 1992; Rafic and Pallett, 1996).
Regarding the OCAQ, organizational commitment and performance scales, there was agreement expressed on a five-point Likert- scale that ranged from 1 (strongly disagree) to 5 (strongly agree). Scales’ items listed in Table 2.
Model testing
Inspection of the psychometric properties of the measures (Organizational culture, Organizational commitment, and Performance) was carried out by a confirmatory factor analysis (CFA) before examining the hypothesized relationships. In order to evaluate the fit of the model, typical fit indices were provided by the EQS 6 software (Bentler, 2005) were used: The Comparative Fit Index (CFI), the Standardized Root Mean Square Residual (SRMR), and the Root Mean Square Error of Approximation (RMSEA with its 90% confidence interval [CI]). An indicator of an adequate fit shows a CFI value greater than .90, while an indicator of an excellent fit shows a value greater than .95 (Hu &Bentler, 1998). For SRMR and RMSEA assessment greater than .08 indicates a good fit of the model to the data (Byrne, 2000). Further examination of the psychometric properties was practiced so to assess the seven latent constructs’ reliability, discriminant and convergent validity, as well as the causal relationships regarding the seven latent constructs with the use of a structural model.
Table 2 Confirmatory factor analysis item statistics for the examined latent factors.
4 Results
The analysis was performed using listwise covariance matrices utilizing the maximum likelihood estimation method. The results revealed a good fit of the model to the data: CFI = .91, SRMR = .08, RMSEA = .08 with the 90% confidence interval between 0.07 and 0.09. All factor loadings were above .50. The average variance extracted (AVE) values were above the .50 cut off and all parameter estimates were significant (±1.96) indicating evidence of convergent validity (Anderson & Gerbing, 1988). The results of Confirmatory factor analysis are displayed in Table 2. Discriminant validity was also obtained since the suggestions of Fornell and Larcker’s, (1981) were followed to report the AVE value for each latent construct. The recommendations of Raykov's (1997) composite reliability were followed to report the construct reliability (rho coefficients were acceptable ranging from .85 to .93.), presented in Table 3.
Table 3 Means, standard deviations, reliability estimates, average variance extracted values, and correlations for the examined latent factors
Note: All correlations were significant at the 0.01 level
The assessment of the conceptual framework (hypothesis testing) was done using a full structural model. (Table 4). The results of the SEM analyses maintained almost all the respective proposed hypotheses (H1-H3). More in detail, the results partially supported H1, since the dimensions of achieving goals (b = .31, p < .05), coordinating teamwork (b = .31, p < .05), customer orientation (b = .33, p < .05) and cultural strength (b = .30, p < .05) significantly predicted Organizational Commitment accounting for 32% of its variance. The results also provided partial support for H2, since the dimensions of achieving goals (b = .24, p < .05), coordinating teamwork (b = .23, p < .05), customer orientation (b = .24, p < .05) and cultural strength (b = .21, p < .05) significantly predicted performance. Finally, organizational commitment (b = .42, p < .05) affected performance significantly. For performance, 59% of its variation was accounted for by achieving goals, coordinating teamwork, customer orientation, cultural strength and organizational commitment.
Table 4 Structural model analysis
5 Discussion
The present study aimed to examine the effect of the Organizational culture (OCAQ) scale (Sashkin & Rosenbach, 1996) on organizational commitment and performance in Luxury hotels. Organizational culture is a research field that needs to be further studied in services. There is limited research regarding the relationships between the OCAQ and organizational commitment and performance in the field of hospitality and tourism. Empirical data from 246 managers of 246 Luxury hotels in Greece was used to examine the relationships.
5.1 Theoretical implications
This study validated the five dimensions of the Organizational Culture Assessment Questionnaire (OCAQ) (Sashkin & Rosenbach, 1996) regarding Luxury hotels, with the CFI evidence of convergent and discriminant validity as well as the construct reliability. Also, the full structural model claimed by the goodness-of-fit indexes had an acceptable fit concerning the data. Additionally, four of five OC dimensions, customer orientation, achieving goals, cultural and coordinating teamwork significantly predicted both organizational commitment and performance, providing partially supported H1 and H2. H3, was supported as organizational commitment had a greater impact on performance. However, the first dimension of the OC which is managing change, did not significantly affected the organizational commitment or the performance. The 59% of the variation was for the Cultural Strength, Coordinating teamwork, Customer orientation, Performance Achieving goals and Organizational Commitment.
The findings of this study line up with Aketch, Basheka, and Bagire, (2017) which refer to the organizational culture in the hotel sector and that could comprise 12.4% of the variance in performance of the hotels. Furthermore, the present findings encourage the high-priority of the organizational culture as it significantly affects the organizational performance in the service sector and hospitality (e.g. Achmad, 2017; Chilla et al., 2014; Denison et al., 2012; Ahmad, 2012; Imam et al., 2010; You et al., 2010; Yilmaz & Ergun, 2008; Fey & Denison, 2003), and validates the importance of the organizational culture as a factor that leads to an important competitive advantage. (Aketch, Basheka, and Bagire, (2017).
The present study indicated that the dimension of organizational culture managing change was not significant in predicting the performance. However, managing change relates to how well the organization may adapt to and effectively manage the changes in its environment (Sashkin & Rosenbach, 1996). The present findings which follow (Aketch, Basheka, & Bagire, 2017) recognized adaptability as a factor of organizational culture which had no impact on performance of hotels, as found by Yilmaz and Ergun (2008) and Fey and Denison, (2003). Also, one possible reason which might explain that may be that SMEs regarding the hotels sector are to be found in a more mature or stable market. This may be because in terms of food and accommodation service, minimal technological changes take place as well as customer’s rapid changes in preference.
The results indicated that four of the five dimensions of organizational culture significantly affected the organizational commitment. This is lines up with Dima, Taghrid and Rateb (2019), Sunarsih and Mashithoh (2016) and Acar, (2012) who provided evidence for the role of the organizational culture to the organizational commitment regarding the service sector. The current research does not verify that the dimension of organizational culture managing changes significantly predicted organizational commitment. These findings are in agreement with the suggested finding by Sarhana, Harbb, Shrafata and Alhusbana (2020) who also found that innovative culture - a factor of the organizational culture – is not significantly related to organizational commitment in the hotel industry. The researchers concluded that other factors like performance and satisfaction may have an impact on the organizational commitment as well as to organizational culture, as only 59% of the variance in organizational commitment is explained by the research model.
Finally, the results proved that organizational commitment had a great impact on performance, and followed the findings in the literature that claims commitment is a key force of performance (e.g., Dedi, 2017;Patiar, & Wang, 2016; Rose, Kumar, & Pak, 2009;Patiar& Mia, 2015; Wang et al., 2011), and that it has positive influence to the performance in public services and hotels.
The results of the present study indicated that including research constructs from the wider range of services management literature (e.g. the OCAQ scale) can lead to a continuous search for drivers regarding the organizational commitment and the performance in the hospitality and tourism industry, such as Luxury hotels.
5.2 Managerial implications
The present study indicated that higher levels of organizational commitment and performance are related to the OC dimensions achieving goals, coordinating teamwork, customer orientation and cultural strength.
Sashkin and Rosenbach, (1996) suggested that it is important for managers to aligned the goals between the employees and with the overall goals of the hotel. Furthermore, the managers should establish the values or beliefs that will promote the goal achievement of the hotel. A positive value is improving quality and performance of the hotel; what the Japanese call “Kaizen", the belief in constant improvement.
Accordingly, encouraging teamwork means coordinating teamwork. Knowledge sharing and cooperation help improve performance in the hotel, as teamwork is an important factor to accomplish common hotel objectives (Wiewiora, Murphy, Trigunarsyah, & Brown, 2014; Childress, 2013; Schein, 2010). Therefore, hotel managers should cooperate with their employees to improve hotel performance and work efforts should "connect" and “fit” to form a whole, including effective ways of meeting unpredictable coordination demands, as well as ways for hotel employees to "mutually adjust" their actions to take into account unplanned circumstances (Sashkin&Rosenbach, 1996; Pathiranage, 2019).
The values referring to an effective customer orientation function are not just a prevailing belief concerning the importance of the customer. Thus, hotel managers should improve certain beliefs that are related to more effective customer orientation strategies. For instance, in the hospitality industry context, managers should follow a customer oriented strategy focused on the belief that innovative products or services should be natural extensions of the product or service so as to support effective customer orientation (Sashkin & Rosenbach, 1996). Hotel managers should also train employees and design processes according to customers’ needs for long-term relationships. They should also apply a complaints procedure and set guidelines in order to register the complaints and maintain a record of them to promote customer partnerships and relationships. Managers could apply a systematic process to gather and store information from results that occur from the analysis of customers’ complaints and in turn recognize and reward employees for sufficient service (Papaioannou, et al., 2018; Robaki, PapaioannouYfantidou, Kourtesopoulou, and Dalakis, 2019).
As for the factor “Cultural Strength”, managers of hotels should evaluate and make use of employees’ strengths, as well as provide access to accurate information about the current issues in the hotel and a justification for them to their human resources. Also, hotel managers should design polices to assure that business decisions are made on the basis of facts, not just perceptions or assumptions and everyone knows and understands the objectives and priorities of the luxury hotel (Sashkin and Rosenbach 1996; Robaki, PapaioannouYfantidou, Kourtesopoulou, and Dalakis, 2019).
To sum up, organizational commitment and performance are related to the OC dimensions, achieving goals, coordinating teamwork, customer orientation and cultural strength. On the contrary, the managing change does not significantly affect the organizational commitment and performance in Luxury hotels
5.3 Limitations and future research
Data of the present study were collected from 246 Luxury hotels in Greece, so the results are only indicative and generalizations should be avoided. This study was cross-sectional in nature and as Schein (2009) claimed, culture is something that changes in time and therefore there cannot be adequate studies by the use of one. This will need qualitative and long term studies in the future. Areas of further research could also include evaluating the influence of organizational culture on the customers’ satisfaction and loyalty of luxury hotels. The OCAQ scale could also be used to other hospitality and tourism areas such as Airbnb accommodation. An extension could be to include any other possible differentiations in the use of organizational culture process and the impact on overall organizational commitment and performance.
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