The Relationship Between Organisational Culture, Strategy And Performance - A Survey Of Companies Listed In The Nairobi Stock Exchange
Abstract
This researcher aimed at establishing the relationship, if any, between culture,
strategy and performance of firms listed at the Nairobi Stock Exchange. Available
literature showed that most corporate leaders understand that a clear and directed
strategy is needed to achieve business success. However, they often disregard the
role of culture with regards to strategy, yet the two factors are critical for the success
of an organisation. The researcher noted that in order to study these two factors and
the third one, performance, the ideal population was that which espouse known
performance measure variables such as share prices, price index, and public
declaration of their performance. The companies listed at the stock exchange, not
only met these considerations, but also were known to be bound by certain
minimum requirements to qualify for listing. Those requirements would generally
require that the firms undertake certain culture and strategy choices geared towards
the attainment of high performance.
Whereas a number of studies had been undertaken in the certain aspects of culture
and strategy types, strategic planning, strategy formulation and implementation,
many of such studies, had left a number of research gaps. Many of them, such as
Gregory (2003),Frese et al (2003),Aosa (1992),Mahindra (2002), Kariuki (2001)were
either broad or only addressed certain aspects of culture or strategy. None of these
studies considered the relationship between the culture, strategy choices and their
resultant influence on performance. The researcher set to find this relationship.
The researcher had two objectives, first, to establish the extent to which firms listed
at the Nairobi Stock Exchange consider organisation's culture in their strategy, and
second, establish the relationship between corporate culture types, strategy types
and performance by these companies.
The researcher used a survey of all the 48 firms that were listed at the Nairobi Stock
Exchange as at 15th September 2005. Likert Scale questionnaires with questions
framed on the basiS of pre-designed operational definitions of the Schneider's four
culture types - control, collaboration, cultivation and competence; and Miles and
Snow's strategy types of defender, prospector, analyser and reactor, were designed,
and used, in collecting primary data from the company managers responsible for
planning and strategy, human resources or finance. This was aimed at collecting
relevant data. Secondary data on companies share prices for the previous thirteen
months were then collected to obtain the share price for the first Wednesday of the
month. This was to reduce costs of the research while at the same time deriving the
share prices over a period of high performance and that long enough to observe a
trend. The average thirteen - months share prices were used to rank the companies
from number one to sixteen as these was the total number that participated.
The primary data was analysed using the SPSS and a chi - square test was run to
test the relationship between culture, strategy and performance. To do this, a null
hypothesis was set that, the choice of culture and strategy types do not determine
performance levels, and the alternative hypothesis was that they do determine
performance.
The researcher observed that the chi - square test could not be relied on as the
counts, that is, the observed frequencies, were less than the minimum required count
of 5 for the correct use of the chi - square statistic. Consequently, the researcher used
tabular analysis of the culture, strategy and average share prices to determine the
relationship.
The first objective of the study was established as the researcher found that 94.5 per
cent of the firms listed at the Nairobi Stock Exchange considered culture in their
strategy. It was not, however, noted that the response was rather low to be able to
determine the relationship and that whereas the relationship existed to some extent,
there were no clear and consistent observation of the relationship between culture,
strategy and performance. Hence, it was noted that some factors other than the
culture-strategy choices could be the main contributors to performance of these
companies.
Citation
Masters thesis University of Nairobi (2006)Publisher
University of Nairobi. Faculty of Commerce
Description
Degree of Master of Business Administration