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How Cultural Factors Influence Organizational Performance:
A Case Study of a Scientific Equipment Trading Company in Thailand
Chayanoot Pungcharoenpong*
National Institution of Development Administration
Chayanootnilchom1@gmail.com
Gary N. McLean
McLean Global Consulting, Inc.
gary.mclean@mcleanglobal.com
*Corresponding Author:
Graduate School of Human Resource Development
National Institution of Development Administration
118 Moo3 Seri Thai Rd. Klongjan Bangkapi Bangkok 10240 Thailand
Words: 4,764
Working Paper
Stream: OD and Organizational Learning
Copyright © 2014 Chayanoot Pungcharoenpong & Gary N. McLean
ORGANIZATIONAL CULTURE AND PERFORMANCE
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Abstract
Organizational culture is an important factor that affects organizational performance.
Organizational culture is perceived as a way to get things done or common characteristics
of organizations shaping organizational members’ behaviors and enhanced (or impeded)
strategic achievement and performance. The purpose of this paper is to: 1) define the
organizational culture through employees’ perceptions and 2) explore how family-like
cultural factors impact on employee performance. Analysis was based on an explorative
case study approach from six in-depth interviews. All participants were selected based on
theoretical selection. The selection of participants depended on the diversity of employees’
positions and years of experience. As a result, the six interviewees ranged from top
executives to entry-level employees. The findings show that the way employees believed
the organization to be their home and perceived their colleagues as family members.
According to this value embedded in the organization, a family culture plays an important
role in creating attitudes and behaviors that can influence organizational performance.
Keywords: organizational culture, performance, family culture, Thailand
ORGANIZATIONAL CULTURE AND PERFORMANCE
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How Cultural Factors Influence Organizational Performance:
A Case Study of a Scientific Equipment Trading Company in Thailand
For more than thirty years, organizational culture has been important due to an
increasingly competitive environment. Given the broad array of studies on this subject, the
concept is confusing due to differences in research foci, semantics, and methodologies
(Kotter & Heskett 1992, p. 9). Schein (1984, p. 3) provided a fundamental definition of
organizational culture:
Organizational culture is the pattern of basic assumptions that a given group has
invented, discovered, or developed in learning to cope with its problems of external
adaptation and internal integration, and that have worked well enough to be
considered valid and, therefore, to be taught to new members as the collect way to
perceive, think, and feel in relation to those problems.
As all cultural levels (i.e., visible artifacts, espoused values, and basic underlying
assumptions) are spontaneously interrelated, organizational culture is widely accepted as
core values and beliefs that guide and shape behaviors and practices (Kotter & Heskett
1992, p. 4; Schein 2009, p. 21). Organizational culture, therefore, is ‘the key to
organizational excellence’ (Schein 1984, p. 3). It is one of the most effective ways to
empower employees, attain legitimate strategies, and create vital behaviors in striving for
organizational success (Narver & Slater 1990, p. 21; O’Reilly & Chatman 1996, p.187).
The Importance and Purpose of Study
Many studies (e.g., Denison & Mishra 1995; Flamholtz 2001; Gordon & DiTomaso
1992) have focused on the relationship between organizational culture and performance.
However, there are few studies that have provided an in-depth understanding of how this
relationship influences organizational performance, especially in Thailand. Given the
assumption of postmodernist paradigms that emphasize ‘the impossibility of an ultimate
basic of knowledge’ (Hill 2008, p. 89), contextualization plays an important role in research
ORGANIZATIONAL CULTURE AND PERFORMANCE
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(Müller 2006, p. 312). Thus, to gain knowledge about the relationship between
organizational culture and performance, there is a need, within Thailand:
1. To define organizational culture with a focus on a Thai scientific equipment
trading company.
2. To investigate how cultural factors impact employee performance within the
selected scientific equipment trading company.
The Context of the Study
To study the impact of organizational cultural on organizational performance,
specifically in the context of Thailand, this study was conducted in the case of a scientific
equipment trading company. The organization has been successfully operating in this
industrial sector for over thirty years and employed more than two hundred employees. It
offered a great opportunity to understand the role of its organizational culture in influencing
its organizational performance, as well as to understand how this relationship exists in
Thailand.
Theoretical Framework
Most definitions of organizational culture emphasize shared assumptions that
influence employee behaviors (Schein 1984, pp. 3-4). However, Schein asserted that the
definition of organizational culture is more complex as it is a key to organizational success.
According to Schein, organizational culture is dynamic and evolutionary; it can be learned,
passed on, and changed over time. The structural model of organizational culture (the
iceberg or onion model) consists of three different domains, including: a) basic underlying
assumptions, b) espoused values, and c) visible artifacts. At the visible level, culture is seen
as symbolic but less decipherable as descriptive of the organizational culture. In contrast,
culture at the least visible level underlies the true reasons for latent behaviors and taken-forgranted values and assumptions. This becomes a pattern that ties organizational members’
ORGANIZATIONAL CULTURE AND PERFORMANCE
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values and behaviors together. Organizational culture, therefore, is viewed as a social
control mechanism that determines patterns of organizational members’ values, thoughts,
and actions (O’Reilly & Chatman 1996, p. 160). This notion is supported by McGregor’s
Theory X, which assumes that employees need to be controlled in order for them to
perform (Carson 2005).
Based on Schein’s (1984) model, Homburg and Pflesser (2000) took a step in
theoretical development to address organizational culture and performance outcomes. They
found that visible artifacts play a critical role in determining employees’ behaviors in
satisfying customers’ needs and wants, as well as in the financial performance of
organizations. The theoretical model of Denison and Mishra (1995) agreed that
organizational culture has an important impact on organizational effectiveness, as there are
positive associations of each cultural trait with both subjective and objective measures of
profitability, quality, sales growth, satisfaction, and overall effectiveness.
Although it is clear that organizational culture has an important impact on
organizational outcomes, a good theory often incorporates multiple research approaches for
theorizing (Lynham 2000, p. 164). This leaves a window for this paper to use a qualitative
approach to enhance and extend an understanding of the relationship between
organizational culture and performance, specifically highlighting impact of possible latent
variables on organizational performance in the context of Thailand. Therefore, the research
question for this study was: How are organizational cultural factors perceived to influence
organizational performance in one organization in Thailand?
Literature Review
Although the culture-performance link seems to be obscure due to the lack of a
consensual definition (O’Reilly & Chatman 1996, p. 159), most investigations have focused
on measuring the power of organizational culture through economic performance,
ORGANIZATIONAL CULTURE AND PERFORMANCE
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management practices, and an ability to motivate employees and satisfy customers. This
section therefore discusses the literature on these topics.
Effect of Organizational Culture on the Bottom Line
There have been many studies (e.g., Calori & Sarnin 1991; Denison 1984;
Flamholtz 2001; Gordon & DoTomaso 1992; Kotter & Hesket, 1992) exploring the impact
of organizational culture. Most studies have suggested the existence of a strong connection
between culture and performance. However, the studies of Calori and Sarnin (1991) and
Kotter and Heskett (1992, pp. 15-57) argued that there are only some circumstances
supporting the conclusion that a strong culture can achieve a relatively high growth in
performance. In short, organizational cultures can affect long-term economic performance
if culture appropriately fits with the business environment and enhance corporate strategies
and alignment among organizational members.
Impact of Organizational Culture on Management Practices
A vast array of studies (e.g., Baird, Hu, & Reeve 2011; Ehtesham, Mahammad, &
Mahammad 2011; Prajogo & McDermott 2005) has supported the importance of managing
organizational culture and the impact of organizational culture on quality management
programs. Also, organizational culture is recognized as ‘a significant input to effective
knowledge management and organizational learning’ (Janz & Prasarnphanich 2003, p.
353), especially when organizational values are aligned with knowledge management
behaviors and outcomes (Alavi, Kayworth, & Leidner 2005-6, p. 197).
Impact of Organizational Culture on Employee Motivation and Customer Satisfaction
According to Alvesson (2002, pp. 3-6), organizational culture is viewed as
providing implicit organizational guidelines influencing organizational members’
behaviors. Therefore, organizational culture is recognized as a key component to employee
motivation and customer satisfaction. For example, the significant relationship between job
ORGANIZATIONAL CULTURE AND PERFORMANCE
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satisfaction and organizational performance is often synergistic with employee motivation
and organizational culture (Roos & Van Eeden 2008). This finding supports the results of
the work of Pantouvakis and Bouranta (2013) that organizational culture (i.e.,
organizational learning culture) indirectly creates a strong effect on customer satisfaction
via employee job satisfaction, when employees have a high level of educational
background.
Research Methodology and Methods
Based on a postmodernist epistemology, this study employed an exploratory case
study to provide an in-depth understanding of organizational culture and performance.
Research Strategy
A case study is used for various purposes—a thick description, theory testing, and
theory building (Eisenhardt, 1989, p.535). This methodological approach was appropriate
to choose as a case study allowed a combination of research methods to bolster
understanding of a phenomenon within a particular setting (Eisenhardt, 1989, p. 538).
Although there are several types of case studies (Yin 2014), in this study, an
exploratory case study explored possible causal links between organizational culture and
performance through dynamics presented in the context of a Thai scientific trading
company. A case study was useful in developing a nuanced view of reality. Human
behaviors could not be as clearly understood through rules-governed acts and theory as
human behaviors could be better to understand through real-life situations and the multiple
wealth of details provided through a case study (Flyvbjerg 2011, p. 303).
Research Methods
In this section the research setting, the data collection, and the data analysis methods
are reviewed.
ORGANIZATIONAL CULTURE AND PERFORMANCE
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Research setting
Permission for the research and the necessary interviews was obtained from the
organization’s owners and its human resource offices. Participants were identified from the
employee database provided by the human resource office. This database provided full
information on all employees in the organization regarding names, positions, job titles, and
positions. It was important for this study to maintain confidentiality related to personal
information and anonymity of all participants’ interviews. This study, therefore, will refer
to the participants using a pseudonym in order to respect anonymity.
Selection
The participants were selected based on theoretical selection in order to generate
insight into how participants perceived the organizational culture to influence performance.
Therefore, the selection of participants was based on a diversity of positions and years of
experiences. The resulting six interviewees consisted of two top executives, one manager,
two supervisors, and one entry-level employee; there were four females and two males (see
Table 1).
ORGANIZATIONAL CULTURE AND PERFORMANCE
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Table 1
A Brief Description of Each Participant
Name
Gender
Years of Experience
Position
Anurak
Male
33
Top Executive
Prapadsorn
Female
28
Top Executive
Prapaporn
Female
17
Manager
Rodjana
Female
12
Supervisor
Prapod
Male
14
Supervisor
Prapai
Female
4
Entry-Level
Methods of data collection
As the main purpose of this study was to gain a rich descriptive insight into how
organizational culture influences organizational performance, an in-depth interview was
used.
Two open-ended questions were used as the main data collection method:

How do you describe your organizational culture?

How does this organizational culture affect performance?
Probing questions were used to develop deeper understanding about the perceived
relationship. The interviews were recorded with the permission of the interviewees in order
to ensure precise transcription.
ORGANIZATIONAL CULTURE AND PERFORMANCE
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Methods of data analysis
This study followed the five-step process of content analysis suggested by Yin (2011,
p.177), which consequently highlighted the thick description of the meaning of
organizational culture in this context and an insight into how organizational culture had an
impact on performance within the organization. The first step was to organize the data
collection file. The second step was to immerse myself in the texts, reading and re-reading
them, and then applying open coding. The codes were then combined into categories and
built into themes. The fourth step was to use the analytical results developed from previous
step to create a new narrative. According to Yin (2011, p. 179), this step was considered as
initial interpretations that might lead to reassemble the data in some novel ways and later
became the critical analytic part of the draft manuscript. Lastly, the data were interpreted
and summarized in the findings. Meaning units reported in this paper were translated into
English.
Findings
Two aspects, consistent with the two questions asked, related to the impact of
organizational culture on organizational performance emerged. First is the meaning of
organizational culture, grounded in the context of a scientific equipment trading company.
Second is the process of how organizational culture was perceived to influence employees’
performance.
Meaning of Organizational Culture
All participants in this study described their organizational culture as being like a
family. They felt that their organization was their home, and their colleagues were their
brothers and sisters. The drive towards the sense of being a family was something they
could not explain; however, it was a sense of a strong relationship among employees and a
commitment to the organization. Prapod asserted: ‘The way of this organization is like
ORGANIZATIONAL CULTURE AND PERFORMANCE
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being brothers and sisters. People are willing to help each other. This creates a unity within
an organization.
The Impact of Organizational Culture on Performance
The participants did not only explain what the family culture was to them, but they
also described positive consequences of the family culture. The four aspects of this
organizational culture impacting organizational performance were identified as: a)
developing a sense of ownership, b) encouraging a sense of service mind, c) developing
good teamwork, and d) fostering open communication within the organization.
Developing a sense of ownership
A sense of ownership was described as a commitment of employees to drive for
organizational success. The family culture provided a powerful effect that encouraged the
participants who had different backgrounds to share the same values and goals. Anurak
discussed his view of organizational values and performance: ‘This organization
encourages its employees to feel as the owner of the organization.’ Rodjana also explained
how she felt that the family culture affected organizational performance:
It is like we are family. It is important to pay attention to the organization in order
to survive. If everyone thought this organization was their home, they had to do
their best to look after their home. If everyone loved their home, they would do
everything for their home.
Others, such as Prapadsorn, expressed her observation about her organizational
culture in this way:
Employees feel that they are part of the organization. It means that they are a key
stakeholder who will benefit from organizational performance. This encourages
employees to feel that they are the organization’s owners…we have employees who
love and are loyal to the organization. These people have been working for the
organization for a long time. They work hard to bring the bright future to this
organization.
ORGANIZATIONAL CULTURE AND PERFORMANCE
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Encouraging a sense of service mindedness
The participants spoke about the family culture as cultivating a sense of friendship
within the organization. Many participants described that a sense of friendship was rooted
in the family culture. It helped them love each other as brothers and sisters, and this was
expressed as a sense of willingness to help each other. Prapaporn spoke about the power of
the family culture, and she felt that the culture nurtured a sense of service in her
organization:
Here, we teach employees to be service minded. It is because we love each other,
and we are brothers and sisters. This is how a sense of friendship is developed. We
are, therefore, willing to service our internal and external customers. …Our way
here is to provide excellent service. We were taught that we had to provide good
service. Because we are a trading company, we have been taught to deal with
customers' satisfaction by providing excellent service to both external customers
and friends. It seems like our organizational culture is very helpful in this way.
Others, such as Rodjana, asserted that her good service was a key to organizational
excellence:
Having a service mind is important to lead our business successfully. If someone
services us badly… if they do not talk to us nicely (not having a service mind),
those services are not in our minds in a positive way. The customers will not want to
remember or recommend our products/brands (or will talk about our products or
brands negatively).
Developing good teamwork
Most participants agreed that the family culture was one important factor to develop
good teamwork. All positive components of a family culture (i.e., friendship, being service
minded, and unity) played a major role in creating excellent teamwork. Prapod expressed
himself as:
If the work flow stops, customers have to wait. If everyone understands each other,
a job will run smoothly. If everybody understands the working process and has a
service mind, … work will run quite smoothly.
Prapai also provided an example of her working experience, describing the power of
teamwork:
ORGANIZATIONAL CULTURE AND PERFORMANCE
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We are able to work as a team because there is solidarity, and we know each other
well and like to help each other. In my department, when people request help, we
support each other step by step. For example, my position is a purchaser. After we
purchase products, we transfer jobs to other teams. Everyone gives good
cooperation, working as a team, so we succeed.
Many participants spoke of a sense of being brothers and sisters; they felt that this
relationship helped to unite people in the organization. It created powerful consequences
and was a key to organizational success. Prapod described his opinion towards this issue in
this way:
We are sisters and brothers, so we must help each other. Using good teamwork will
strengthen organizational performance. For example, if we have disunity (i.e., the
same as our country condition), it is hard to work together. In my opinion, if we
have unity, and if we face small problems or big problems, we are able to go
forward...to have a strong organization.
Fostering open communication within the organization
The participants explained that the family culture helped them to be able to
communicate their ideas openly. As the family culture cultivates a sense of ownership
within the organization, they felt that they were encouraged to give suggestions. A sense of
being a family encourages employees to feel like a part of the organization in order to
improve their organizational performance. Prapaporn explained open communication
within this organization in this way:
Our organizational culture is being like brothers and sisters. We have a clear
organizational structure and positions, but we are more like a family…This culture
encourages employees to help each other…It does not matter that employee position
is only a message, but he is older than us. This organizational tradition is to respect
elders. We communicate like an older brother talking to a younger sister, not a
position.
Prapadsorn shared her experience that a sense of being brothers and sisters
motivated employees to point out organizational weaknesses:
If employees think we are the same family, they say what they see as problems even
though those employees are from different departments. For example, there is
someone telling me that someone forgets to turn the light off.
ORGANIZATIONAL CULTURE AND PERFORMANCE
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Discussion
This study suggests that, at least for these employees in this context, organizational
culture (e.g., the family culture) is an effective tool to influence organizational
performance. According to Bay (1986), organizational culture can be a source to sustain
competitive advantage if firms’ cultures are ‘valuable, rare, and imperfectly imitable’ (p.
663). Organizational culture, therefore, is potentially a valuable resource for an
organization (Chan, Shaffer, & Snape 2004, p. 17).
Based on previous studies about organizational culture and performance (e.g.,
Alavi, Kayworth, & Leidner 2005; Baird, Hu, & Reeve,2011; Kotter & Heskett,1992;
Pantouvakis & Bouranta 2013), organizational culture can have a powerful impact on an
organization’s bottom line, management practices, employees’ motivation, and customers’
satisfaction. The findings of this study further highlight latent elements that influence
organizational performance, such as a sense of ownership, service mindedness, teamwork,
and open communication. Kim and Bang (2013) asserted that these attributes are key
characteristics of high-performance organizations.
Research Limitations
This study was grounded in a qualitative research approach. The findings in this
study are, therefore, limited in the scope of a scientific trading company in Thailand. The
intent of this study was to determine if the experiences of the employees in one
organization in this context support the relationship of organizational culture with
performance (Denison & Mishra 1995; Homburg & Pflesser 2000). Also, because a
postmodernist epistemology was used, knowledge produced in this study will be difficult
for positivists to accept because of their presumption of an independent role between
researchers and objects (Guba & Lincoln 1994, p. 112). The insights of this study are
interpreted according to a subjective view of researchers (Grbich 2013, p. 8). While we
ORGANIZATIONAL CULTURE AND PERFORMANCE
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view this as a strength, others may not. Finally, although Schein (1984, p. 3) recommended
interviews as an effective way to understand employees’ behaviors, this study did not
incorporate other methods, such as observation, to delve more deeply into Schein’s iceberg
model, such as basic underlying assumptions
Future Research
Future research may include:

Replicating the study in Thai high-performance organizations operating in a
variety of industries in order to gain in-depth understanding the impact of
cultural elements on organizational performance.

Replicating the study on family businesses, as family controlled-businesses
seem to have long-term success (Miller & Le Breton-Miller 2005, p. 13).

Studying the relationship of cultural elements and performance using a
quantitative method in order to suggest possible generalizations.

Developing a Thai-based theory of organizational culture and performance, as
all studies on this topic appear to have been grounded in a western context.
Practical Implications
Because this study employed an exploratory case study approach, no generalizations
are possible. Therefore, the knowledge from this study may be useful in helping the study
organization and other organizations to reflect on the findings to determine the relevance of
the experiences expressed by these employees. Such reflection might underscore how
important organizational culture is to organizations in Thailand and may help them to
identify other factors of culture that might influence organizational performance.
Social Implications
While the findings of this study cannot be generalized, this study may be fruitful in
the Thai society as:
ORGANIZATIONAL CULTURE AND PERFORMANCE

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This study can be used as an example of how organizational culture might
influence organizational performance. This may encourage Thai organizations to
understand the value of organizational culture. It is hoped that, by adopting an
appropriate culture, organizations will potentially gain competitive advantage.

Organizational culture may be a principle factor that may contribute to
organizational success because it can influence employees’ behaviors. For
example, this research pointed out that culture can create a sense of ownership,
service mindedness, teamwork, and open communication in workplace. These
latent variables can therefore stimulate organizational performance and affect
national economic growth (Bergheim 2008, p. 35).

As organizational culture is generally accepted as a key to organizational
excellence, it is possible to think that organizations with a positive
organizational culture are more likely to act ethically.
Originality/Value
Given strong evidence in the literature of the relationship between organizational
culture and performance, this study extends our understanding of this relationship by
highlighting the impact of cultural elements on organizational performance in the context of
Thailand. Through an exploratory case study, we have illustrated that the family culture
can enhance organizational performance through developing a sense of ownership,
teamwork, service mindedness, and open commination in the workplace.
Organizational culture can create powerful consequences for an organization. This
study illustrates an example of the family culture cultivated in the context of a Thai
scientific trading organization. In this context, the family culture was a pervasive pattern of
behaviors that employees perceived in their organization as a home, viewing their
colleagues as their own brothers and sisters. In this regard, the family culture plays an
ORGANIZATIONAL CULTURE AND PERFORMANCE
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important role in enhancing organizational performance in several ways, including
cultivating a sense of ownership, teamwork, service mindedness, and open communication
in workplace.
ORGANIZATIONAL CULTURE AND PERFORMANCE
18
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