2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Influences of Organizational Vision on Organizational Effectiveness Doris W. Carver, Ph.D. Vice President, Continuing Education Piedmont Community College United States of America (336) 322-2111 carverd2010@gmail.com I’d like to acknowledge my support team; my family, Bob, Barbie, Ross, Justin, and Nicole; and friends and colleagues, who offered words of encouragement, prayers, and advice. Special thanks to Dr. Shawn Carraher, Dr. John Parnell, Dr. Stephen Fitzgerald, Angel Solomon, Ernest Avery, and Stacey Wood. July 2-3, 2013 Cambridge, UK 1 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Influences of Organizational Vision on Organizational Effectiveness ABSTRACT: This quantitative study explored the relationship between organizational vision and organizational effectiveness from an organizational theory perspective. The purpose of this study was to increase the base of knowledge on organizational theory pertaining to strategic management by conducting an empirical study showing the relationship between organizational vision and organizational effectiveness while moderating for organizational size and age. Organizational vision was operationalized using the seven vision attributes (e.g. brevity, clarity, abstractness, challenge, future orientation, stability, and desirability) developed by Baum, Locke, and Kirkpatrick (1998). Organizational effectiveness was operationalized using financial and non-financial measures (e.g. three financial measures of return on investments (ROI), return on assets (ROA), and change in sales (chgsales); and the three non-financial measures of organizational goals, profitability satisfaction, and industry growth). This study expected to find that organizations that had organizational visions would have higher degrees of organizational effectiveness than organizations that did not have organizational visions. It further expected to find that institutions with processes that utilized institution wide input from participants of all levels in the organization would be more effective organizations than those that had only one person’s (usually the Chief Executive Officer (CEO)) or the board of director’s/trustee’s (BOD) input into the process of developing organizational vision. The findings indicated mixed results. INTRODUCTION: This quantitative study explored the relationship between organizational vision and organizational effectiveness from a strategic management view of organizational theory. Creating a vision had been cited by many organizational theorists as being important to the July 2-3, 2013 Cambridge, UK 2 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 success of an organization (Baum, Locke, & Kirkpatrick, 1998; Baum, Locke, & Smith, 2001; Baum & Locke, 2004; Collins & Porras, 1994; Daniels, 2004; Larwood, Falbe, Kriger, & Miesing, 1995; Lipton, 2004; Quinn & Rohrbaugh, 1983). The purpose of researching organizational vision and organizational effectiveness was to determine the processes organizations had for developing positive relationships between these two constructs and what influenced excellence in these areas. Since organizational vision was seen as a starting point of a transformational process, it was important to understand this relationship (Collins & Porras, 1994: Kotter, 1990; Sashkin, 1988). It was also important to note that while leadership traits of organizational leaders impact organizations, both successfully (Kouzes & Posner, 1987) and negatively (Hayward, Shepherd, & Griffin, 2006; Lipton, 2004), the focus of this study did not analyze the impact of leadership on organizational vision or on organizational performance. Organizational effectiveness was the ultimate purpose of organizations, and therein lays its significance to organizational theory (Cameron, 1986(a); Cameron, 1986(b)). Organizations that are not effective, eventually ceased to exist. The purposes for this study were to determine the relationship between organizational vision and organizational effectiveness, with moderating effects for organizational size and age, and to determine the correlation between the seven dimensions of organizational vision (i.e. the vision attributes of brevity, clarity, abstractness, challenge, future orientation, stability, and desirability) and organizational effectiveness (Baum, et al., 1998; House & Shamir, 1993). This study also examined organizations that reported no organizational vision and the comparison of the organizational effectiveness of these two groups: organizations with organizational vision and organizations without organizational vision. For the purpose of this research, only explicit visions were considered as being organizational visions. July 2-3, 2013 Cambridge, UK 3 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Explicit visions were those visions that were clearly stated and defined. Unspoken or tacit visions were not considered, because 1) it was very difficult to capture this data and 2) tacit vision appeared to be more appropriate to examine within an organization instead of across organizations. Finally, this study examined any correlations between organizational vision, organizational effectiveness, and the mediating variable named “whoinput”. The “whoinput” variable consisted of three levels. These three levels were: 1) high (institution wide input into developing organizational vision), 2) medium (the development of organizational vision by TMTs), and 3) low (organizational vision that was developed by CEOs and/or BODs). Organizational effectiveness was cited as the ultimate dependent variable in empirical research on organizations (Cameron, 1986(a); Cameron, 1986(b)). If evidence supported the theory that organizational vision leads to organizational effectiveness, then businesses would have a key tool for improving the process for designing successful organizations. SIGNIFICANCE OF THE STUDY: The significance of this quantitative study was to enhance and expand the knowledge base on organizational theory by identifying which dimensions of organizational vision most influenced organizational effectiveness, and by determining what impact organizational size, age, and participant input had on organizational vision and ultimately organizational effectiveness. Empirical research showed that organizational vision was important to organizational effectiveness in both small and large, simple and complex organizations (Baum, et al., 1998; Filion, 1991; Kotter, 1990; Westley & Mintzberg, 1989). Many of the studies reviewed used primarily qualitative methods for studying organizational vision and organizational effectiveness (Collins & Porras, 1991; Westley & Mintzberg, 1989). Kantabutra (2006) related vision-based leadership to sustainable business performance using vision July 2-3, 2013 Cambridge, UK 4 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 attributes designed by Baum, et al. (1998), and he recommended that for future research it would be important to “know which of the seven vision attributes” was the most critical to the vision components (p. 48). By identifying the organizational vision variables that influence organizational effectiveness, this study sought to define the variables that have the most significant influence on organizational effectiveness. By studying the relationship that organizational vision had to organizational effectiveness and the impact of who has input into the process of developing organizational vision, a new perspective could be studied that would add new knowledge to organizational theory. REVIEW OF THE LITERATURE: A literature review on the topic of organizational vision yielded many studies on organizational vision. The same was true for organizational effectiveness. There were many studies on the relationship between organizational vision and organizational effectiveness as they related to leaders/leadership (Baum & Locke, 2004; March & Sutton, 1997; Quigley, 1994; Snyder & Graves, 1994; Wang, 2002), organizational vision and job performance (Chorpenning, 2000; Wiedower, 2001), and leaders/leadership disconnected from organizational success (Aldrich and Martinez, 2001). The focus of this research was not on leadership, but on organizational vision and its impact on organizational effectiveness. There were very few studies that compared organizational vision to any part of organizational effectiveness (Kantabutra, 2006; Lipton, 2004). Two studies found closely related organizational vision to any element of organizational effectiveness, without leadership as a key focus, were the studies by Baum, et al. (1998; 2001) and Kantabutra (2006). July 2-3, 2013 Cambridge, UK 5 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Organizational effectiveness There were many financial indicators for determining organizational effectiveness. Two dominate organizational effectiveness measures were rate of return on equity and rate of return on total assets (Cox, 1977). Other studies found that financial measures of profitability should have been used to measure organizational effectiveness (Ansoff, 1965; Baum, et al., 1998; Child, 1977; Cox, 1977; Dess, et al., 1995; Hitt, Clifford, Nixon, & Coyne, 1999; Durand, 1999; Schendel & Hofer, 1979). Ansoff (1965) found that “rate of return on investments is a common and widely accepted yardstick for measuring business success” and is applicable in different industries (Ansoff, 1965, p. 53). The study by Baum, et al. (1998) examined the relationship of organizational vision to venture capital. In the study of entrepreneurial organizations, they found a significant relationship between vision attributes and organizational effectiveness as measured by venture growth. Venture growth, the organizational effectiveness construct, was operationalized using the measures of sales growth, annual employment growth, and average annual profit growth (Baum, et al., 1998). Baum, et al. (1998) used organizational level performance and organizational effectiveness terms interchangeably. A study by Parnell (2005) focused on the financial measures of sales growth, return on equity (ROE), return on assets (ROA), and on the non-financial measures of performance satisfaction and industry vigor. Research indicated that these financial measures were valid methods for conducting research on organizational effectiveness. This research also indicated that non-financial measures were valid methods for conducting research on organizational effectiveness (Parnell, 2005). July 2-3, 2013 Cambridge, UK 6 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Research showed that the weakness of using a single-variable (effectiveness) model could have been overcome by introducing at least two or three effectiveness variables in empirical models (Hitt, Clifford, Nixon, & Coyne, 1999; Murphy, Trailer, & Hill, 1996). Research by Judge (1994) indicated that organizational effectiveness was closely linked with financial performance measures. There were “two general approaches used in the measurement of effectiveness – those used by business executives and policy researchers and those used by organizational researchers” (Hitt, 1988, p. 29). The two major financial measurement approaches were accounting measures and the capital asset pricing model (Hitt, 1988). The accounting measures included return of investments, return on assets, return on equity, and earnings per share. Financial measures Return on assets was a “valuable indicator of how efficiently management has utilized the firm’s resources” (Hitt, Clifford, Nixon, & Coyne, 1999, p. 69). Parnell and Carraher (2001) supported the use of ROA as a measure. In one of Parnell and Carraher’s (2001) studies, they calculated ROA based on a mean for a two-year period. This study examined ROA for a twoyear period. Return on assets was calculated by dividing average total assets into net income. Return on investments (ROI) was calculated by dividing the average stockholder’s equity, or owner’s equity, into net income available to stockholders or net income for owner(s) (Shim & Siegel, 2000). This ratio indicated the rate of return earned on investments. Sales growth was measured as the increase in sales from one period of time to the next, usually expressed in annual sales, divided by annual sales of the base period (i.e. (((gross sales for 2006 + gross sales for 2007) / 2) / gross sales for 2006) (Baum, Locke, & Kirkpatrick, 1998). Sales growth was essential to financial planning and budget planning (Droms, 2003). July 2-3, 2013 Cambridge, UK 7 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Non-financial measures Non-financial measures of performance satisfaction and industry vigor were examined. Scales to measure organizational goals and profitability satisfaction, and industry growth were developed and validated by Parnell (2000), Parnell and Carraher (2001), and Parnell (2005). The measures from Parnell’s study (2005) resulted from his research in the strategic management field while examining “management as an art or science, strategic emphasis on consistency or flexibility, and strategy as a top-down or bottom-up approach” (Parnell, 2005, p. 2). There were eight survey statements that addressed the non-financial measures. These statements were 1) I am satisfied with the current profitability of my company as compared to the competition, 2) I am satisfied with the current growth of my company as compared to the competition, 3) My organization is doing a good job of meeting its goals and objectives, 4) My organization’s current level of financial performance exceeds the industry norm, 5) Our industry growth is relatively stable, 6) The potential for profit in this industry is relatively strong, 7) The industry is growing at a fast pace, and 8) The boundaries of the industry in which my company operates are clear (Parnell, 2005). The alpha for performance satisfaction is .8072 and the alpha for industry vigor is .6646 (Parnell, 2005). The loading measures for each statement above are statements 1) .855, 2) .872, 3) .856, 4) .591, 5) .695, 6) .823, 7) .595, and 8) .711 (Parnell, 2005). For the purpose of this study, organizational effectiveness was operationalized using both financial and non-financial measures, which included the financial measures of sales growth, return on investments (ROI), return on assets (ROA), and the non-financial measures of organizational goals (OG), profitability satisfaction (PS), and industry growth (IG). July 2-3, 2013 Cambridge, UK 8 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Organizational vision Organizational vision was defined as the ideal that represented or reflected the shared vision to which the organization should have aspired (House & Shamir, 1993). This was the definition that was used in this research because the literature review revealed that this definition or very similar definitions were used most often, and it also reflected the researcher’s belief of organizational vision. Senge (1990) found that shared vision was linked to organizational effectiveness. Wiedower (2001) examined shared organizational vision as it related to job performance, organizational commitment, and organizational members’ intent to leave the organization. Her research supported the importance of having a shared vision that would be communicated throughout a vision driven organization. In order for organizational vision to have been effective, action must have been taken (Nanus, 1992). Strategy was the process by which action was taken. Strategy was the “pattern or plan that integrates an organization’s major goals, policies, and action sequences into a cohesive whole” (Seth & Thomas, 1994, pp. 166-167). Mission “describes who the organization is and what it does…it is a statement of purpose, not direction” (Levin, 2000, p. 93). Organizational vision and strategy were the catalysts that moved the organization into a future state (Bennis & Nanus, 1985). Organizational vision and organizational effectiveness were key components of organizational theory, and organizational vision serves a critical role in the success of today’s organizations (Lipton, 1996; 2004). There has been extensive research on the topic of organizational vision, and this topic included structure and organizational vision (Larwood et. al., 1995), strategic management and visionary leadership (Baum & Locke, 2004; Westley & Mintzberg, 1989), vision and venture growth (Baum, et al., 1998; Baum & Locke, 2004), July 2-3, 2013 Cambridge, UK 9 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 organizational vision and visionary organizations (Collins & Porras, 1991), vision and leadership (Bennis & Nanus, 1985; House & Shamir, 1993; Kouzes & Posner, 1987: Peters, 1987; Snyder & Graves, 1994), and vision and motivation (Daniels, 2004). The literature revealed that there was no one best definition for organizational vision. There were many definitions of organizational vision. One definition of this term described organizational vision as a “future state of the organization” (Bennis & Nanus, 1985, p. 89). For the purpose of this study, organizational vision was defined as the ideal that represented or reflected the shared vision to which the organization should aspire (House & Shamir, 1993). Organizational vision was of vital importance to understanding organizational effectiveness. The studies by Baum, et al. (1998; 2001) and Kantabutra (2006) used seven vision attributes to assess organizational vision. The Baum, et al. (1998) organizational vision study focused on choices that leaders made and actions taken by leaders to guide the organization. Kantabutra’s (2006) study examined the relationship between organizational vision and sustainable business effectiveness, using the same seven vision attributes that Baum, et al. (1998) created (p. 37). For the purpose of this study, organizational vision consisted of constructs that were made up of many attributes and were labeled as vision attributes. These vision attributes included brevity, clarity, abstractness, challenge, future orientation, stability, and desirability (Baum, et al., 1998). Brevity Brevity was a key component of forming an effective vision statement (Baum, et al., 1998). In order for vision statements to have been effective, they must have been brief and communicated frequently (Locke, et al., 1991). “The ideal vision statement contains 11-22 words” (Kantabutra & Avery, 2003, p. 3). Brevity also did not mean that the briefer a vision July 2-3, 2013 Cambridge, UK 10 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 statement, the better it was at creating organizational vision. Vision statements must have been long enough to encompass the other six vision attribute characteristics and succinct enough to be communicated effectively (Locke,, et al., 1991; Peters, 1987). The vision must have been clear, so that everyone within the organization may have been able to understand its meaning. Brevity and clarity improved the communication of a vision (Kantabutra & Avery, 2003; Kotter, 1990; Yukl, 1998). A clear vision combatted confusion, clarified purpose, and gave direction (House & Shamir, 1993; Jacobs & Jaques, 1990; Kouzes & Posner, 1987; Nanus, 1992). Clarity A clearly defined vision strengthened and supported organizational functions and added to the members’ ability to work toward a shared vision (Sashkin & Burke, 1990). Communicating a clear vision to organizational members, in ways that compelled them to buy into the vision, creates a shared vision (Sashkin, 1988; Daniels, 2004). A clearly communicated organizational vision assisted in overcoming resistance to change (Palmer, 2004). Clarity of vision served to improve the remembrance of goals and the relationship of goals to goal obtainment (Jacobs & Jaques, 1990; Sashkin, 1988). Clarity also included clarifying the organization’s direction and working towards achieving the vision (Sashkin, 1988). Nanus (1992) found that a clear vision combated confusion and clarified organizational purpose and direction. Senge (1990) found that a clear vision was necessary to motivate individuals and groups to realize desired results. This study defined clarity as the “degree to which a vision statement directly points at a prime goal it wants to achieve with a clearly indicated timeframe” (Kantabutra & Avery, 2003, p. 3). July 2-3, 2013 Cambridge, UK 11 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Abstractness Adding further to the interaction between the vision attributes was the fact that the vision must have been broad based enough so as not to have been restrictive to the organization as it changed over time. The vision statement should have been abstract, not abstract in clarity, but abstract as it related to the representation of a general idea, not a one-time specific goal (Baum, et al., 1998; Kantabutra, 2006; Locke, et al., 1991). Vision statements should have been abstract enough to meet long-term goals of the organization and should not have been so narrow as to have been one-time goal oriented, then easily discarded (Locke, et al., 1991; Nanus, 1992). This study defined abstractness as the “degree to which a vision statement is not a one-time goal that can be met and then the vision is discarded” (Kantabutra & Avery, 2003, p. 3). Future orientation The vision must have been abstract enough that changes to the organization over time did not impact the focus of the vision. This is not to say that once a vision was established, it must never have been changed. Sometimes visions do change, and the organization must establish new visions. Because it was normal for organizations to change over time, by its very nature, vision was future oriented. Vision was a desired future state (Collins & Lazier, 1992; Collins & Possar, 1994; Jacobs & Jaques, 1990). Organizational vision reflected the shared vision to which the organization should have aspired (Kouzes & Posner, 1987). Visions were future oriented (Baum, et al., 1998; Collins & Lazier, 1992; Jacobs & Jaques, 1990; Kantabutra, 2006; Kotter, 1990; Lipton, 1996; Locke, et al., 1991; Senge, 1990) and focused on the long-term perspectives of the organization and the environment in which it functioned (Baum, et al., 1998; Kantabutra, 2006; Locke, et al., 1991). Vision attracted commitment, energized and created meaning for people, established a standard of excellence, and bridged the present to the future (Nanus, 1992). July 2-3, 2013 Cambridge, UK 12 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Vision directed the organization into the future (Kotter, 1990; Sashkin, 1988). This study defined future orientation of vision as the “degree to which a vision statement indicates the longterm perspective of the organization and the environment in which it functions” (Kantabutra & Avery, 2003, p. 3). Challenging Brevity, clarity, abstractness, and future orientation vision attributes were joined by desirability and challenging to produce organizational vision. Challenging was another vision attribute that examined the “degree to which a vision statement motivates members to try their best to achieve a desirable outcome” (definition used in this study) (Kantabutra & Avery, 2003, p. 3). Visions challenged people to try to do their best to achieve a desired outcome (Baum, et al., 1998; Kantabutra, 2006; Locke, et al., 1991). A vision must have motivated members to work toward the vision’s goal. A vision must have instilled employee confidence (Bennis & Nanus, 1985). Organizational members had a need for meaningful achievement (Sashkin & Burke, 1987). Nanus (1992) and Jacobs and Jaques (1990) found that people wanted to commit to a significant challenge that was worthy of their best efforts, in essence, making a meaningful difference. Members who shared a vision were challenged to achieve the vision and thereby strengthened and supported the organization’s functions and direction (Jacobs & Jaques, 1990; Sashkin, 1988). Desirability Desirability was considered the most important criterion of a vision (Locke, et al., 1991). Followers must have wanted to achieve or work towards obtaining the vision (Baum, et al., 1998; Kantabutra, 2006; Lipton, 1996; Locke, et al., 1991; Kouzes & Posner, 1987; Sashkin 1988). Visions should have been designed to provide roles for members, so they had meaningful July 2-3, 2013 Cambridge, UK 13 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 responsibility, and they had methods for effectively coordinating and integrating activities based on involvement, not structure or rules (Sashkin, 1988). Vision helped keep members moving in the desired direction despite internal and external influences (Kotter, 1990). This study defined desirability as the “degree to which a vision statement states a goal and how the goal directly benefits staff” (Kantabutra & Avery, 2003, p. 3). Desirability and challenging attributes were shown to instill employee commitment which enhanced organizational effectiveness (Nanus, 1992). Desirability attracted emotional commitment from organizational members (Kantabutra, 2006; Nanus, 1992). This commitment helped to lay the foundation for moving the organization forward and for improving organizational effectiveness. A vision that created a desired future state moved organizational members from a present state to a future state (Senge, 1990). Vision created direction for the organizational members (Collins & Lazier, 1992; Collins & Possar, 1994; Jacobs & Jaques, 1990; Kantabutra, 2006; Kotter, 1997; Lipton, 1996; Levin, 2000). Stability For vision statements to be useful, they must also have had stability and must not have changed frequently or been easily influenced by the market or changes in technology (Baum, et al., 1998; Kantabutra, 2006; Locke, et al., 1991). Changes should only have been “minor adjustments to reflect changes in the operating environment” (Locke, et al., 1991, p. 52). “Occasionally, an entirely new vision statement is required, but only if the organization needs to undergo a significant transformation” (Locke, et al., 1991, p. 52). Stability for this study was defined as the “degree to which a vision statement is unlikely to be changed by any market or technology change” (Kantabutra & Avery, 2003, p. 3). July 2-3, 2013 Cambridge, UK 14 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 METHODOLOGY: This research study was a non-experimental study that used survey data. The purpose of this survey study was to test the theory of organizational behavior that related organizational vision (e.g. vision attributes) to organizational effectiveness (e.g. financial and non-financial measures), while accounting for any influence that organizational age and organizational size may have had on this relationship. The sample population was entrepreneurial organizations in North Carolina. The independent variable, organizational vision, was operationalized using the seven vision attributes of brevity, clarity, abstractness, challenge, future orientation, stability, and desirability (Baum, et al., 1998). The dependent variable, organizational effectiveness, was operationalized using the three financial measures of return on investments (ROI), return on assets (ROA), and change in sales (chgsales); and the three non-financial measures of organizational goals, profitability satisfaction, and industry growth. The unit of analysis for this study was the organizational level. Survey instrument A survey instrument developed by Baum, et al. (1998) and modified by Kantabutra and Avery (2003) was used in order to further research conducted by Baum, et al. (1998) and Kantabutra and Avery (2003). Modifications to the instrument for this study only impacted demographic information. Statistical methods This quantitative study explored the relationship between organizational vision and organizational effectiveness from a strategic management view of organizational theory. The nature of the sample, data, and data preparation led to multiple applications of generalized linear July 2-3, 2013 Cambridge, UK 15 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 analysis. This study presented analysis using organizational size and organizational age as moderating variables. Whoinput was analyzed as a mediating variable. The researcher had planned to use multiple regression analysis, but because the data was not normally distributed (i.e. failed the test of normality), an alternative method of analysis was used. This study utilized a generalized linear model (GLM) using a gamma distribution model with a log link. Model Figure 1 depicts the diagram showing the relationship between organizational vision and organizational effectiveness while moderating for organizational size and age. The independent variable was vision attributes. The dependent variable was organizational effectiveness. The moderating variables were organizational size and age. The mediating variable of who developed the organizational vision was also included in the model. RESULTS: Sample, data collection, and data preparation Privately held entrepreneurial firms in North Carolina were surveyed in this study, but only those organizations that had been in operation for three or more years were examined. The list of entrepreneurial organizations was obtained from InfoUSA, a database marketing service organization (www.infousa.com). Industry designation was not collected. While participants from North Carolina entrepreneurial firms were selected, this research model is applicable to other industries. A random sampling was generated from the population size of 87,361 North Carolina entrepreneurial businesses. Eight hundred participants were sent surveys. A total of 163 participants responded, for a response rate of 20.4 percent. This sample size was adequate for July 2-3, 2013 Cambridge, UK 16 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 the analysis. The primary statistical method used in this study was generalized linear model (GLM) using a gamma distribution model with a log link (McCullagh & Neldar, 1989). Data was captured using a secure website (web-online surveys.com). Once data was captured from participants, the information was uploaded to an Excel spreadsheet. The Excel spreadsheet data was then uploaded into SPSS for coding and analysis. Mean substitution was used in this study to calculate values for missing data. This method was used because it provided all cases with complete information, which resulted in a relatively strong relationship among variables and generally yielded consistent results (Hair, et al., 2006). Correlation results The purpose of this non-experimental research study was to determine the relationship between organizational vision and organizational effectiveness in order to generalize from a sample to population inferences regarding organizational vision and organizational effectiveness. Presented in Table 1 (Kendall's tau) are the results for means, standard deviations, and correlations. This study found, as expected, that there were statistically significant correlations between the vision attributes of brevity, abstractness, challenging, future orientation, stability, desire, and the aggregated vision attributes. The correlations between the vision attributes and the aggregated vision attributes, using Kendall’s tau, were significant at 0.01 (2-tailed). This study also found that for change in sales (chgsales) and clarity/goal, clarity/time, abstractness, challenging, future orientation, stability, desirability, and vision attribute; the correlations were significantly different from zero at the 0.05 level (2-tailed). This indicated that there was a correlation between organizational vision and organizational effectiveness for the July 2-3, 2013 Cambridge, UK 17 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 dependent variable of change in sales. Note that there was not a statistically significant correlation between change in sales and brevity. For the correlation between return on investments (ROI) and the variables, there were no statistically significant correlations. There was a statistically significant positive correlation between ROI and return on assets (ROA) at the 0.01 level (2-tailed). For the correlations between ROA and the variables, there were no statistically significant correlations. The correlation between who had input (whoinput) into defining organizational vision and the variables indicated that all of the relationships were statistically significant at the 0.01 level (2-tailed). Reporting on the results using Kendall’s tau, the positive correlations between who had input and brevity, clarity/goal, clarity/time, abstractness, challenging, future orientation, stability, desirability, and vision attributes were statistically significant. Financial measures and mediation For Step 1 of this analysis, this study found that for the financial measures, no statistically significant relationships were observed for organizational vision (aggregated and individual attributes) with organizational effectiveness. Steps 2 through 4 were not completed because there were no statistically significant relationships observed for the IV-DV relationship. Non-financial measures and mediation For Step 1 of this analysis, statistically significant relationships were observed for several of the vision attributes (VA) on two of the non-financial dependent variables: organizational goals (OG) and profitability satisfaction (PS). Specifically, aggregated vision attributes, brevity, clarity-goals, clarity-time, abstractness, challenging, future orientation, stability, and desirability were significantly related to organizational goals, and challenging was significantly related to profitability satisfaction. July 2-3, 2013 Cambridge, UK 18 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 The statistically significant associations observed from Step 1 of the above analysis are further analyzed in the next steps. Step 2 of the Baron and Kenny analysis also required that the IV predicts the mediator. For Step 2 of the Baron and Kenny analysis, statistically significant relationships were observed for the aggregated vision attributes and challenging to whoinput. Table 2 presents the findings using the Baron and Kenny analysis. This indicates that the only potential mediating effects of whoinput were for aggregated vision attributes and challenging to organizational goals, and for challenging to profitability satisfaction. Steps 3 and 4 below show the final mediating effects of whoinput. The effects in both Steps 3 and 4 are estimated in the same equation, with Step 4 requiring that the effect of X on Y controlling for M (path c') should be zero. These steps test to determine if the IV is not statistically significant and if the mediator, whoinput, is statistically significant. Using Steps 3 and 4 of the Baron and Kenny analysis, the results of this study found that for the non-financial measures challenging was observed to be significantly related to organizational goals (Table 3). Additionally, the analysis showed that the relationship of organizational vision to organizational effectiveness was actually negative. Hypotheses testing summary In summary, for the financial measures, this study found that for all of the hypotheses (Table 4) there were no significant relationships observed; therefore, all of the hypotheses were not supported. For the non-financial measures, this study found mixed results for the hypotheses (Table 4). The results of this study also showed that the sign of the coefficients of the significant results for some of the non-financial indicators for Hypotheses H1a-H1h were negative. Table 4 presents the results for each hypothesis of this study. July 2-3, 2013 Cambridge, UK 19 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 CONCLUSION: This non-experimental quantitative study explored the relationship between organizational vision and organizational effectiveness from a strategic management view of organizational theory. The purpose of this study was to determine the relationship between organizational vision and organizational effectiveness, while accounting for any influence of organizational age, organizational size, and whoinput. The findings from this study provided additional understanding of this relationship. A primary focus of this study was to test the defined research questions and the hypotheses regarding the influences of organizational vision on organizational effectiveness. The results of this study found that no statistically significant relationships were observed between organizational vision and organizational effectiveness for ROI, ROA, and change in sales. For the non-financial measures, organizational goals and organizational vision all vision attributes were found to be statistically significant. For the non-financial measure, profitability satisfaction, the vision attribute, challenging was found to be statistically significant. For industry growth, the third non-financial measure, no statistical significance was observed. July 2-3, 2013 Cambridge, UK 20 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 References Ansoff, H. I. (1965). Corporate strategy: An analytic approach to business policy for growth and expansion. New York: McGraw-Hill Book Company. Baron, R. M., & Kenny, D. A. (1986). The moderator-mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51, 1173-1182. Baron, R. A., & Ward, T. B. (2004). Expanding entrepreneurial cognition’s toolbox: Potential contributions from the field of cognitive science. Entrepreneurship: Theory and Practice, Winter Issue, 553-573. Baum, J. R. (1994). The relation of traits, competencies, vision, motivation, and strategy to venture growth. Dissertation. (UMI No. 9526175). Baum, J. R. & Locke, E. A. (2004). The relationship of entrepreneurial traits, skills, and motivation to subsequent venture growth. Journal of Applied Psychology, 89(4), 587-598. Baum, J. R., Locke, E. A., & Kirkpatrick, S. A. (1998). A longitudinal study of the relation of vision and vision communication to venture growth in entrepreneurial firms. Journal of Applied Psychology, 83(1), 43-54. Baum, J. R., Locke, E. A., & Smith, K. G. (2001). A multidimensional model of venture growth. Academy of Management Journal, 44(2), 292-303. Bennis, W., & Nanus, B. (1985). Leaders: The strategies for taking charge. New York: Harper & Row. Cameron, K. S. (1986 (a). A study of organizational effectiveness and its predictors. Management Science, 32(1), 87-112. Cameron, K. S. (1986 (b). Effectiveness as paradox: Consensus and conflict in conceptions of organizational effectiveness. Management Science, 32(5), 539-553. Child, J. (1977). Organizational: A guide to problems and practice. New York: Harper & Row. Chorpenning, D. (2000). Components in the design and implementation of an organizational vision. (UMI No. 9959018). Collins, J. C., & Lazier, W. C. (1992). Beyond entrepreneurship: Turning your business into an enduring great company. Englewood Cliffs, NJ: Prentice Hall. Collins, J. C., & Porras, J. I. (1991). Organizational vision and visionary organizations. California Management Review, 34(1), 30-52. July 2-3, 2013 Cambridge, UK 21 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Collins, J. C., & Porras, J. I. (1994). Built to last: Successful habits of visionary companies. New York: HarperCollins. Cox, W. E., Jr. (1977). Product portfolio strategy, market structures, and performance. In H. B. Thorelli (Eds.), Strategy + structure = performance: The strategic planning imperative (pp. 83-102). Bloomington & London: Indiana University Press. Daniels, J. (2004). Driving to make things happen. Industrial Management, 46(6), 20-25. Dess, G. G., Gupta, A., Hennart, J., & Hill, C. W. L. (1995). Conducting and integrating strategy research at the international, corporate, and business levels: Issues and directions. Journal of Management, 21(3), 357-393. Droms, W. G. (2003). Finance and accounting for nonfinancial managers. Cambridge, MA: Perseus Publishers. Durand, R. (1999). The relative contributions of inimitable, non-transferable and nonsubstitutable resources to profitability and market performance. In M. A. Hitt, P. G. Clifford, R. D. Nixon, and K. P. Coyne (Eds.), Dynamic strategic resources: Development, diffusion and integration (pp. 67-95). Chichester: John Wiley & Sons, LTD. Filion, L. J. (1991). Vision and relationships: Elements for an entrepreneurial metamodel. International Small Business Journal, 9, 112-131. Hair, J. F., Jr., Black, W. C., Babin, B. J., Anderson, R. E., & Tatham, R. L. (2006). Multivariate data analysis. Upper Saddle River, NJ: Pearson/Prentice Hall. Hayward, M. L. A., Shepherd, D. A., & Griffin, D. (2006). A hubris theory of entrepreneurship. Management Science, 52(2), 160-172. Hitt, M. A. (1988). The measuring of organizational effectiveness: Multiple domains and constituencies. Management International Review, 28(2), 28-40. Hitt, M. A., Clifford, P. G., Nixon, R. D., & Coyne, K. P. (1999). The development and use of strategic resources. In M. A. Clifford, P. G. Clifford, R. D. Nixon, & K. P. Coyne (Eds.), Dynamic strategic resources: Development, diffusion, and integration (pp. 1-14). Chichester: John Wiley & Sons, LTD. House, R. J., & Shamir, B. (1993). Toward the integration of transformational, charismatic and visionary theories of leadership. In M. M. Chemers and R. Ayman (Eds.), Leadership theory and research: Perspectives and directions (pp. 81-107). San Diego, CA: Academic Press. July 2-3, 2013 Cambridge, UK 22 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Jacobs, T. O., & Jaques, E. (1990). Military executive leadership. In K. E. Clark & M. B. Clark (Eds.), Measures of leadership (pp. 281-295). West Orange, NJ: Leadership Library of America, Inc. Judge, W. Q., Jr. (1994). Correlates of organizational effectiveness: A multilevel analysis of a multidimensional outcome. Journal of Business Ethics, 13(1), 1-10. Kantabutra, S. (2006). Relating vision-based leadership to sustainable business performance: A Thai perspective. Leadership Review, 6(Spring 2006), 37-53. Kantabutra, S. (2007). Vision effects in customer and staff satisfaction in Thai retail store: An empirical investigation. Leadership and Organizational Development Journal, forthcoming. Kantabutra, S. (2009). Toward a behavioral theory of vision organizational settings. Leadership and Organizational Development Journal, 30(4), 319-337. Kantabutra, S. (2010). Vision effects: A critical gap in educational leadership research. The International Journal of Educational Management, 24(5), 376-402. Kantabutra, S., & Avery, G. C. (2003). Enhancing SME performance through vision-based leadership: An empirical study. 16th Annual Conference conducted at the meeting of Small Enterprise Association of Australia and New Zealand. Victoria, Australia. Kantabutra, S., & Avery, G. C. (2007). Vision effects in customer and staff satisfaction: An empirical investigation. Leadership and Organizational Development Journal, 28(3), 209-229. Kantabutra, S. & Avery, G.C. (2010). The power of vision: Statements that resonate. Journal of Business Strategy, 31(1), 37-45. Kotter, J. P. (1990). A force for change: How leadership differs from management. New York: Free Press. Kouzes, J., & Posner, B. (1987). The leadership challenge. San Francisco, CA: Jossey-Bass. Larwood, L., Falbe, C. M., Kriger, M. P., & Miesing, P. (1995). Structure and meaning of organizational vision. Academy of Management Journal, 38(3), 740-769. Levin, I. M. (2000). Vision revisited: Telling the story of the future. The Journal of Applied Behavioral Science, 36(1), 91-107. Lipton, M. (1996). Demystifying the development of an organizational vision. Sloan Management Review, 37(4), 83-92. July 2-3, 2013 Cambridge, UK 23 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Lipton, M. (2004). Walking the talk (really!): Why vision fail. Ivey Business Journal Online, January/February, 1-6. Locke, E. A., Kirkpatrick, S., Wheeler, J. K., Schneider, J., Niles, K., Goldstein, H., Welsh, K., & Chah, D. (1991). The essence of leadership: The four keys to leading successfully. New York: Lexington Books. March, J. G., & Sutton, R. I. (1997). Organizational performance as a dependent variable. Organizational Science, 8(6), 698-706. McCullagh & Nelder, J. A. (1989). Generalized Linear Models (2nd ed.). Boca Raton, Fl.: Chapman & Hall. Mintzberg, H. (1991). The effective organization: Forces and forms. Sloan Management Review, 32(2), 54-67. Murphy, G. B., Trailer, J. W., & Hill, R. C. (1996). Measuring performance in entrepreneurship research. Journal of Business Research, 36(1), 15-23. Nanus, B. (1992). Visionary leadership: Creating a compelling sense of direction for your organization. San Francisco: Jossey-Bass. Palmer, B. (2004). Overcoming resistance to change. Quality Processes, 33(4), 35-39. Parnell, J. A. (2000). Reframing the combination strategy debate: Defining forms of combination. Journal of Applied Management Studies, 9(1), 33-54. Parnell, J. A. (2005). Managing paradoxes in strategic decision-making. International Journal of Management & Decision Making, 7(6), 708-724. Parnell, J. A., & Carraher, S. (2001). The role of effective resource utilization on strategy’s impact on performance. International Journal of Commerce & Management, 11 (3 & 4), 1-34. Peters, T. (1987). Thriving on Chaos. New York: HarperCollins Publishers. Quinn, R. E., & Rohrbaugh, J. (1983). A spatial model of effectiveness criteria: Towards a competing values approach to organizational analysis. Management Science, 29(3), 363377. Quigley, J. V. (1994). Vision: How leaders develop it, share it, and sustain it. Business Horizons, 37(5), 37-42. Sashkin, M. (1988). The visionary leader. In J. A. Conger & R. N. Kanungo (Eds.), Charismatic leadership: The elusive factor in organizational effectiveness (pp. 122-160). San Francisco: Jossey-Bass. July 2-3, 2013 Cambridge, UK 24 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Sashkin, M. & Burke, W. W. (1987). Organization development in the 1980’s. Journal of Management, 13(2), 393-418. Schendel, D. E., & Hofer, C. W. (1979). Strategic management: A new view of business policy and planning. Boston, MA: Little Brown and Company. Senge, P. M. (1990). The fifth discipline: The art & practice of the learning organization. New York, NY: Doubleday/Currency. Seth, A., & Thomas, H. (1994). Theories of the firm: Implications for strategy research. Journal of Management Studies, 31(2), 165-191. Shim, J. K. & Siegel, J. G. (2000). Financial Management. Hauppauge, NY: Barrons. Wang, H. (2002). CEO leadership attributes and organizational effectiveness: The role of situational uncertainty and organizational culture. (UMI No. 3094775). Westley, F., & Mintzberg, H. (1989). Visionary leadership and strategic management. Strategic Management Journal, 10(special issue), 17-32. Wiedower, K.A. (2001). A shared vision: The relationship of management communication and contingent reinforcement of the corporate vision with job performance, organizational commitment, and intent to leave. (UMI No. 3030139). Yukl, G. (1998). Leadership in Organizations (4th ed). Englewood Cliffs, NJ: Prentice Hall. July 2-3, 2013 Cambridge, UK 25 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Table 1 Correlations-Kendall’s tau Kendall's tau Correlations Variables Brevity Claritygoal Clartityime Abstractness Challenging Future orientation Stability Desire Vision attributes roi2007 roa2007 Chgsales Whoinput Org.age Org.size clarity goal clarity time abstractness challenging 1 .88** .79** .75** 1 .79** .77** 1 .77** 1 .75** .76** .71** .79** .85** .73** .77** .85** .71** .83** .80** .76** .77** -0.02 0.06 0.12 .71** -0.04 0.11 .72** -0.00 0.06 .14* .76** -0.08 0.05 .71** 0.01 0.07 .14* .77** -0.01 0.08 .85** -0.05 -0.00 .12* .72** -0.04 0.07 Mean 1.39 0.59 1.01 2.60 2.15 Std.Dev. 1.62 0.56 0.96 2.71 2.33 brevity 1 .79** .73** .75** .69** 2.40 3.06 1.85 2.74 2.87 2.12 1.88 500.1 502.9 1.06 1.44 26.18 90.99 1.77 39.53 36.77 0.20 1.56 23.98 791.76 future orient. stability desire .76** .76** .75** 1 .82** .76** 1 .75** 1 .79** -0.05 -0.02 .17* .75** -0.03 0.07 .86** -0.05 0.03 .12* .72** -0.05 0.05 .77** -0.03 0.04 .14* .76** -0.04 0.06 .81** 0.03 0.04 .15* .68** 0.00 0.06 vision attrib. roi 2007 1 -0.04 0.00 .14* .68** -0.02 0.09 1 .53** 0.04 -0.03 0.03 0.05 ** Correlation is significant at p < 0.01 (2-tailed) * Correlation is significant at p < 0.05 (2-tailed) July 2-3, 2013 Cambridge, UK 26 roa 2001 1 -0.02 0.02 0.04 0.05 chg sales 1 .14* -0.00 .00 who input 1 -0.06 0.02 org. age 1 .29** org. size 1 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Table 2 Step 2: Mediating Effect –Vision Attributes and Whoinput Parameter (Intercept) VA and Whoinput (Scale) (Intercept) Brevity and Whoinput (Scale) (Intercept) Clarity-Goals and Whoinput (Scale) (Intercept) Clarity-Time and Whoinput (Scale) (Intercept) Abstractness and Whoinput (Scale) (Intercept) Challenging and Whoinput (Scale) (Intercept) Future Orientation and Whoinput (Scale) (Intercept) Stability and Whoinput (Scale) (Intercept) Desirability and Whoinput (Scale) a. Maximum likelihood estimate b. p < 0.05 July 2-3, 2013 Cambridge, UK Parameter Estimates 95% Wald Confidence Interval Hypothesis Test Std. Wald ChiB Error Lower Upper Square df Sig. .408 .2421 -.067 .882 2.834 1 .092 .156 .0708 .017 .295 4.842 1 .028b .271a .0383 .205 .357 .849 .1175 .619 1.079 52.190 1 .000 .034 .0422 -.049 .117 .651 1 .420 a .282 .0397 .214 .371 1.325 .2544 .826 1.823 27.113 1 .000 -.378 .2381 -.845 .088 2.523 1 .112 a .277 .0391 .210 .365 .573 .2217 .139 1.008 6.683 1 .010 .200 .1205 -.036 .436 2.756 1 .097 a .276 .0390 .210 .364 .741 .1458 .456 1.027 25.870 1 .000 .041 .0293 -.016 .098 1.963 1 .161 a .278 .0393 .211 .367 .509 .1280 .258 .760 15.774 1 .000 .107 .0306 .047 .167 12.229 1 .000b .253a .0359 .192 .334 .901 .1160 .674 1.128 60.308 1 .000 .008 .0240 -.039 .055 1.01 1 .750 .283a .619 .058 .279a .890 .013 .283a .0399 .2457 .0442 .0394 .1214 .0329 .0399 .215 .138 -.029 .212 .652 -.051 .215 .373 1.101 .144 .368 1.128 .078 .373 6.355 1.695 1 .012 1 .193 53.698 .162 1 .000 1 .687 27 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Table 3 Steps 3 and 4: Mediating Effect –Organizational Vision and Whoinput on Organizational Goals Parameter Estimates 95% Wald Confidence Interval Parameter B Std. Error (Intercept) .284 .1103 Whoinput -.029 .0808 VA and OG -.129 .0714 a (Scale) .924 .1023 (Intercept) .259 .1052 Whoinput -.027 .0770 Challenging and OG -.102 .0517 a (Scale) .920 .1019 (Intercept) .168 .1077 Whoinput -.055 .0788 Challenging and PS -.041 .0529 a (Scale) .964 .1068 a. Maximum likelihood estimate b. p < 0.05 July 2-3, 2013 Cambridge, UK Lower .068 -.188 -.269 .743 .053 -.178 -.204 .740 -.043 -.210 -.145 .776 Hypothesis Test Wald ChiUpper Square df Sig. .500 6.620 1 .010 .129 .131 1 .718 .011 3.247 1 .072 1.148 .465 6.079 1 .014 .124 .125 1 .724 -.001 3.920 1 .048b 1.143 .379 2.437 1 .119 .099 .494 1 .482 .063 .605 1 .437 1.198 28 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 Table 4 Results of Alternative Hypotheses Testing Alternative Hypotheses Testing Results ALTERNATIVE HYPOTHESIS H1: The aggregate of all of the vision attributes (i.e. brevity, clarity, abstractness, challenge, future orientation, stability, and desirability) has a positive association with organizational effectiveness. H1a: Organizational vision statements with brevity will have a positive association with organizational effectiveness. H1b: Organizational vision statements with clarity will have a positive association with organizational effectiveness. H1c: Organizational vision statements with abstractness will have a positive association with organizational effectiveness. H1d: Organizational vision statements that are challenging will have a positive association with organizational effectiveness. H1e: Organizational vision statements that are future oriented will have a positive association with organizational effectiveness. H1f: Organizational vision statements with stability will have a positive association with organizational effectiveness. H1g: Organizational vision statements with desirability will have a positive association with organizational effectiveness. H1h: Organizational effectiveness is enhanced in organizations that have organizational vision. H2: Organizational size positively moderates the relationship of organizational vision to organizational effectiveness. H3: Organizational age positively moderates the relationship of organizational vision to organizational effectiveness. H4: Organizational vision’s (aggregated) influence on organizational effectiveness is mediated through input into designing organizational vision (i.e. whoinput). RESULTS FINANCIAL ROI ROA Change in Sales RESULTS NON-FINANCIAL1 Org. Profitability Industry Goals Satisfaction Growth - - - -*- - - - - - -*- - - - - - -*- - - - - - -*- - - - - - -*- * - - - - -*- - - - - - -*- - - - - - -*- - - - - - -*- ** - - - - ** - ** - - - ** - - - - - - - - * Supported, p < 0.05 ** Partially supported, p < 0.05 -*- Significant, negative relationship, p < 0.05 1 Note: the coefficients for Hypotheses H1a-H1h were negative for some of the non-financial indicators. July 2-3, 2013 Cambridge, UK 29 2013 Cambridge Business & Economics Conference ISBN : 9780974211428 M2 Organizational Age M1 Organizational Size H2 (+) H3 (+) H1 (+) ORGANIZATIONAL EFFECTIVENESS (OE) ORGANIZATION AL VISION (OV) -Brevity -Clarity -Abstractness -Challenge -Future Orientation -Stability -Desirability -Financial Attributes -Sales growth -Return on equity -Return on assets H1a-H1h (+) M3 WHOINPUT -Non-Financial Attributes - Performance satisfaction - Industry vigor H4 (+) Figure 1. The figure presents the model of the relationship of organizational vision to organizational effectiveness as moderated by organizational size and organizational age. July 2-3, 2013 Cambridge, UK 30