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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.
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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
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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.
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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
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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).
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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).
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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).
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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).
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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),
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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
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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).
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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).
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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
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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).
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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
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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
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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
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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.
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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.
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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.
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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)
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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
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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
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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
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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
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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
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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.
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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.
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