Linking knowledge processes with firm performance: Organizational culture
This research paper provides quantative evidence linking organizational culture with firm performance. Results show that companies with higher levels of trust, comaraderie, and pride significantly outperformed comparible companies in value creation, operating income per employee, return on assets, and growth rate between 2004 and 2008.
Purpose – The purpose of this paper is to report the results of a matched sample comparison group study of elements of organizational culture that enable knowledge processes to drive superior firm performance.
Design/methodology/approach – A matched sample comparison group approach was used to compare firm performance among matched pairs of public companies. Companies demonstrating high levels of trust (benchmark group) were matched with firms of similar size in the same industries demonstrating lower levels of trust (control group).
Findings – The benchmark group generated significantly superior value, operating performance, and had higher average annual growth rates than matching firms in the control group. Firms with higher relative levels of trust embedded in the organizational culture are more likely to outperform similar firms with lower levels of trust.
Research limitations/implications – The findings are based on surveys and financial performance of companies with securities traded on stock exchanges in the United States and may not represent other organizational forms, other geographic, economic, or cultural environments.
Practical implications – This study begins to identify a link between knowledge management, organizational learning, and knowledge creation (collectively knowledge processes) with firm performance.
Social Implications – Identifying elements of organizational culture that link knowledge processes with firm performance is essential to developing a leadership model that reinforces enabling cultural attributes.
Originality/value – Many researchers have identified a lack of empirical research linking knowledge processes with firm performance. This study begins to fill the research gap with evidence that elements of organizational culture, specifically trust, enable firms to convert knowledge and learning initiatives into tangible performance recognized by financial markets.
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