Productivity and Quality in Smart Manufacturing Systems

The relationship between organisational culture and firm performance: An empirical study on Indonesian manufacturing firms

Didik Wahjudi, Moses Laksono Singgih, Patdono Suwignjo, Imam Baihaqi

Abstract

The impact of organisational culture on firm performance has been well documented. Previous studies on the impact of organisational culture derived from its national culture have been conducted in homogenous cultures. Little attention has been given to the impact of organisational culture derived from Indonesian culture on firm performance. Indonesia’s subcultures may not be represented in the national culture. This study examines the impact of organisational culture on firm performance among Indonesia manufacturing firms. Results from 152 organisations confirm that organisational culture has significant effect on firm performance. Only individualism and uncertainty avoidance significantly impact firm performance. The implication is that, even in a country with many subcultures, firms’ top management still need to pay attention to the impact of national culture at organisational level. Furthermore, since Indonesia has a very low score on individualism, managers need to create a conducive and rewarding environment for individuals to contribute.


Keywords: national culture; firm performance; structural equation modelling; SEM; organisational culture; Indonesia; empirical study.


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