Sarhad Nawzad Jafar 3031 PG-Student University of Kurdistan 02-May-12

For most people, corporate culture is a vague and slippery concept at best. Almost everyone agrees that it is an important factor in the success or failure of any organization, but many people have difficulty pinning down exactly what their corporate culture is and are truly at a loss when it comes to knowing how to change it. Peg Neuhauser, 2005

Introduction Lately, corporate culture has been recognized to be an important determinant of organizational behavior and performance. The press and the mass media often make references to a specific corporations culture, such as the HP Philosophy, the IBM Way, and 3M Value, and attribute each companys competitive advantage to its culture. Furthermore, several books and various case studies have focused on corporate culture to explain how it works, how it changes and evolves, and how it influences behavior and corporate performance (e.g., Deal and Kennedy, 1982: Schein, 1985).

In spite of the popular attention paid to organizational culture, however, very few quantitative studies have been conducted to establish its importance. The shortage of quantitative evidence can be related to the fact that corporate cultures have tacit, ambiguous, and unobservable aspects, which are usually hard to measure using publicly available information, and thus show an obstacle to quantitative analysis. There are a few exceptional works such as Denison (1984), Gordon and DiTomaso (1992), which report that corporate culture and cultural strength are associated with higher performance. However, these previous studies focused almost exclusively on cultures impact on performance. Needless to say, ascertaining the statistically significant performance effects of culture, and determining whether a particular culture enhances or harms performance are not easy tasks. This study will clarify the relationship among corporate culture and organizational performance; In addition, it will explain the different kinds of corporate culture and their impact on the performance of an organization.

What is Organizational Culture? A numerous definitions and explanations have been suggested for the concept of corporate culture. Several of these explanations are extracted directly from anthropology and some other are detailed to the organization sector. One of The first researcher discussed organizational culture was (Pettigrew, 1979) in the Administrative Science Quarterly journal. The culture anthropological theory was introduced by Pettigrew who has explained the relation theory that can be employed in the analysis of the organization, such as symbolism, myth, and rituals. Many Researchers and authors have defined corporate culture in various ways. However, some of them concurred on, that corporate culture is combining the pattern of
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behavior, beliefs, procedures and values that constitute the organizations identity; and also to assist in the formation of the users behavior. It is very significant to view how people perform within the context of the group, sharing with a group of people in an organization is the main definition of corporate culture that most authors agreed on. (Deal and Kennedy 1982, Schein 1991, Deshpande and Farley 1993). A significant study was conducted by Deshpande etal. (1993), in which culture was defined as a pattern of shared values and beliefs that help individuals to understand organizational functioning, and thus provide them with the norms for behavior in the organization. In fact, for many companies, organizational culture can end up being more valuable than its own tangible assets. Organizational cultures represent the character of an organization, which directs its employees' day-to-day working relationships and guides them on how to behave and communicate within the organization, as well as guiding how the company hierarchy is built (Tseng, 2010). Ouchi (1983) Defines corporate culture as a shared phenomenon. This means that culture is a product that can be learnt within experienced individuals and also can be found only in a group with an important history Furthermore, (Schein 1991) agrees on defining culture as a prototype of fundamental hypothesis created, revealed and expanded by means of a particular group of people while it learns to deal with its internal integration and external adaptation problems. Subsequently, all these principles are trained to new staff in a corporation to lead them to the right way to believe and think relatively to these problems. Also, (Schein, 1999) opinion about culture is to formulate and manage system in order to create behavioral standards. Many researchers and authors, apart from (Schein 1991), proclaimed that there are two stages of corporate culture, the visible stage and the less visible or deeper stage. The visible phase includes behavior patterns that are used via group, such as the social and physical atmosphere. However, the culture with less visible phase is associated to the values of a group that comprise of objectives and concerns that will form a sense of what is must to do. This is what known as basic assumptions in Scheins opinion. Schein 1991 also believed that culture is more linked with less visible stage, even though in many articles he has explained corporate culture and other cultures by means of using visible evidences. The values that have been mentioned above may stay conscious and may be stated explicitly in a companys mission statement as the dominant values of the organization (Deal and Kennedy 1982). These values
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can be seen as espoused values if it is not based on the learning of previous culture, which expect the individuals attitude in different cases and what they really want to do in the case where the values ought to be working (Hofstede, 1980). Hence, the missions of the company may contradict with what the records say, so the corporate cultures beliefs and values are more than just priorities and strategic objectives. Organizational culture is a complex notion in which we can find very many components. Besides the influences of these components, organizational culture is also acted upon by influences originating from the social environment, but also by the personal features of each employee. Organizational culture is influenced by each of the previously mentioned components, but especially by the way these components relate with each other and with external environment factors. Organizational Performance Each organization has its own goal, and workers have to utilize different control activities and effective operation to achieve their organizational goal. Performance guides are an instrument to evaluate goal achievement. In the for-profit organizations, performance is to measure revenue, production, and profit making. In the non-profit organizations, they do not evaluate performance by profits. They do not have to make an imminent improvement whether the decision is right or not, whether the resource is used properly, and whether the mission is being achieved. However, Seetoo (1999) the non-profit organizations need performance management to control organizational operation. Drucker (1990/2004) indicated that the performance of the non-profit organizations must use missions as guideline. Otherwise, they cannot operate properly since missions determinate what performances and results they want to accomplish. Thus, the mission accomplishment is the performance indices of the non-profit organization. Decision makers have to continuously examine whether their missions are meaningful to the society and whether the resources are effectively used, and they need seek timing for an improvement. Therefore, management performance is the key for the long term survival of the non-profit organizations and the evaluation indices to the society (Seetoo, 1999). Moreover, Chou (2005) categorized the management performance into business performance and overall satisfaction. Business performance refers that the organizational missions not only meet the expectation of the society but also receive the overall confirmation from the society. In the meantime, manpower and resource have been utilized properly and effectively. The overall satisfaction refers to the degree
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of members or group overall satisfaction with the recognition, the cohesiveness and organizational performance in an organization.

Impact of Corporate Culture on Organization In the last two decades corporate culture has obtained the attention from many organizations due to the impact on the organizations achievement. Many researchers such as (kotter and heskett, 1992) supposed that there is a long lasting impact of corporate culture on the performance of the organizations. They believed that organizational strategy is also associated with corporate culture, mostly in the application in an organization of a chosen strategy. Corporate culture is the most significant element in the scope of the behavior performance in any organization, especially in understanding the framework of the organization. This means that the success of the organization in attaining its objectives and target was affected by the corporate culture.

Cultures help build a strong sense of ownership among employees by emphasizing such practices as empowerment, employee involvement, teamwork, consistency, adaptability and a strong sense of mission (Fey & Denison, 2003). Organizational cultures enhance organizational outcomes by appealing to employees ideals allied with commitment and effort (e.g. Pettigrew, 1979). Upper management employ culture to boost effectiveness by focusing organizational members attention and by highlighting priorities that guide and coordinate members behavior towards achieving performance goals (OReilly & Chatman, 1996). Performance outcomes that are associated with organizational culture range from increased member participation (Pettigrew, 1979), through employee commitment to financial performance goals (Denison & Mishra, 1995; Kotter & Heskett, 1992). In an extensive study of 764 organizations, Denison and Mishra (1995) found significant relationships between organizational culture and performance. Their findings demonstrate how different culture dimensions (e.g. involvement and mission-orientation) can enhance different aspects of performance (e.g. profitability and sales growth). As far as linking specific culture dimensions to specific types of organizational outcomes, a number of works provide a basis for the formulation of hypotheses. Mintzberg (1973) suggested that one of the key executive roles is the entrepreneurial role, which involves searching the organization and its environment for new opportunities and facilitating change and innovation in the organization.
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Cultures that are associated with innovation and entrepreneurial goals facilitate firms efforts to manage. Another great consequence of a strong company culture is that it raises behavioral consistency across employees in a firm. Organizational culture defines a normative order that serves as a source of steady behavior within the organization. In this sense, organizational culture is a social control mechanism (O'Reilly, 1989; O'Reilly and Chatman, 1996). At the same time, organizational cultures frame people's interpretations of organizational events and basic assumptions about organizational processes. Schein (1991: 15) emphasized that organizational cultures "offer group members with a way of giving meaning to their daily lives, setting guidelines and rules for how to behave, and, most important, reducing and containing the anxiety of dealing with an unpredictable and uncertain environment." Widespread agreement about basic assumptions and values in the firm should increase behavioral consistency (Gordon and DiTomaso, 1992) and thereby enhance organizational performance, which is a function of the potential return to an organization's activities and its ability to carry out those activities.

Organizational Culture impact in reality Throughout the paper there is lots of evidence which shows the impact of organizational culture on performance, but in theory. However, in order to be able to prove that theory in reality there are very little efforts and resource for proving these claims. Especially the case in even more hard to be able to a empirical study on that subject in Kurdistan or Iraq and also another limitation is the available time that the researcher have to conduct the empirical study. That is why I have decided to use a research which was done by (Kareem, 2010) on Zain Company. The reason for choosing that case is that, the company is operating in the area and so that their experience and their procedures can be more applicable to our organization in Kurdistan rather than bringing examples from the western countries where their cases might not be one hundred percent applicable in here. The general aim of the study is to examine whether corporate culture has any positive impact on the organizations overall financial performance. For the empirical study the major aims are to examine the organizational culture in Zain Organization, examine the financial performance and finally to examine the existence among corporate culture and financial performance in Zain Organization. It evaluates this by measuring the same for a

telecommunication company and juxtaposing it with assertions and arguments by leading authors and researchers in the subject.

Case Study: Zain Company Background of the company: Zain is a Mobile Telephone Service Company which was originally known as Fastlink. Zain Company was established in Kuwait in 1983, and now days it is one of the most two significant and well known mobile operators in the Middle East and Africa. Worldwide, Zain has 70 million total mobile customers and it operates in 24 countries in the Middle East and Africa, such as Jordan, Kuwait, Saudi Arabia, Iraq, Sudan, Ghad, Kenya, Tanzania, Zambia and many others (Zain 2009). Zain has the most distinctive corporate culture that generates the greatest practices. In addition, culture has a positive impact that directs to an excellent corporate, and this is the major element for Zains success in the Middle East and Africa (Zain 2009). Without any doubts, Zain has proclaimed that the impact of corporate culture has played an important role in developing and enhancing the strength of their brands, products and dynamism. Staff and clients are the most significant property the company has in order to continue in maintaining and developing the corporate culture in Zain.

Corporate culture of Zain The researcher Kareem (2010) chose some aspects of culture in order to find out how the culture of Zain is formed the components are involvement, consistency, and adaptability. Involvement It can be said that Zain Telecommunication possesses a very high involvement in their corporate culture. Employees are very satisfied with the top management since they delegate authority among middle management and give them enough freedom to do their work without any involvement from top management. However, there is a policy called open door policy which means middle management are more than welcome to discuss with top management with the work they have been delegated with and they can take suggestions and ideas from top management to get the work done (Kareem, 2010).

Consistency A company is said to have consistent culture when its system, structures and processes are consistent. Employees were asked about the existence procedures and communication within the company in order to find out consistency in culture.

Adaptability Zain telecommunication possesses a high level of adaptability as found from discussion with the employees of the company. For example, corporate sales team of Zain telecom use an innovative system to operate. There are four members for each of the corporate sales team. They always have three sales personnel working outside on sales call while one of employees works in the office (Kareem, 2012). Impact of Zains Culture on the organizational performance The second part of the empirical study focused on the effects of organizational culture on performance more specifically financial wise, including market share, profit margin, and return on total equity.

Market Share According to Denison (1995), a company that has an effective corporate culture is most likely to have a higher market share in the industry or its market share should always go up. Zain Telecom is no exception to that sine at 2008 Annual Report, it has been announced that total market share owned by Zain Jordan at this moment is approximately 45%. It was 41.6% in the last year while 41.2% on 2006. And the vision of Zain is to increase its market share even further by the end of 2011 through effective application of 3*3*3 strategy (which hasnt been disclosed for privacy reason). Therefore, they are expecting to have a higher market share within a very short period of time (Kareem, 2010).

Profit Margin Zain made total revenue of $484.9 million dollar for the year 2008 while the total profit was $128.4 million dollars. Therefore, the profit margin for Zain for the year of 2008 was 26.48%. On the other hand, profit margin for Jordan Telecom for the year of 2008 was 24.73%. Zain Telecom did better than Jordan Telecom in 2007 as well where Zain telecom had a profit margin of 24.98% and Jordan Telecom had a market share of 23.54%. A comparison of two years
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between Jordan Telecom and Zain Telecom made it quite clear that Zain Telecom performed better than Jordan Telecom on a continuous basis(Kareem,2010).

Return on Total Equity Return on Total Equity = Net Income/Shareholder's Equity Zain Telecom had ROE of 20.41% in the year of 2008 and 19.93% in the year of 2007 while Jordan Telecom had a ROE of 18.18% in the year 2008 and 19.16% in the year of 2007. Therefore, we can see that in both years, Zain performed better than Jordan Telecom in having more return on the total money invested on the company by the shareholders (Kareem, 2010).

In Conclusion Corporate culture is a significant component of any organization whether private or public for profit or non-profit. Also, the culture of the organization can have an impact on the organization whether negative effect or positive effect. In this report, more focus was to the positive influence of organizational culture over performance. In the report it the literature has shown for the positive impact also for the sake of the report also empirical evidence was shown regarding the positive effect of organizational culture on performance. The data was taken from another study which was conducted on Zain, which is a telecommunication company. My recommendation for the organization in Kurdistan would be, given closer attention to the concept of organizational culture and perceiving it as a major ingredient which is needed for the process of growth and prosperity!

References Chou, S. W. (2005). A study on organizational commitment, learning, and performance of nonprofit Institutes: With Rotary International Taiwan as an example. Unpublished masters thesis, National Chung Cheng University, Taiwan.

Deal, T. and A. Kennedy (1982), Corporate Cultures, Addison-Wesley: Reading, MA. Denison, D. R. (1984), Bringing Corporate Culture to the Bottom Line, Organizational Dynamics 13, pp. 5-22. Denison, D. R., & Mishra, A. K. (1995). Toward a theory of organizational culture and effectiveness. Organization Science, 6, 204223.

Deshpande, R., Farley, J.U., Webster, F.E. (1993), "Corporate culture, customer organization, and innovativeness in Japanese firms: a quadrate analysis", Journal of Marketing, 57 (1), 23-37. Drucker, P. F. (2004). Managing the non-profit organizations (P.S Yu, Trans). Taipei:YuanLiou. (Original work published in 1990) Fey, C. F., & Denison, D. R. (2003). Organizational culture and effectiveness: Can American theory be applied in Russia? Organization Science, 14, 686706.

Gordon, G. G. and N. DiTomaso (1992), Predicting Corporate Performance from Organizational Culture, Journal of Management Studies 29, pp. 783-798. Hofstede, G. (1980). Cultures consequences. Newbury Park, CA.: Sage. Kotter, J. P. and J. L. Heskett (1992), Corporate Culture and Performance, Free Press: New York. Kareem, M. (2010). Relationship between Corporate Culture and Organizational Effectiveness: A Case Study on Zain Telecommunication Limited. Accessed Date: 10-April-2012 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1624690 Neuhauser, P. C. (2005). Strategies for Changing Your Corporate Culture. [On-line]. Available:
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www.culturedotcom.com/culturedotcom/article_4.htm Mintzberg, H. (1973). The nature of managerial work. New York: Harper & Row. O'Reilly, C. A. (1989).Corporations, culture and commitment: Motivation and social control in organizations. California Management Review, 31(4): 9-25. O'Reilly, C. A., and J. A. Chatman (1996). Culture as social control: Corporations, culture and commitment." In B. M. Staw and L. L. Cummings (eds.), Research in Organizational Behavior, 18: 157-200. Greenwich, CT: JAI Press. Ouchi, W. (1981), Theory Z: How American Business Can Meet the Japanese Challenge, Addison-Wesley: Reading, MA. Pettigrew, A. M. (1979). On studying organizational cultures. Administrative Science Quarterly, 24, 570. Schein, E. H. (1985), Organizational Culture and Leadership, Jossey-Bass Publishers: San Francisco. Schein, E. (1990). Organizational culture. American Psychologist, 45: 109-119. Schein, E. H. (1991).The role of the founder in the creation of organizational culture. In P. J. Frost, L. F. Moore, M. R. Louis, C. C. Lundberg, and J. Martin (eds.), Refraining Organizational Culture: 14-25. Beverly Hills, CA: Sage. Seetoo, D. H. (1999). Non profit organizations management. Taipei: Common Wealth.

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