UNIVERSITY OF GHANA DEPARTMENT OF PSYCHOLOGY THE INFLUENCE OF ORGANISATIONAL CULTURE AND ORGANISATIONAL CLIMATE ON ORGANISATIONAL EFFECTIVENESS IN GHANA BY GEORGE NKONSAH 10067972 THIS THESIS IS SUBMITTED TO THE UNIVERSITY OF GHANA, LEGON IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF MPHIL INDUSTRIAL AND ORGANISATIONAL PSYCHOLOGY. JULY, 2013 University of Ghana http://ugspace.ug.edu.gh i DECLARATION I hereby declare that, the research entitled “The Influence of Organisational Culture and Organisational Climate on Organisational Effectiveness in Ghana” was conducted solely by me (George Nkonsah) and supervised by Dr. Maxwell Asumeng (Main Supervisor) and Professor Samuel Danquah (Co-supervisor) both at the Department of Psychology, University of Ghana, Legon. I also declare that, all authors used in the study have been duly cited and referenced. I also declare that, to the best of my knowledge, this work has not been published anywhere or at the University of Ghana, Legon for the award of a degree. …………………………................ .................................... GEORGE NKONSAH DATE (STUDENT) …………………………………… ……………………… DR. MAXWELL ASUMENG DATE (MAIN SUPERVISOR) …………………………………… ……………………… PROF. SAMUEL DANQUAH DATE (CO-SUPERVISOR) University of Ghana http://ugspace.ug.edu.gh ii DEDICATION I dedicate this thesis to my lovely wife, Alberta and my two soldiers, Kweku and Kwasi. University of Ghana http://ugspace.ug.edu.gh iii ACKNOWLEDGEMENTS The successful completion of this thesis was certainly due to the contribution of many hands. First, I acknowledge the significant contribution of the Almighty God for the spiritual and physical stamina from start to finish of my master of philosophy programme. Next, I express my heartfelt gratitude to Dr. Maxwell Asumeng for his thoroughness and critical review of my work. Also, I wish to express my sincere thanks to Professor Samuel Danquah for his constructive criticism and desire for the production of good thesis. I wish to say a big thank you to my wife, Alberta for the emotional support she gave me when things were difficult. In particular for handling our children when I was always busy working on my project. Finally, I thank all the organisations that granted me the opportunity to use them for the study and particularly those employees who accepted to be part of the study. University of Ghana http://ugspace.ug.edu.gh iv TABLE OF CONTENTS Content Page DECLARATION ............................................................................................................................. i DEDICATION ................................................................................................................................ ii ACKNOWLEDGEMENTS ........................................................................................................... iii TABLE OF CONTENTS ............................................................................................................... iv LIST OF TABLES ........................................................................................................................ vii LIST OF FIGURES ..................................................................................................................... viii ABSTRACT ................................................................................................................................... ix CHAPTER ONE: INTRODUCTION ............................................................................................. 1 1.1.Background of the Study .......................................................................................................... 1 1.2. Statement of Problem ............................................................................................................... 2 1.3. Rationale for the Study ............................................................................................................ 3 1.4. Objectives of the Study ............................................................................................................ 4 1.5. Significance of the Study ......................................................................................................... 4 CHAPTER TWO: LITERATURE REVIEW ................................................................................. 5 2.1. Theoretical Framework ............................................................................................................ 5 2.1.1. Internal Process Theory ........................................................................................................ 5 2.1.2. Goal Attainment Approach ................................................................................................... 6 2.2. Organisational Culture ............................................................................................................. 7 2.2.1. Subcultures in Organisations ................................................................................................ 9 2.3. Organisational Climate .......................................................................................................... 12 2.4. Organisational Effectiveness ................................................................................................. 20 University of Ghana http://ugspace.ug.edu.gh v 2.5. Review of Related Studies ..................................................................................................... 21 2.5.1. Relationship between Organisational Culture and Organisational Effectiveness ............... 21 2.5.2. Relationship between Dimensions of Organisational Culture and Organisational Effectiveness ...................................................................................................................... 26 2.5.3. Relationship between Organisational Climate and Organisational Effectiveness .............. 31 2.6. Statement of Hypotheses........................................................................................................ 42 CHAPTER THREE: METHODOLOGY ..................................................................................... 44 3.0. Introduction ............................................................................................................................ 44 3.1. Research Setting..................................................................................................................... 44 3.2. Research Design..................................................................................................................... 45 3.3. Population .............................................................................................................................. 45 3.4. Sample Size and Sampling Techniques ................................................................................. 48 3.5. Instruments/Measures ............................................................................................................ 51 3.6. Procedure ............................................................................................................................... 54 3.6.1. Pilot Study ........................................................................................................................... 54 3.6.2. Main Data Collection .......................................................................................................... 54 3.7. Ethical Consideration ............................................................................................................. 55 CHAPTER FOUR: RESULTS ..................................................................................................... 57 4.0. Introduction ............................................................................................................................ 57 4.1. Preliminary Analysis .............................................................................................................. 57 4.2. Test of Hypotheses ................................................................................................................. 60 4.3. Summary of Findings ............................................................................................................. 63 University of Ghana http://ugspace.ug.edu.gh vi CHAPTER FIVE: DISCUSSION ................................................................................................. 64 5.0. Introduction ............................................................................................................................ 64 5.1. Discussion of Findings ........................................................................................................... 64 5.1.1. Relationship between Organisational Culture and Organisational Effectiveness ............... 65 5.1.2. Relationship between Dimensions of Organisational Culture and Organisational Effectiveness ...................................................................................................................... 67 5.1.3. Relationship between Organisational Climate and Organisational Effectiveness .............. 69 5.2. Implication of Findings .......................................................................................................... 72 5.3. Limitations and Recommendations........................................................................................ 73 5.4. Conclusion ............................................................................................................................. 75 REFERENCES ............................................................................................................................. 76 APPENDIX: RESEARCH QUESTIONNAIRE........................................................................... 84 University of Ghana http://ugspace.ug.edu.gh vii LIST OF TABLES Table 3.1: Sample Characteristics of Respondents.............................................................. 50 Table 4.1: Descriptive Statistics, Reliability Analysis and Test of Normality Results for Independent variables and Dependent variable ………………………….…… 58 Table 4.2: Bivariate Correlation of the Relationship between Demographic Variables, Independent Variables and Dependent variable………………………….……. 59 Table 4.3: Summary of Standard Multiple Regression of the Relationship between Organisational Culture, Organisational Climate and Organisational Effectiveness………………………………………………………………….…………… 60 Table 4.4: Hierarchical Multiple Regression Results of the Relationship between Subcultures and Organisational Effectiveness………………………….………. 62 University of Ghana http://ugspace.ug.edu.gh viii LIST OF FIGURES Figure 1: Summary of Hypothesized relationship between Independent Variable and Dependent Variable ........................................................................................ 42 University of Ghana http://ugspace.ug.edu.gh ix ABSTRACT The study investigated the influence of organisational culture and climate on organisational effectiveness using a sample of manufacturing organisations in Ghana. Using a correlational research design, data were collected from 274 participants of three manufacturing organisations using reliable research questionnaires. Standard multiple regression and hierarchical regression analyses were conducted on the data. The results showed that, organisational culture was significantly and positively related to organisational effectiveness, with innovative and community cultures accounting for significant amount of variance in organisational effectiveness than competitive and bureaucratic cultures. In addition, organisational climate significantly and positively related to organisational effectiveness. Results are discussed within the internal process and goal attainment theories of organisational effectiveness. University of Ghana http://ugspace.ug.edu.gh 1 CHAPTER ONE INTRODUCTION 1.1. Background of the Study An effective organisation is desirable to work in. Every organisation, regardless of the sector in which it is operating, strives to be more effective (Haid, Schroeder, Sims & Wang, 2010). Organisational effectiveness research has engaged the attention of scholars in the field of industrial and organisational psychology, organisational behaviour and management because an effective organisation is one with a highly satisfied, committed workforce and satisfied customers(Moyes, Shao & Newsome, 2008). The creation of an effective organisation is a necessity in contemporary business practice globally, however, an organisation is effective to the extent that its culture and the prevailing climate allows or encourages it. This tallies the view expressed by researchers that organisational culture is a direct predictor of organisational effectiveness (Barney, 1986; cited in Mehr, Kenari, Emadi&Hoseini, 2012). Similarly, organisational culture has been found to relate positively to components of organisational effectiveness such as employee satisfaction, customer satisfaction, and employee commitment (Bhati&Qureshi, 2007; Durmaz, 2006; Moyes et al., 2008). Thus, organisational culture is a strong antecedent of positive workplace behaviours because the satisfaction of employees who constitute the most vital resource of organisations also influence strongly their level of commitment and their productivity in organisations. The concentration by scholars have been on the nexus between organisational culture and effectiveness despite clear evidence that organisational climate can significantly predict organisational effectiveness (Patterson, 1997; West, 1999). The researcher considers climate an important antecedent in the present study because work settings that are characterised by high University of Ghana http://ugspace.ug.edu.gh 2 level of distrust, lack of communication, ambiguity and lack of worker autonomy has the strong propensity to destroy effectiveness in organisations (Amabile, 1988; Mumford, 1988). Similarly, organisational climate has been found to provide an important mediating role between organisational characteristics and organisational work outcomes like attitudes, motivation and psychological well-being (Parker, 1999). Against this backdrop, the present study seeks to investigate the link between organisational culture, climate and their dimensions on organisational effectiveness in the manufacturing sector of Ghana. Examining the dimensions of culture and climate on effectiveness would provide a clear picture with regards the varying impact of the dimensions on effectiveness. 1.2. Statement of Problem Organisational effectiveness is a desirable thing which all organisations try to accomplish. This is because an effective organisation has a workforce with the right behaviour and attitudes which in turn translates to customer satisfaction and high level of organisational profit. An organisation that is characterized by low commitment, low level of employee morale, inefficiency, low profit, limited individual autonomy, high level of distrust, unclear goals, and lack of communication is one that tends to have low level of effectiveness (Amabile, 1988; Mumford, 1988) . However, a major driver of organisational effectiveness is organisational culture and climate. To ensure an increase in organisational effectiveness, there is the need ensure that the prevailing organisational culture and climate encourages high level of employee commitment, autonomy, responsibility and also ensure effective communication and high level of organisational trust. It is against this backdrop that the present study seeks to investigate the influence of organisational culture and climate on organisational effectiveness in the Ghanaian manufacturing sector. University of Ghana http://ugspace.ug.edu.gh 3 1.3. Rationale for the Study Effectiveness is an outcome every organisation irrespective of the sector of operation aspires to achieve. A conducive organisational climate necessitates the production of good behaviours among the membership of organisations. Despite the significant contribution of climate to an effective organisation, very little attention has been paid to these two variables by way of empirical research (Lawler, Hall & Oldham, 2004; Litwin & Stringer, 1998; Pritchard & Karasick, 1993). The few studies that have been conducted, however, requires confirmation from other different setting. Ghanaian-based empirical findings is particular important because it would not only strengthen existing literature but also will contribute literature from a collectivist environment to the already numerous individualistic research findings. In addition, the present study would consider organisational culture as a whole as well as the various dimensions of culture on organisational effectiveness in this single study. This makes the present study largely unique as very few studies have sought to investigate culture from this angle (Lawler et al., 2004; Pritchard & Karasick, 1993). Finally, the researcher utilized a multidimensional scale to measure organisational effectiveness (Nile, 2002). Together, the various dimensions measure organisational effectiveness as a single measure. Although, organisational effectiveness was measured without testing each of the subcomponents of the variables as a dependent measure, measurement of organisational effectiveness was based on the multidimensional organisational effectiveness scale. This provided a broad scope in the measurement of the construct. University of Ghana http://ugspace.ug.edu.gh 4 1.4. Objectives of the Study The general objective of the study is to examine the influence of organisational culture and climate on organisational effectiveness in Ghana. In line with this broad focus, the study specifically sought to;  Determine the relationship between organisational culture and organisational effectiveness  Find out the relationship and amount of variance in organisational effectiveness accounted for by the various dimensions of culture  Investigate the link between organisational climate and organisational effectiveness 1.5. Significance of the Study The outcome of the present study would have theoretical and organisational relevance. Theoretically, it would add to existing literature by broadening the scope findings in the area of organisational culture, climate and effectiveness to include empirical evidence from the Ghanaian context. A number of organisational benefits can be reported. First, the environment of an organisation impact positively on behaviour, and behaviour whether positive or negative has significant implications on the effectiveness of organisations. Thus, the outcome would help organisations create the right climate capable of encouraging positive behaviours that would impact positively on the effectiveness of the organisation. In addition, organisations would be able to enforce relevant aspects of organisational climate in order to guarantee a constant organisational effectiveness. Similarly, the relevance of the various dimensions of organisational culture and their impact on organisational effectiveness would be manifested in the study. This would inform the kind of attention organisations would give to the various aspects of their culture in an attempt to maintain an effective organisation. University of Ghana http://ugspace.ug.edu.gh 5 CHAPTER TWO LITERATURE REVIEW 2.1. Theoretical Framework This study is grounded in two important theories of organisational effectiveness, namely; the internal process and goal attainment theories. The theoretical relevance of these theories in the present research is presented. 2.1.1. Internal Process Theory This theory stresses that an effective organisation is one with a strong internal environment. Both culture and climate are variables that affect the internal environment of organisations. Specifically, organisational culture informs the kind of behaviour employee‟s exhibit because it constitutes the values, norms and beliefs of the organisation. Similarly, the prevailing atmosphere in the workplace has the power to encourage positive behaviours. This makes the internal process theory relevant in accurately explaining the predictors of organisational effectiveness. Specifically, the theory posits that, a harmonious and efficient internal working environment is directly responsible for the attainment of superior organisational results (Steers, 1977). In the view of scholars, this theory reflects the conversion of organisation‟s inputs into appropriate outputs using the human and other resources in the organisation (Pfeffer, 1977; Steers, 1977). Thus, the nexus between internal processes and organisational outcome like an effective organisation is the underlying central position of this theory. This theory is relevant for the current study because a strong internal organisational environment is as a result of a strong and positive culture and climate. Thus, a strong and positive organisational culture is likely to increase employees level of satisfaction, commitment which in tend will lead to maximum productivity in the organisation. Similarly, the kind of internal climate created has the force to University of Ghana http://ugspace.ug.edu.gh 6 encourage the exhibition of positive behaviours which contributes significantly to the attainment of organisational goals and objectives. Thus, the effectiveness of an organisation is influenced largely by the kind of culture and climate created and the extent to which the culture and climate encourage behaviours that lead to the attainment of organisational goals. 2.1.2. Goal Attainment Approach The view that organisational effectiveness relates to the accomplishment of organisational goals is the central position espoused by the goal attainment theory of organisational effectiveness (Price, 1972; Scott, 1977). Every organisation exists for a purpose and organisations that accomplish its mission are said to be effective organisations. This is consistent with the position taken by researchers that, this theory measures the effectiveness of an organisation in terms of goal accomplishment or realization (Pratt & Eitzen, 1989). Given that, goal accomplishment is typical of every organisation irrespective of its sector of operation, the goal attainment theory of organisational effectiveness has been acknowledged as the most logical theory to study organisational effectiveness (Chelladurai & Haggerty, 1991). Though relevant in organisational effectiveness studies, this theory is not without some limitations. According to scholars, organisations have several goals some of which may conflict, and that organisational goal especially short-time operative goals may shift over time (Weese, 1997; Pratt & Eitzen, 1989). Additionally, when organisational goals are unclear, unstable and conflicting, it becomes difficulty to assess organisational effectiveness using the goal criteria (Chelladurai & Haggerty, 1991). Despite these limitations, the goal attainment theory still remains useful as a measure of organisational effectiveness. With respect to the present study, the goal attainment theory is very relevant because the effectiveness of the manufacturing University of Ghana http://ugspace.ug.edu.gh 7 organisations like Nestle, Ghacem, and Promasidor etc. is determined by the quality of their products, services delivered and availability of their products in the market. In addition, Ghanaian attach significant importance to the manufacturing sector and organisations in that sector are required to ensure that products that process or manufactured are of high quality and easily available. 2.2. Organisational Culture Every organisation is governed by a culture and this culture is the main driver of productivity and progress. Within organisational behaviour literature, the construct organisational culture has been variously defined. Some scholars have defined culture from the point of view of its connection with behaviour in organisations. For instance, researchers have expressed the view that, within any human society and most importantly organisations, members engage in rituals, pass along corporate myths and stories, use jargons, though informal practice they have the capacity to facilitate or hinder management‟s goal for the organisation (Baker, 1980; Deal & Kennedy, 1982; Peters & Waterman, 1982). There is no universally acceptable definition of organisational culture despite the extensive research carried out on the construct. Thus, several definitions for the construct have been provided by different authors based on their theoretical position on the variable (Alvesson, 2002; Adler & Jelinek, 1996; Argris, 1996; Carroll &Nafukho, 2006; Cook & Yanow, 1993; Popper & Lipshitz, 1995; Shien, 1990). For instance, Bateman and Snell (1999) intimated that, organisational culture ensured that people‟s behaviour in the organisation was purposeful and goal-directed. Thus, culture shapes the behaviour of the workforce. Culture has also been characterised as an important feature of excellent organisations (Amah, 2006; Peters & Waterman, 1982). Organisational culture has also University of Ghana http://ugspace.ug.edu.gh 8 been referred to as the genetic blueprint of an organisation which has the capacity influence all aspects of the organisation (Davenport, 1998). According to Schein (1985), organisational culture represents the basic assumptions invented, discovered or developed by a group of people to adjust to problems of external adaptation and integration and therefore good enough to influence the way people in the organisation think and feel about problems in the organisation. This definition is consistent with Deal and Kennedy (2000) who defined organisational culture simply as the way things are done in the organisation. In the view of Nickels et al (2010), organisation involves values which are representative of the organisation and provide an important source cooperation, harmony and coordination of efforts with the purpose to achieve organisational goals. Thus, culture binds people together in organisations. Marguardt (2002) offered the definition of culture as the values, beliefs, practices, rituals and customs specific to an organisation. Schein (1990) states that organisational culture consists of two layers of concepts, namely, visible and invisible characteristics. The visible layer means external building, clothing, behaviour modes, regulations, stories, myths, language, and rites. On the other hand, the invisible layer means common values, norms, faith, and assumptions of business organisational members. In the current management literature on organisational culture (for example, Deal and Kennedy, 1982; Peters & Waterman, 1982) which includes the work of Schein (1990), culture is widely understood as an instrument to be used by management to shape and control in some way the belief, understandings, and behaviours of individuals, and thus the organisation to reach specified goals. Therefore, a number of definitions for any organisational culture have been University of Ghana http://ugspace.ug.edu.gh 9 proposed (for example, Kilman et al, 1985; Uttal, 1983). Many studies have been conducted about the impact of organisational culture on different variables in the organisational setting. For instance, the relationship between organisational culture and several important employee and organisational outcomes such as job satisfaction (Lund, 2003), individual learning (Aksu&Ozdemir, 2005), organisational effectiveness (Denison, 1990; Denison & Mishra, 1995), leadership (Kasper, 2002; Chang & Lee, 2007; Schein, 1992), organisational problem-solving (Bate, 1984), creativity (Koberg& Chusmir, 1987) organisational commitment (Lock & Crawford, 1999), organisational performance (Wilkins and Ouchi, 1983), TQM (Pool, 2000) communication and information (Brown & Starkey, 1994). 2.2.1. Subcultures in Organisations According organisational culture scholars, organisations are characterized by four different subcultures (Hellriegel, Slocum & Woodman, 2001:523; Ogbonna & Harris, 2000). The present research subscribed to the subculture dimensions developed and used by Ogbonna and Harris (2000) in their study. These culture dimensions namely; innovative culture, competitive culture, bureaucratic culture and community culture are similar to the dimensions reported by Hellriegel et al. (2001:523) which are bureaucratic culture; clan culture; entrepreneurial culture; and market culture. Specifically, innovative culture, competitive culture, bureaucratic culture and community culture by Ogbonna and Harris (2000) relates to entrepreneurial culture, market culture, bureaucratic culture and clan culture respectively as reported by Hellriegel et al (2001). The four culture dimensions are discussed below. University of Ghana http://ugspace.ug.edu.gh 10 Bureaucratic culture An organisation that values formality, rules, standard operating procedures, and hierarchical co- ordination has a bureaucratic culture. Long-term concerns of bureaucracy are predictability, efficiency, and stability. Its members highly value standardized goods and customer service. Behavioral norms support formality over informality. Managers view their roles as being good co-coordinators, organizers, and enforcers of certain rules and standards. Tasks, responsibilities, and authority for all employees are clearly defined. The organisation„s many rules and processes are spelled out in thick manuals and employees believe that their duty is to go by the book and follow legalistic processes. According to Weber (1946), a bureaucratic culture ensures that there is a fixed division of labour, a hierarchy of positions and authority, administration based on written documents and adherence to general rules and full-time commitment to official activities. This type of culture is rigid and therefore restricts the creative potential of employees in organisation. Clan culture Clan culture also called community culture is characterized by tradition, loyalty, personal commitment, extensive socialization, teamwork, self-management, and social influences which reflects the way of doing things in the organisation. The organisational membership sees their obligation beyond the concept of exchange such as labour for salary which often reflects employer-employee relationship in organisations. Specifically, members of the organisation understand that their contributions to the organisation may exceed any contractual engagement or agreement between them and the employer. Thus, the employee‟s long term commitment to the organisation is exchanged for the organisation‟s long term-commitment to the individual. Also, University of Ghana http://ugspace.ug.edu.gh 11 the individuals in such an organisation believe that the organisation will treat them fairly in terms of salary increases, promotions, and other forms of recognition. They therefore, hold themselves accountable to the organisation for their actions. This implies that, members of the organisation view the organisation as their own because of the sense of belongingness and oneness characterizing the core principles of the organisation. This type of culture creates fertile ground for the performance of organisational citizenship behaviours (Organ, 1988). According to Organ (1988) employees tend to engage in OCB when they find the work environment conducive. Entrepreneurial culture/Innovative Culture Organisations characterized by this type of culture favour or encourage high level of risk taking, dynamism, and creativity from the workforce. The organisation commits to experimentation, innovation and leading edge attitude as the attributes of members in the organisation. In the view of Hellriegel et al. (2001) with an entrepreneurial culture, organisations do not easily react to changes in the environment it creates. Individual initiative, flexibility and freedom which is the hallmark of this culture is encouraged and rewarded in the organisation. Market culture/Competitive Culture This type of culture is characterized by the achievements of measurable and demanding goals, especially those that are financial and market-based. Additionally, hard driving competitiveness and a profit orientation prevail throughout organisations where this type of culture is being practiced. Like community/clan culture, market culture also involves a contractual relationship between individual employees and the organisation. Specifically, a rewarding relationship exists between the individual and the organisation to the extent that the individual is responsible for University of Ghana http://ugspace.ug.edu.gh 12 some levels of reward in the engagement. According to Hellriegel (2000), market culture does not exert much informal, social pressure on an Organisation„s members. They do not share a common set of expectations regarding management style or philosophy. The absence of a long- term commitment by both parties results in a weak socializing process. These four subcultures have different impact on organisations and employee behaviour and largely reflect management philosophies or styles. 2.3. Organisational Climate The prevailing atmosphere in organisation can either reinforce positive or negative behaviours. The concept of organisational climate can be traced to a group of social scientist (Lewin et al., 1939). In fact, the concept was popularised these social scientists in the late 1930s. Originally, they used social climate to explain the subjective feelings they encountered in their study of organisations. Since then the construct, organisational climate has become popular among scholars in the field of psychology and organisational behaviour. Organisational climate research has witnessed an increased level of attention since it appeared in research arena in the late 1940s (Baltes, 2002). Generally, classified as a perceptual variable, organisational climate has been viewed from three angles, that is, at the individual, group and organisational level (Patterson, West, Shackleton, Lawthom, Maitlis, Robinson, Dawson, & Wallace, 2005). Psychological climate is the term used for the individual perceptions of the work environment while perception by groups or organisational membership is termed group or organisational climate (Patterson et al., 2005). Though organisational climate can be measured from any of these three perspectives, the present study concentrated on the organisational level of measurement. This position taken by the University of Ghana http://ugspace.ug.edu.gh 13 researcher is consistent with theory and research in organisations (Schneider, Smith & Goldstein, 2000). The concept is broadly defined as the extent to which membership of the organisation experience the organisation and attaches shared meanings to their perceptions of the work setting (Schneider et al., 2000). Individuals do not just perceive anything in the organisation but focus specifically on three cardinal things, namely processes, practices and behaviours rewarded and supported in the organisation (Schneider, 1990).The perception of the organisational environment is subjective because it is cognitively motivated and subject to the well-being of the individual (James,James, & Ashe, 1990). Organisational climate has been defined differently by scholars. Despite the availability of variety of definitions of the construct of organisational climate, the central theme is that it is a subjective reflection of organisational members about the organisation. One of the earliest and most accepted definitions of the concept of organisational climate was offered by Forehand and Gilmer (1964). According to Forehand and Gilmer (1964) the set of characteristics that describes, differentiates one organisation from another and is enduring over time and also influence significantly the behaviour of people in the work environment reflects organisational climate.Consistent with the above definition, Pritchard and Karasick (1973) put forward that organisational climate is a relatively enduring quality of an organisation‟s internal environment, that is clearly different from other organisations, but results from the behaviour and policies of members of the organisation, especially top management, which is perceived by the members, serves as a basis for interpreting situations and acts as a source of pressure for directing activity. University of Ghana http://ugspace.ug.edu.gh 14 It has been defined as the accomplishment of goals at the organisational level (Cameron & Whetten, 1983; Quinn & Rohrbaugh, 1983). Thibodeaus and Favilla (1995) intimated that, organisational climate measures the extent to which organisations fulfil their main objectives. Other researchers viewed organisational climate from the angle of shared norms, values, beliefs, practices and procedures which are general or specific to the organisational membership (Guldenmund, 2000). In the view of Gregopoulos (cited in Campbell et al., 1970) organisational climate reflects the normative structure of attitudes and behavioural standards which provides the basis for interpreting the situation and act as a source of pressure for directing activity. Litwin and Stringer (1968) viewed climate from the perspective of motivational theories with the purpose to clearly describe the effects of organisations and organisational life on the motivation of individuals and ultimately their behaviour. Based on this stance, they defined organisational climate as a set of measurable properties of the work environment that is perceived directly or indirectly by people who influence their motivation and behaviour.Against this backdrop, a positive organisational climate is perceived to be a strong motivator and hence the demonstration of positive behaviours by organisational members. Building on the definition proposed by Litwin and Stringer (1968), Tagiuri and Litwin (1968, p. 8)also emphasized the motivational aspect of work environment and accordingly defined organisational climate as the cognitive interpretation of the organisation by members and the effect of the interpretation on their attitudes and motivation. They broadly captured the concept of organisational climate as “Organisational climate is a relatively enduring quality of the internal environment of an organisation that (a) is experienced by its members, (b) influences University of Ghana http://ugspace.ug.edu.gh 15 their behaviour, and (c) can be described in terms of the values of a particular set of characteristics (or attributes) of the organisation.” (p. 8). It has also been opined that organisational climate is the dynamic phenomenon or force that may release, channel, facilitate or constrain the organisation‟s technical or human resources (Friedlander & Margulies, 1969). This dynamic force which affects the sense of involvement of employees in organisations is social and interpersonal in nature. In an attempt to provide a better understanding of the concept of organisational climate, scholars suggested that consideration should be given to certain properties of organisational climate (Campbell et al., 1970). According to them, organisational climate has to do with a set of organisational characteristics unique to the organisation and is as a result of the way the organisation treats its members and the work environment. They intimated that, organisational climate describes the organisation in terms of static and behaviour-outcome relationships. Other scholars viewed the construct from both organisational and individual perceptual perspective. They posited that organisational climate involves individual perception of their organisational environment, and this perception is motivated by assembling inputs from objective events in and attributes of the organisation as well as characteristics of the individual (Schneider & Hall, 1972). According to Hellriegel and Slocum‟s (1974), organisational climate deals with a set of attributes that is perceived about a particular organisation and/or its subsystems, and that may be induced from the way in which the organisation and/or its subsystems deals with its members and environment. Based on this definition, the following themes evolved:  Perceptual responses are primarily descriptive rather than evaluative. University of Ghana http://ugspace.ug.edu.gh 16  Items, scales and constructs relate to the macro as opposed to the micro level.  Units of analysis refer to the organisation and/or subsystem and not the individual.  Perceptions have potential behavioural consequences like effect on work outcomes like job satisfaction, commitment and intention to leave. Following from the above, Schneider and Snyder (1975) conceptualized organisational climate as the summary or global perception that people have about an organisation. These perceptions in their opinion come in different ways depending on the individuals‟ specific situation and the information available to them. Against this backdrop, what is important to the individual is what drives his/her perception of the organisation and hence his/her behaviour in the organisation (Schneider, 1975). Organisational climate has been defined simply as an organisational phenomenon, unique to the organisation and goes beyond just the collection of individuals‟ perception of events in the organisation (Ash, 1983). Moran and Volkwein (1992, p. 20) provided a comprehensive definition of organisational climate based on inspiration from previous definitions put forward by Forehard and Gilmer (1964) and Pritchard and Karasick (1973). Organisational climate in their view is the relatively enduring characteristic of an organisation which distinguishes it from other organisations: and (a) embodies members collective perceptions about their organisations with respect to such dimensions as autonomy, trust, cohesiveness, support, recognition, innovation and fairness; (b) is produced by member interaction; (c) serves as a basis for interpreting the situation; (d) reflects the prevalent norms, values and attitudes of the organisation‟s culture; and (e) acts as a source of influence for shaping behaviour. University of Ghana http://ugspace.ug.edu.gh 17 West, Smith, Lu Feng and Lawthom (1998) definedorganisational climate as the shared perceptions of the fundamental elements of individuals‟ particular organisation.In this sense, climate perception is about all the members of organisation and not just an individual. It has also been submitted that, organisational climate is about the collective perceptions of organisational members and how the organisation deals with its members and the environment (Wallace, Hunt & Richards (1999). The description of organisational variables such as size, structure, policies and leadership styles has been labeled organisational climate (Boeyens& Hutchinson as cited in Sempane, Rieger&Roodt, 2002). It has also been postulated as the representative and collective perceptions and/or feelings organisational members have about their organisation (Coetsee as cited in Gerber, 2003). The author also stressed that, climate reflects the subjective attitudes and perceptions whether accurate or not which organisational members have about the organisation (cited in Gerber, 2003). Gerber (2003) tagged the construct as the surface manifestation of organisational culture that consists of the conscious behaviour, such as the feelings or perceptions and attitudes, that is shared by individuals in an organisation at a particular time regarding the fundamental elements of the organisation and that can positively or negatively influence the behaviour of organisational members in terms of organisational effectiveness. McMurray (2003) took a descriptive stance and defined organisational climate as a descriptive construct that mirrors consensual agreement among members of organisations regarding the key elements in terms of systems, practices, policies and leadership style in the organisation. According to Garg and Rastogi (2006), organisational climate is the feelings organisational members have about the organisation as a result of the physical layout of the organisation, the University of Ghana http://ugspace.ug.edu.gh 18 way in which participants interact with one another and how they conduct themselves with other organisational members or outsiders.Haakonsson, Burton, Obel and Lauridsen (2008) indicated that organisational climate refers to affective events that influence employees‟ emotions and consequent information-processing behaviours. Further, Litwin and Stringer (1968) defined the construct organisational climate as the sum of individual perceptions about the working environment. Similarly, Reicher and Schneider (1990) intimated that “climate is the shared perceptions of the way things are around here” (p.22). Momeni (2009) posited that organisational climate is about employee‟s perceptions and attitudes .toward their organisation at any point in time. Organisational climate basically is a reflection of the organisation‟s culture. Sowpow (2006) called organisational climate the here and now of an organisation. Thus, climate affects and is shaped by organisational culture (Hunt & Ivergard, 2007). Organisational climate has also been associated with the policies, procedures and practices of an organisation which the organisational membership generally perceives (Schneider, 1990). Similarly, Schneider and Bowen (1995) viewed organisational climate as a subjective construct which deals with the collective experiences and awareness about the policies and procedures of the organisation. The researcher subscribes to the position taken by Schneider (1990) in that, the general atmosphere in the organisation in terms of culture of interaction/relationship, co-worker support and feelings of together are all informed by the policies, procedures and practices developed and encouraged by the leadership of the organisation. In this regard, organisational climate is defined as the perceptions of organisational members of the organisation‟s support for the prevailing organisational atmosphere with regards employee‟s work, attitude, work procedures and behaviours. University of Ghana http://ugspace.ug.edu.gh 19 Organisational climate has become an important antecedent of organisational effectiveness because of its capacity to significantly predict job satisfaction and performance, employee motivation and organisational commitment (Patterson, 1997; West, 1999). Organisational climate plays an important mediating role between organisational characteristics and work- related outcomes like employee attitudes, motivation and psychological well-being (Parker, 1999). The environment characterizing organisations can be viewed from an overall global sense and also from a more specific and targeted angle. Scholars who come from the global angle indicated that climate in different work contexts can be summed up to include (a) role of stress and lack of harmony, (b) job challenge and autonomy, (c) leadership facilitation and support, and (d) work- group cooperation, friendliness, and warmth (James & James, 1989; James & McIntyre, 1996; James & Sells, 1981). Organisations are multifaceted by nature and thus perceptions of organisational environment can be based on a wide variety of more specific targets. In view of this, Schneider (1975) indicated that the dimensions of organisational climate will differ depending on the focus of the investigation and the criterion of interest. Schneider (1975) stressed that; general measure of organisational climate may include irrelevant dimensions. Thus, the use of measures that contain several dimensions of climate which includes service and innovation was required (Bunce & West, 1995; Schneider, 1990; West, 1990). Decision regarding the use of either of these measures of climate was entirely determined by the interest of the researcher and the interest of the study. The present study utilized the global measure. However, the scale which was highly reliable and developed through factor analysis contained items measuring dimensions of organisational climate. According to researchers, the University of Ghana http://ugspace.ug.edu.gh 20 global approach provided an overall snapshot of organisational functioning (Ashkanasy, Wilderom, &Peterson, 2000). 2.4. Organisational Effectiveness Organisational effectiveness has engaged the attention of researchers since the early development of organisational theory and therefore many studies have been conducted to determine variables that predict it (Rojas, 2000). Despite some consensus among some scholars on the construct, there is still significant lack of agreement on the definition and operationalization of this concept (Cameron, 1986). In the view of researchers, organisational effectiveness reflects a construct in which the focus is on the definition in terms of assessment and conceptualization (Goodman, Pennings& Associates, 1977). Against this backdrop, several definitions of the construct have been provided by researchers in the field.According to Daft (2003), organisational effectiveness is a difficult construct to measure. This difficulty lies in the fact that, it involves myriad of variables varying from organisational to departmental level variables. In terms of measurement, there are two basic approaches to the measurement of organisational effectively, namely; the traditional which includes the goal approach, system resource approach and the internal process and contemporary approaches (Daft, 2003). Various models and theoretical approaches have been developed to assess organisational effectiveness. Herman and Renz (1997) indicated that there are as many effectiveness models as there are models of organisations. Different models with their relating criteria reflect different values and preferences of schools of thought concerning effectiveness (Walton & Dawson, 2001). The best known models are the goal models (Etzioni, 1960; Price, 1972; Scott, 1977), the system resource model (Yuchtman & Seashore, 1967), the internal process approach (Pfeffer, University of Ghana http://ugspace.ug.edu.gh 21 1977; Steers, 1977), the multiple constituency models (Connolly, Conlon & Deutsch, 1980; Tsui, 1990; Zammuto, 1984) and the CVA (Quinn &Rohrbaug, 1981, 1983). 2.5. Review of Related Studies This section provides a review of relevant studies on the variables being examined in the study. Specifically, the review would border on the link between organisational culture and organisational effectiveness; the relationship between organisational climate and organisational effectiveness dimensions of organisational culture and organisational effectiveness; and organisational climate as a moderator on the relationship between organisational culture and organisational effectiveness. 2.5.1. Relationship between Organisational Culture and Organisational Effectiveness Researchers have generally agreed that, organisational culture is a significant predictor of organisational effectiveness. The large categories of research in this area were reported in the western cultures. Empirical study involving 759 firms revealed that organisational cultures that stress higher risk tolerance tends to encourage radical innovations (Tellis, Prabhu & Chandy, 2009). This culture which facilitates risk taking, willingness to experiment, initiative taking and fast moving character tends to promote adaptability and learning (Baer & Frese, 2003; Caldwell & O‟Reilly, 2003). This study which was quantitative in nature utilized culture scale which is different from that being used in the present study (Ogbonna & Harris, 2000). Again, though their study looked at culture from a dimensional angle, the labels of culture (i.e. community, innovative, competitive and bureaucratic) are quite different from that used by them. University of Ghana http://ugspace.ug.edu.gh 22 The nexus between organisational culture and organisational effectiveness has also been found in the school setting. A correlational research design was employed to study the relationship between organisational culture and the effectiveness of principals of secondary schools in the Lorestan State in the Islamic Republic of Iran. The study involved a random sample of 800 teachers from a population of 4403 teachers and 300 principals from a total of 512 principals in the province of Lorestan secondary schools.Questionnaire was used to collect data from the participants. The researchers utilized Pearson correlation and Regression analysis (Enter and stepwise) to test the hypotheses in the study. It was observed that, a significant positive correlation exist between organisational culture and principal effectiveness (r=.85, p=0.05). Using the stepwise regression method, it was also observed that, components of organisational culture such as transparency, communication, supportive and reward system predicted about .85 of the total variance of principal effectiveness in Lorestan State (Mehralizadeh & Atyabi, 2006). Researchers have broadened the base of organisational effectiveness research to compare effectiveness between public and private sector organisations. Parhizgari (2008) carried out a study in which a comprehensive measure of organisational effectiveness was utilized to assess differences in performance between public and private sector organisations. Nine measures of organisational effectiveness were empirically derived and validated for the study was used. A total of 11,352 participants were selected from 28 private sector organisations and 41 public sector organisations. Test result after statistical analysis showed that, private sector organisations significantly and more effective than public sector organisations on all the measures of organisational effectiveness.However, Schneider, Gunnarson and Niles (2007) provided empirical evidence which showed that, there was no significant difference in organisational effectiveness between private and public sector organisations in the UK. University of Ghana http://ugspace.ug.edu.gh 23 Scheider et al. (2007) sought to determine the effect of organisational culture on organisational effectiveness between public and private sector organisations in the United Kingdom. The study involved 1143 participants from the two sectors (public and private). The researcher‟s operationalized culture as constructive or destructive in which they indicated that constructive cultures were related to organisational effectiveness and destructive cultures were not related to organisational effectiveness. The result showed no significant difference in organisational culture between private and public sector organisations. In addition, there was no significant difference in organisational effectiveness between private and public sector organisations. These contradictory findings on organisational effectiveness between private and public sector organisations only strengthened the point that the need for further studies is a clarion call. It is also clear from the findings that the study was based on western culture and the need to conduct such a study in the collectivist culture was necessary. The present study is different from what has been reported because it is based on only the private sector and limited only manufacturing organisations. Chien (2008) investigated factors that affect organisational effectiveness. The study was to explore the important issues of the factors that affect organisational effectiveness. The research method adopted was the case study of the qualitative research and the data was collected by in- depth interviews. In the process of the research, the author interviewed with 30 employees, including ten mangers and twenty private and public workers. According to the analysis of the research data, there were seven factors effecting organisational effectiveness: (1) personal characteristics, (2) leadership styles, organisational culture, (4) working environment, (5) model University of Ghana http://ugspace.ug.edu.gh 24 of organisational operation, (6) flexibility, (7) organisational commitment. All these factors were found to favour private organisations compared to public organisations. Wallace (2007) assessed the relationship between organisational culture, organisational climate and managerial values as predictive factors of organisational effectiveness. The paper begins with a comprehensive review of the management literature on culture, and demonstrates close parallels with research and writings on organisational climate and values. The paper then reports the findings from an empirical investigation into the relationship between the organisational culture, climate, and managerial values of a large Australian public sector agency. The relative strengths of four dimensions of culture in this organisation were measured using Hofstede's (1980) instrument. Added to this were items from a questionnaire developed by Ryder and Southey, derived from the Jones and James instrument measuring psychological climate and providing scores across six specific dimensions of organisational climate. Measures of managerial values, drawn from a questionnaire by Flowers and Hughes, were also incorporated. Results show that levels of culture within this particular organisation are at variance with those reported by Hofstede from his Australian data. Findings indicated a strong link between specific organisational climate items and a number of managerial values dimensions. Additional relationships between particular dimensions of culture, climate and managerial values were also found to promote organisational effectiveness. Comparison of public and private sector managerial effectiveness in China: A three-parameter approach was conducted by Chanzi (2009). The study sought to explore the similarities and differences in terms of managerial effectiveness between public- and private-sector organisations from the dimensions of motivation, constraints and opportunities. The research was undertaken University of Ghana http://ugspace.ug.edu.gh 25 in the form of case studies targeting senior managers in four multinational corporations' (MNCs') Chinese subsidiaries. Data were collected through survey and semi-structured interviews. The analysis of the public sector was referred to previous research conducted by Analoui. Findings indicated that there were a number of common themes applicable to both sectors. The level of effectiveness between public and private sectors was also not significant. This study should have considered using Chinese public sector to complete a comparative analysis since private and public sector organisations from two different countries cannot serve as a good comparison group. Additionally, this research was conducted at one point in time, making it difficult to draw robust conclusions when the selected MNCs are in the developing or transitional phase of their company policies and practices. Organisational culture has also been found to affect economic performance (i.e. financial performance) firms. In an over three year‟s longitudinal study involving five French companies, Calori and Sarnin (1991) examined the relationship between corporate culture and economic performance. They observed that cultural profile of the firms was associated with the company‟s growth. Specific cultural values like personal fulfillment, listening to others, team spirit, responsibility, trust, quality, and consistency were found to be positively and significantly related with the firm‟s relative growth performance. However, they reported a negative relationship between duty, experience, authority and performance of the firms. This longitudinal study has confirmed that, not all aspects of organisational culture impacts significantly on performance or effectiveness in the organisations. Clearly, the outcome of the longitudinal study has shown that organisations that emphasize togetherness, teamwork, quality, high level of trust and the culture of listening to others reaps University of Ghana http://ugspace.ug.edu.gh 26 significant benefits from the workforce compared to organisations where these values are encouraged. Other evidence gathered in their study revealed that very few values and management practices were significantly associated with profitability. It was indicated that the firm‟s relative performance on return on investment and return on sales, both seemed to be related to five values like openness to the environment, participation in local activities, societal contribution, solidarity and flexibility. Calori and Sarnin (1991) intimated that strong cultures were strongly associated with high growth performance of firms. In addition, they submitted that the intensity of company‟s culture was positively correlated with its relative growth and that culture seems to influence growth of firms more than profitability. Their findings are consistent with earlier research finding which revealed that, strong cultures and particularly those with widely accepted beliefs within the organisation, performed better than those with lack of shared values (Peter & Waterman, 1982).However, other researchers have indicated that strong could lead to stagnation and reduced ability to adapt to changes in the environment (Cloke & Goldsmith, 2002). 2.5.2. Relationship between Dimensions of Organisational Culture and Organisational Effectiveness The effectiveness of an organisation somehow can be traced to its culture. Despite this, it is reasonable to conjecture that, each of the dimensions of organisational culture would have different impact on organisational effectiveness (Ogbonna & Harris, 2000). The connection between organisational culture and organisational effectiveness has also be demonstrated empirically from manufacturing organisations. Khazanchi, Lewis and Boyer (2007) in a study involving 271 manufacturing plants revealed that aspects of organisational culture especially University of Ghana http://ugspace.ug.edu.gh 27 those that emphasize greater value congruence among members, respect for flexibility and control were significantly associated with the successful implementation of technology. They intimated flexibility and control encourage organisational empowerment and creativity respectively. Denison (1984) found, in his study of organisational culture, that companies with a participative culture reaped a return on investment, which averaged nearly twice that of firms with less efficient cultures. His conclusion was that cultural and behavioral aspects of organisations were intimately linked to both short-term performance and long-term survival (Petty et al., 1995:483). Petty et al. (1995:485) conducted a study amongst 3977 employees across a United States company to assess whether there was a relationship between organisational culture and organisational performance. The results of this study indicated that organisational performance was linked to organisational culture. The authors affirm that there was a strong link evident in the correlation between teamwork and performance. This correlation indicated that teamwork, being the major aspect of culture, was significantly related to performance. The authors also contend that such behaviors as helping others, sharing of information and resources, and working as a team seemed to enhance performance in the organisation studied. Brightman and Sayeed (1990:226) found, in a study done by Gordon (1995) of an electric utility company, that cultures affect organisational performance. The study revealed four factors that differentiated financially successful companies from less successful companies. These four factors were: successful companies had greater horizontal coordination; they possessed more affective internal communications; they encouraged their University of Ghana http://ugspace.ug.edu.gh 28 employees to air conflicts and criticisms openly; and they showed greater concern for developing people. Researchers among themselves have different opinions of performance. Performance, in fact, continues to be a contentious issue among organisational researchers (Barney, 1997). For example, according to Barney (1997), performance is equivalent to the famous 3Es (economy, efficiency, and effectiveness) of a certain program or activity. However, according to Daft (2000), organisational performance is the organisation„s ability to attain its goals by using resources in an efficient and effective manner. Quite similar to Daft (2000), Richardo (2001) defined organisational performance as the ability of the organisation to achieve its goals andobjectives. Organisational performance has suffered from not only a definition problem, but also from a conceptual problem. Hefferman and Flood (2000) stated that as a concept in modern management, organisational performance suffered from problems of conceptual clarity in a number of areas. The first was the area of definition while the second was that of measurement. The term performance was sometimes confused with productivity. According to Ricardo (2001), there was a difference between performance and productivity. Productivity was a ratio depicting the volume of work completed in a given amount of time. Performance was a broader indicator that could include productivity as well as quality, consistency and other factors. In result oriented evaluation, productivity measures were typically considered. Ricardo (2001) argued that performance measures could include result-oriented behavior (criterion-based) and relative (normative) measures, education and training, concepts and University of Ghana http://ugspace.ug.edu.gh 29 instruments, including management development and leadership training, which were the necessary building skills and attitudes of performance management. Hence, from the above literature review, the term “performance” should be broader based which include effectiveness, efficiency, economy, quality, consistency behavior and normative measures (Ricardo, 2001). The next issue that was always asked about organisational performance was what factors determine organisational performance. According to Hansen and Wernerfelt (1989) in the business policy literature, there were two major streams of research on the determinants of organisational performance. One was based on economic tradition, emphasizing the importance of external market factors in determining organisational performance. The other line of research was built on the behavioral and sociological paradigm and saw organisational factors and theirfit with the environment as the major determinant of success. The economic model of organisational performance provided a range of major determinants of organisational profit which included: Characteristics of the industry in which the organisation competed, the organisation„s position relative to its competitors, and the quality of the firm„s resources. Organisational model of firm performance focused on organisational factors such as human resources policies, organisational culture, and organisational climate and leadership styles. Another study by Chien (2004) found that there were five major factors determining organisational performance, namely: Leadership styles and environment, Organisational culture, Job design, Model of motive, and Human resource policies. University of Ghana http://ugspace.ug.edu.gh 30 Organisational culture and competitive intensity in addition to organisational innovativeness are used in the current study. The economic factors and organisational factors model was supported by many researches including Hansen andWernerfelt(1989) who found in their study that economic factors represented only 18.5 % of variance in business returns, while organisational factors contributed 38 % of organisational performance variance. This research focused more on organisational factors that determine organisation„s performance. Organisational factors were found to determine performance to a greater extent than economic factors indicated by Trovik and McGivern (1997). Firms „performance is widely measured through the financial success of the organisation. Financial stress for most profit-oriented firms can be assessed both in terms of ―top-line‖ (e.g., sales) as well as bottom-line (e.g., profitability) measures (Davis et al., 2000).The profitability of an organisation is an important financial indicator to reflect the efficiency of the organisation and the owners/managers ability to increase sales while keeping the variable costs down (Davis et al., 2000). Profit margin, return on assets, return on equity, return on investment, and return on sales are considered to be the common measures of financial profitability (Robinson, 1982). Furthermore, according to the study conducted on the Malaysian SMEs, sales, sales growth, net profit, and growth profit are among the financial measures preferred by the SMEs in Malaysia (Abu Kasim et al., 1989). Sales growth is measured based on the average annual sales growth rate for three consecutive years from (2006-2008) (Hashim, 2000). On the other hand, profitability is analyzed by three financial ratios, which are return on sales (ROS), return on investment (ROI) and return on asset (ROA)- incurred during the last three years from 2006 to 2008. University of Ghana http://ugspace.ug.edu.gh 31 The three consecutive years „financial ratios (ROS, ROI and ROA) are averaged out and incorporated into a Business Performance Composite Index (BPCI) similar to the measurement used in the study by Hashim (2000). The BPCI is a common index used by researchers to measure profitability since it provides the complete measurement of firm„s profitability (i.e., combination of ROS, ROA and ROI). Hence, the use of BPCI could be the best measurement of profitability. Furthermore, the inclusion of the three financial ratios as components of BPCI provides a comprehensive and fair view of the firm„s financial performance as compared to using only one measurement alone such as ROS or ROA or ROI. ROS is derived by dividing net income of the fiscal year with total sales. ROA is derived by dividing net income of the fiscal year with debt and equity. ROA is derived by dividing net income of the fiscal year with total assets. 2.5.3. Relationship between Organisational Climate and Organisational Effectiveness According to Schneider and Bowen (1985) when the general spirit and feelings of organisations make employee‟s feel that there is a reward for the accomplishment of individual and organisational goals, then, psychologically that become the climate perceived by the employees in the organisation. It is this climate which would govern the behaviour of all the members of the organisation. It has been acknowledged by scholar‟s that, the organisational climate of an organisation is not felt by only employees but also customers of the organisation through such things as inter-activities with frontline employees (Schneider, 1980, 1990) and this awareness of the prevailing organisational climate by customers affects their opinions and level of satisfaction with the services of the organisation (Bitner et al., 1990; Kao, 2008‟ Parasuraman, 1987).Against this backdrop, the researcher takes the position that the perception of organisational climate by University of Ghana http://ugspace.ug.edu.gh 32 employees would strongly affect the relationship between organisational culture and organisational effectiveness. Schneider et al. (2005) posited that, managerial efforts combined with the internal work environment related to the services of the organisation will inform the exhibition of customer- service related behaviours by employees. This means that, to be effective, an organisation must create and maintain organisational climate that suits the services it provides. It is only by doing this that the organisation can accomplish the task of service excellence (Schneider & Bowen, 1992). An organisation with high organisational climate have employees with a caring attitude and a high sense of appreciation for the provision of quality service and also have high appreciation for customer satisfaction and their implications for organisational success. This means that, a good climate generates automatically a reciprocal relationship between the organisation, employees and customers. This is because as the organisation demonstrates support for the prevailing climate, it means that employees will continue to demonstrate positive behaviours as the by- product of the climate and these in turn will impact positively on customers of the organisation. In effect, the customers will continue to patronize the services of the organisation because of the climate (Katz & Kahn, 1978). Hsu et al. (2010) pointed out in an empirical study, that the OC of an international airline company had positive effects on the service-oriented OCBs of the flight service crews. Dimitriades (2007) also found in his empirical study: organisational climate sensed by frontline contact employees of the service industries has positive effect on customer-oriented OCBs. University of Ghana http://ugspace.ug.edu.gh 33 Work experiences under the socialized structure and the social cues conveyed by the socio- interpersonal environment also have certain influence on employees‟ definition of work role and OCBs (Morrison, 1994). Organisational climate also represents organisational values sensed by employees (Schneider, 1990) and the messages are sent from the environment of the organisation to the perception of each individual member. These messages convey the organisations‟ expectations for employees‟ behaviours and imply the possible consequences linked to these behaviours. Therefore, employees of an organisation develop self-expected work behaviours based on this information. Schneider, Ehrhart, Mayer, Saltz, and Niles-Jolly (2005) support the above theory. They believe that employees detect how much the organisation values services based on organisational strategies and relevant information they received, and when employees identify to the value of “service first”, they are more likely to perform service-oriented OCBs. Other researchers have also verified that a safety climate in an organisation balances the relationship between leader-member exchange and safety citizenship behaviours (Hofmann, Morgan, & Gerras, 2003). Hsu, Lin and Chang (2010) also pointed out in an empirical study that the OC of an international airline company has moderating effects on transformative leadership and service-oriented OCBs. Similarly, to the service industries, when the frontline contact employees sense the company‟s value in pursuing service excellence, such a message may change employees‟ cognitive categorization; that is, changes in the definitions and expectations of personal roles. And such changes expand beyond the official role definition to include extra-role behaviours that facilitate achievement of customer satisfaction. Employees who have a stronger sense of OS often build an open exchange to give official feedback for the work and have a higher tendency to perform service-oriented citizenship behaviours as a means to repay the support from the organisation University of Ghana http://ugspace.ug.edu.gh 34 (Morrison, 1994). Therefore, when an organisation has a stronger organisational climate, the effect of OS, as sensed by employees, on service- oriented OCBs would also be reinforced. The effectiveness of an organisation lies solely in the hands of employees and management of those organisations. Organisational climate provides accurate information about commitment, performance, and satisfaction and also indicate to a large extent the meaning employees attach to the organisational situation and understanding employee attitudes and behaviour (Jones & James, 1979; James et al., 1990; Schneider, 1983; Schneider et al., 2000). Organisational climate has been reported to be a significant predictor of important work-related outcomes from individual, group, and organisational levels. These include leader behaviour (Rousseau, 1988; Rentsch, 1990), turnover intentions (Rousseau, 1988; Rentsch, 1990), job satisfaction (Mathieu, Hoffmann, & Farr, 1993; James & Tetrick, 1986; James & Jones, 1980), individual job performance (Brown & Leigh, 1996; Pritchard & Karasick, 1973), and organisationalperformance (Lawler, Hall, & Oldham, 1974; Patterson, West, Lawthom, &Nickell, 1977). Brown and Leigh (1996) demonstrated that perceptions of a motivating and involving organisational climate were positively related to supervisory ratings of performance. Organisational climate has also been shown to relate to group process variables across organisational levels (Griffin & Mathieu, 1997). Day and Bedeian (1991) also showed that employees performed better (as rated by their supervisors) in organisational climates they perceived as structured (unambiguous) and supportive of risk. It has also been demonstrated that service climate is related to customer perceptions of service quality (Schneider, 1980; Schneider, Parkington, & Buxton, 1980; Schneider, White, & Paul, University of Ghana http://ugspace.ug.edu.gh 35 1998). Safety climate has also been significantly linked with safety behaviors and accidents teams (Hofmann &Stetzer, 1996), and safety compliance in the health sector (Murphy, Gershon, &DeJoy, 1996). Research in the area of innovation also suggests that group climate factors influence levels of innovativebehaviour in health care and top management teams (West & Wallace, 1991; West & Anderson, 1996). A plethora of empirical studies have been conducted. In a study to determine the relationship between perceived organisational climate and organisational effectiveness among 46 employees of Lithuanian Government, the researchers utilized questionnaire in collecting the data. The sample comprised 27 females and 19 males with the majority of them having university education; more than 50 percent had extensive working experience in organisations as counsellors, experts and heads of departments of the Lithuanian Government. Bivariate analysis was conducted to determine the relationship between dimensions of organisational climate and organisational effectiveness. It was observed that, a significant correlation exists between organisational effectiveness and well-defined, achievable tasks (r=0.426, p=0.003), comfortable work environment (r=0.443, p=0.002), enough communication within organisation (r=0.372, p=0.011), tolerance for individual differences (r=0.378, p=0.009), and pride in work and organisation (r=0.592, p=0.000) (Aleksandras & Aiste, 2003). This result is a reflection of the relationship between organisational climate and effectiveness in a public sector-oriented organisation. However, the climate created in private sector-oriented organisations sometimes differs significantly from public sector organisations. This makes investigations in private sector organisations a necessity to establish whether the findings can be generalized across these two sectors globally. University of Ghana http://ugspace.ug.edu.gh 36 Chacko (2006) did a study on organisational climate as predictor of organisational effectiveness among 149 managers across 49 private and public sector organisations in India. The researchers used qualitative approach where 63 participants took part in the study. The results showed the dimensions of organisational climate are a predictive of some of the factors of organisational effectiveness. Hart and Griffin (2006) found that organisational Climate model accounts for at least 16% single-day sick leave and 10% separation rates in one organisation. The study sought to understand the nature of interdependence between organisational culture and climate on learning perception of organisational members. Organisational culture was measured using Wallach Organisational Culture Index (OCI) and a 20-item Likert scale (developed by the author based on the Litwinian perspective). The employees of an insurance company, and a functional unit (marketing department) of a textile company were selected for the sake of homogeneity and making comparisons. Research findings, to an extent, indicated that there was a match between certain cultural attributes and corresponding climatic elements apart from the idiosyncratic features of the organisations. The assessment of culture-climate (OC – OCT) fit is of help for both senior management of organisations and HR departments to take necessary measures prior to the implementation of change strategies as well as the betterment of organisational productivity. Organisational climate has also been found to be a significant predictor of organisational performance. The performance of an organisation may not broadly capture the concept of organisational effectiveness, but it is definitely an important aspect of the measurement of organisational effectiveness. It has been reported that, perceived positive organisational climate University of Ghana http://ugspace.ug.edu.gh 37 was significantly associated with increased participation in decision making; greater information sharing and management support, and hence improved corporate effectiveness (Kangis & Williams, 2000). This finding was based on an empirical study involving industries ranging from manufacturing to hosiery and knitwear. Rigorous statistical analysis revealed a significant statistical index between organisational climate and performance. Work climate has also been reported as an enforcer of positive workplace behaviours like employee satisfaction, commitment and performance. Organisational climate and job satisfaction have been viewed as related but distinct constructs and therefore it is possible to test the relationship between them (Al-Shammari, 1992; Keuter, Byrne, Voell& Larson, 2000). While organisational climate stresses perception of organisational attributes perceived by the rank and file in the organisation, job satisfaction deals with perceptions and attitudes people have towards work. Specifically, Litwin and Stringer (1968) provided empirical justification why climate is different from satisfaction by conducting a field experiment. In the experiment, different climates were created and tested on employee satisfaction. The result showed that each of the created climates had different effects on levels of employee satisfaction. The effectiveness of an organisation is attributed to the workforce. Thus, an organisation populated with a large number of highly satisfied employees is likely to be an effective organisation because it is the contribution of the workforce that leads to the attainment of organisational goals. Climate has been demonstrated to significantly impact on employee job satisfaction among western samples. For instance, Friedlander and Margulies (1969) reported that organisational climate was significantly and positively related to employee job satisfaction. They further reported that individuals with different work values were more satisfied in different University of Ghana http://ugspace.ug.edu.gh 38 work climates and that individuals‟ satisfaction with various aspects of their work was a function of the work climate in the organisation in which they work. In a study involving 15 different organisations, researchers confirmed that organisational climate cause employee satisfaction. The study which was conducted by Taylor and Bowers comprised 284 workgroups (cited in LaFollette& Sims, 1975). Similarly, Hand, Richards and Slocum (cited in LaFollette& Sims, 1975) also corroborated the organisational climate-job satisfaction relationship reported earlier. They observed that managers with positive perception of the prevailing organisational climate demonstrated high level of acceptance of self and others than those with less positive view of the climate.People come to work with specific attitudes, needs and aspirations which are unique to them, but the impact of the work climate on these attitudes cannot be underestimated as it can influence them positively or negatively. Also, thought people may find themselves working in different units, departments, with different teams, the degree to which the work environment affects them is crystal clear (Gini cited in Peek, 2003). Interest in understanding the effect of perception of workplace environment on employee‟s attitude continue to engage the minds of scholars after the earliest study by Mayo (1933) at Western Electric. Humans generally feel comfortable in organisations where they are given a good amount of space to operate. In a study, Bisconti and Solomon (cited in Peek, 2003) observed that organisational climates that allowed a high degree of autonomy and nurtured relationships between peers, supervisors and subordinates resulted in high level of satisfaction among the workforce. Similarly, Hackman and Suttle (cited in Peek, 2003) found that, organisations with good/positive climates were those that generally were interested in their employees, provided them with opportunities and recognized their achievements. Such organisations have a highly satisfied workforce.In a study among industrial engineers, Ford University of Ghana http://ugspace.ug.edu.gh 39 (cited in Peek, 2003) identified organisational climate characteristics such as concern for the feelings of others as a significant predictor of job satisfaction. Similar results were found in a study conducted by Hopkins (cited in Peek, 2003), where a high regard for the feelings of others increased satisfaction. Employees feel comfortable with work environments that are not characterized by ambiguities relating to their career progression and development. Such climates provide fertile grounds for job satisfaction and commitment in organisations. In the opinion of Schlesinger (cited in Peek, 2003), a work environment that encourages continuous learning and provides new opportunities influences job satisfaction. Similarly, Brief (1998) found that salary, benefits and advancement opportunities were components of organisational climate that had a direct influence on job satisfaction, while Freeman and Rodgers (cited in Peek, 2003) found that people desire plenty of opportunities for advancement in addition to an environment that is not political and encourages open communication. Recent studies have also found similar results for the climate-satisfaction relationship, where various organisational climate characteristics can lead to the satisfaction of organisational members (Aarons &Sawitzky, 2006; Fisher, Milner &Chandraprakash, 2007; Gratto, 2001; Lephoko, Bezuidenhout&Roos, 2006; Peek, 2003). It can be deduced from the above literature that, an effective organisation is one with highly satisfied workforce and satisfaction of employees largely influenced by the prevailing workplace climate. According to Gray (2007), a supportive work environment is related to employees‟ performance. He argues that a positive environment will result in motivated employees who enjoy their work. University of Ghana http://ugspace.ug.edu.gh 40 It therefore comes as no surprise that work climate is an excellent predictor of organisational and employee performance. IBM recognises the importance of workplace climate and the role it plays in the success or failure of organisations. A recent study at IBM showed that 25% variance in business results was directly attributable to variance in climate (Nair, 2006). Results from various surveys conducted at IBM reveal that there is a relationship between climate and the attraction and retention of employees, productivity and effectiveness which, when translated into results, shows growth in sales and earnings, return on sales and lower employee turnover. IBM views climate as the key to business results, stating that motivated employees will be more productive, more passionate and more engaged, thus resulting in significant and cost-effective output. In an extensive study of manufacturing companies conducted by Williams in the UK, the relationship between climate and performance was investigated. The results showed that the majority of the dimensions were positively and significantly related to each other as well as to organisational performance with positive correlations on nearly all climate and performance measures (Gray, 2007). In similar research, Watkin (cited in Gray, 2007) found in his study of bottling plants, that the manufacturing plants with the most favourable working environments were in fact, the most profitable. Patterson, Warr and West (cited in Gray, 2007) found positive correlations of productivity with dimensions of organisational climate in their research on manufacturing companies. According to Litwin and Stringer (1968), climate assists managers to understand the relationship between the processes and practices of the organisation and the needs of employees. By understanding how different practices and initiatives stimulate employees, managers will be able University of Ghana http://ugspace.ug.edu.gh 41 to understand what motivates employees to behave in a manner that leads to a positive climate and results in the organisation‟s success. Noordin, Omar, Sehan and Idrus (2010) designed a study to investigate the influence of organisational climate on organisational commitment of employees at ABC Company. The study involved 150 employees comprising executive and non-executive level employees who volunteered to participate in the study. A response rate of 72% was recorded as 108 questionnaires were duly completed and returned out of the 150 administered. The findings of the study indicate that employees perceived the organisational climate of their organisation to be at a moderate level. The mean values for the organisational climate ranged from the lowest of 3.38 to the highest of 3.77 of the 5-point likert scale. In terms of the commitment variables, continuance commitment appeared to be the lowest of the three components with a mean of 3.22. The correlation results revealed a no significant relationship between continuance commitment, organisational design, teamwork and decision making. All the other variables showed significant positive correlations. Overall, the findings of the study showed that there is a need to improve the current situation at ABC Company with respect to all the components of the organisational climate and organisational climate. The link between organisational climate and organisational variables was also studies by researchers. For instance, Liu and Zhang (2010) conducted a study involving 419 participants of different educational levels, job position and length of service to determine the effect of organisational climate on human resource management effectiveness such as turnover intention, job satisfaction and work efficacy. Their findings showed that, educational level, job position, organisational tenure had significant main effects on organisational climate; specialty, enterprise character and enterprise size also had significant main effect on organisational climate. It was University of Ghana http://ugspace.ug.edu.gh 42 also revealed that, organisational climate had a significant main effect on human resource management effectiveness such as turnover intention, job satisfaction and work efficacy. In addition, organisational climate had significant main effect on organisational effectiveness like staff members‟ organisation commitment and collective identity. 2.6. Statement of Hypotheses  There will be a significant positive relationship between organisational culture and organisational effectiveness  The dimensions of organisational culture (innovative, community, competitive and bureaucratic) will relate positively to organisational effectiveness with innovative culture accounting for more variance than the other subcultures (Community, competitive and bureaucratic).  Organisational climate will relate positively and significantly to organisational effectiveness Independent Variables Dependent Variables Organisational Culture Figure 1: Summary of Hypothesized Relationship between Independent Variables and Dependent Variable Organisational Climate Organisational Effectiveness Innovative Community Competitive Bureaucratic University of Ghana http://ugspace.ug.edu.gh 43 2.7. Operational Definition of Terms  Organisational Culture: It refers to the value systems of organisations that encourages sense of togetherness, innovative behaviours, competitive spirit and policies abd procedures that influence employees behaviour.  Organisational Climate: It refers to the comfortable internal environment that creates and encourages positive behaviours in organisations  Organisational Effectiveness: This refers to the attainment of organisational goals and objectives in organisations. University of Ghana http://ugspace.ug.edu.gh 44 CHAPTER THREE METHODOLOGY 3.0. Introduction This chapter presents the methodology ideal for the study. Specifically, focus would be on the research setting, design, population, sample size and sampling techniques, instrument/measures for collecting data on the independent and dependent variables, data collection procedure, and ethical issues considered in the study. 3.1. Research Setting The study was conducted in the Greater Accra Region of Ghana. Essentially, focus was on the manufacturing sector. This sector was chosen over the other sectors because the great majority of studies in Ghana have focused on the service sector to the neglect of the manufacturing sector despite the significant role this sector play in the development of Ghana. Specifically, organisations like Nestle Ghana Limited, PZ Cussons, and Promasidor Ghana Limited were considered for the study. These organisations represent the giants in the manufacturing sector in Ghana especially those involved in nutritional, beverage and toiletries. Additionally, the sector provides the Ghanaian society with finished goods which serves our nutritional needs as well as bathing needs. In addition, the sector is an important source of employment for the Ghanaian people. Thus, investigating the influence of organisational culture and climate on effectiveness in this sector would serve relevant theoretical and organisational purpose in Ghana. University of Ghana http://ugspace.ug.edu.gh 45 3.2. Research Design The study employed a correlational research design to investigate the relationship between the independent variables (organisational culture and climate) on the dependent variable (organisational effectiveness). This design was appropriate for the study because the purpose was to determine the specific relationship that exists between the variables without any attempt to establish the cause of the relationship. In addition, the study was purely quantitative because only numeric data was gathered using a self-report questionnaire. 3.3. Population The study comprised all employees in the selected manufacturing organisations in the research domain. The organisations involved in this study were Nestle Ghana Limited, PZ Cussons and Promasidor Ghana Limited, all manufacturing-related organisations. All permanent employees (i.e. non-probational staff) were the target participants in the study. The profile of these organisations demonstrates their pedigree in their areas of operation in the manufacturing sector of Ghana. Nestlé Ghana Limited Nestlé Ghana Limited started business in Ghana in 1957 under the trading name of Nestlé Products (Gh) Limited with the importation of Nestlé products such as milk and chocolates. It was incorporated as Food Specialist (GH) Limited in 1968 to manufacture and market locally well-known Nestlé brands. The company became Nestlé Ghana Limited in 1987. The company‟s famous brands, IDEAL milk and MILO found their way into the Ghanaian market in 1971 when production started at the Tema factory. A catalogue of products have been produced since then with products such as CARNATION milks, CHOCOLIM, CHOCOMILO CEREVITA, University of Ghana http://ugspace.ug.edu.gh 46 CERELAC and NESCAFÉ 3 in 1.