The effects of leadership styles & organizational culture over firm performance

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  • 1. THE EFFECTS OF LEADERSHIP STYLES & ORGANIZATIONAL CULTURE OVER FIRM PERFORMANCE Multi National Companies in Istanbul, Turkey By:Cemal Zehira , Öznur Gülen Ertosunb , Songül Zehirc, Bü ra Müceldilid,
  • 2. THE MAIN QUESTIONS ADDRESSED IN THIS PAPER ARE:  a) Does organizational culture affect organizational performance ?  b) Is there a significant relationship between organizational culture and leadership styles?  c) Does leadership affect organizational performance?  d) Mediating effect of organizational culture between leadership and performance.
  • 3. WHAT IS ORGANIZATION CULTURE?  Behavior of humans who are part of an organization and the meanings that the people attach to their action  Organizational culture includes:  organization values, visions, norms, working language, systems, symbols, beliefs and habits.  Organizational culture affects the way people and groups interact with each other, with clients, and with stakeholders.
  • 4. CULTURE & ORGANIZATIONAL PERFORMANCE  In the fields of management and organizational theory, organizational culture is one of the most popular concepts.  There’s a significant relationship between organizational culture and organizational outcomes such as financial performance, competitive advantage , firm effectiveness
  • 5. CULTURE & ORGANIZATIONAL PERFORMANCE  McDonalds, IBM, P&G and HP these firms have superior financial performance .  Their focus on culture and leadership fit  Culture will remain linked with superior performance only if the culture is able to adapt to changes in environmental conditions and it must have unique qualities which cannot be imitated.
  • 6. LEADERSHIP & PERFORMANCE  Leaders interacting with employees from different backgrounds produce different types of leadership styles .  Leadership styles divided into two major categories: Mechanistic based leadership style  Humanistic based leadership style 
  • 7. MODELS OF LEADERSHIP STYLES  Mechanistic based model practiced in organizations that operate in a stable market environment  Focus on internal organizational environments and give less emphasis to high commitment human resource practices  Humanistic model operate in a dynamic market environment  Focusing on external competitiveness and emphasizing high performing human resource practices
  • 8. LEADERSHIP STYLES  Research paper has mentioned 3 leadership styles • Transactional Supportive Participative • •
  • 9. LEADERSHIP STYLES  Transactional leaders are more focus on performance.  Supportive leaders are focus on emotional, informational, instrumental and appraisal support to followers.  Participative leaders are often work more closely with their followers and involve all levels of followers in making decisions  H1: There is a relationship between leadership types and organizational performance
  • 10. CULTURE & LEADERSHIP & PERFORMANCE  Leadership is crucial because, as organizational cultures develop and change, they also need to be managed and controlled.  Leaders create mechanisms for cultural development  Cultural norms arise and change due to its leaders focus  Good leaders develop their skills to alter the culture in order to improve organizational performance.
  • 11. PERSPECTIVES Functionalist perspective  Attribution perspective  Contingency perspective   These Perspectives lightening the relationship between organizational culture and leadership behavior.
  • 12. CULTURE & LEADERSHIP & PERFORMANCE  All these perspectives states that there is a positive relationship between culture and leadership but in certain conditions organizational outcomes affected by leaders’ behavior  H2: There is a relationship between culture dimensions and leadership types  H3: There is mediating effect of culture of organizations on the relationship between leadership types and organizational performance.
  • 13. TYPES OF CULTURE  Community Culture(based on loyalty and commitment to a strong leader )  Competitive Culture(concentrate on achieving goals under aggressive and competitive leaders and focus to gain competitive advantage)  Bureaucratic Culture(governed by formal procedures, policies and value longevity, predictability, efficiency, and stability.)
  • 14. IMPACT OF CULTURE TYPES ON ORGANIZATION PERFORMANCE  A close connection between organizational culture and organizational performance  H4: There is a relationship between culture types and organizational performance.
  • 15. RESEARCH MODEL
  • 16. RESEARCH DESIGN Data collected through face-to-face questionnaire technique  Manufacturing and service sector companies.  All most 62% of companies are global  25%of them are international  12% are national.  Almost 12% of companies are small  30% are medium-sized  58% are big companies 
  • 17. RESEARCH DESIGN  Valid questionnaires were 295.  Questionnaires were allocated as hard copy.  Gathered data have been analyzed in SPSS software  Correlation and regression analysis used
  • 18. RESULTS  These results imply that, organizational culture and leadership are vital components of firm performance.  Mechanistic-based leadership and humanisticbased leadership are significantly related to organizational culture.  Associations between the leadership styles and organizational performance are Mediated by organizational culture.
  • 19. RESULTS  Humanistic-based leadership bureaucratic and competitive culture are partial mediator on this relationship, Community culture is not significant.  If firms have to achieve positive firm performance in the competitive business environment; firms need to give importance to organizational culture and leadership.
  • 20. LIMITATIONS & SUGGESTIONS  Only three leadership styles have been studied.  Use different leadership types.  Study only focused on the link between culture, leadership and performance.  Should include individual outcomes.  Study was conducted in Turkey.  Focus on different national cultures and across different types of organizations.