disc

1. Research Article
Factors affecting the organizational
performance of manufacturing firms
Ahmad Adnan Al-Tit
Abstract
Numerous studies have been conducted to explore the individual effects of organizational culture (OC) and supply chain
management (SCM) practices on organizational performance (OP) in different settings. The aim of this study is to
investigate the impact of OC and SCM on OP. The sample of the study consisted of 93 manufacturing firms in Jordan. Data
were collected from employees and managers from different divisions using a reliable and valid measurement instrument.
The findings confirm that both OC and SCM practices significantly predict OP. The current study is significant in reliably
testing the relationship between SCM practices and OP; however, it is necessary to consider cultural assumptions, values
and beliefs as the impact of OC on OP is greater than the impact of SCM practices. Based on the results, future studies
should consider the moderating and mediating role of OC on the relationship between SCM practices and OP.
Keywords
Organizational culture, supply chain management practices, organizational performance, manufacturing firms
Date received: 9 November 2016; accepted: 4 May 2017
Introduction
Research on organizational performance (OP), either with
regard to its financial or its operational aspects, has
revealed different factors that have significant effects on
OP. Examples of these factors include enterprise risk man-
agement,1
multidivisional structures of organizations,2
CEO charisma,3
stakeholders’ involvement and support,4
intellectual capital,5
human capital,6
CEOs’ social net-
works,7
organizational learning,8
the strategic integration
of human resource management,9
managerial practices
related to strategies, performance measurement, corporate
governance, innovation and development, along with the
external environment,10
adoption of green supply chain
management (SCM) practices,11
human resource prac-
tices,12
knowledge management capacity,13
supportive
organizational climate,14
supply chain quality manage-
ment,15
supply chain innovation,16
human capital disclo-
sure17
and knowledge creation.18
Concerning the relationship between organizational cul-
ture (OC) and OP, Yesil and Kaya19
carried out a study to
explore the impact of OC (clan, adhocratic, market and
hierarchical cultures) on financial OP using a sample con-
sisting of managers of Turkish companies. Their results
indicated that none of these dimensions were related to the
financial dimensions of OP. On the other hand, Prajogo and
McDermott20
found a positive relationship between OC
and OP.
In a study on the impact of human resources on SCM
and OP, Gómez-Cedeño et al.21
found a direct influence of
an SCM implementation on SCM outcomes and an indirect
influence on OP of firms from different industries in Spain.
Using a sample of manufacturing and service firms from
Malaysia, Chong et al.22
asserted the positive impact of
SCM practices on OP.
Business Administration Department, College of Business and Economics
(CBE), Qassim University, Al Malida, Kingdom of Saudi Arabia
Corresponding Author:
Ahmad Adnan Al-Tit, Business Administration Department, College of
Business and Economics (CBE), Qassim University, Al Malida, Buraidah
15452, Qassim, Kingdom of Saudi Arabia.
Emails: aa.altit@qu.edu.sa; ahmteet@yahoo.com
International Journal of Engineering
Business Management
Volume 9: 1–9
ª The Author(s) 2017
DOI: 10.1177/1847979017712628
journals.sagepub.com/home/enb
Creative Commons CC BY: This article is distributed under the terms of the Creative Commons Attribution 4.0 License
(http://www.creativecommons.org/licenses/by/4.0/) which permits any use, reproduction and distribution of the work without
further permission provided the original work is attributed as specified on the SAGE and Open Access pages (https://us.sagepub.com/en-us/nam/
open-access-at-sage).

2. Evidence from China has confirmed the positive impact
of supply chain integration (internal, customer and supplier
integration) on OP. Li et al.23
investigated the impact of
four practices of SCM (supplier and customer partnership,
the level and quality of information sharing and postpone-
ment) on OP, measured by market and financial perfor-
mance. Their results pointed to a significant influence of
these practices on OP dimensions. Miguel and Brito24
ana-
lysed data collected from companies in different industries
in Brazil to explore the relationship between SCM and OP.
They concluded that SCM practices exert positive influ-
ences on OP.
Okongwu et al.25
investigated the impacts of quality of
information sharing and supplier–customer partnerships on
the OP of industrial firms in France. Their results supported
the hypothesis that SCM practices positively predict OP. In
light of the aforementioned findings, the aim of this study is
to explore factors affecting financial and non-financial per-
formance via investigating the impact of OC dimensions
and SCM practices on OP.
The remainder of the article is organized as follows:
‘Literature review and hypothesis development’ section
provides a literature review and hypothesis development;
this is followed by the presentation of the conceptual
model for the study in section ‘Conceptual model’. The
‘Research methodology’ section addresses the research
methodology, and results are presented in section ‘Data
analysis and results’. A discussion of the findings and
conclusion are provided in the sixth section. The final
section highlights the research implications and provides
future research directions.
Literature review and hypothesis
development
Organizational culture
Scholars have defined OC as shared values and beliefs
held by individuals that form the basis for patterns of
behaviour in solving problems.26
Denison27
argued that
the core content of OC covers beliefs, values and assump-
tions held by individuals within organizations. In contrast,
Schein28
described OC as a behaviour that determines
how an organization grasps and reacts to the external and
internal environments, thus embedding the reaction to the
organizational environment in the definition of OC. Many
attributes concerning OC emerge in the literature. It has
been considered to guide individual communications
within an organization29
and to be a critical antecedent
factor for the success of knowledge management initia-
tives30
and a predictor of OP.31
In terms of the dimensions of OC, studies such as that of
Balthazard et al.32
have used the Organizational Culture
Inventory®
(OCI),(#2012HumanSynergisticsInternational)
developed by Robert Cooke and J. Clayton Lafferty, which
covers three types of OC: aggressive/defensive, passive/
defensive and constructive cultures. The OCI measures 12
behavioural norms called 1–12 o’clock positions. Chang
and Lin33
plotted OC on four axes (flexibility, internal,
external and effectiveness), which cover four types of
OC: cooperative, innovative, consistent and effective.
According to these authors, cooperation, information
sharing, empowerment and teamwork distinguish a coop-
erative culture. Adaptability and creativity are the major
features of innovative cultures. Rules and regulations, as
well as efficiency, are the dimensions included in a con-
sistency culture.
Finally, the main focus of the effectiveness, culture is on
competitiveness, goal achievement and effectiveness. In
their study of the relationship between OC, total quality
management and operational performance, Baird et al.34
used the organizational culture profile to measure OC. The
profile consists of six dimensions: teamwork/people
respect, outcome orientation, innovation, stability, atten-
tion to detail and aggressiveness. For this study, two OC
dimensions were adopted: adaptability26
and performance
orientation.35
According to Ahmad,26
customers, risks and
mistakes drive an adaptable organization. Performance
orientation refers to the accountability of members towards
results and high levels of performance.35
Table 1 shows
examples of the OC dimensions used in the literature.
Supply chain management
Chong et al.22
defined supply chain management (SCM)
based on two approaches: supply management and logistics
management. The focus of the supply management is inte-
gration, while the focus of logistics management is inven-
tory reduction. According to Park and Krishnan,38
cited in
Chong et al.,22
SCM can be defined as activities aimed at
integrating partners in the supply chain to produce the right
quantity of a product to be distributed in the right place at
the right time.
Huang et al.39
classified SCM research into three cate-
gories: (i) an operational approach that relates to produc-
tion, inventory and operational tools; (ii) a design approach
that deals with operational systems and information and
(iii) a strategic approach that refers to relationships and
competitive advantage. Huang et al.40
used information
sharing and technological interdependence to measure the
level of integration in the supply chain. Okongwu et al.’s25
study explored the relationship between SCM practices and
OP. They measured SCM practices in terms of information
sharing, supplier partnerships, customer relationships and
information quality. Two of these dimensions (supplier
partnerships and customer relationships) were adopted to
meet the purposes of this study (Table 2).
Organizational performance
Performance indicates to the achievement level of the mis-
sion at the work place that develops an employee job.44
2 International Journal of Engineering Business Management

3. Treacy and Wiersema,45
cited in Zack et al.,46
suggested
three OP-related capabilities that provide a baseline for
competitive advantage: customer intimacy, product leader-
ship and operational excellence. Product leadership refers
to competition based on product and service innovation.
Customer intimacy relates to the competition in terms of
the strength of customer satisfaction and retention. On the
other hand, operational excellence relates to competition by
virtue of the efficiency of internal processes.44
In the SCM domain, Arif-Khan et al.41
identified three
categories of OP related to SCM: flexibility, output and
resource performance. According to these authors, flexi-
bility in performance relates to an organization’s respon-
siveness, output performance pertains to an organization’s
ability to deliver a superior level of customer service and
resource performance concerns an organization’s ability
to achieve efficiency. Using a sample consisting of 652
firms in Singapore, Chia et al.47
examined performance
measurements used by SC managers. They found that the
most usable indicators were cost reduction, gross revenue,
pre-tax profit and customer satisfaction. Table 3 shows
examples of the OP dimensions used in the existing
literature.
Relationship between OC and OP
On the association between OC and OP, Yesil and Kaya19
provided evidence from Turkey using a sample consisting
of 300 companies operating in the textile, food and service
industries. Measuring OC in terms of adhocratic, clan, hier-
archical and market cultures and OP by sales growth and
return on assets, they found no significant relationship
between their OC dimensions and OP indicators. Prajogo
and McDermott20
examined the relationship between OC
and OP using four cultural dimensions adopted from Quinn
and Spreitzer50
– group culture, developmental culture,
hierarchal culture and relational culture – and four dimen-
sions of performance, namely, product and process quality,
product and process innovation. Their findings indicated a
Table 1. Organizational culture dimensions used in the literature.
Dimensions of organizational culture Researcher (s)
Clan culture
Adhocracy culture
Market culture
Hierarchy culture
Yesil and Kaya19
Cooperativeness
Innovativeness
Consistency
Effectiveness
Chang and Lin33
and
Akhavan et al.30
Aggressive/defensive cultures
Passive/defensive culture
Constructive cultures
Balthazard et al.32
Adaptability culture
Consistency culture
Involvement culture
Mission culture
Ahmad26
Culture management
Conflict resolution
Change disposition
Employee participation
Goal clarity
Identification with the organization
Organization focus and integration
Authority locus
Management style
Customer orientation
Human resource orientation
Task orientation
Performance orientation
Erwee et al.35
Information flow
Involvement
Meetings
Staff perceptions of teamwork
Staff perceptions of teamwork
supervision
Sikorska-Simmons36
Results-oriented vs. process-oriented
cultures
Tightly controlled vs. loosely controlled
cultures
Job-oriented vs. employee-oriented
cultures
Closed system vs. open system cultures
Professional vs. parochial cultures
Chang and Lin37
Teamwork/people respect
Outcome orientation
Innovation, stability
Attention to details
Aggressiveness
Baird et al.34
Table 2. Supply chain management dimensions used in the
literature.
Dimensions of supply chain management Researcher (s)
Customer relationship
Information sharing
Information technology
Internal operation
Strategic supplier partnership
Training
Chong et al.22
Collaborative distribution
Distribution flexibility
IT-enabled distribution
Inventory management
Order commitment
Transparency in the distribution process
Arif-Khan et al.41
Supply chain integration
Information sharing
Strategic relationships with suppliers and
customers
Support customer order
Jabbour et al.42
Information sharing, information quality
Supplier partnership
Customer relationship
Okongwu et al.25
,
Al-Tit43
Technological interdependence
Information sharing
Huang et al.40
Al-Tit 3

4. positive relationship between developmental culture and
three of the OP dimensions (product quality, product inno-
vation and process innovation).
Al-Tit51
conducted a study to investigate the mediating
role of OC between Human Resource Management (HRM)
practices and OP. It was found that OC moderated the rela-
tionship between HRM practices and OP. Lee and Yu31
investigated the relationship between OC and OP using a
sample of companies from three sectors: high-tech firms,
hospitals and insurance companies. Their results confirmed
the positive impact of OC on OP.
In Jordan, Bashayreh52
investigated the relationship
between OC and OP. It was found that there is a relationship
between OC (policies and procedures) and OP. Based on 240
valid questionnaires collected from insurance companies,
Al-Nsour53
investigated the role of OC in improving employ-
ees’ performance in the Jordanian banking sector. The results
identified there is a relationship between OC components
(expected Organization) and Employees’ Performance. Con-
sequently, the following hypothesis is proposed:
H1: OC (cultural adaptability and performance orienta-
tion) predicts OP.
Relationship between SCM and OP
Chong et al.22
collected data from a sample consisting of
163 manufacturing and service companies in Malaysia to
test the relationship between SCM practices and OP (opera-
tional and innovative performance). They found a direct
influence of SCM practices, on both the operational and
the innovative performance of Malaysian companies.
Based on 128 valid questionnaires collected from different
manufacturing companies in India, Arif-Khan et al.41
investigated the relationship between agile SCM practices
and OP. The results identified four SCM practices related
to the agile supply chain: collaborative distribution, distri-
bution flexibility, inventory management and order com-
mitment. In addition, they confirmed the association
between these practices and OP. Using the four dimensions
of SCM (information sharing, cooperation, long-term rela-
tionships and process integration) and four dimensions for
OP (cost, delivery, flexibility and quality), Miguel and
Brito’s24
results supported the positive relationship
between SCM and OP. In addition, in a study of the rela-
tionship between SCM and OP with a sample of 450 man-
ufacturing companies in France, Okongwu et al.25
found
direct and indirect impacts of SCM practices on OP. There-
fore, the following hypothesis is proposed:
H2: SCM (supplier partnership and customer relation-
ship) predicts OP.
Conceptual model
Figure 1 shows the study variables and the relationships
postulated between them. The conceptual model consists
of three variables: OC, SCM and OP. Two potential relation-
ships between the variables are assumed: OC is significantly
related to the OP, and SCM is significantly related to the OP.
Research methodology
Research sample and data collection
The study population comprises manufacturing firms oper-
ating in Amman, the capital city of Jordan. Of these firms, a
Table 3. Organizational performance dimensions used in prior literature.
Dimensions of organizational performance Researcher (s)
Sales-based performance Ismail et al.48
, Al-Tit43
, Chong et al.22
and Lee and Yu31
– Sales revenue, profitability, return on investment
– Return on assets, manufacturing productivity
– Product added-value, employee added-value
– Sales growth and market share
Organizational-based performance
– Product leadership (product and service innovation)
– Product and service quality
– Customer intimacy (customer satisfaction and retention)
– Operational excellence (internal processes efficiency)
– Employee development, and job satisfaction
Supply chain-based performance Arif-Khan et al.41
– Flexibility performance
– Output performance
– Resource performance
– Cost reduction
– Gross revenue
– Profit before tax
– Customer satisfaction
Treacy and Wiersema45
– Profitability, revenue, sales volume and growth
– New customers, customer satisfaction, company reputation
Tan and Sousa49
4 International Journal of Engineering Business Management

5. sample of 300 firms was randomly selected. The study
sample intentionally involved employees from different
departments because OC might differ among organiza-
tional units. A questionnaire-based survey was carried out
to collect data from the participants. The response rate was
34% (102) due to the low percentage of firms that agreed to
participate in the study. Of the questionnaires returned,
nine were incomplete. This left 93 questionnaires usable
for data analysis.
Measures
The OC measure comprises two dimensions: adaptability26
and performance orientation.35
Four items were developed
to measure this variable. SCM practices were measured
using two dimensions adapted from Okongwu et al.25
and
Flynn et al.54
: supplier partnerships (information networks,
market information sharing, inventory level sharing,
demand forecast sharing) and customer relationships
(information networks, market information sharing,
computer-based orders, customer feedback and com-
plaints). Also based on these authors, mutual collaboration
and inventory management were used to evaluate supplier
partnerships, while practices directed towards the manage-
ment of customer complaints and building long-term rela-
tionships with customers were used to evaluate customer
relationships. Eight items were developed to measure this
variable. In addition, following Okongwu et al.25
and
Quinn and Spreitzer,50
employee satisfaction, customer
satisfaction and the introduction of new products were used
to measure non-financial performance, based on Hallavo55
and Quinn and Spreitzer.50
Five items were developed to
measure this variable. Therefore, the total number of items
in the questionnaire was 17 items. The questionnaire was
anchored based on a 5-point Likert-type scale that con-
sisted of from 1 point (strongly disagree) to 5 point
(strongly agree). Table 4 summarizes the measurements
used to evaluate the study variables.
Validity and reliability
Construct validity was assured as a measure previously
developed and validated. Reliability testing is defined as
a measure that ensures the stability and consistency of
results over time.56
The findings of validity and reliability assessments, as
displayed in Table 5, confirm the acceptability of the mea-
surements used in the current study as recommended55,57,58
(Cronbach’s a values above 0.7, w2
/df 2.0, RMSEA
0.080, and CFI 0.9).
Data analysis and results
Intercorrelation matrix
The Pearson’s correlation coefficients in Table 6 indicate
that all the study variables are associated with each other.
There are significant relationships between OC, SCM prac-
tices and OP indicators.
Hypothesis testing
The results of the paths postulated for this study, as summar-
ized in Table 7 and portrayed in Figure 2, provide support for
H1 and H2. The OC dimensions explain 45% of the variance
in OP and have a significant positive impact on OP (Cultural
adaptability, b ¼ 0.367, t ¼ 4.897, p value 0.05; Perfor-
mance orientation, b ¼ 0.321, t ¼ 4.132, p value 0.05).
The SCM dimensions explain 40% of the variance in OP and
have a significant positive impact on OP (Supplier partner-
ship, b ¼ 0.281, t ¼ 3.897, p value 0.05; Customer rela-
tionship, b ¼ 0.275, t ¼ 3.712, p value 0.05).
Discussion and conclusion
This study aimed to investigate factors affecting OP by
exploring the effect of OC and SCM practices on the OP
Figure 1. Research model.
Table 4. Measurements used in the study.
Variables Dimensions Researcher (s)
OC Cultural
adaptability
Performance
orientation
Ahmad26
and Erwee et al.35
SCM Supplier
partnership
Customer
relationship
Okongwu et al.25
and Quinn and
Spreitzer50
OP Operational
performance
Okongwu et al.25
and Al-Tit51
and
Quinn RE and Spreitzer50
OC: organizational culture; SCM: supply chain management; OP: organi-
zational performance.
Al-Tit 5

6. of manufacturing firms from Jordan. The findings of the
study indicate that both OC and SCM practices signifi-
cantly predict OP. Concerning the relationship between
OC and OP, the results in the literature are mixed. In a
study of the relationship between the same constructs, Yesil
and Kaya19
revealed a non-significant relationship between
OC and OP. On the other hand, Lee and Yu31
confirmed
that OC positively predicts OP. The findings of this study
are consistent with Abu-Jarad et al.,59
suggesting that OC is
a key dimension in studies intending to investigate OP,
particularly in non-Western settings.
On the relationship between SCM practices and OP,
Chong et al.,22
Arif-Khan et al.,41
Miguel and Brito24
and
Okongwu et al.25
found a positive effect of SCM practices
and OP. Consistent with Quinn and Spreitzer,50
this study
found a significant relationship between customer partner-
ship and operational performance. The results of Quinn
and Spreitzer50
rejected the hypothesis that supplier
partnerships are related to operational performance. How-
ever, they explained that this was due to the introduction of
internal integration in the model. In this study, the ultimate
aim of which was to investigate factors affecting OP, the
results show that both OC and SCM practices are examples
of such factors. Overall, the study concludes that organiza-
tions driven by customers, partners, risk and mistakes and
oriented towards high levels of employee performance will
experience more enhanced levels of OP.
Implications and future research
directions
Despite the significant contribution of SCM practices to
OP,41,22,24,25
the findings of this study indicate that the
impact of OC on OP is greater than the impact of SCM
practices on the same construct. Therefore, both research-
ers and managers should give importance to organizational
beliefs, values and assumptions along with other variables.
Hence, future research should examine the moderating and
mediating role of OC on the relationship between supply
chain practices and OP. The aim of this study is to explain
the direct relationship between SCM, OC and OP in the
absence of previous studies conducted in Jordanian
settings. However, the intended direct relationship is
Table 5. Reliability and validity of measurements.
Construct Items Mean SD a w2
/df RMSEA CFI p Value
OC Cultural adaptability 2 3.74 0.90 0.83 1.22 0.061 0.94 0.00
Performance orientation 2 3.80 0.89 0.81
SCM Supplier partnership 4 3.86 0.88 0.78 1.63 0.074 0.91 0.00
Customer relationship 4 3.98 0.91 0.78
OP Operational performance 5 3.81 0.81 0.80 1.47 0.067 0.96 0.00
OC: organizational culture; SCM: supply chain management; OP: organizational performance.
p 0.05.
Table 6. Intercorrelation of variables.
1 2 3 4 5
1 1.00
2 0.42 1.00
3 0.52 0.40 1.00
4 0.61 0.39 0.46 1.00
5 0.66 0.71 0.63 0.69 1.00
1: Cultural adaptability; 2: performance orientation; 3: supplier partner-
ship; 4: customer partnership; 5: operational performance.
p 0.05.
Table 7. Hypothesis testing.
Hypotheses Dimensions r2
b T Result
H1: OC
predicts OP
Cultural
adaptability
0.446 0.367 4.897* Accepted
Performance
orientation
0.321 4.132*
H2: SCM
predicts OP
Supplier
partnership
0.397 0.281 3.897* Accepted
Customer
relationship
0.275 3.712*
OC: organizational culture; OP: organizational performance; SCM: supply
chain management.
*p Value 0.05.
Figure 2. Final model.
6 International Journal of Engineering Business Management

7. considered an initial point to develop new models on
direct–indirect relationship between these variables in the
same context. Hence, neither mediating nor moderating
effects were studied in the current study. As recommended,
future research is required to examine such casual effects of
mediating and moderating variables.
The sample used in this study is limited to manufac-
turing firms in Amman, the capital city of Jordan. This
study is limited by its low response rate due to firms’
refusal to participate in the study, since they regarded the
required data, as secrets should be preserved from com-
petitors. Consequently, the findings should be considered
with caution based on the declined response rate. Accord-
ing to Holbrook et al.,60
a lower response rate will only
affect the survey estimates.
Future studies should assess the impact of OC and sup-
ply chain practices on the OP of other manufacturing
firms in other countries. Finally, the research model
should include additional variables that contribute to OP
level to explore more factors that may affect OP in
Jordanian settings.
Acknowledgement
The author would like to thank the Jordanian firms who partici-
pated in this research. He would also like to thank the Deanship of
Scientific Research in Qassim University, Saudi Arabia.
Declaration of conflicting interests
The author(s) declared no potential conflicts of interest with
respect to the research, authorship, and/or publication of this
article.
Funding
The author(s) received no financial support for the research,
authorship, and/or publication of this article.
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