Organizational Culture and Firm Performance: Evidence from the Restaurant Industry

2020-06-23T18:18:23Z (GMT) by Hong Soon Kim
This study investigated the effect of organizational culture on firm performance in the restaurant industry. Despite the importance of organizational culture in the organizational functioning, empirical evidence for the organizational culture-performance relationship remains fragmented. The inconsistency in the literature was aroused from a lack of theoretical development, a negligence of industry-specific factors, a small sampling issue, and a lack of longitudinal examination. Therefore, this study proposed to use text analysis in measuring organizational culture and examined the organizational culture-restaurant performance with a consideration of moderating effect of service orientation, franchising, and economic condition. This study found that different organizational culture influences restaurant performance differently. Specifically, the result of this study reveals that: clan culture immediately increases restaurant productivity; adhocracy culture decreases restaurant growth; and hierarchy immediately decreases restaurant productivity. In terms of moderating role of service orientation, this study found that: that tangible service orientation positively moderates both hierarchy culture-profitability and hierarchy culture-productivity relationships. This result implies that tangible service orientation works better with the hierarchy culture in improving restaurant performance than intangible service orientation. As for the moderating effect of franchising on the organizational culture-performance relationship, this study found that franchising positively moderates the clan culture-profitability relationship and the clan culture-productivity relationship. This result implies that operational and economic benefit of franchising could be passed on to create synergetic effect with the clan culture and maximize the positive clan-productivity relationship while offset the clan-profitability relationship. Last, this study found that recession positively moderates the hierarchy culture-profitability relationship and the hierarchy culture-productivity relationship. Theoretically, this study contributes to the literature by: providing logical link between the organizational culture and firm performance; providing empirical evidence that reveals the performance implication of the organizational culture; and by using alternative organizational culture measurements based on text analysis of firms’ 10K filings. Practically, this study offers insightful implications for industry professionals in understanding the effect of organizational culture on restaurant performance.