IMPACT OF ORGANIZATIONAL CULTURE ON PRODUCT MANAGEMENT
PERFORMANCE – CASE STUDY ON DOMESTIC APPLIANCE INDUSTRY
dr. Neven Šerić
University of Split/Faculty of Economics
Cvite Fiskovića 5, Split, Croatia
Phone: ++ 385 21430659; Fax: ++ 385 21 430 701
E-mail: [email protected]
dr. Peter Meža
College of Industrial Engineering
Mariborska 2, Celje, Slovenia
Phone: ++ 386 41 769 566; Fax: ++ 386 3 428 79 06
E-mail: [email protected]
Abstract
In this paper, we joined gained knowledge about organizational culture and product management with
empirical findings. We gathered quantitative data with the use of questionnaires on the sample of
twenty organizations. Based on the results of the questionnaire analysis, which were prepared to
measure organizational culture based on the Cameron and Quinn typology – CVF (The Competing
Values Framework) we tried to establish the link between organizational culture in organizations and
the functioning of product management teams. We aimed to establish, which type of organizational
culture is most appropriate for successful functioning of product management teams. We set two
research questions for our research problem which result findings that organizational culture have
influence on the functioning of product management teams, and that the findings which type of
organizational culture is most relevant for successful teams.
Key words: organizational culture, product management, Tuckman's model
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1. Introduction
Product management is one of the most important functions in company. Yet the product
management literature has focused largely on creating successful products and has relatively
little to say about its interaction with organizational culture. This paper focuses on the
organizational determinants of product management at the level of project teams.
Organization culture, in regard to its impact on various situational variables within the
framework of organization, is a particular research subject in management science which has
never decreased its research area popularity. Organization culture has been seen as a main
factor to be investigated through in organizational life, and the researches questioning its
impact on realization of organizational goals has been increasing day by day.
To drive growth and profitability, firms need to successfully introduce new products and
manage existing products effectively through their life cycle. Product management is the
corporative role that carries this important responsibility. Despite the importance of the
product management function, there is considerable ambiguity about the roles and
responsibilities of product managers and the factors that drive effective product management
performance (Katsanis, Laurin, and Pitta, 1996; Low and Fullerton, 1994). Product
management teams often lack the authority they need to carry out their jobs effectively.
Organization structure is often poorly defined, which in turn makes it difficult to determine
the appropriate metrics for evaluating the performance of product managers (Katsanis et al.;
Wood and Tandon, 1994).
2. Review of literature
2.1. Organizational culture
As Drucker (1975) mentioned, the management system is concerned with people, culture, and
performance. One challenge of organizational development is organizational culture. Culture
is traditionally referred to as intangible, a set of values, beliefs, and symbols that make the
community an organization. Additionally, each organization has its own culture. Culture is a
model of norms, values, beliefs and attitudes which affects organizational behaviour. The
definition of the organizational culture exists in many versions. Kilmann et al. (1985) stated
that organizational culture as “shared philosophy, ideology, value, assumption, beliefs, hope,
behaviour and norms that bound the organization together”. Robbins (1984) mentioned it as
“Common perceptions which are held by the members of an organization; a system of
common meaning”, while George & Jones (2002) mentioned it as “Informal design of values,
norms that control the way people and groups within the organization interact trough each
others and with parties outside the organization” (2005).
Schein (1992), who is an expert in this field, defined organizational culture as “a pattern of
shared basic assumptions that the group learned as it solved its problems of external
adaptation and internal integration, that has worked well enough to be considered valid and,
therefore, to be taught to new members as the correct way you perceive, think, and feel in
relation to those problems”. Moreover, Dwivedi (1995) mentioned that organizational culture
also has influence on the attitude and behavior of employees that will lead to organizational
improvement. In comparison, the strong organizational culture will lead to improving
innovation, supporting teamwork, and increasing efficiency, quality, and productivity, while a
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weak organization culture could block the creating of new ideas, processes, and systems
(Morgan, 1989).
In the literature, there are several organizational culture typologies and related dimensions
such as Schein (1992) who present The Competing Values Framework (CVF). The CVF is
one of the most influential and extensively used models in the area of organizational culture
research. Cameron and Quinn (1999) have developed an organizational culture framework
built upon a theoretical model called the “Competing Values Framework” The CVF is one of
the most influential and extensively used models in the area of organizational culture
research. In this study CVF is utilized. This framework refers to whether an organization has
a predominant internal or external focus and whether it strives for flexibility and individuality
or stability and control. The framework is also based on six organizational culture dimensions
and four dominant culture types (i.e., Clan, Adhocracy, Market, and Hierarchy). The
implications of each culture type are summarized as follows.
It has been shown that the CVF is both theoretically sound in integrating organizational
culture to other organizational components and can be operationalized as a psychometrically
sound instrument (Yeung et al., 1991). The CVF (Fig. 1) is built upon two axes to reflect
different value orientations (McDermott and Stock, 1999). The control-flexibility axis
(vertical) reflects the extent to which an organization focuses on change and stability. A focus
on flexibility indicates the organization’s desire for flexibility and spontaneity, while a focus
on control indicates a complementary desire to stay stable, controlled, and in order. The
internal-external axis (horizontal) refers to the organization’s focus on the internal
organization and the external environment. An internal focus means that the organization
emphasizes maintaining and improving the existing organization, whereas an external focus
means that the organization focuses on competing, adapting to, and interacting with the
external environment.
Figure 1.
Flexibility
Constancy
Cameron and Quinn's model,1999
Internal concentration
External concentration
Group
Hierarchical
Developmental
Market
Source: Cameron and Quinn, 1999
The two axes combine to reflect four culture types, each representing different values about
motivation, leadership, and strategic orientation in organizations. Group culture focuses on
flexibility and internal maintenance by emphasizing strong human relations, cohesion, and
participation of members. Developmental culture emphasizes flexibility but external
positioning through growth, resource acquisition, creativity, and adaptation to the external
environment. Rational culture puts a focus on the external environment while stressing
control by encouraging competition and achievement of well-defined goals. Hierarchical
culture emphasizes stability and internal organization and thus stresses centralization and
regulations with rules and routinization (McDermott and Stock, 1999).
An important assumption underlying the CVF is that the four quadrants are ideals (Henri,
2006). Organizations seldom reflect only one culture type, rather each organization will
exhibit a combination of different culture types, although it may be that one type is more
dominant than the others (McDermott and Stock, 1999). In other words, a high rating on one
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end (e.g., internal orientation) does not exclude high rating at the other end (e.g., external
orientation) (McDermott and Stock, 1999). Thus, when using the CVF to assess an
organization’s culture, researchers can examine the relationships between different culture
types and different facets of the construct(s) being studied. A number of empirical studies
have adopted the CVF to explore the effect of organizational culture on various operations
management practices such as advanced manufacturing technology (McDermott and Stock,
1999).
2.1. The concept of product management
Product managers in industry are responsible for the overall product success on market and
business development. Meža (2009) defines product management as a kind of a messenger of
a market. It directly transfers clear information market logic to different departments in a
company which need such information to make their business decisions. Nowadays, in the
times of severe competition and constant price pressures, this should be a permanent activity
of product managers to care for cost reduction of product cycles. Product management core
activities are by no means focused on a product and/or on management activities. They are
related to direct participation in project development and in planning of new products. The
outcomes of the product management work can be judged by the product quality or the level
its success. Certainly, we should note, that there are some products which are more likely to
be successful on the market, and there are others, which might be unsuccessful as well.
On the other hand, domestic appliance industry is facing a crisis nowadays. Some authors
(Meža, 2009) suggest variety of possibilities to solve or even prevent such product crises.
Product management plays an important role in avoiding and preventing potential product
crises resulting in inefficient market communication, weak commercialization of
novelties/changes (due to poor advertising start and inadequate advertising strategy).
According to definition, a product management as a discipline (i.e., organizational design) has
been tested, scrapped, and brought back by many firms. This is not surprising since there are
both advantages and disadvantages to it. Gorchels (2000) points out that a product manager
becomes a champion for select products, brands or services in a multiproduct firm, acting as a
"general manager of a virtual company." This provides dedicated attention to a set of
offerings, but can also pose challenges. Product managers must juggle the demands of selling
existing products with the development of new products. They may also be faced with
resource constraints when competing with other product managers in the same company.
Product management is the entrepreneurial management of a piece of business (product,
product line, service, brand, segment, etc.) as a "virtual" company, with a goal of long-term
customer satisfaction and competitive advantage. Product managers are generally accountable
for this piece of business without having direct authority over the entities that "make it
happen." It may include, but is not synonymous with, project management, new product
development, or sales support.
2.2. The relationship between culture and product management
There is a gap in research literature regarding studies addressing relationship between culture
and product management. Steers (1975) and Zammuto (1982) described the measurement of
effectiveness was the most issue in the organizational culture theory. For linking
organizational culture, Ouchi (1980) identified the characteristics to determine the
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organizational effectiveness. Quinn and Rohrbaugh (1983) examined that relationship
organizational culture and effectiveness by utilizing the competing value framework.
Kotter and Heskett (1992) studied the relationship between strength of culture and
organizational effectiveness. Ostroff and Schmitt (19993) found that the organizational
effectiveness was influenced by the organizational culture. Juechter, Fisher and Alford [28]
completed the research found that the organizational culture heavily influenced the
organizational effectiveness of business. Quinn noted that organizations were likely to
experience tension among organizational effectiveness attributes – for example, all
organizations have a need for some level of stability as well as a need to be flexible and
adaptable; a need for control and discipline as well as a need to allow some degree of freedom
and autonomy; a need for rational formal structures and non-rational informal relations. They
concluded that effectiveness depended upon the ability of an organization, and its managers,
to strike the right balance among these critical attributes, as required by the organization’s
objectives and situation (2002). An increasing body of evidence supports a linkage between
an organization's culture and its business performance. In accordance with the studies
presented above, the organizational culture has a positive influence on organizational
effectiveness, therefore the relationship between organizational culture and organizational
effectiveness becomes important. Product managers often lack the authority to carry out their
responsibilities effectively. This section reviews relevant literature and presents qualitative
finding of our research.
3. Research model
3.1. Research background
From the perspective of product management in organizations and in the light of literature
framework appearing of significant relationship between organizational culture and
organizational efficiency dimensions, the effect of stable or variable organizational
environment in internal and external context on the organizational culture and product
management task structure can be proposed for this research as is shown in Figure 2.
Figure 2.
The research framework of organizational culture
Organizational Culture
(Clan, Adhocracy,
Hierarchy, Market)
Product management
Tasks structure
The aim of the present study is to investigate the relationship between organizational culture
and product management task in domestic appliance industry. In this research the relationship
between four different kinds of organizational culture, namely group, developmental, market
and hierarchical culture and product management tasks is examined. The research was carried
out in the domestic appliance industry. In order to examine organizational culture types,
Quinn and Cameron’s Organizational Culture types (Clan, Hierarchy, Adhocracy, Market).
5
3.1. Research methodology and results
This study is applied, correlationnal descriptive research and is categorized as field study. To
collect related literature, the related books, articles and journals were consulted as data
collection procedure and analyzing the collected data, two kinds of questionnaires has been
used. The first is Comeron and Queen’s (1999) questionnaire about organizational culture
types and the second of one is Meža's (2012) classification of product manager tasks.
Subjects answered the relevant questions based on a 5 staged Likert scale. This shows that
measuring tools have high levels of constancy. The whole population was about 57 among
which 35 were randomly selected. The relevant information about level of education, age, sex
and years of service is as follows:
Education: 13% have diploma (4 persons), 76% have BA degree (27 person) and 11% MA (4
person).
SEX: 83% (29 person) male and 7% (6 person) were female participants.
Age: 15% was under 30 year old (5 person), 55% between 30-40 years old (19 person) and
30% more than 40 years old (11 person).
Years of product management job: 22% of participants have less than 5 years of record of
service, 23% between 5-10 years and 35% between 10-15 years, 17% between 15-20 years
and 3% more than 20 years (12 person).
In this study for the purpose of analyzing the collected data, SPSS software was used. Also
descriptive statistics (percentage, frequency, mean, standard deviation) was used to test
research question inferential statistics like variance test, pearson correlation coefficient and
regression test were used. The result of ranking different organizational culture from the view
point of product managers in companies is presented in table 1.
Table 1. Results of the mean of organizational culture types
Organization culture
Group culture (G)
Developmental culture (D)
Hierarchical culture (H)
Market culture (M)
Average
3,15
2,53
2,93
3,25
Table 2. Product manager function - Product manager Tasks
Product manager Tasks
T1: Initiate market research studies or analyze their findings.
T2: Use sales forecasting or strategic planning to ensure the
sale and profitability of products, lines, or services, analyzing
business developments and monitoring market trends.
T3: Coordinate or participate in product promotional/education
activities or trade shows, working with developers, advertisers,
or production managers, to market products or services.
T4: Managing new product proposals, product registration and
product changes
T5: Demonstrate or explain products, methods, or services to
persuade customers to purchase products or use services.
T6: Suggest specific product purchases to meet customers'
needs.
6
Performance
3,65
3,5
4,25
3,25
3,75
4
T7: Collaborate with sales teams to understand customer
requirements, to promote the sale of company products, and to
provide sales support
T8: Develop, present, or respond to proposals for specific
customer requirements, including request for proposal
responses and industry-specific solutions
T9: Collaborate with sales teams & quality department about
product quality issues
T10: Prepare and deliver technical presentations that explain
products or services to customers and prospective customers.
T11: Provide technical and non-technical support and services
to clients or other staff members regarding the use, operation,
and maintenance of equipment.
T12: Direct and coordinate activities involving sales of
manufactured products, services, commodities, real estate or
other subjects of sale.
T13: Confer with potential customers regarding equipment
needs and advise customers on types of equipment to purchase.
4,25
2,75
4,25
3,25
4
3,25
3,5
The obtained results from pearson's correlation, coefficient are presented in table 3-6.
Table 3. Correlation Coefficient between Group Culture (G) and Product management task
(G)
R
Sig
n
r2
T1
0,854
0,00
35
0,729
T2
0,822
0,00
35
0,676
T3
0,612
0,00
35
0,375
T4
0,834
0,00
35
0,696
T5
0,633
0,00
35
0,401
T6
0,763
0,00
35
0,582
T7
0,807
0,00
35
0,651
T8
0,657
0,00
35
0,432
T9
0,831
0,00
35
0,691
T10
0,603
0,00
35
0,364
T11
0,609
0,00
35
0,371
T12
0,797
0,00
35
0,635
T13
0,671
0,00
35
0,450
T12
0,835
0,00
35
0,642
T13
0,671
0,00
35
0,450
T11
0,611
0,00
35
0,373
T12
0,817
0,00
35
0,667
T13
0,675
0,00
35
0,456
T11
0,623
0,00
35
T12
0,801
0,00
35
T13
0,681
0,00
35
Table 4. Correlation Coefficient between Developmental culture (D) and Product management task
(G)
R
Sig
n
r2
T1
0,861
0,00
35
0,663
T2
0,861
0,00
35
0,741
T3
0,607
0,00
35
0,368
T4
0,834
0,00
35
0,696
T5
0,627
0,00
35
0,393
T6
0,763
0,00
35
0,582
T7
0,832
0,00
35
0,658
T8
0,673
0,00
35
0,426
T9
0,833
0,00
35
0,694
T10
0,612
0,00
35
0,375
T11
0,611
0,00
35
0,373
Table 5. Correlation Coefficient between Hierarchical culture (H) and Product management task
(G)
R
Sig
n
r2
T1
0,798
0,00
35
0,637
T2
0,873
0,00
35
0,762
T3
0,607
0,00
35
0,368
T4
0,834
0,00
35
0,696
T5
0,621
0,00
35
0,386
T6
0,763
0,00
35
0,582
T7
0,811
0,00
35
0,692
T8
0,653
0,00
35
0,453
T9
0,828
0,00
35
0,686
T10
0,614
0,00
35
0,377
Table 6. Correlation Coefficient between Market culture (M) and Product management task
(G)
R
Sig
n
T1
0,814
0,00
35
T2
0,817
0,00
35
T3
0,628
0,00
35
T4
0,832
0,00
35
T5
0,621
0,00
35
T6
0,753
0,00
35
T7
0,833
0,00
35
T8
0,675
0,00
35
T9
0,833
0,00
35
T10
0,619
0,00
35
7
r2
0,741
0,667
0,394
0,692
0,386
0,567
0,694
0,456
0,694
0,383
0,388
0,697
0,464
4. Conclusions
A product management function is an important activity that helps enterprises to survive and
make further steps to increase competitiveness. On the other hand, culture can affect product
management performance in different ways. As product management task framework and it's
related findings can penetrate into culture, organizational culture is also affected by
organization efficiency. In the present study the concept of organizational culture and product
management and the relationship between them was examined, then with the application of
the proposed model the extent of relationship between four different kinds of organizational
culture (group culture, developmental culture, hierarchical culture and market culture and
thirteen product management tasks (T1 – T13) of product management in domestic appliance
industry were evaluated. For doing so after data collection procedures and analyzing them by
appropriate statistical techniques the dominant situation in domestic appliance industry were
examined. Results indicated that the dominant culture in domestic appliance industry is
Developmental culture. Moreover this research shows that 99%, there is significance
relationship between different organizational culture and product management task. Also the
Market culture plays an important role in product management framework.
A more significant aspect of the study however, is identifying potential lessons for product
management development policy that domestic appliance industry may adopt. Therefore, we
recommend conducting further research related to other types of cultural model and product
management competencies, because the findings may have a significant impact on the
company strategies and daily business.
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