THE EFFECT OF CORPORATE CULTURE ON ORGANIZATIONAL PERFORMANCE: A SURVEY OF LISTED COMPANIES AT NAIROBI SECURITIES EXCHANGE, KENYA
Abstract
Statement of the Problem: Performance challenges persist among companies listed on the Nairobi Securities Exchange despite implemented governance reforms, highlighting the need to understand how corporate culture influences organizational performance.
Purpose of the Study: This study aimed to evaluate the influence of corporate culture on organizational performance among companies listed on the Nairobi Securities Exchange, with specific focus on examining the potential moderating effect of organizational factors on this relationship.
Research Methodology: The study employed a mixed-methods explanatory design targeting all 60 Nairobi Securities Exchange-listed companies. Data was collected through semi-structured questionnaires and analyzed using descriptive statistics, correlation analysis, and multiple linear regression.
Findings: The study revealed that teamwork and adherence to core values are critical drivers of organizational performance, explaining 65.6% of performance variability. While adaptability and analytical skills showed positive correlations with performance, their effects were not statistically significant. Similarly, synergy and behavioral conduct exhibited non-significant relationships. Moderation analysis indicated that organizational factors did not significantly alter the culture-performance link.
Conclusion: Corporate culture, particularly through teamwork and core values, significantly influences organizational performance among NSE-listed companies, though the impact of adaptability, analytical skills, synergy and behavioral conduct requires further investigation.
Recommendations: Companies should prioritize cultivating teamwork, upholding core values, and enforcing robust codes of conduct to enhance performance.
Keywords: Corporate Culture, Organizational Performance, Listed Companies, Nairobi Securities Exchange, Kenya
References
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Rowe W L. (1982). Two criticisms of the agency theory. Philosophical Studies, 42(3), 363–378.
Sackmann, S. A. (2021). Culture and Organizational Performance. In S. A. Sackmann (Ed.), Culture in Organizations: Development, Impact and Culture-Mindful Leadership (pp. 117–134). Springer International Publishing. https://doi.org/10.1007/978-3-030-86080-6_5
Schein, E. H. (1980). Organizational psychology. Prentice-Hall.
Schein, E. H. (2010). Organizational Culture and Leadership. John Wiley & Sons.
Silwal, P. P. (2022). Corporate cultures and financial performance: The mediating role of firm innovation. Cogent Business & Management, 9(1), 2010480. https://doi.org/10.1080/23311975.2021.2010480
Stevenson, A., & Waite, M. (Eds.). (2011). Concise Oxford English dictionary (12th ed). Oxford University Press.
Taouab, O., & Issor, Z. (2019). Firm performance: Definition and measurement models. European Scientific Journal ESJ, 15(1), 93–106.
Team, M. S. (2016). Business Performance Measurement (BPM) Definition | Operations & Supply Chain Dictionary. MBA Skool-Study.Learn.Share.
https://www.mbaskool.com/business-concepts/operations-logistics-supply-chain-terms/15587-business-performance-measurement-bpm.html
Tedla T B. (2016). The impact of organizational culture on corporate performance. Walden University.
Yu-Hua Y. (2016). Relationship between organizational culture and organizational effectiveness—A Study of nurses in Taiwan. Studies in Health Technology and Informatics, 225, 957–958.
Alvesson, M. (2002). Understanding organizational culture. SAGE.
Arora, A., & Sharma, C. (2016). Corporate governance and firm performance in developing countries: Evidence from India. Corporate Governance International Journal of Business in Society, 16(2), 420–436. https://doi.org/10.1108/CG-01-2016-0018
Bashayreh, A. M. (2019). Organizational culture and organizational performance. Human Performance Technology: Concepts, Methodologies, Tools, and Applications, 1378–1393. https://doi.org/10.4018/978-1-5225-8356-1.ch067
Bhuiyan F, Baird K, & Munir R. (2020). The association between organizational culture, CSR practices and organizational performance in an emerging economy. Meditari Accountancy Research, 28(6), 977–1011.
Buallay, A., Hamdan, A., & Zureigat, Q. (2017). Corporate governance and firm performance: Evidence from Saudi Arabia. Australasian Accounting, Business and Finance Journal, 11(1), 78–98. https://doi.org/10.14453/aabfj.v11i1.6
Cameron, K. S., & Quinn, R. E. (2006). Diagnosing and changing organizational culture: Based on the competing values framework (Rev. ed). Jossey-Bass.
Cano J A, Vergara J J, & Puerta F A. (2017). Design and implementation of a balanced scorecard in a Colombian company. Revista Espacios, 38(31), 1–12.
Chen, F.-H., Hsu, T.-S., & Tzeng, G.-H. (2011). A balanced scorecard approach to establish a performance evaluation and relationship model for hot spring hotels based on a hybrid MCDM model combining DEMATEL and ANP. International Journal of Hospitality Management, 30(4), 908–932. https://doi.org/10.1016/j.ijhm.2011.02.001
Daft, R. L. (2015). Organization Theory and Design. Cengage Learning.
Doucoure’ B, & Diagne A. (2020). The effect of size and age on the performance of Senegalese small food companies: The role of market orientation. Transnational Corporations Review, 12(4), 349–359.
Eisenhardt, K. M. (1989). Agency Theory: An Assessment and Review. The Academy of Management Review, 14(1), 57. https://doi.org/10.2307/258191
Fama, E. F., & Jensen, M. C. (1983). Separation of Ownership and Control. The Journal of Law & Economics, 26(2), 301–325.
Freeman, R. E., Wicks, A. C., & Parmar, B. (2004). Stakeholder Theory and “The Corporate Objective Revisited.” Organization Science, 15(3), 364–369. https://doi.org/10.1287/orsc.1040.0066
Garrison R H, Noreen E W, & Brewer P C. (2020). Managerial Accounting (17th Edition). McGraw-Hill International. https://www.mheducation.com/highered/product/managerial-accounting-garrison-noreen/M9781260247787.html
Hillman, A. J., & Dalziel, T. (2003). Boards of directors and firm performance: Integrating agency and resource dependence perspectives. The Academy of Management Review, 28(3), 383–396. https://doi.org/10.2307/30040728
Hung C V, Vinh T P, & Thai B D. (2021). The impact of firm size on the performance of Vietnamese private enterprises: A case study. Problems and Perspectives in Management, 19(2), 243–250.
Hussain, N., Rigoni, U., & Orij, R. P. (2018). Corporate governance and sustainability performance: Analysis of triple bottom line performance. Journal of Business Ethics, 149(2), 411–432.
Jensen, M. C., & Meckling W H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.
Jiang F, Kang J K, Kim J, & Zhu B. (2018, November 6). Female board leadership, firm performance, and corporate governance: Evidence from China.
Kamaamia, A. T. (2017). The effect of organizational culture on organizational performance: A case of Kenya School of Monetary Studies. USIU-Africa.
Kaplan, R. S., & Norton, D. P. (1992, January 1). The Balanced Scorecard—Measures that drive performance. Harvard Business Review, January–February 1992. https://hbr.org/1992/01/the-balanced-scorecard-measures-that-drive-performance-2
Kiel, G. C., & Nicholson, G. J. (2003). Board composition and corporate performance: How the Australian experience informs contrasting theories of corporate governance. Corporate Governance, 11(3), 189–205. https://doi.org/10.1111/1467-8683.00318
Liu, Y. (2020). Firm size, firm age and firm profitability: Evidence from China [Thesis, Wenzhou-Kean]. https://wkuwire.org/handle/20.500.12540/356
Maina, J. W. (2016). Influence of organizational culture on performance of commercial banks in Kenya. University of Nairobi.
Martin J, W. (2002). Organizational Culture: Mapping the Terrain. Journal of Comparative Policy Analysis, 4, 217–221. https://doi.org/10.1023/A:1015468409408
McCahery J A, Sautner Z, & Starks L T. (2016). Behind the scenes. The Journal of Finance, 71(6), 2905–2932.
Nikpour, A. (2017). The impact of organizational culture on organizational performance: The mediating role of employee’s organizational commitment. International Journal of Organizational Leadership, 6(1), 65–72. https://doi.org/10.33844/ijol.2017.60432
Niven, P. R. (2006). Balanced scorecard step-by-step: Maximizing performance and maintaining results (2nd ed). Wiley.
NSE. (2021, November). ESG Disclosures Guidance Manual by NSE.
Ogbonna, E., & Harris, L. (2000). Leadership Style, Organizational Culture and Performance: Empirical Evidence from U.K. Companies. International Journal of Human Resource Management - INT J HUM RESOUR MANAG, 11. https://doi.org/10.1080/09585190050075114
Pervan M, Pervan I, & C’urak M. (2017). The influence of age on firm performance: Evidence from the Croatian food industry. Journal of Eastern Europe Research in Business and Economics, 1, 1–10.
Robbins, S. P., & Judge, T. A. (2011). Organizational behaviour (14th ed). Pearson.
Rowe W L. (1982). Two criticisms of the agency theory. Philosophical Studies, 42(3), 363–378.
Sackmann, S. A. (2021). Culture and Organizational Performance. In S. A. Sackmann (Ed.), Culture in Organizations: Development, Impact and Culture-Mindful Leadership (pp. 117–134). Springer International Publishing. https://doi.org/10.1007/978-3-030-86080-6_5
Schein, E. H. (1980). Organizational psychology. Prentice-Hall.
Schein, E. H. (2010). Organizational Culture and Leadership. John Wiley & Sons.
Silwal, P. P. (2022). Corporate cultures and financial performance: The mediating role of firm innovation. Cogent Business & Management, 9(1), 2010480. https://doi.org/10.1080/23311975.2021.2010480
Stevenson, A., & Waite, M. (Eds.). (2011). Concise Oxford English dictionary (12th ed). Oxford University Press.
Taouab, O., & Issor, Z. (2019). Firm performance: Definition and measurement models. European Scientific Journal ESJ, 15(1), 93–106.
Team, M. S. (2016). Business Performance Measurement (BPM) Definition | Operations & Supply Chain Dictionary. MBA Skool-Study.Learn.Share.
https://www.mbaskool.com/business-concepts/operations-logistics-supply-chain-terms/15587-business-performance-measurement-bpm.html
Tedla T B. (2016). The impact of organizational culture on corporate performance. Walden University.
Yu-Hua Y. (2016). Relationship between organizational culture and organizational effectiveness—A Study of nurses in Taiwan. Studies in Health Technology and Informatics, 225, 957–958.
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Published
2025-02-20
How to Cite
Karuu , G. G., Muhoho , J., & Mwangi, K. (2025). THE EFFECT OF CORPORATE CULTURE ON ORGANIZATIONAL PERFORMANCE: A SURVEY OF LISTED COMPANIES AT NAIROBI SECURITIES EXCHANGE, KENYA. African Journal of Emerging Issues, 7(4), 76–92. Retrieved from https://ajoeijournals.org/sys/index.php/ajoei/article/view/776
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