Financial Performance Impacts of Corporate Entrepreneurship - Research Paper Example

 Financial Performance Impacts of Corporate Entrepreneurship The purpose of this essay is to discuss the validity of the statement that states that eighty percent of the management is about the managing of the work culture. The work culture is essential for an organization to prosper however the extent to which it is pertinent would be discussed in the essay. For this reason the paper first focuses on the essential requirements of the work culture. Then it moves on the different ways the requirements can be fulfilled. It also emphasizes on the various aspects of the culture that need to be addressed so that the work culture can be truly ‘managed.’ Later it considers the importance of the work culture in the performance management of an organization. Then it considers other factors apart from the work culture that have a role to play in the performance management and compares the relative significance of each of the factors. The latter part of the essay deals with the assessment of the statement and concludes whether the statement is understated or overstated. The Work culture  Work culture can be crudely defined, as Cowman and Jackson (2005) put it, to be a set of qualities that exist in an organization and in the employees of the specific organization. These set of qualities arise from what are accepted as generally appropriate and reasonable ways to think and act. Lotze (2004) defines the work culture as the ‘set of assumptions understandings and beliefs shared by a working community that manifest itself with clear and distinct patterns of interaction in a particular workplace.’ (p. 11) Cooper and Burke (2008) consider the work culture of an organization as a product of its background, traditions and values. This is because the work place is the place where the individuals are taught institutionalized values such that they follow methods and steps that have proved to be successful for the organisation in the past. Also they are taught the procedures that may have been invalid so that they can restrain from them in the future. So they are basically guided in terms of the institutional values such that they can work together for a common goal and achieve greater performance and success. It is important to note here that the teaching of the same values does not mean that the diversity is restricted in a work culture. In fact as Watkins (1994) argues, diversity is considered very important in a work culture because the same diversity is reflected in the actions and thoughts of the individuals. Therefore it can lead to the development of better ideas. A work culture is often associated with the term of an organizational culture as Martin (2006) relates. Alvesson (2002) defines the organizational culture to be a certain set of rules that define the affective aspects of the membership in a certain organization. Therefore in Schien’s (2003) words the work culture is more like an organizational one where a certain group of individuals learn to adapt to certain external conditions and internal integration. Consequently, as the groups evolve over time they engage in collective learning, as Roelofs (1997) relates, which leads to the development of a ‘culture.’ Why is a better work culture needed? The people that work in as the work culture are very different from each other, in terms of the beliefs and ideologies, as Tehrani (2001) relates. People may also differ in other ways e.g. the ways in which they find jobs, organise their work day, develop relations with hierarchies, and manage their assigned tasks. Therefore, there are various dimensions through which one can observe the workers in a workplace to differ from each other. This difference, especially in the case of a difference between the designations and gender, in Tehrani’s (2004) study, is the most important cause of bullying at the work place. Bolton (2007) would also agree here because he believes that it is very hard to tackle with this problem of difference. However there is one solution, the notion of the work culture itself. Work culture is important because it helps the workers in situations where differences may seem to be the barriers to unity. Through a common ‘culture’, as Moran et al. (2007) relate, the individuals are in a better position to coordinate their activities. As a consequence, it is easier to achieve common goals and expectations even if there are inherent differences present among the workers. Therefore, the role undertaken by each individual is not confined to the short term. Rather, emphasis is laid on the larger picture, as Kourik (2005) concludes. The acceptance of certain roles, that define the larger picture, means that that the individuals adopt acceptable conduct towards each other. This creates a friendly environment for the workers who consider each other like a family and hence prefer team work and consensus over bullying and disturbing each other over racial and gender discriminations. Also, the needs of each individual are taken into account so that nobody feels left out. Daft (2007) believes that the organisations that have such ‘clan-like’ cultures are easy to work in and individuals may want to actually work in such a culture to the best of their abilities. Further, this type of culture means that the consistent interpretations of the behaviours of the individuals are developed throughout the organisation. This means that the individuals can be better aware of the behaviours of the individuals that they are to work with. Since they know about each others’ behaviours, they are better accustomed to coping with each other, according to a notion proposed by Erez and Earley (1993). The work culture is also considered an ‘adhocracy’ one. This is because it is a place where the individuals create a dynamic environment. The leaders are considered as innovators and there is a lot of emphasis on the creativity of the institution. Bremmer (2010) argues that the continuous experimentation that arises due to the dynamic environment of the institution is the key reason for the creation and discovery of other better quality goods and services. So the work place also leads to the development of new and better ideas. Bremmer (2010) also terms the work culture as a ‘market culture.’ In a market, firms and organizations have to compete with each other in order to have unimpeded access to greater profits and benefits. The notion of operating in a market causes the work culture to emphasize on the need of getting things done quickly. People, as a consequence, are more focused on their goals and instead of concentrating on differences and creating problems, put in their efforts to compete with the workers of other institutions. So the notion of the market culture also leads to a sense of unity among the individuals. There may be instances where the designations of the individuals or for that matter the hierarchy may be a cause of concern for the other individuals of the organisation. However, the presence of the hierarchy may also be beneficial for the work place. This is because the leaders are considered the ‘efficiency’ based coordinators. As a consequence, the individuals are more likely to follow the instructions of these leaders and hence can achieve greater success. A smooth planning can hence be achieved without the incurring of high costs. Now it is important to discuss the main question of the essay that deals with the correlation of the work culture and the performance management of an organization. The effect of the work culture on the performance Throughout the last three decades there has been a continuous debate on the relation of the work culture and the resultant performance of the organization. A lot of research has been conducted in this regard and most of the research, as Hartman and Hayden (2005) relate, points to the fact that a positive culture can lead to ‘a good bottom line’. The reason given by Hartman and Hayden (2005) for this result is the fact that possible positive cultures are generally linked to a greater alignment of the staff. Increased alignment means a greater organizational effectiveness and consensus regarding strategic decisions. The employees take more responsibility for their actions and work more productively. The result is that the organisation benefits from a comparative advantage over many others. It is important here to discuss what a positive culture looks like. Positive Reinforcements Miletsky (2003) believes that a positive culture should be characterized by salient features. One of this is the positive reinforcements. Positive reinforcements ensure that rewards are given to those who are deserving of them. The giving of rewards creates an incentive for the workers and helps them to maintain their productive level or even improve it. In reality, reinforcements are actually ignored because the organizations are so pre occupied over the starting of new projects. Positive reinforcements play a very crucial part in the progress of a firm or organization. The giving of these, as previously mentioned, ensures that the people do not consider themselves to be taken as granted. There have been various examples of firms that have introduced the notion of the positive enforcements in the past and thus have increased their productive potential. An example is that of the Indiana Regional Medical Centre. The introduction of positive reinforcements by the centre, as Hartman and Hayden (2005) relate, led to the decrease in the employment turnover of 3%. This means that the effort to create a positive culture led to the progress of the firm in terms of the lower employee turnover. Flexible Work Structure A flexible work structure may also ensure, as Mendonca and Kanungo (1996) relate, that the workers are satisfied with their lives. If the entire time of the workers s spent in working they may lose interest in the work and would not be as productive as they might be if they are left to have some leisure time too. Bremmer (2010) believes that the introduction of flexible work hours have affected the performance of many organisations in the right way. Simon Jones, who was also the then acting chief executive at Investors in People (UK), also supported this notion by stating that "people management must be woven into the DNA of any organisation that wants to maximise its performance – it cannot be piecemeal or tokenistic," he added. No micromanageing Lesser or no micromanaging makes certain that the workers do not feel as if they are dictated. Hartman and Hayden (2005) add to this fact stating that the removal of micromanaging leads to the people being less constrained by orders. This way they are able to achieve better results as they are more motivated. They feel as if their existence matters rather than feeling that they are being ruled. It is for this reason that the employee morale in the survey that was carried out in IRMC had increased. Freedom to create Many analysts also believe that the freedom to create leads to a better work culture and a consequent increase in the progress of the institution. A freedom to create means that the workers are given a little guidance or direction by the leaders after which they are to create or design products or consider different and unique ideas. The freedom of choice means that the workers are happier as they do not have to be forced into doing something. Mendonca and Kanungo (1996) believe that the presence of the freedom has led many organisations in the US and the Great Britain to prosper. The freedom to create means that newer and improved ideas can be introduced without any constraint. This, in effect, means that the Research and Development sectors and departments of the organisations can be well established. It has been quite evident through many surveys and studies that the individuals who are given a chance to freely exercise their will know that they are being watched and evaluated. As a consequence, they improve their work quality and hence create designs that help the respective organisation to have a comparative advantage over others. (Importance of Improving HR Performance with Balanced Scorecard) The importance of the Research and Development department is a well known fact. Therefore the presence of the positive culture results in a well developed Research and Development department which may lead to the increases in the progress. It is very important to note here that the above mentioned situations may not always be possible. It is very true that a positive culture leads to an increase in the performance management of organisations. However, this fact may not be true for all cases. Essentially, attempts that encourage a positive culture should result in increased achievements of the organisations. But there are other things that have to be compared first too. Studies have shown that the notion of the positive correlation of the work culture and the performance measurement is only constrained to the developed countries. In the developing countries, the case is the opposite. This is what is highlighted in the study of Mendonca and Kanungo (1996) the most. A lot of money and other resources have to be spent to formulate a plan that helps achieve a positive culture and result in an improvement of the organisation in terms of the performance. This is possible for the developed countries that have a lot of resources. However the same rule may not be applicable to the developing countries. Naturally, the developed countries are different from the developing countries in terms of greater resources, better bureaucracies, and higher productivity levels. In the west, according to Mendonca and Kanungo (1996), the organization development and change strategies have led the organizations to be able to create conditions that ‘foster, promote, support, and reinforce employee effectiveness. These techniques and practices give organizations the competitive edge both in the short and long term, as well as in their domestic and international market’ This implies that the developed countries can make use of the strategies that influence the work culture and hence affect the performance of the institution directly. On the contrary, it is not that easy for the developing countries. In the developing countries recently there has been a trend of an increased investment in the human resource department. Many of the organisations in the developing countries have adopted the methods of the North America and the Great Britain. But it seems that the methods that are so efficient in the developed countries are not working in the developing ones. The reason for this is the fact that there has been a lack of proper management service. Bureaucratic inefficiencies and low productivity levels that are prevalent in the economy may be a cause for this trend. The falling economy forces the managers to adopt a speedy way in which they implement the changes. The objective in this context may be noble and laudable but the implementation may not result in to the desired consequences. There has been a debate over the effects of the work culture improvement on the performance of the institutions in the developing world. While some might agree to the fact that performance indeed is improved, others might argue that the performance may actually fall. The reason that may be given for this is the fact that the limited and scarce resources may be spent on the human resource improvement. The lack of resources may then affect the overall performance of the firm adversely. The whole point of the discussion has been that indeed in most of the cases a positive work culture has a positive impact on the performance i.e. they had a positive relation. However there are cases that a negative culture might actually lead to a betterment of the performance rather than a positive one. Hence, the effect of the work culture on the performance depends on the resources and the socio-economic working conditions. Apart from work culture, other factors also determine the progress of an institution. Some are discussed as below. Other factors that affect the performance One determinant of the performance of a firm is the presence of financial resources. Aktan and Bulut (2008) argue that the presence of the financial and material resources ensure that the performance of the firm is improved. This makes sense because if a firm has ample amount of financial resources, it is likely to invest them in the best way possible. Also, new and improved technology can be used to improve the overall performance of the organisation. The availability of the financial and material resources also makes certain that the respective firm/ organization is the dominant one in the global market. Dominancy in the markets means that the organization already has a comparative advantage over others in the production of certain goods. The inelastic demand for the dominant market power would cause the organization to actually prosper. In short, the financial and material resources that are owned by certain organisations can lead them to be more dominant and so more competitive in the global market and therefore there is a greater chance of success for the organization. Apart from the financial and material resources, firms may also have technological resources. Aktan and Bulut (2008) believe that the presence of the technological resources is extremely important for the unimpeded success of an organisation. This is because of an emphasis on new technology. Over the years, it has been observed that companies and organisations have spent a lot on their Research and Development departments. The reason for this trend is the fact the Research and Development leads to the creation of technology that can be used by the organisations so that they can benefit more than the others e.g. in the incurring of lesser costs. In a world where the organisations are striving to get hold of technological advancements, an organisation that already possesses technological resources has an absolute advantage over all others. Because of the technological resources, the productivity of the firm may be improved. The productivity of a firm is highly correlated with the success of an organisation. This means that the organisations that have better technological resources are likely to prosper because of the ease with which they can compete over others and possibly form a monopoly. The paper now moves on to the main question that needs to be addressed. Is it an over statement or an understatement? When one passes through and learns about the different factors that affect the performance of an organisation, one might come to the conclusion that the statement that relates eighty percent of the performance management to the human resource development (in terms of the improved work culture) is invalid. This is so because one might believe that the presence of so many factors that affect the performance, especially the financial and the material resources, automatically means that each of the factors has a significant role to play. Giving a share of eighty percent to one factor that affects the performance might prove to be a contradiction. Normally would argue that the statement is over stated. However in actuality, this may not be the case. It is important to know the fact that the work culture is not something that is different or for that matter mutually exclusive of the financial, technological and material resources that determine the performance. It is a well known fact that an increase in the financial and economic resources leads to the success of an organisation in the global market. But the concept of this ‘success’ is also similar to the improvement of the performance when the human resource is managed. This is, as Mendonca and Kanungo (1996) discuss, because the resources that are termed generally as the ‘financial’ resources and ‘material’ resources are the resources that are actually created because of the efforts of the creative and industrious people. Also it is due to the ingenuity of these people that the resources are deployed so much effectively that the performance of the organisation overall is improved. Hence, the statement may actually be right about the effect of the work culture on the performance management. By now it is known that the resources that supposedly are a cause of the improvement of the financial conditions of the organisation arise due to the presence of creative and intellectual individuals. It has also been discussed in detail that the creativity in the individuals is enhanced due to the presence of a work culture. So the work culture might affect the creativity of individuals which may be portrayed in the resources that are a source of success for the organisation. The statement may also be validated by a study that was carried out Korn/ Ferry International and Columbia University Graduate School of Business in 1989. According to this study, the human resource department had by then joined the strategy formulation in organisations and was so important for the expertise of the CEOs that it was actually considered to have surpassed even marketing and sales. Marketing and sales are the two most important aspects that the organisations consider and so the surpassing of the Human Resource over these two means that in fact it has been given a lot of importance while making strategies. It is obvious that the strategies that yield the best results are used, and the constant use of the human resource in the formulation of the strategies points out to the fact that it is the most essential element of the organisation. Hence, it can also be seen from this study that the statement may hold valid. Prior research and the discussion so far state that the statement that eighty percent of the performance management in the organisations is explained by the work culture is true. Of course every organisation has another work culture and each culture may affect the performance of the organisations in a different way. Therefore, it is important to add here that eighty percent should not be generalised. The percentage just represents the extent to which the work culture (and the human resource sector) is important for the achievements of a business. As I mentioned before, the rough estimate of ‘eighty’ percent may not be applicable to all the organizations but it is true and not something that is over stated or under stated. The other factors that affect the performance measurement are indirectly a resultant of the human resource and so the work culture of the organisation. Conclusion To conclude, the work culture is defined as a set of principles and ideas that unite the people working in similar circumstances (for the same company/ organisation) to achieve common goals and greater success. The managing of the work culture is often associated with an improved performance of an organisation. It is true that a positive culture generally motivates the people to work hard and creatively. This leads to the development of ideas that are a source of a comparative advantage in regard to the competitors. However this notion of the positive work culture may not be valid for developing countries that might actually suffer by investing in human resource. Factors other than the work culture may also be a cause of the success of a certain firm or organisation that may include the financial, material and technological resources. However, when seen closely one may discern the fact that the resources that lead to the performance management are indirectly dependent on the work culture themselves. As a consequence, the work culture is the most important factor when it comes to the performance of the firms. Thus the proposed statement may actually be true. However, it can be argued that the eighty percent performance as a result of the managing of the work culture is not valid. A lot of research has to be undertaken to come to that conclusion. References Aktan, B. and Bulut, C. 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