A Study on Organizational Culture and Its Relationship with Job Satisfaction in Manufacturing and Information

Technology Sectors

Dr. Koteswara Rao, Dr. P.T.Srinivasan and S.George

Dr.P.K.Kotewara Rao is a senior executive in Southern Railway

Dr.P.T.Srinivasan, professor, Department of Management Studies, University of Madras

S.George, doctoral research scholar in Management, university of Madras

ABSTRACTOrganizational culture has a significant effect on how employees

view their organizational responsibilities and their job satisfaction.

With increasing globalization, a greater knowledge of organizational

culture and its effect in non-western cultures can be beneficial for

practicing leaders and decision makers. This study explores the

association between organizational cultural values and employee

satisfaction in manufacturing and Information Technology companies

in India. Surveys were distributed to 4 manufacturing companies and

4 IT companies. The sample size was 461. Significant findings are: (1)

Organizational culture differs in terms of the mean scores of its

dimensions between manufacturing and the sectors. (2) Employee job

satisfaction differes between manufacturing and IT sectors, and the

level of job satisfaction is high among employees in the IT sector

compared to their counterparts in the manufacturing sector. (3)

Dimensions of organizational culture explain significantly the variance

in job satisfaction of employees in both manufacturing and IT sectors.

INTRODUCTION

Organizational culture has been perceived to have greater

impact on a range of organizationally and individually desired

outcomes (Jill L. Mckinnon,et all, 2003). Fortune conducted a survey

on the most admired companies and it has indicated that the CEO

respondents believed that corporate culture was their most important

lever in enhancing key capability (Anonymous, 1998). Research

scholars have considered from earlier period onwards that

organizational culture affects such outcomes as productivity,

performance, commitment, self confidence, and ethical behavior

(Ritchie 2000). More recent writers have reaffirmed that

organizational culture does affect significantly an organization –

employees’ behaviour and motivation and its financial performance

(Holmes and Marsden, 1996).

Yet, there is very little empirical research is done on the

outcomes of organizational culture(Detert et al.,2000 and

Schein,1996). Following are the few research papers which have

studied organizational culture and outcomes: Sheridan (1992) found

an association between organizational cultural values and the rates at

which new recruits voluntarily terminated their employment, and

O’Reilly et al.(1991) identified an association between the fit of

organizational culture with employee preferences for culture (the

person-organization fit) and organizational commitment, job

satisfaction, and turnover. These studies were conducted in the U.S.

and, hence, within the particular national cultural context of that

country.

National culture has the potentiality to influence the relation between the

organizational culture and individual outcomes (Chow 2000, Agarwal et al.1999 and Lee

and Mathur, 1998). Some researchers like Agarwal et al. (1999) point out the necessity

of broadening the study of organizational phenomena beyond the boundaries of Anglo-

American cultures.

This study (Koteswara Rao, 2002) attempts to broaden the

boundary. The study examines empirically the association between

organizational cultural values and employee satisfaction in a large

manufacturing and information technology companies in India.

DEVELOPMENT OF HYPOTHESES

Organizational Culture

Organizational culture has been defined in many ways in the

literature, for example organizational culture is defined as “a system

of shared values (that define what is important) and norms

(appropriate attitudes and behaviors) by O’Reilly and Chatman’s

(1996). In most definitions various combinations of assumptions,

values, norms, beliefs and ways of thinking and acting are used to

explain the organizational culture (Jill L. Mckinnon,et all, 2003)

Antal, Dierkes and Hahner (1997) have observed the

connection between corporate culture and the way firms perceive

their environment in their research. To improve corporate

performance, transformation of organizational culture to fit into the

prevailing business environment is viewed as the utmost necessity

(Peters and Waterman, 1982).

Culture of a nation is directly related with its economy and

particular kinds of culture more conducive for the economic success

while others can be counter productive (Cartwright, 1999). For the

effective functioning of an organization, its culture has to be in tune

with national culture (Redding, 1992). Unlike many other countries

the Indian subcontinent has the tremendous range of environmental

regimes and supports a large range of human population and consist

of a fascinating mosaic of varied castes and cultural traits (Joshi et all,

1993). Hierarchical relationship dominates in India (Sinha and Sinha,

1994). Indians find it easier to work in superior-subordinate roles

rather than with equals ( Kotheri, 1970). A highly controlling superior

is more successful in bringing out positive effect on subordinate

performance and satisfaction in the organizations operating in

India(Kakar, 1971).

Job-satisfaction

In organizational behavioral research, job satisfaction is the

most frequently studied variable (Appelbaum, Bailey, Berg, and

Kalleberg 2000; Spector 1997). Job satisfaction emphasizes the

specific task environment of the employee (Mowday, Porter, & Steers,

1982). It is also the individual’s affective attitude or orientations for

work ( Blum & Naylor, 1968, Muchinsky, 1990).

Many factors affect employees’ job-satisfaction. Porter and

Lawler (1968) divide the factors into the intrinsic satisfactory factors

related to work itself and the extrinsic satisfactory factors not directly

related to work itself. Seasohore and Taber (1975) consider that

personal attributes and environment play major role in influencing job

satisfaction. Glisson and Durick(1988) indicate that the worker

himself/herself, work and organizational characteristics are the

factors affecting job satisfaction.

Some organizational researchers argue that employing high-

performance work systems improves organizational productivity and

increases job satisfaction (Appelbaum et al. 2000; Berg 1985). Other

researchers focus more squarely on the promise of bilateral control as

a mechanism for workers to have meaningful input into decision-

making processes even as they directly relate to improving job

satisfaction (Hodson 1999a).

Organizational Culture and Job Satisfaction

Jimfrase and his collegues propose that the culture of the

workplace is the foundation from which workers develop an

assessment of appropriate organizational behavior (Jimfrase &

Co,2002). And their qualitative analysis highlights that the perceived

gap between organizational norms and their actual implementations

creates a deeply felt discontent for many workers from a number of

social groupings.

Harris and Mossholder (1996) point out that organizational

culture stands as the center from which all other factors of human

resource management derive. It is believed that culture influences

individuals’ attitudes concerning outcomes, such as commitment,

motivation, morale, and satisfaction. Wallach (1983) has suggested

that individual job performance and favorable job outcomes, including

job satisfaction, propensity to remain with the organization, and job

involvement, depend upon the match between an individual’s

characteristics and the organization’s culture.

A study conducted by Jill L. Mckinnon and co in Taiwan(2003)

indicates that there is a quite compelling support for the importance

of organizational culture in affecting job-satisfaction.

Odom, Boxx, and Dunn (1990), found that the bureaucratic

culture neither improves nor distracts an employee’s commitment and

satisfaction. They also found that employee attitudes and behaviors

are enhanced by an organizational culture that exhibits innovative

characteristics. Additionally, they found that employees who work in a

supportive environment express more job-satisfaction.

Therefore we formulated the following hypotheses based on the

above mentioned literature:

H1. Organizational culture (OC) as a composite index namely

‘Organizational culture composite Index (OCCI) as well as its

dimensions will differ between manufacturing and Information

Technology (IT) sectors.

H2. Employee job satisfactions will differ between manufacturing and

IT sectors.

H3: The dimensions of OC will serve as significant predictors and

explain the variance in employee job satisfaction in manufacturing

and IT sectors.

MEASURES

An integrated questionnaire combining instruments and demographic questions

has been developed specifically for this study. This integrated questionnaire has been

administered to the respondents who are working in India. It consists of three parts which

are geared to the research questions.

Organizational Culture Measuring Instrument (OCMI)

This instrument is developed by the authors for the purpose of using the same in

this research study. OCMI comprises of 46 items and adopts a 7-point- rating scale

anchored from “strongly disagree’ to ‘strongly agree’ and the responses to items are

scored from 1 to 7 respectively.

The instrument taps the following 10 dimensions of organizational culture with

the abbreviation and number of items forming the sub-scale for each dimension given in

parentheses respectively: collaboration (COLLAB,7), open communication

(COMMUN,4), employee concern (CONCERN,3), creativity – adaptability

(CREATIVE,5), code of conduct (CONDUCT,5), customer care (CUSTOMER,3),

culture nurturing (NURTURE,4), quality consciousness (QUALTY,4), role clarity

(ROLE,6) and unity in diversity (UNITY,5). The organizational culture composite Index

(OCCI) is computed by adding the scores of all the 10 dimensions. A typical item of each

OC dimension is given in table 1.

The psychometric properties of the scale have been examined

first establishing the content validity of the dimensions of

organizational culture and corresponding items for measuring them

by factor analysis of the instrument adopting principle component

analysis with varimax rotation( Eigen value > 1 and explaining 65.8%

of variance was explained). The reliability of the dimensions was

ascertained by finding the internal consistency of the measures by

using the cronbach’s coefficient alpha (α > 0.7).

Job Satisfaction Measuring Instrument (JSMI)

The job satisfaction questionnaire was developed by Hackeman

and Oldham (1975). The measure composes 5 items with 7 – point

response ranging from completely disagree to completely agree in

each case. Two items were reverse scored. The internal reliability

coefficient alpha was .77. The Job Satisfaction Index (JSI) is computed

by adding the scores of all the 5 items.

Table 1A typical item of OC dimensions

Dimension ItemUnity in diversity

The unity among employees can easily be broken in this organization ®

Creativity adaptability

Employees who come out with new ideas are encouraged in this organization

Culture nurturing

The employees are aware of “do’s and don’ts” in this organization

Customer care In this organization customer complaints are immediately attended to

Quality consciousness

Employees strongly believe here that it is very important to produce quality work for the survival of the organization

collaboration Employees here strongly believe that working

together is important to achieve goals and targetsOpen communication

Employees feel free to convey their views to anyone at any level in this organization.

Code of conduct

Strict discipline is in built in this organization and the employees are used to it

Role clarity Employees are having clear understanding about their roles and responsibilities in this organization

Employee concern

Prompt attention is given to employees grievances in this organisation

SAMPLE AND DATA COLLECTION

The list of organizations operating in Chennai (state capital of

Tamil Nadu, India) was obtained from confederations of Indian

Industry and Madras management association, Chennai. Ten

organizations from each sector was selected using random sample

method. However permission to conduct the study could be obtained

only from 4 organizations from each sector. The manufacturing

companies are named as MAN1, MAN2, MAN3 abd MAN4. And IT

companies are named as IT1, IT2, IT3 and IT$. There were totally 625

questionnaires distributed and 461 filled in valid questionnaires were

received back and used in the study. All the four manufacturing

organizations are connected with production activities related to

Transport sector and are ISO9002 certified. While MAN1 is

government managed, manufacturing railway coaches, the other 3 are

privately managed manufacturing automobile spares. All the four IT

companies are SEI CMM Level 4 ones engaged in development of

export oriented software packages.

RESULTS

Descriptive and Correlation Analysis

Significant demographic findings include the following: (1) the

mean age of the participants in Manufacturing sector was 37.33 with

SD of 9.4 and in IT sector mean age was 26.22 with SD of 4.04. The

female respondents constituted 2.2% of the Manufacturing sector and

12.1% of the IT sector.

T-test:

From the results of t-test (Table2), it is evident that the mean

scores of dimensions of OC in the organizations of Manufacturing

sector differ significantly from the mean scores of the dimensions of

OC in the organizations of IT sector. This indicates that organizational

culture in manufacturing sector differs from culture existing in IT

sector. This is in line with the findings of Bhatnagar and Bhandari

(1998). They had pointed out the culture in Public sector, private

sector and government sector in Indian context differs from one

another.

Table 2: Test for Mean differences of OC and Job satisfaction between Manufacturing and IT sectors

Name of Dimensions

Manufacturing sector ( n = 279)

IT Sector (n=182) t- value

mean SD mean SDUNITY 4.97 0.94 5.55 0.89 -6.54**CREATIVE 4.97 1.1 5.28 0.92 -3.16**NURTURE 4.98 1.02 4.68 1.37 2.70**CUSTOMER 5.46 1.38 6.15 0.86 -5.95**QUALTY 5.25 1.55 5.68 1.39 -3.01**COLLAB 5.13 1.32 5.96 0.86 -7.58**COMMUN 4.58 1.26 5.16 1.32 -4.78**

CONDUCT 5.08 1.27 5.46 1.07 -3.31**ROLE 5.28 1.12 5.7 1.12 -3.93**CONCERN 4.87 1.45 5.18 1.36 -2.32*OCCI 5.06 0.87 5.5 0.72 -5.66**JSI 5.3 1.14 5.64 0.98 -5.99**

* p < .05 ** p< .01

The findings consistently show that for all dimensions of

organizational culture except ‘culture nurturing’, the employees in the

IT sector tend to perceive more strongly than their counterparts in the

manufacturing sector. Attention to customer needs and complaints

and the collaborative spirit for achieving the organizational goals are

noteworthy aspects of the IT sector. Role clarity is more pronounced

in IT as there are no rigid hierarchies and overlapping of

responsibilities when compared to manufacturing sector. Since the

manufacturing firms are established over a longer period of time,

their culture is historical and hence tends to be nurtured.

The mean value of ‘unity in diversity’ in IT is on higher side

which indicates that though IT firms tend to have a more diverse work

force the unity among employees is more coherent when compared to

the manufacturing sector. It is striking to note that the dimension

‘code of conduct’ is rated high even though strict discipline has not

been the phenomenon.

The results provide overwhelming support to the H1, hence this

hypothesis

“Organizational culture(OC) as a composite index namely

‘Organizational culture composite Index (OCCI) as well as its

dimensions will differ between Manufacturing and Information

Technology sectors.” is accepted.

In case of the H2, there is a significant difference between

manufacturing and IT sectors, hence the hypothesis: “H2. Employee

job satisfactions will differ between manufacturing and IT sectors” is

also accepted.

Multiple regression analysis

A step-wise Multiple Regression Analysis was conducted with

job-satisfaction as the dependent variable and dimensions of OC as

the independent variable (table 2). The analysis has been made

organization wise in each sector to examine the replication of

independent variables in explaining the variance in Job satisfaction.

In MAN 1, open communication and creativity –

adaptability emerged as the significant predictors of Job

satisfaction which duly explained 20.9% of variance. In MAN 2 open

communication and customer care emerged as the significant

predictors which duly explained 40.1% of variance. In MAN 3,

collaboration emerged as the significant predictor which explained

10.1% of variance. In MAN4, collaboration, customer care, culture

nurturing, quality consciousness and role clarity emerged as

significant predictors that explained 59.2% of variance.

In IT1, employee concern and role clarity emerged as the

significant predictors of Job satisfaction which duly explained 77.6%

of variance. In IT2, role clarity emerged as the significant predictor

which explained 26.4% of variance. In IT3, open communication

and role clarity emerged as the significant predictors that duly

explained 42.3% of variance. IT 4, code of conduct emerged as the

significant predictor which explained 13.4% of variance.

Table 3:Multi Regression Analysis of OC with Job Satisfaction

OrganizationSample size

Dimensions (independent Variables)Entered in final equation

Adjusted R² Value 

F value

MAN1(n=84)

COMMUN CREATIVE

1.05 11.97

MAN2(n=67)

COMMUN CUSTMR

0.73 23.06

MAN3(n=77)

COLLAB 0.95 09.20

MAN4(n=51)

COLLAB CUSTMR NURTUR QUSLTY ROLE

0.62 15.49

IT1(n=46)

CONCRN 0.56 79.02

IT2(n=48)

ROLE 0.60 17.87

IT3(n=41)

COMMUN ROLE

0.83 15.67

IT4(n=47)

CONDCT 0.66 08.14

On the whole, the independent variables customer care ,

collaboration, open communication, creativity – adaptability,

culture nurturing , quality consciousness and role clarity of OC

emerged as the predictors of the job satisfaction i.e customer care,

collaboration and open communication in 2 of the 4

organizations and creativity – adaptability, culture nurturing ,

quality consciousness and role clarity in one organization. In the

IT organizations, role clarity, open communication, code of

conduct, and employee concern emerged as the significant

predictors i.e role clarity in three organizations while open

communication, code of conduct, and employee concern in one

organization.

Thus Role clarity emerged as the most significant variable in

explaining the variance in job satisfaction and the other noteworthy

variables being open communication, code of conduct and employee

concern. It is of interest to note that only 4 dimensions of

organizational culture emerged as the predictors of job satisfaction in

IT sector where as seven dimensions emerged in the case of

manufacturing sector.

Hence the hypothesis:

“H3: The dimensions of OC will serve as significant predictors and explain the

variance in employee job satisfaction in manufacturing and IT sectors” is accepted.

CONCLUSIONS

In helping to understand the nature of organizational culture

and its relationship to job satisfaction, both generally and in the

Indian culture, the results have several important implications for

research and practice.

First, the results reveal that for the various dimensions of

organizational culture, marked differences prevail across sectors. The

IT sector with its pronounced people centred skills and activities tend

to display a higher strength on most dimensions of OC. The higher

level of job satisfaction seen for the IT sector in comparison to the

manufacturing sector, is in line with the differences witnessed for the

dimensions of OC and lend credence to the examination of OC as a

concomitant of job satisfaction.

Second, the results provide quite compelling support for the

importance of organizational culture in affecting outcomes. Seven of

the ten dimensions in the organizational culture set -Customer Care,

Collaboration, Open communication, Creativity-adaptability Culture

nurturing, Quality consciousness and Role clarity - had strong

association with job satisfaction in manufacturing organizations. In IT

organizations, four of ten dimensions – Open communication, Code of

conduct, employee concern and role clarity - were able to explain the

variance in job satisfaction.

These results confirm the fact that even though the nature of

production is same in the organizations, the dimensions of

organizational culture may differ in explaining employee job

satisfaction. Hence blindly imitating the success strategy of one

organization will not be of much help unless the underlying and

influencing culture is understood. The negative dimensions of a

culture need to be paid attention and consciously corrected since it

can block the growth and demotivate the employees thus creating

discontent among them

Of additional significance is that these findings are evidenced

from a study in the Indian cultural context, a very different cultural

context in comparison with the other studies done at US and other

countries as reported in the literature.

There are limitations to this study. As the existing literature

supports the measuring of OC in terms of values and beliefs, the same

method is adopted in this study and methods like ‘observation of rites

and rituals’ and ‘interview’ have not been incorporated in the

research methodology. As India is a vast country with a diversity of

cultures practiced by various ethnic groups, the restricted

geographical region – in and around Chennai – for the data collection

is another limitation. This may, nevertheless, be viewed as scope for

further research by organization behaviour researchers.

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