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IJQRM
17,1
14
Received May 1998
Revised April 1999
International Journal of Quality &
Reliability Management,
Vol. 17 No. 1, 2000, pp. 14-26.
# MCB University Press, 0265-671X
available at http://www.emerald-library.com
Quality performance and
organizational culture
A New Zealand study
Lawrence M. Corbett and Kate N. Rastrick
Victoria University of Wellington, Wellington, New Zealand
Keywords New Zealand, Manufacturing, Quality, Organizational culture
Abstract For many years culture has been claimed as an important component of organizational
success in general and TQM and quality improvement in particular. This study examined
management culture and quality performance in a sample of New Zealand manufacturing
organizations. The culture was measured using the Organizational Culture Inventory, and quality
performance was measured using questions from Leading the Way: A Study of Best Manufacturing
Practices in Australia and New Zealand. Different management cultures were found to have
correlations with quality indicators such as: warranty claims, percent defectives, ratio of quality
inspectors to direct production workers, and delivery in full on time. No significant correlations were
found between the organizational cultures and cost of quality, or with supplier quality. We suggest
that through understanding these relationships between culture and quality, managers may be able to
develop more effective and competitive organizations.
Introduction
This study investigates the quality performance and management culture of a
sample of New Zealand's manufacturing firms. Over the past 15 years the New
Zealand manufacturing industry has undergone major reforms. These have
been designed to open the New Zealand economy to global competition. To
survive and be competitive in this environment, one of the earliest initiatives
these organizations have turned to has been quality improvement (Campbell-
Hunt and Corbett, 1996).
Peters and Waterman (1982) were possibly the first authors to tell managers
that having a strong culture was a key to organizational success. Though
organizational culture undoubtedly existed before Peters and Waterman's
book, it was more of interest to academics. By linking it to corporate
performance, managers began to take it much more seriously. The literature on
organizational culture began in the traditional organizational development
model of slow, planned change (Beer and Walton, 1987). It ``later converged
with the field of total quality management in the belief that either culture
change or at least culture awareness was a necessary prerequisite for
`excellence' and `quality''' (Lewis, 1998). There have been many recent studies
investigating the relationship between quality management and firm
performance (e.g. Adam et al., 1994, Terziovski et al., 1997). The benefits of
TQM have been well documented and include bottom line improvements in
competitiveness, productivity and market share. Evidence shows companies
that pursue best practice and TQM achieve higher profits and cashflows, as
well as greater shareholder value (AMC, 1994). However, some recent findings
suggest that most features generally associated with TQM ± such as quality Quality and
training, process improvement, and benchmarking ± do not generally produce organizational
advantage, but that certain tacit, behavioral, imperfectly imitable features ± culture
such as open culture, employee empowerment, and executive commitment ±
can produce advantage. Powell (1995) concludes that these tacit resources, and
not TQM tools and techniques, drive TQM success, and that organizations that
acquire them can outperform competitors, with or without the accompanying 15
TQM ideology. So. while much current literature describes the importance of
management culture in relation to quality improvement, there have been fewer
attempts to test this relationship by measuring organizational culture and
quality performance. The particular focus of this paper is thus to explore the
relationship between culture and quality in some New Zealand manufacturers.
We now look, in turn, at some of the relevant literature on culture and quality,
and then the literature linking quality, culture and performance.

The nature of culture

Culture has traditionally been viewed as one facet of anthropology (Robbins,
1983), but some claim that classifying organizational culture as purely
anthropological is too narrow, as it really is ``an interdisciplinary phenomenon
with contributions from psychology, sociology, anthropology and social
psychology'' (Lewis, 1998). Culture is not innate. It is transmitted through
contact with others in our environments and is shared amongst them
(Schermerhorn et al., 1995). Its nature is of groups rather than individuals and it
develops in strength through time. Culture is difficult to define in a way that
encompasses its full meaning and many short definitions have previously only
captured a hint of its entirety (Alvesson and Berg, 1992). Ott (1989) states that
culture has five attributes: language, artifacts and symbols, patterns of
behaviour, underlying assumptions and subcultures. Klein et al. (1995) divide
culture into myths, stories, language, rites and ceremonies, symbolic
interactions and shared norms and beliefs about behaviour. Most early studies
of management and culture focused on the differences or similarities in national
cultures and the implications for managing international businesses.
(Weinshall, 1977). In Hofstede's well-known study, New Zealand managers
were in the same cluster as US and some other Anglo-Saxon managers
(Hofstede, 1980). In the business literature, Kotter and Heskett (1992) take a
social anthropological approach and suggest culture represents the qualities of
any specific human group that are passed from one generation to the next.
Formally they define it as ``the totality of socially transmitted behaviours,
patterns, arts, beliefs, institutions and other products of human work and
thought characteristic of a community or population''. They propose that
culture in organizations consists of two aspects. One aspect is the invisible,
deeper and harder to change aspect associated with the shared values or beliefs
that shape group behaviour and persist over time, even with changes in group
membership. For example, the notion that ``in this company the managers care
about the customers''. The second aspect involves group behavioural norms,
IJQRM which are more visible and easier to change. These are the common or
17,1 pervasive ways of acting that are found in a group, and they persist because
they are taught to new group members, because rewards flow to those that fit
in and sanctions to those that do not. For example, ``in this firm the employees
are quick to respond to customer enquiries''. Although writers often talk about
organizational culture in the singular, all firms will have multiple cultures
16 owing to different functional groupings or collectivities within the
organization.

The nature of quality and TQM

The evolution of the different definitions of quality has been well summarised
by Reeves and Bednar (1994). The early definitions portrayed quality as
excellence or some intrinsic feature that ``you know it when you see it''.
Currently, the favoured definitions are ``quality is conformance to
specifications'' and ``quality is meeting and/or exceeding customer's
requirements''. Zeithaml (1988) describes quality as the attributes or features
(that is the qualities) of a product or service. They are the distinguishing
features that differentiate one product or service from another, for example,
appearance, components, price, brands, size, colour, smell and taste. While
there is no consensus on a single definition of TQM (Gehani, 1993), most
authors see it as an integrative philosophy of management of continuously
improving the quality of products and services to achieve the customer's
satisfaction or requirements. ``It is based on the premise that an organization
must build quality into its products and processes, and that everyone in the
organization has a responsibility in this effort'' (Vupplapati et al., 1995).

Culture and performance

Almost without exception, the business literature asserts that culture
(imperfectly understood as it may be) has a significant effect on organizational
performance (Lewis, 1998). The cultural traits necessary for success, and the
importance of a ``strong culture'' form the basis of the work of Peters and
Waterman (1982) and Deal and Kennedy (1982). They argue that if culture has
no effect then there would be little interest in it, and arguments about it would
be purely academic. Most authors treat ``culture'' as a single entity in assessing
its impact on performance, whereas only behaviour can affect performance, and
culture is not the only determinant of behaviour (Lewis, 1998). While several
authors have questioned the value of the ``strong culture'' hypothesis (Schein,
1989; Saffold, 1988; Schlesinger and Balzer, 1985) and a direct link between
culture and performance, more recent writings still use this term and assert the
linkage (Kotter and Heskett, 1992). They go on to suggest that the ``content'' of a
culture, i.e. in terms of which values and behaviours are common, is as
important, if not more important, than its ``strength''. This leads to the idea that
a culture is good only if it ``fits'' its context, i.e. the objective conditions of the
industry or the business strategy itself. In other words, the better is the fit, the
better is the performance, and a changing environment can undermine a good
fit. Reed et al. (1996) have proposed a theory linking TQM content, firm Quality and
performance and uncertainty in the business environments. They suggest if organizational
firms need to change their orientation to fit with a changing environment, then culture
this may require a change in the culture. If TQM is to contribute to firm
performance then there is a need to focus on the content of the TQM
implementation as much as the process. There are three difficulties which can
make it nearly impossible to detect statistically the direct effects of TQM on 17
global measures of organizational outcomes (Hackman and Wagman, 1995,
p. 323). They are the serious measurement problems associated with even
standard indices of firm performance such as market share, profitability, or
stock price; exogenous shocks can obscure the link between work processes
and organizational outcomes; and temporal issues such as how long should we
wait before we analyse outcome measures.
While these writings have looked at business-level performance, the general
idea that organizational culture influences people's actions and reference points
and thus alters their actions in and perceptions of all aspects of their work has
been extended to include quality. Consequently a relationship between
organizational culture and quality has been proposed, which suggests that it is
possible to improve quality management and its implementation through the
study of the firm's organizational culture (van Donk and Sanders, 1993; Klein et
al., 1995). Among some authors on quality and culture, the relationship is so
ingrained that the terms are becoming affiliated, with phrases appearing such
as ``a culture of quality'' (Yanderick, 1992) or a ``quality culture'' (Jones, 1988;
Saraph and Sebastian, 1993).
Other authors suggest that to implement quality programs effectively, the
organizational culture should be molded to the quality method or vice versa. It
is important that this occurs at the initial implementation of the quality
program, because the culture's initial experiences of the quality program will
affect their future responses to quality initiatives. That is, organizational
culture impacts on quality from the conception of quality within the
organization (Sinclair and Arthur, 1994; McNabb and Sepic, 1995).
Nevertheless, despite the claims for a link between organizational culture and
quality performance, few studies appear to have actually examined the
existence of, as well as the nature of, the relationship (Lim, 1995). One recent
study on quality and organizational culture focused on perceived quality of
service and hypothesized that organizational culture has a direct impact on
service quality. This study found positive correlations between the perceived
levels of quality and two sub-cultures: the constructive and the aggressive/
defensive styles (Klein et al., 1995).
In New Zealand manufacturing firms, quality was found to have a ``positive
and significant relationship to performance'' (Adam et al., 1994). Similar studies
(Maani et al., 1994; Sluti et al., 1994) showed empirically that in 184
manufacturing companies, improving quality had positive effects on
operational performance and on certain indicators of business performance.
The most pronounced association was between quality and process utilisation.
IJQRM This literature review suggests that, despite reservations by some authors,
17,1 there is a link between culture and firm performance, a link between quality
(TQM) and firm performance, and that organizational culture should influence
quality performance. In this study it is the last-mentioned that we wish to
examine empirically, by attempting to measure both culture and actual quality
performance.
18
Methodology
Measuring culture
Traditionally, the concept of organizational culture has been assessed by
qualitative methods. However, quantitative approaches may be more practical
for purposes of analyzing data-based change in organizations. The
Organizational Culture Inventory (OCI) by Cooke and Lafferty (1983) is a
self-scoring, multilevel diagnostic system for individual change and
organizational development, based on a configuration of interpersonal and
task-related styles. This survey instrument is one of the most widely-used
quantitative measures of culture (Rousseau, 1990). It has been shown to have
reliability and validity for assessing organizational norms and expectations
(Cooke and Szumal, 1988). The analysis of the completed OCI instruments
divides organizations into 12 distinct culture categories, though for
simplification the 12 culture categories are usually reduced to three cultural
styles which each contain four categories with similar characteristics (Cooke
and Rousseau, 1988). These three styles are:
(1) Passive/defensive styles (also referred to as the people/security culture):
which is the basis for the approval, conventional, dependent and
avoidance cultures. These cultures usually have low levels of
performance and employee well being.
(2) Aggressive/defensive styles (also referred to as the task/security culture):
is the basis of the oppositional, power, competitive, and competence/
perfectionist cultures. These styles represent cultures that perform tasks
sufficiently, but to the detriment of the people involved, through
creating high stress levels. These cultures generally encourage a steady
reliability rather than outstanding levels of performance and innovation.
(3) Constructive styles (also referred to as the satisfaction culture): which is
the basis for the achievement, self-actualisation, humanistic-helpful and
affiliative cultures. These are the preferred or most desirable group of
cultural expectations and norms. They are usually associated with high
levels of performance and low levels of stress among the organization's
members.

Quality performance indicators

We examined the quality performance using six questions, see Table I.
Questions were coded by a response on a 5-point Likert scale. For each point on
the scale we gave a value for the participant to indicate their response. These
Percentage of defective materials received from suppliers
Quality and
Likert scale Less than 0.1 0.1-0.49 0.5-1.99 2.0-5.0  5.0 organizational
1 2 3 4 5 culture
Total defects as a percentage of production volume
Likert scale Less than 0.1 0.1-0.49 0.5-1.99 2.0-5.0  5.0
1 2 3 4 5
Warranty claims cost as a percentage of total sales 19
Likert scale Less than 0.1 0.1-0.99 1-1.49 1.5-3.0  3.0
1 2 3 4 5
Cost of quality (error, scrap, rework and inspection) as a percentage of total sales
Likert scale Less than 1 1-4.9 5-9.9 10.0-15.0  15.0
1 2 3 4 5
Ratio of quality control inspectors to direct production operators
Likert scale 1:5 1:10 1:50 1:100  1:100
1 2 3 4 5
Percentage delivery in full on time to customers
Likert scale Less than 50 50-80 81-90 91-96 97-100
1 2 3 4 5
Table I.
Notes: Five responses were available for each of these measures. They were then coded Quality performance
from 1 to 5 as a Likert scale indicators

questions were based on the quality literature, and had been developed by a
team, which included the lead author, for a large-scale study of ``best practice''
in Australian and New Zealand manufacturers (AMC, 1994).
In consultation with Human Synergistics, and cognizant of the resources
available, we decided that 40 random manufacturing companies would be
surveyed. We approached 68 companies until we had 40 agreeing to
participate. Five copies of the instrument were sent to each organization to be
completed by senior managers. Eventually, despite many follow-up calls, only
21 returned the minimum requirement of three completed organizational
culture inventories per company. These have thus been used in our analysis.

Hypotheses
There were 18 hypotheses developed relating each of the three cultural styles
with the six quality indicators. Examples for the first quality performance
indicator follow.
H1: The percentage of defective materials received from suppliers:
. (H1a) The percentage of defective materials received from suppliers is not
related to constructive management cultures in New Zealand
manufacturing industries.
. (H1b) The percentage of defective materials received from suppliers is not
related to passive/defensive management cultures in New Zealand
manufacturing industries.
IJQRM . (H1c) The percentage of defective materials received from suppliers is not
17,1 related to aggressive/defensive management cultures in New Zealand
manufacturing industries.

Results
We decided that Spearman's Coefficient of Rank Correlation was the most
20 appropriate choice for this investigation for the following reasons. First, owing
to the number of organizations that returned sufficient surveys, the data could
not be assumed to be normally-distributed. ``One method of analysing such
data is by ranking the variates and calculating a coefficient of rank correlation.
This approach belongs to the general family of non-parametric methods'' (Sokal
and Rohlf, 1981). Spearman's Coefficient of Rank Correlation is one
non-parametric method of testing correlations. Second, both the OCI and
quality indicator questions collected ordinal data. Spearman's Correlation is the
appropriate method when one scale constitutes ordinal measurement and the
remaining scale is either ordinal or higher (Runyon and Haber, 1968).
One concern was whether the type of manufacturing sector would have an
effect. The literature suggests we might expect different cultures in each
industry because of the unique business environments they face and the need
for ``fit'', e.g. stable, slow-growth or dynamic short product life cycles. (Reed
et al., 1996). Figure 1 shows the three culture scores for each company by

140
120
Culture Scores

100 Key
80 Constructive
Passive
60 Aggressive
40
20
0
0 2 4 6 8 10 12
Manufacturing Industry

Key for Manufacturing Industry Groups (X-axis):

1: Food Beverages and Tobacco,
2: Textiles,
3: Clothing and Footwear,
4: Wood, Wood Products and Furniture
5: Paper, Paper Products, Printing and Publishing,
6: Chemical, Petroleum and Coal Products,
7: Non-metallic Mineral Products,
8: Basic Metal Products,
Figure 1. 9: Fabricated Metal Products,
Culture scores and 10: Transport Equipment,
manufacturing industry 11: Other Machinery Equipment,
groups 12: Other.
respective manufacturing sector (x-axis). We tested for differences using Quality and
Wilcoxon's method, but found no significant differences. We suggest an organizational
explanation for this is that the pervasiveness of the quality improvement culture
theories and the adoption of similar practices for quality across industries may
negate the effect of the different environments the firms are facing.
Of the respondents, 91 per cent were in a middle management position or 21
higher, 53 per cent of respondents were in the positions of senior management,
executive/senior vice president or CEO/president. Hence, middle and upper
management were strongly represented. We tested for intra-company
differences using Kendall's Coefficient of Concordance and found no significant
differences between the scores of the managers.
The results of the Spearman's correlation analysis for the six quality
performance measures and three cultural styles appear in Table II. In each box,
we have the value for the correlation coefficient, , and the significance level, p.

Cultural styles Aggressive/

Quality indicator Constructive Passive/defensive defensive

Percentage of defective No significant No significant No significant

materials received from correlation correlation correlation
suppliers (Ho accepted) (Ho accepted) (Ho accepted)
 = 0.0292  = 0.0746  = 0.1127
p = 0.8399 p = 0.7479 p = 0.6746
Total defects as a percentage Strongly negative No significant No significant
of production volume correlation correlation correlation
(Ho rejected) (Ho accepted) (Ho accepted)
 = ±0.4770  = 0.0889  = 0.0989
p = 0.0072 p = 0.7016 p = 0.6648
Warranty claims cost as a Strongly negative Positive Strongly positive
percentage of total sales correlation correlation correlation
(Ho rejected) (Ho rejected) (Ho rejected)
 = ±0.4833  = 0.4597  = 0.4728
p = 0.0067 p = 0.0208 p = 0.0086
Cost of quality (error, scrap, No significant No significant No significant
rework and inspection) as a correlation correlation correlation
percentage of total sales (Ho accepted) (Ho accepted) (Ho accepted)
 = ±0.1996  = 0.0054  = 0.06
p = 0.3857 p = 0.9815 p = 0.8033
Ratio of quality control No significant Strongly negative No significant
inspectors to direct correlation correlation correlation
production operators (Ho accepted) (Ho rejected) (Ho accepted)
 = 0.1489  = ±0.4887  = ±0.2089
p = 0.5193 p = 0.0041 p = 0.3635
Delivery in full on time to No significant No significant Positive
customers correlation correlation correlation
(Ho accepted) (Ho accepted) (Ho rejected) Table II.
 = ±0.0417  = 0.3160  = 0.4086 Summary of Spearman
p = 0.8575 p = 0.1628 p = 0.0435 correlations
IJQRM The relationships discovered in this study, between culture and quality, are
17,1 now examined more closely by looking at them in terms of each cultural
style.

Constructive styles
These styles are the preferred group of cultural expectations and norms. This
22 group is usually associated with high levels of performance and low levels of
stress within the organizational members. The results of this study
demonstrate that constructive style scores are negatively correlated with two
quality performance indicators, viz. ``warranty claims cost as a percentage of
total sales'', and ``defects as a percentage of production volume''.
The relationship of the constructive culture with the latter is particularly
important, as this is the question that encompasses a fundamental measure of
quality. Manufacturing organizations with a high constructive score are
associated with lower defects as a percentage of production volume. This
indicates that in these firms the quality philosophy is widely understood
throughout the entire production process. Mistakes are not ignored until they
are discovered by quality control in the final stages. This is consistent with the
result on warranty claims. If the defects were not being found, then the
percentage of warranty claims would be high.

Passive/defensive styles
The literature indicates that these styles represent cultures that generally have
low levels of performance and employee wellbeing (Cooke and Rousseau, 1988).
The passive/defensive styles were positively correlated with the quality
indicator: ``warranty claims cost as a percentage of total sales'', and negatively
correlated with ``ratio of quality inspectors to direct production workers''. The
warranty claims correlation suggests that the present quality control methods
are either ineffectual or require additional support. Additional support may
mean more inspectors, new methods of communication between management
and all levels of the organization, redesigning policies, accomplishment
recognition or other methods of cultural adjustment.

Aggressive/defensive styles
These styles represent cultures that perform tasks sufficiently well, but to the
detriment of the people involved through creating high stress levels. These
cultures generally encourage a steady reliability rather than outstanding levels
of performance and innovation (Cooke and Rousseau, 1988). Positive
correlations were found with warranty claims and delivery performance. It
would seem that firms with this culture style might be trading off quality in
order to meet delivery deadlines.

Null hypotheses accepted

There were two quality performance indicator questions that were not
correlated with any of the cultural styles. These questions were:
 (1) The percentage of defective materials received from suppliers. Quality and
(2) The cost of quality as a percentage of sales. organizational
The first may be explained by noting that supplier quality is controlled by the culture
suppliers and is thus external to the firm, though firms may have supplier-
certification programs and such like. However, the ``percentage of defective
materials received from suppliers'' is strongly correlated with ``warranty claims 23
cost as a percentage of total sales'' ( = 0.3824, p = 0.0872). The latter is
correlated with all three of the cultural styles, which suggests this question
may be indirectly related or a relationship may exist that these tests did not
discover.
The second result indicates that all styles impact broadly equally on the cost
of quality. This result is harder to explain given the correlations found with
warranty claims cost. It may be that there are issues outside manufacturing at
play here, such as product design or the handling of products after they have
left manufacturing.
From this investigation it can be seen that there are some important
relationships between managerial culture and the quality performance of the
organization. The quality indicators are important to an organization's success.
If organizations wish to be able to change their cultures and improve their
quality to become more effective, then it is important that they understand and
can identify their present culture and quality performance.

Conclusions
We have been using the term ``organizational culture'' as though it was a single
entity, and management has the job or right to shape it or change it. In reality,
all organizations have elements of each of the cultures measured here, because
each respondent will have some score on each dimension. Some of the
researchers mentioned earlier believe that organizations are composed of
integrated sub-cultures and this makes measurement or study of culture
difficult (Lewis, 1998). This study, by itself, does not prove that senior
management culture style creates specific quality performance. However, it
does show that manufacturing organizations, with a certain, dominant
management culture style, tend to have specific quality characteristics.
Combining these points, one limitation of our study is that we have only
investigated the styles of a small group of senior managers. Different
functional groups within the organization will not necessarily have the same
style as senior managers. However, the literature on quality improvement
stresses the importance of senior management involvement and commitment,
and thus the ability of the transformational leader to unite all members of the
organization to lead them to work as a team towards common goals and
objectives, and to achieve enhanced standards of achievement.
For effective implementation of quality initiatives, some writers suggest the
organizational culture should be personalised to the quality method, or the
quality initiative should be personalised to the organizational culture (McNabb
IJQRM and Sepic, 1995). However, this information is only valuable if the cultures that
17,1 are conducive to the quality methods can be identified. Our recommendation
for practice is that managers aim to have the constructive style as the dominant
style in their organizations. We have identified the ``constructive'' style as most
conducive to good performance on total percentage defectives and warranty
costs. The characteristics of this style are:
24 . There is a focus on people and participation. The members are meant to
be positive, encouraging and willing to compromise.
. These organizations are high performers. Organizational members who
design and accomplish their own goals are valued. The organizational
members are expected to set realistic goals, develop plans and
accomplish the goals with enthusiasm.
. These organizations emphasise creativity, task accomplishment and the
development of individuals. The enjoyment of work, further
development and new activities are encouraged.
. These organizations place a strong focus on constructive relationships
between people. The members of the organization should be amicable,
open and understanding to their fellow workers.
Our second recommendation concerns how to move the culture, or balance of
cultures, towards the constructive style. We suggest approaches would include
personnel selection, training, job design, work practices and supervision
structure, as well as leadership from top management. In other words, harness
the package of powerful interventions proposed by the founders of the quality
movement (Hackman and Wagman, 1995), and be cognizant of the required
balance between the tacit features and the tools and techniques (Powell, 1995).
In order to change, organizations need measures of inputs and outputs. In
this study, we have looked at associations between organizational culture
(input) and quality performance (output), and suggest that aspects of each are
correlated in ways that enhance organizational performance.

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