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BIJ
18,4 A comparative study
of organizational strategy
and culture across industry
510
Bindu Gupta
Institute of Management Technology, Ghaziabad, India
Abstract
Purpose – The present study examines the strategy and culture of 32 Indian organizations belonging
to seven industry segments namely construction, banking, information technology (IT),
pharmaceuticals, power, steel, and telecom. Further it also examines the linkage between the
organization’s strategy and the culture of the organization.
Design/methodology/approach – It has used the typology suggested by Miles and Snow and
organizational culture assessment instrument developed by Cameron and Quinn which is based on the
competing values framework of Quinn and Rohrbaugh. The Miles and Snow framework suggests four
organizational strategies namely, prospector, defender, analyzer and reactor. Organizational culture is
categorized into four types: adhocracy, clan, market, and hierarchy.
Findings – The findings indicated that there are significant differences in the strategy and culture of
organizations belonging to different industry segments. Prospector strategy is most widely used by the
telecom industry and least in construction. The analyzer strategy was reported to be most frequently
used by the IT sector and defender and reactor strategy were used by the construction sector. Adhocracy
culture was most prevalent in the pharmaceutical sector. Clan, market, and hierarchy culture were most
prevalent in the construction industry. Further organizations using prospector strategy were high on
adhocracy culture. Both clan and adhocracy cultures were found more in organizations with analyzer
strategy. Organizations with defender and reactor strategy were high on hierarchy and clan culture,
respectively.
Practical implications – This study asserts that different culture and strategy is used in Indian
organizations.
Originality/value – The contribution of the study lies in examining the differences in culture and
strategy of organizations belonging to different industry segments.
Keywords Culture, India, Industry type, Strategy, Organizational culture, Corporate strategy
Paper type Research paper
In the global environment, organizations all around the world are constantly facing
challenges to have competitive advantage. The global world is characterized by more
competition, diverse work force, continuously changing customers’ needs, and new
technological changes, etc. Till the nineties the process of globalisation of the Indian
economy was constrained by the barriers to trade and investment. The organizations
were working in protected environment with few competitors. After the liberalisation of
trade, investment and financial flows initiated in the nineties has progressively lowered
the barriers to competition and hastened the pace of globalisation. In this uncertain
Benchmarking: An International environment only those organizations can survive and grow which are able to define
Journal
Vol. 18 No. 4, 2011
pp. 510-528 The author sincerely acknowledges the reviewer for giving constructive criticisms which have
q Emerald Group Publishing Limited
1463-5771
helped to improve the paper. The author also acknowledges the contribution of colleagues and
DOI 10.1108/14635771111147614 students who have helped directly and indirectly in developing this paper.
2. the strategy which is aligned with the industry environment. Numerous researches Strategy
across the world indicate that firms with a strategy have got much more chances of and culture
success compared to those without a strategy. Within India, strategy has become
popular particularly after the reforms on 1991 brought and influx of multinational and
increasing competition. The companies operating in India need to understand the
inherent issues in strategy on one hand and focus on strategy implementation on the
other hand to get the intended results. (Pillania, 2009). 511
Organizational strategy can be defined as a plan for interacting with the competitive
environments to achieve organizational goals (Daft, 1995, p. 49). The study of
organizational strategy started with Andre (Collis and Montgomery, 1995) who defined
strategy as the match between what an organization can do within the universe of what
it might do. Later researchers, as represented by Porter (1980), focused on the industry
environment of an organization and concluded that the structural characteristics of an
industry determine the strategy of organizations in it.
There have been different typologies for strategy and among all the typologies, the most
frequently used in empirical research into a wide variety of organizations and industries, is
that proposed by Miles and Snow. The various studies that have applied Miles and Snow’s
model have lent it strong support in different environments (Zahra and Pearce, 1990). Dent
(1990) concludes that the Miles and Snow typology provides the richest portrayal of
organizational arrangements associated with particular business strategies. Various
studies have provided support for the reliability and validity of this approach and it has
recognized as one having good codification and prediction strengths (Snow and Hambrick,
1980; Hambrick, 1983a, b; Shortell and Zajac, 1990; Abernethy and Guthrie, 1994).
The purpose of this study is to address three questions in the context of Indian
enterprises. First, what is the dominant strategy across the industries in India and are
there significant differences in the strategy of organizations belonging to different
industry segment? Second, which is the most prevalent culture across the industries in
India and are there significant differences in the culture of organizations belonging to
different industry segment? Further, there have been rich theoretical descriptions to
demonstrate the importance of aligning culture and strategy for organizational
performance and effectiveness (Schein, 2004; Sackmann, 1991). However, researchers
have pointed out (Bitici et al., 2004; Lee and Yu, 2004) that there are few studies that have
examined empirically, and across multiple organizations, the link between specific
components of culture and strategy. So, this study intends to examine the relationship
between different components of organizational culture and strategy of the organization.
It has used the strategy typology suggested by Miles and Snow (1978) and the competing
values framework (CVF) of Quinn and Rohrbaugh (Quinn and Rohrbaugh, 1981; Quinn,
1988; Rohrbaugh, 1983) for measuring organisational culture.
Miles and Snow’s strategy framework
Miles and Snow’s (1978) framework is rooted in Child’s (1972) conceptualization of
strategic choice and considers the rate at which organizations change their products or
markets. According to Miles and Snow (1978) organizations act to create their own
environments through a series of choices regarding markets, products, technologies,
desired scale of operations, and so on.
Miles and Snow (1978) classified strategy types as defender, analyzer, prospector,
and reactor. Research over the years has investigated differences among these four
3. BIJ strategic types with respect to variety of internal factors, including innovation,
18,4 management characteristics, organizational performance, and organizational design.
According to Miles and Snow (1978), organizations in each category show a consistent
pattern of strategic behavior in their decisions when dealing with various environmental
forces (Conant et al., 1990). More than one strategy can be successful in a given
environment, but it is imperative for a firm to be organized appropriately and to plan and
512 implement strategies relevant to a particular strategic type (Gupta et al., 1997, p. 400).
Defenders are internally oriented organizations. They stress efficiency, and are
tightly organized firms focused on maintaining a niche with a limited range of
products or services (Miles and Snow, 1978). They try to protect their markets through
lower prices, high-quality, well-target products, and superior delivery while not often
being at the forefront of industry developments. Because of their narrow focus, these
firms hardly ever need to make major adjustments in their technology, structure, or
methods of operation. These firms devote primary attention to improving the efficiency
of existing operations. They develop a core technology that is highly efficient and uses
an organization structure with centralized control.
The prospectors are the exact opposite of a defender. The prospectors have an
external focus and assumes more business risk than the defender by attempting to be
“first to market” with new products and services, even when these efforts are not
highly profitable initially. These firms more emphasizes in maintaining the image of an
innovator in product terms than securing high profitability (McDaniel and Kolari,
1987). They are continuously involved in monitoring the external environment as these
intend to respond quickly to early signs of opportunities and exploiting the benefits of
being a pioneer in a new product/market area (Mitchell, 1991; Robinson et al., 1992).
They are aggressive, rather than passive, in their efforts. The prospector avoids
long-term commitments to any type of technological process. These firms usually
create change and uncertainty in the marketplace to which competitors are forced to
react (Stathakopoulos, 1998, p. 539) The structure of these firms is characterized by a
low degree of formalization and routine, decentralization and lateral as well as vertical
communication, emphasizing aspects such as innovation and flexibility.
Analyzers blend the characteristics of both the prospector and defender orientations
(Miles and Snow, 1978). The analyzer maintains a moderate level of business risk by
waiting to see the experience of others before entering a market. They are rarely first-in
with new services or into new markets, but are often second-in with better offerings.
Analyzer firms show frequent dialogue with customers and commonly weigh up their
competitors’ activities (Slater and Narver, 1993). They put emphasis on longer-term
planning and much thought about decisions prior to action in most instances. The
analyzer partitions its technology so that it can serve its stable domains with efficient
technologies and its dynamic domains with flexible and effective technologies. They
include flexibility as well as stability, adopting structures that can accommodate both
stable and changing domains.
Reactor organizations do not present any consistent pattern of response behavior to
environmental conditions (Matsuno and Metzer, 2000, p. 4). These firms do not attempt
to maintain an already acquired defined product/market domain, nor do they try to
capitalize on viable environmental opportunities or take true risks (Croteau et al., 1999,
p. 2). Their actions are mostly reaction to outside forces, such as the economy,
competitors, or market pressures. They lack a consistent strategy-structure relationship
4. (Parnell and Wright, 1993, p. 30).They are not planners, but reactive and thinkers by Strategy
necessity. Miles and Snow consider this strategy type to be a nonstrategy, but Hrebiniak and culture
and Joyce (1985) consider the reactor to be an appropriate strategy in an extremely placid
environment.
Organizational culture
Organizational culture can be defined a pattern of shared basic assumptions that the 513
group has 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 to perceive, think, and feel in relation to these
problems (Schein, 1985, p. 12). Organizational culture can serve as a tool to improve
productivity and has a significant effect on an organization’s long term sustainability,
economic performance and outcomes such as profitability, turnover, and commitment
(Kotter and Heskett, 1992; Tidball, 1988; Cremer, 1993) and if properly communicated,
culture can be used to encourage all employees to subscribe to organizational goals (Deal
and Kennedy, 1982; Wilkins and Ouchi, 1983). According to Schein (1992) understanding
of organizational culture is fundamental to examine what goes on in organizations, how
to run them and how to improve them. Studies have emphasized the importance of
culture in implementing organizational initiatives such as supply chain management
(Mello and Stank, 2005) and reported that the organizational culture supports the
linkages between the adoption of technology and organizational growth and as critical
factor in determining the success or failure of mergers and acquisitions (Balthazard et al.,
2006). It has also been considered a form of organizational capital (Barney, 1985;
Camerer and Vepsalainen, 1988).
A range of tools to measure organizational culture have been developed and applied
in industrial, educational, and health care settings over the last two decades. For the
present study, the CVF of Quinn and Rohrbaugh (Quinn and Rohrbaugh, 1981; Quinn,
1988; Rohrbaugh, 1983) has been adopted. Quinn and Cameron (1983) assert that
organizational culture is a complex, interrelated, comprehensive and ambiguous set of
factors and it is impossible to include all relevant factors in diagnosing and assessing
organizational culture. Organizational Culture Assessment Instrument (OCAI), has
been developed by Cameron and Quinn (1999) which is based on the competing value
framework. Cameron and Quinn (1999) categorized organizational culture into four
types: hierarchy, clan, market, and adhocracy. Their two cultural variables are stability
and control versus flexibility and direction, and internal focus versus external focus.
While stressing the importance of establishing a fit between organizational culture and
the organization, Cameron and Quinn (1999) concluded that there is a progression
toward higher flexibility and external focus in order for an organization to thrive.
These four patterns of organizational culture show differences in terms of focus,
leadership styles, criteria for effectiveness, management of employees, organizational
glue and criteria of success (Cameron and Quinn, 1999). Hierarchy culture emphasizes
stability or control with high level of internal focus. This culture is characterized by
uniformity, coordination, internal efficiency, and a close adherence to rules and
regulations. The leaders are coordinators and organisers. Formal rules and policies hold
the organisation together. Success is defined in terms of dependable delivery, smooth
scheduling, and low cost. Adhocracy culture would be its opposing contrast in that
it underlines flexibility and external orientation toward changes. Creativity, innovation,
5. BIJ and external growth are emphasized in response to the changing demands of the external
18,4 environments (e.g. competitors and customers). Clan culture is similar to hierarchy
culture in that it stresses the internal aspects of an organization, but different in that an
emphasis is given more on the flexibility dimension. In this culture, employees are
empowered and encouraged to participate in enhancing and optimizing internal
resources and business processes. Market culture is externally oriented with a stress on
514 control and stability. Organizations with market culture accentuate productivity and
achievement with well-defined objectives against external competitions (Stock et al.,
2007). People are competitive and goal-oriented. The leaders are hard drivers, producers,
and competitors. Success is defined in terms of market share and penetration.
Competitive pricing and market leadership are important in this culture (Cameron and
Quinn, 1999, p. 87).
The market, adhocracy, clan, and hierarchy culture types are dominant ones rather
than mutually exclusive classifications. Hence although the majority of organizations
may be characterized by more than one form of culture, one culture type assumes a
predominant position over a period of time (Deshpande and Webster, 1989). Cameron and
Quinn (1999) explained some examples of different types of organisations and pointed out
that government organisations fit in the hierarchy quadrant. Government organizations
share some characteristics such as being well-organised, secure, stable, controlled
systems. Financial organisations belonged to the hierarchical and market quadrant.
Strategy and culture
Organizational culture and strategy are highly interrelated. It is generally accepted that
once the organization change strategy, it must align organizational culture with strategy,
or face almost certain strategic failure. Behaviors that are intended to achieve strategic
goals may be supported or impeded by the culture (Semler, 1997; Tosti and Jackson, 1994).
Vestal et al. (1997) explained the relationship between organizational culture and strategy
and it was supported by other researchers (Semler, 1997; Tushman and O’ Reilly, 1996).
Schwartz and Davis (1981, p. 47) pointed out, ‘for better or worse, a corporate culture has a
major impact on a company’s ability to carry out objectives and plans, especially when a
company is shifting its strategic direction’. Studies also have indicated the significance of
organizational culture in strategy implementation among the other factors such as
organization structure, work and information system, and essential business process
(Wu et al., 2004). Bates et al. (1995) found that in manufacturing environment, strategy that
include formal planning, communication of strategy, contribution to competitive position,
and a long range orientation co-exist with a clan oriented culture that is characterized by
the use of groups and teams (Bates et al., 1995). Weber and Pliskin (1996) explained culture
as a determinant of quality in public sector organizations. Organizations, such as
Hewlett-Packard, which pursued a prospector/differentiation strategy developed a
culture that fostered risk-taking, individuality, and innovation. In contrast, Emerson
Electric pursued a defender/low cost strategy and, also appropriately, shaped a culture
that emphasized frugality, attention to detail, and discipline (Miles et al., 1993).
The above discussions re-emphasize that component of organizational culture need
to be aligned with specific organizational strategy. Following section discusses some
more findings related to specific strategy and culture of the organization and hypotheses
for investigation.
6. Prospectors are highly proactive and innovative and need flexibility and Strategy
effectiveness while defenders are much less proactive and need stability and efficiency
(Reeve, 1994, p. 19). Studies indicate that the prospector strategy is associated with more
and culture
with R&D, new product introduction, and marketing efforts compared to analyzer and
defender strategy (Thomas et al., 1991; Hambrick, 1983a, b, Snow and Hrebiniak, 1980; and
Connant et al., 1990). Organization with prospector strategies are more likely to encourage
experimentation and innovation (Brown, 2005), are likely to emphasize creativity to a great 515
extent (O’ Regan and Ghobadian, 2006), and characterized by organizational cultures
higher on innovation and outcome orientation than defenders (Baird et al., 2007).
Defender’s emphasis on low cost requires close attention to operational details,
including the relentless pursuit of cost economies and productivity improvements
through standardization of components and processes, routinization of procedures and
the integration of functional activities across business units (Walker and Ruekert,
1987). According to Day and Nedungadi (1994), preoccupation with the internal
business environment is common with defenders, causing executives to emphasize
efficiency rather than effectiveness. The findings of the study by Baird et al. (2007)
indicated that defenders were characterized by culture higher on stability.
Analyzer strategy is a hybrid strategy which greatly focuses both on aspects of
innovation and efficiency. Analyzers are an intermediate type both as regards
proactiveness and innovativeness, needing greater stability and efficiency than
prospectors but greater flexibility and effectiveness than defenders (Reeve, 1994, p. 19).
Information needs of analyzers will be the combination of the needs identified for
prospectors and defenders (Miles and Snow, 1978). Alike to firms emphasizing
prospector strategy, firms emphasizing analyzer strategy also are expected to view
customer and learning and growth measures as being very important. Shortell and Zajac
(1990) found no significant differences in the actual number of new services offered by
health care organizations adopting prospector and analyzer strategy.
The above discussions lead to the development of the following hypotheses:
H1. Organizations following defender strategy will be high on hierarchy and
market culture.
H2. Organizations following prospector strategy will be high on adhocracy and
clan culture.
H3. Organization with analyzer strategy will be high on market and adhocracy
culture.
Methodology
Industry/sample description
Data were collected by means of questionnaires that were sent through electronic mail.
Overall 1,600 questionnaires were mailed, and 1,030 usable questionnaires were
received, with response rate 64.37 per cent of respondents. Thus, sample was not
random; only participants who volunteered to take part in the study were surveyed.
The respondents came from 32 organizations from seven industries namely
construction, Banking, Information technology (IT), pharmaceutical, power, steel, and
telecom. These industries have been considered to make significant contribution to
Indian economy for some decades. The breakdown of the respondents by industrial
groups is as follows:
7. BIJ .
IT – 31.9 per cent.
18,4 .
Steel industry – 17.5 per cent.
.
Banking – 15.1 per cent.
.
Pharmaceutical – 9.3 per cent.
.
Telecom – 8.7 per cent.
516 .
Construction – 8.7 per cent.
.
Power – 8.6 per cent.
There have been variations in the number of organizations and participants from each
industry; this can be attributed to some of the factors like presence of organizations
across India and percentage of returned responses from participants. The organizations
selected for the study are high performance organizations within their industry segment
and are among the top ten organizations in India and represent right mix of public,
private, and multinationals. The average age of participants was 35.09 years, average
experience in current organisation 5.61 years. The only those employees were requested
to respond to questionnaire who have minimum three years of experience with the
present organization, as employees need to spend some time with the organization to
understand the strategy of organization. With respect to the level of qualifications,
60.8 percent were graduates from various streams (i.e. commerce, science, computers,
arts, management, electrical, textile etc); and 39.2 per cent were post-graduates from
management, science, etc. Male respondents accounted for 64.5 percent of the population
and 35.5 percent were the females.
Earlier studies examining the strategy of organizations relied on CEO of company,
which was challenged by later studies (Bowen, 1987; Chaganti and Sambharya, 1987).
Golden (1992) reported that 58 per cent of CEOs surveyed did not agree with the
previously validated accounts of their organization’s past strategies (see also Hiam,
1993; Sayles, 1993). In respond to these observations later studies have surveyed the
individuals from lower-top, middle and lower level to analyze the strategy of the
company (Parnell, 1997). The present study also took the responses from the lower,
middle and top level employees from of the organizations surveyed.
Description about industries
The economy of India is as diverse as it is large, with a number of major sectors including
manufacturing industries, agriculture, textiles and handicrafts, and services. Thirty-two
organizations from seven industries were selected to investigate their dominant strategy
and culture. This section discusses briefly the industries represented in the study.
Banking. Banking in India has a long and detailed history of more than 200 years.
This industry started in 1786, when the country’s first bank, Bank of Bengal, was
established. The industry has changed rapidly and drastically, after the nationalization
of banks in 1969.Liberalization and economic provided the Indian banking scenario a
remarkable facelift that only continues to get better with time. The Indian banking
system includes nationalized banks, private banks and specialized banking institutions.
Nationalized banks are the biggest lenders in the country because of the size of the banks
and the penetration of the networks. The Reserve Bank of India is a centralized body in
the Indian financial sector that monitors discrepancies and shortcomings in the
system (http://info.shine.com/Industry-Information/Finance-and-Banking/117.aspx).
8. The study sampled 156 managers from the six organizations. The participants belonged Strategy
to both from the public and private banks. and culture
Information technology. IT industry in India is among the rapidly growing
industries. It has created brand equity for itself in the global markets. IT industry in
India involves software industry and information technology enabled services (ITES),
which also includes business process outsourcing (BPO) industry. India is pioneer in
software development and a favorite destination for IT-enabled services. Today, 517
Indian IT companies such as Tata Consultancy Services, Wipro, Infosys, HCL, etc. are
renowned in the global market for their IT proficiency. The organizations surveyed
produced 329 responses from 10 major IT organizations including Indian and
multinational organizations.
Telecom. Telecom industry in India has a high market potentiality and is a fast
growing sector. India has nearly 200 million telephone lines which make it the third
largest network in the world after China and USA. With a growth rate of 45 per cent,
Indian telecom industry has the highest growth rate in the world. Bharat Sanchar
Nigam Limited, Mahanagar Telephone Nigam Limited, Bharti Airtel, Tata
Teleservices, Reliance communications and IDEA are the major telecommunications
service providers in India. In this study, 90 respondents from three major private
telecom players participated in the survey.
Construction. The Indian construction industry is a one of the key growth driver for
the national economy and it contributes on average 6.3 per cent of the GDP. It is the
second largest contributor to the national economy and second largest employment
generation avenue in the country. This industry is highly fragmented. It includes
smaller builders and major players those involved in infrastructure development. For
this study, 90 responses were received from the employees of three organizations
representing the major players in construction industry.
Pharmaceutical. The Indian Pharmaceutical Industry is among the top rank of
India’s science-based industries with extensive ranging capabilities in the field of drug
manufacture and technology. It is estimated to be worth $ 4.5 billion, growing at about
8 to 9 percent annually. It ranks very high in the third world for technology, quality
and range of medicines manufactured. This sector is highly fragmented and has more
than 20,000 registered units (http://pharmaceutical-drug-manufacturers.com/
pharmaceutical-industry/). It has expanded significantly in the last two decades.
Ninety-six respondents from three Indian private players participated in the survey.
Power. India is the 5th largest power producer in the world with the total power
capacity of more than 145,000MW (http://researchandmarkets.com/reportinfo.
asp?report_id¼694706). Key players in the Indian power sector are National
Thermal Power Corporation Limited, Nuclear Power Corporation of India Limited,
North Eastern Electric Power Corporation Limited, Power Grid Corporation of India,
Tata Power, etc. The study sampled 89 managers from the three organizations. The
participants belonged to both from the public and private organizations.
Steel. India’s rapid economic growth and increasing demand by sectors like
infrastructure, real estate and automobiles, at home and abroad, has put Indian steel
industry on the global map. The report by International Iron and Steel Institute indicate
that India is the seventh largest steel producer in the world. This industry is organized
in three categories, i.e. main producers, other major producers and the secondary
producers. The main producers and other major producers have integrated steel making
9. BIJ facility with plant capacities over 0.5 mT and utilize iron ore and coal/gas for production
18,4 of steel. The major players are Tata Steel, SAIL, and RINL, and the other major
producers are ESSAR, ISPAT and JVSL (http://iloveindia.com/economy-of-india/steel-
industry.html). The organizations surveyed produced 180 responses from main
producers and major producers in steel industry.
518 Measures
Business strategy. A multi-item scale developed by Parnell (1997), based on the work of
Conant et al. (1990) was used for operationalizing the Miles and Snow strategic
typology. This multi-item scale can be referred to as multivariate measurement of
strategy which contains a broad set of strategic variables (Hambrick, 1980). There were
a total of 12 questions with each consisting of four statements, one for each possible
strategy. Each respondent was required to indicate which statement is true for his/her
organization. The terms Prospector, Analyzer, Defender, and Reactor were omitted
from the questions in order not to indicate that the types necessarily represent good or
poor strategy. To measure the strategy, an overall evaluation of the degree to which the
firm emphasizes a given strategy was derived by taking the no of agreements across
the twelve items. The study assigned strategies to organizations based on the degree of
agreement among the respondents of specific organization. The twelve responses for
each participant in each organization was used to classify the business into one of the
four strategy categories, depending on which strategy received the more than and
equal to 50 per cent responses.
Organizational culture was measured with OCAI developed by Cameron and Quinn
(1999). There were 20 items in all, five for each of the culture classifications. Within this
classification, a question for each type of culture was considered in the context of five
different organizational variables, namely organizational leadership, management of
employees, organizational glue, strategic emphasis, and criteria of success. Each
respondent was required to indicate whether he or she agrees or disagrees with each
statement concerning their organization by using a five-point Likert scale ranging from
“1 ¼ Strongly disagree” to “5 ¼ Strongly agree”. To measure the culture, an overall
evaluation of the degree to which the firm emphasizes a given culture was derived by
taking the mean score across the five items for each culture dimension. A reliability
check using Cronbach alpha was done to test the internal consistency of the culture
constructs. This test produced the alpha coefficients of 0.65 (clan), 0.60 (adhocracy) and
0.62 (Market), and 0.70 (Hierarchy). According to Nunnally (1978), alpha coefficients of
0.50 to 0.60 are acceptable for exploratory research.
Data analysis – data were analyzed through descriptive statistics and analysis of
variance (ANOVA).
Results
Results for business strategy
Table I shows the mean scores for all the strategy across the industries and for each
industry. The mean score indicates that most used strategy is analyzer (M ¼ 4.36)
followed by prospector (M ¼ 3.53). The least used strategy is defender (M ¼ 1.97). The
results of ANOVA with repeated measure on strategy indicated the significant
difference in the use of these four strategy F (3, 3069) ¼ 217.48, p , 0.00.
10. Strategy
Industry Mean SD n
and culture
Prospector
Construction 2.18 1.58 90
Banking 3.36 2.05 156
IT 3.63 2.28 329
Pharmaceutical 3.86 2.23 96 519
Power 2.52 1.52 89
Steel 3.96 1.82 180
Telecom 4.64 2.31 90
Total 3.53 2.15 1,030
Analyzer
Construction 3.39 2.03 90
Banking 4.45 2.03 156
IT 4.69 1.98 329
Pharmaceutical 4.60 1.96 96
Power 4.57 2.16 89
Steel 4.31 2.04 180
Telecom 3.60 1.99 90
Total 4.36 2.06 1,030
Defender
Construction 3.46 1.52 90
Banking 2.50 1.93 156
IT 1.38 1.27 329
Pharmaceutical 1.50 1.09 96
Power 3.24 1.57 89
Steel 1.49 1.29 180
Telecom 1.88 1.73 90
Total 1.97 1.64 1,030
Reactor
Construction 2.96 1.75 90
Banking 1.50 1.28 156
IT 2.22 1.58 329
Pharmaceutical 1.54 1.39 96
Power 1.67 1.18 89
Steel 2.24 1.78 180 Table I.
Telecom 1.87 1.42 90 Mean scores
Total 2.04 1.58 1,030 for business strategies
The mean scores for different industries indicate that prospector strategy is most used
in telecom sector and least in construction industry. The result of ANOVA indicated
the significant differences in different industries for the use of prospector strategy
(F (6, 1023) ¼ 16.47, p , 0.00. There is also significant difference in the use of analyzer,
defender, and reactor strategy in different industries (F (6, 1023) ¼ 7.51, p , 0.00.;
F (6, 1023) ¼ 43.50, p , 0.00; and F (6, 1023) ¼ 12.59, p , 0.00, respectively). Analyser
strategy is most used in IT sector and least in construction sector. Defender and reactor
are most used in construction industry (Table I).
Results for organizational culture
Table II shows the mean scores for different organizational culture across the industries
which indicates that most prevalent culture is adhocracy culture (M ¼ 4.36) followed
11. BIJ
Industry Mean SD n
18,4
Clan culture
Construction 3.69 0.48 90
Banking 3.43 0.68 156
IT 3.62 0.46 329
520 Pharmaceutical 3.53 0.41 96
Power 3.03 0.49 89
Steel 3.43 0.47 180
Telecom 3.06 0.56 90
Total 3.46 0.55 1,030
Adhocracy culture
Construction 3.51 0.50 90
Banking 3.49 0.55 156
IT 3.54 0.52 329
Pharmaceutical 3.59 0.37 96
Power 3.31 0.73 89
Steel 3.39 0.54 180
Telecom 3.34 0.46 90
Total 3.47 0.54 1,030
Market culture
Construction 3.50 0.52 90
Banking 3.27 0.58 156
It 3.47 0.55 329
Pharmaceutical 3.48 0.49 96
Power 3.44 0.64 89
Steel 3.20 0.39 180
Telecom 2.93 0.52 90
Total 3.35 0.55 1,030
Hierarchy culture
Construction 3.63 0.54 90
Banking 3.49 0.65 156
IT 3.49 0.62 329
Pharmaceutical 3.38 0.53 96
Power 3.27 0.83 89
Table II. Steel 3.42 0.55 180
Mean scores for Telecom 3.07 0.56 90
organizational culture Total 3.42 0.63 1,030
by clan culture (M ¼ 3.45). The least prevalent culture is market culture (M ¼ 3.35). The
results of ANOVA with repeated measure on culture indicated the significant difference
in industries in terms of these four culture F (3, 3069) ¼ 13.26, p , 0.00.
The mean scores of organizational culture for different industries indicate that clan
culture is most prevalent in construction sector and least in power sector. The result of
ANOVA indicated the significant differences in different industries for the clan culture
(F (6, 1023) ¼ 29.32, p , 0.00). There is also significant difference for adhocracy, market,
and hierarchy culture in different industries (F (6, 1023) ¼ 4.51, p , 0.00.;
F (6, 1023) ¼ 17.58, p , 0.00; and F (6, 1023) ¼ 8.74, p , 0.00, respectively). Adhocracy
culture is most prevalent in pharmaceutical sector and least in power sector. Market and
hierarchy culture is most prevalent in construction industry (Table II).
12. Table III shows the mean scores of organizational culture for different strategy. Strategy
These results indicated that when organizations use defender strategy the most and culture
prevalent cultures is hierarchy culture (M ¼ 3.41) followed by market culture (3.34)
which support the stated hypotheses hypothesized that the organizations following
defender strategy more likely to have market culture and hierarchy culture (H1). The
results of ANOVA with repeated measure on culture indicated the significant difference
in prevalent cultures when organization use defender strategy F (3, 87) ¼ 6.77, p , 0.00. 521
In the case when organizations use prospector strategy the most prevalent culture is
adhocracy (M ¼ 3.60) followed by clan culture (M ¼ 3.53) and these results support the
stated hypothesis organizations following prospector strategy will be high on
adhocracy culture and clan culture. (H2). The results of ANOVA with repeated
measure on culture also indicated the significant difference in prevalent cultures when
organization use prospector strategy F (3, 237) ¼ 38.83, p , 0.00.
When organizations use analyzer strategy the most prevalent cultures are clan culture
(M ¼ 3.43) and adhocracy culture (M ¼ 3.43). The results of ANOVA with repeated
measure on culture indicated the significant difference in prevalent cultures when
organization use analyzer strategy F (3, 667) ¼ 3.02, p , 0.029. The most prevalent
culture was clan culture (M ¼ 3.97) when organization use reactor strategy and results of
ANOVA with repeated measure on culture indicated the significant difference in
prevalent cultures when organization use reactor strategy F (3, 27) ¼ 7.43, p , 0.001.
Discussion
Strategy type, viewed as the particular approach chosen by the firm to achieve success in
its competitive environment, may require a tailored culture for effective implementation.
This research focused on organizational culture and type of strategy adopted by Indian
organization.
Three basic questions regarding organizational strategy and culture were examined.
First, what is the dominant strategy across the industries in India and are there significant
differences in the strategy of organizations belonging to different industry segment?
Second, which is the most prevalent culture across the industries in India and are there
significant differences in the culture of organizations belonging to different industry
segment? Third, it examined the linkage between types of business strategies and culture
of organization. The contribution of the study lies in examining the differences in culture
Strategy Clan culture Adhocracy culture Market culture Hierarchy culture
Analyzer Mean 3.43 3.43 3.37 3.42
SD 0.57 0.57 0.56 0.65
n 670 670 670
Prospector Mean 3.53 3.60 3.28 3.38
SD 0.45 0.42 0.48 0.58
n 240 240 240 240
Defender Mean 3.28 3.16 3.34 3.41
SD 0.55 0.50 0.56 0.54
n 90 90 90 90
Reactor Mean 3.97 3.70 3.74 3.83 Table III.
SD 0.26 0.36 0.35 0.44 Means scores for culture
n 30 30 30 30 for different strategy
13. BIJ and strategy of organizations belonging to different industry segment. Further it also
18,4 examines the culture and strategy of the organizations in the Indian context which is
considered to be one of the stars of global economics The findings indicated that most
dominant strategy is analyzer strategy and most prevalent culture is adhocracy culture
followed by clan culture across the industries in India. These findings may be interpreted
in the light of the national culture dimension of Hofstede (1991). Hofstede (1991) defined the
522 national value as the collective mental programming of the people of a nation, which
shapes the values, attitudes, competencies, behaviors and perceptions of individuals of
specific nations in a particular manner. It is known to have a significant influence on
managerial styles and functions of an organization (e.g. Hofstede, 1993; Budhwar and
Sparrow, 2002). Indian work culture exhibits a high power-distance, collectivism and
affective reciprocity among the cultural values of Indian managers (Chhokar, 2000; Sinha,
1997). With respect to uncertainty avoidance, while Hofstede (1997) suggests that India is
high on uncertainty avoidance, a later study by Chhokar (2000) found India to be moderate
on this dimension, which may be the reason that Indian organizations use more analyzer
strategy which maintains a moderate level of business risk by waiting to see the
experience of others before entering a market. Further, in the line of contingency
perspective, these findings may be attributed to the journey of Indian organizations from
protected environment to more global competitive environment. According to Kumar
(2009), India organizations transformed from domestic players, scared of global
competitors and constantly seeking government protection in domestic markets, into
confident players capable of building Indian multinational.
The study also points out there are significant differences in the strategy and culture
of organizations belonging to different industry segment. The findings indicated that
prospector strategy is most widely used by telecom industry and most prevalent culture
is adhocracy culture in organizations belonging to telecom industry. Miles and Snow
(1978) proposed that organizations develop relatively enduring patterns of strategic
behavior to co-align the organization with the environment. Prospectors perceive a
dynamic, uncertain environment and maintain flexibility to combat environmental
change. The prospector seeks to identify and exploit new product and market
opportunities. Telecom industry in India has a big market potentiality and is a fast
growing sector. With a growth rate of 45 per cent, Indian telecom industry has the
highest growth rate in the world. These facts may justify why prospector strategy is
dominant in telecom sector in India.
Defender strategy was found most dominant in organizations belonging to
construction industry and most dominant culture was clan culture followed by
hierarchy culture. The current size of the construction industry in India is estimated at
$70.8bn, of which the 87 key players account for nearly one third, while the rest is
distributed amongst the 25,000 plus smaller players. The present study includes the
organizations from the key players segment that may be the reason these organizations
perceive the environment to be stable and certain, and thus seek stability and control in
their operations to achieve maximum efficiency.
The analyzer strategy was reported to be most frequently used by IT sector and
most prevalent culture is clan culture. IT industry in India comprises of software
industry and ITES, which also includes BPO industry. Further, the organizations
belonging to IT provides products, solutions, and services to client organizations, these
factors may be some of the reasons of using analyzer strategy by IT industry.
14. Regarding the relationship between strategy and culture, the direction is viewed Strategy
differently by different authors. Some studies views strategy as a outcome of and culture
organizational culture (Saffold, 1988) and maintains that “strategic options are limited
by the culture of the organization” (Schein, 2004, p. 91). Others maintain that an
organization’s strategic position may subsequently influence culture (Joyce and Slocum,
1990). While, the direction of causality between culture and strategy is beyond the scope
of this study, the findings of the study indicate that the two concepts are interrelated and 523
need to be aligned to ensure organizational success and support the findings of earlier
studies (Bate, 1994; Lado and Wilson, 1994).
As expected, organizations with prospector strategy were characterized by
organizational cultures higher on adhocracy (combination of flexibility and external
focus) than defenders. These findings are aligned with findings of other studies which
stated that organization with prospector strategies are more likely to encourage
experimentation and innovation (Brown, 2005), are likely to emphasize creativity to a
great extent (O’ Regan and Ghobadian, 2006), and characterized by organizational
cultures higher on innovation and outcome orientation than defenders (Baird et al., 2007).
Defenders were characterized by cultures higher on hierarchy (combination of stability
and internal focus) and are congruent with the the findings of the study conducted in
Australian organizations (Baird et al., 2007) which indicated that defenders are
characterized by culture higher on stability. Organizations with analyzer strategy was
high on both clan and adhocracy culture. For reactor strategy no hypothesis was
proposed, however the findings indicated that in the organizations using the reactor
strategy the most prevalent culture is clan culture.
Implications of the study
This study suggests that the organizations that operate in different competitive
environments and rely on the different types of strategies should have different cultures,
with the characteristics of the culture aligned to the unique demands of the competitive
environment and strategy type. The results obtained in the study study have
implications for Indian organizations. There have been few studies in Indian context
examining the strategy and culture of organizations of different industry segment. The
specific implications are discussed below:
(1) Organizations in the telecom sector need to use more prospector strategy as lot
of untapped market in this sector and scope for innovation.
(2) Organizations in the IT industry need to have blend of defender and prospector
industry, as this industry is not very old in India. It started with imitation and to
provide services to global clients. Now it needs to bring more innovation along
with leveraging on existing products and services.
(3) Organizations which are high capital intensive such as construction and power,
the better strategy will be defender.
(4) Organizations with prospector strategy should support its strategy with
adhocracy culture, which reinforce the creativity among employees.
(5) Organizations with defender strategy should be high on hierarchy which is
more efficiency focused.
(6) Organizations with analyzer strategy need to blend clan and adhocracy culture.
15. BIJ Conclusions
18,4 It is concluded that this study reaffirms the theoretical contention that culture needs to
be aligned with strategic intent. Organizations seeking particular strategies need to
consider whether their culture is favorable to, or can be changed to be favorable to, the
desired strategy. As the organization’s strategy evolves, managers need to create or
modify systems and structures to install and reinforce the kind of culture needed
524 to effectively implement the type of strategy selected. The findings of study can be
used as benchmarking tool to select the right strategy and culture for the organizations
to suit their environment and to develop right culture and cultural artifacts for
dominant organizational strategy.
The present study has also some limitations that need to be addressed in future
research. The study would have included financial performance of the organizations
which can be strong indicator of how the congruence between strategy and culture
influence organization’s effectiveness. Yet, some inferences can be made as the
organizations surveyed were among the top ten organizations of country. Further the
study did not examined the differences among organizations belonging to same industry
segment as Indian organizations varies in terms of ownership, i.e. public, private and
multinational organizations. Future study can examine the differences in organizational
strategy and culture with respect to size, ownership and cross cultural variables.
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About the author
Bindu Gupta has a PhD in Psychology from the Indian Institute of Technology Kanpur, India.
She has nearly 15 years experience in the areas of teaching and research. At present,
Dr Bindu Gupta is Associate Professor in the area of organizational behavior at IMT, Ghaziabad,
India. She has authored various papers that have appeared in reputed national and international
journals. She has also been the editor of three books. She has organized an international
conference and presented papers in national and international conferences. She has been actively
involved in training and consultancy and is a qualified trainer of MBTI. Bindu Gupta can be
contacted at: bgupta@imt.edu
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