The Influence of Organizational Values on Profitability

Abstract

Organizational values have received increased attention in the literature. Research suggested that a relationship existed between organizational values and organizational performance (Alexander & Nagel, 1996; Cascio, 2006; Dobni, Ritchie, & Zerbe, 2000; Hitt, Hoskisson & Harrison, 1991; Van Beurden & Gossling, 2008; Wilkins & Ouchi, 1983; Wolfe, Parker, & Napier, 1994). Despite this belief and the increased attention organizational values have received in the literature, little empirical work has been directed at exploring specifically how this relationship is accomplished. Pearson’s r product-moment correlations and HLM analyses were used to test the hypotheses and research questions in this study. Partial support was found for several hypotheses. Specifically, support was found for the relationship between values-based business practices and the level of companies’ reported organizational values for several values studied. The strongest support was found for hypothesis 4, which examined the relationship between organizational identity and several dimensions of employee behavior. Surprisingly, overall findings provided little support for the hypotheses and research questions studied. Despite several significant findings, due to the reliability issues with the scales and a small sample size, study findings should be interpreted with caution. In general, the findings of this study can be used to facilitate the discussion on organizational values and organizational profitability. Specifically, additional research can further the discussion on the relationship between organizational values and organizational profitability. Future research can examine the intermediate factors that should be present to ensure organizational values are implemented in the organization, thus creating an opportunity for organizational values to influence organizational profitability. Implications of this study and future research are discussed.