Impact of Organizational Culture on Strategic Advantage

cushion of Organizational Culture on strategical AdvantageImpact of Organizational Culture on the proceeding of Strategic Advantages of ERP in PakistanABSTRACTThis hear locutions at the relationship that organisational finale has with the achievement of Strategic advantages from implementing first step option Planning (ERP) softw ar. A sample of 30 plaques that implemented ERP was utilized to test the hypotheses. A competing prises approach to measuring organisational gardening was used to vicenaryly measure an organizations last profile. The results evince that the organizations culture is significantly related to the achievement of strategic advantages from implementing ERP1. IntroductionThis paper studies the relationship between Enterprise Resource Planning (ERP) and organisational Culture. ERP is buzz word now days with every company implementing from distinguishable models coined by different vendors in order to stay in the competition and to ensure that its ope rations are efficient and effective. Through ERP the organizations are able to achieve low costs of procurement, production, livestock distribution etc thus streamlines whole value chain that includes various primary secondary activities. These are pivotal in make any organization victorful and taking it ahead of competition. Furtherto a greater extent higher turnovers, reduced cycle times, inventory levels and financial operations can be given a face-lift to meet the ch whollyenges of the youthful worldwide recession the world is observing. ERP refer to the integrated way of carrying out all or major / consequence operations of the company. Organizations now regard ERP as a vital tool for the enhancement of their business operations by implementing most of its functions if not all of their processes nether a sensation information arranging in an endeavor to bene equate from the strategic advantages that ERP offers.Organizational culture is a vital notion in organisation al summary. In past few years, there has been a lot of focussing on the burgeon forthment of organisational cultures that are conducive of achieving better results and higher performance motivational levels of the employees. Organizational culture can be described as an abstract composite of assumptions, value, and artifacts shared by its members that can be reliably delineate by the determinewhich drive its members attitudes and activities (Howard, 1998, p. 234). The model proposed in this study advocates that there is an essential connection between an organizations culture and the achievement of strategic advantages from ERP. A Competing Values approach to measuring organizational culture is used to take into account an empirical measure for an organizations culture (Quin and Spreitzer, 1991). The competing values approach provides a profile of four cultural arche fictional characters booked by a particular organization. These archetypes are group, hierarchal, developmen tal and rational cultures. The combination of the archetypes describes the organizations culture profile. The primary scruple this study attempts to answer is how does Organizational cultural profiles affects the achievement of strategic advantages of ERP.2. Literature reviewThis segment lead appraise the pertinent Literature touching ERP and Organizational Culture.2.1 Enterprise Resource Planning (ERP)Enterprise Resource Planning (ERP) is relatively a new concept however now a days close to every organization ranging from small to large enterprise, devotes a major portion of its developmental budgets on the performance of ERP software. ERP is not merely software but an approach of carrying out business operations in the modern times where technology plays a decisive role in making an organization a success story or failure. However An ERP software system can be described as a set of integrated business applications, or modules, to carry out most business functions, including in ventory control, planetary ledger accounting, accounts payable, accounts receivable, material requirements planning, order management and human imagings, among other(a)wises. (Martin et al., 1999). ERP is a technique to bring all of an organizations info and IS /IT resources under a iodine Information system (Oliver, 1999). The author affirms that ERP systems evolved to help organizations manage their information through-out the Company, from the graft to the back office, and or the front office. (Oliver, 1999, pg. 12). ERP intends to integrate its load if not all of an organizations processes under a single ERP system. The processes can be seen in impairment of a value chain (Porter, 1985), which connects the suppliers to the organization to the clients. For example, imagine a system where the customer orders a product over the Internet (ecommerce). As soon as the customer places the order, it is automati holloy sent to the manufacturing department, while at the same time sent to the accounting department for billing- The use of materials by the manufacturing department depletes the stock, therefore a parts order is sent automatically to the supplier when reorder points are reached for replenishment of the stock. In traditional systems, time would be required for the sending of the messages between departments, for the place of the parts, and the billing of the customer.ERP intends to automate these systems to achieve a number of strategic advantages- Implementation of ERP software can forgo an organization certain strategic advantages(Radding, 1999, Stein 1998). The literature tells us that organizations can benefit from greater flexibility, change magnitude efficiency (Radding, 1999), improved communication, Lower operating costs, increased revenue (Oliver, 1999). Reduced cycle times, better collaborationism and higher profit margins (Stein, 1998). These strategic advantages affect not only the organization, but can affect all members of an or ganizations value chain. ERP is a system that seeks to unite all of a value chains disparate processes.An organizations value chain represents all of the different processes that involve organizational resources and that are trained to reinforcer the organizations operations. Porter(1985) developed a model of an organizations value chain. This model of the value chain contains 9 processes 5 primary processes, and 4 support processes.The organizations primary processes involve the production and delivery of the organizations products to the consumer (Bergeron, 1991). The processes involved in the primary activity are inward logistics, operations, outbound logistics, marketing and sales, and customer service. The organizations secondary business processes represent the support processes for the primary activities and are, administrative coordination and support, human resource management, technology development, and procurement of resources.Implementation of ERP systems where carrie d a number of strategic nature of benefits, on the other hand it bears extreme risks. The growing numbers of Unsuccessful stories countenance compelled managers to take a deep look into the causes of it. ERP tries to push the logic that the system has which is conflicting with the Business. It may sometimes withal lead to integration where decentralization fragmentation may best suite the organization. Furthermore, ERP may force the organization to go for generic processes than customization. consequently ERP has to go along with technology and culture (Davenport, 1998). In contemporary organizations the data generation takes place at scattered places and the magnitude of the data is huge. thitherfore a real time access to the data becomes unconditional for the data in deal with such complex nature of information. ERP aligns all the information into various functions alike finance, operations, sales, Customer relation etc subject to the nature of business an organization is in to.Enterprise resource planning system (ERP), as a type III IS innovation, has strategic Significance for the organization due to their integration into the tenderness business processes or strategies can directly impact the firms performance (Swanson 1994 Sambamurthy et al. 2003 Sample 1998). Consequently, numerous companies take over started to develop strategy focusing on information technologies, with ERP adoption being a critical thrust (Bharadwaj 2000 Powell and Dent-Micallef 1997 Robey et al. 2002). on the other hand, whereas the firm is on the lookout for competitive advantages by adopting this sophisticated information system, the tangible experiences grant reveal ambiguity some organization are able to reap the true benefits of ERP whereas on the other hand majority of the firms face losses and failed to achieve the desired level of strategic and tactical benefits. (Scott and Vessey 2002). accord to the survey conducted by Deloitte, the success rate of ERP implementa tion is less than 20%. Hence it is of the essence(p) for tec to unlock the mystery of benefit realization in ERP adoption and theorize the important predictors effect on ERP implementation practice (Brown and Vessey 2003). Other than strategic benefit, ERP as well as contributes toward making an organizational structure more blandish flexible, enabling organization to streamline their management structures and more democratic organization. On the other hand it also involve the centralization of control over information and the standardization of processes, which are attributes more consistent with hierarchical command and control organization with uniform cultures (Davenport, 1998).2.2 Organizational cultureCulture can be seen from a number of different levels. Of interest to business are the concepts of national culture and organizational culture. National culture is important due to a more global economy where communication technicalities suck begun to evolve. It is also impo rtant to the study of information systems technology and management. For example, Watson et al. (1994) looked at national culture as king a dimension, in a study facial expression at Group Support Systems success. This experimental study involved looking at the deviations between groups from the U.S. and Singapore. For the majority of the business Literature on culture the level of analysis has dropped to the organization. The immensity of studying an organizations culture is, like ERP and BPR, a fairly new concept-An organizations culture can be delineate by a number of constructs, such as the symbols, language, ideology, beliefs, rituals, and myths that affect an individuals behavior (Pettigrew, 1979). According to Pettigrew (1979), the culture constructs follow to provide some form of commitment to the established order. Hofstede et al. (1990) proposes a model of culture that is made up of values and practices. The practices reflect member beliefs about symbols, heroes and my ths. In an exploratory analysis, Hofstede et aI. (1990) found three factors affecting the values, yet, the core of organizational culture was represent by six dimensions of organizational practices. The dimensions represent opposing ideologies as to what constitutes decent practices. Using the dimensions of organizational practices, Hofstede (1998) identified 3 distinct subcultures within 131 different work groups. The three subcultures represented include a professional subculture, an administrative subculture, and a customer interface subculture. Quinn and Rohrbaugh (1983) developed a duodecimal measure of organizational effectiveness, which was later successfully used to study organization culture (see Kalliath et al., 1999, Howard, 1998, Quinn and Spreitzer, 199 1, Zammuto and Krakower, 199 1, Yeung et al., 1991). Quinn and Rohrbaugh (1983) exploratory study revealed that organizational effectiveness cm be represented by three distinct dimensions, a focus dimension (internal vs. external point of view), a structure dimension (flexibility vs. control orientation) and a means vs. ends dimensions.The authors call the resulting approach the Competing Values Approach to measuring organizational culture. The model in figure 2 represents the competing values approach. In figure one, each quadrant represents an ideal type of culture. A particular organization need not be classified exclusively as having one type of culture, but can be handed as containing elements from the four culture types, yet one type may be dominant (Quinn and Spreitzer,1991, Cameron and Freeman, 1991, Yeung et al., 1991). apiece culture type is measured using four items, which are aggregated to achieve a culture profile- The core values of the Group culture are belonging, trust and participation, which are motivated by factors of attachment, viscidity and membership (Denison and Spreitzer, 1991). Like the group culture, the developmental culture also emphasis flexibility but focuses it s worry on the external environment. Productivity, performance, goal fulfillment and achievement are the important factors for the rational culture. These cultures emphasize the following and attainment of well-defined objectives.Finally, for the hierarchical culture, the focus is on the logic of the internal Organization and the emphasis is on stability- (Denison and Spreitzer, 1991, pg. 6) As the authors distinguish, the motivating factors for this quadrant include security, order, rules, and regulations. A number of studies have been done, looking at and corroborative this framework. Quinn and Spreitzer (1991) performed a multitrait-multi-method analysis as well as multidimensional scaling on two competing values instruments (one using an ipsative scale measure, the other using a likert type scale measure), The authors found evidence for both(prenominal) convergent and discriminant validity. Zammuto and Krakower (1991) looked for relationships between culture and other orga nizational variables including, centralization, moral, administrator credibility, conflict, strategic orientation and culture strength- Authors state that evidence for construct validity exists due to the correlation of the competing values measure of culture and the other variables stated. Yeung et al. (1991) canvas the competing values measure of culture in relation to organizational performance, culture strength and human resource practices- In a cluster analysis, the authors found that organizations from their study could be classified into 5 distinct culture types (or profiles). More recently, the competing values framework was again validated in two more studies (see Howard, 1998, Kalliath, 1999). The next function testament look at some of the literature on assimilation and organizational culture change.Denison (1996) gave some other perspective of culture by trying to research whether organizational culture and organizational climate were two different points of views or just a matter of perception. He further said that there are similarities differences at the time same time. Measurement of organizational culture is usually carried through qualitative analysis and deals with individuals set of beliefs, shared norms perception. Organizational climate on the other hand is measured through quantitative methods like questionnaire and print outs etc. Other factors also helped to differentiate these two topics in the literature. Culture researchers were more anxious with the progress of social systems over time (Mirvis Sales, 1990 Mohr, 1982 Pettigrew, 1979 Rohlen, 1974Schein, 1985, 1990 Van Maanen, 1979), whereas climate researchers were generally less touch with evolution but more concerned with the impact that organizational systems have on groups and individuals (Ekvall, 1987 Joyce Slocum, 1984 Koyes DeCotiis, 1991). The research also addressed to where does this organizational culture climate originates.Chatman (1989) says In order for resea rchers to understand and predict behavior, they must consider both person and situation factors and how these factors interact. Even though organization researchers have developed interactional models, many have overemphasized either person or situation components and most have failed to consider the effects that persons have on situations. Using a Q-sort methodology, individual value profiles are compared to organizational value profiles to determine fit and to predict changes in values, norms, and behaviors. By this we understand that both the organization individuals beliefs norms compliments each other and have an impact on over organizational environment which people and policies constitutes. Therefore the significance of any single factor can never be underestimated while evaluating the type of profile organization maintains in terms of its culture.Organizational effectiveness have long been a very vital area for the researchers to determine the causal relationship of organi zational effectiveness higher level productivity with several variables. Among them organizational culture have well been under the consideration by the researchers. The increase in the research The intensification of research on organizational effectiveness has led to the formulation of theories about factors within an organization that can make a difference in performance. Organizational culture is one such variable that has received much attention in organizational behavior literature (Amsa 1986 Hofstede 1986 Hofstede, Neuijen, Ohayv and Sanders 1990 Jelinek, Smircich and Hirsch 1983 Kilman, Saxton and Serpa 1985 Ouchi 1981 Owens 1987 Schein 1990 Trice and Beyer 1984). This attention is mainly because researchers has postulated that cultural factors play a spot role in determining levels of organizational outcomes. A common hypothesis about this role suggests that if an organization possesses strong culture by exhibiting a well-integrated and effective set of specialized value s, beliefs, and behavior patterns, then it will perform at a higher level of productivity (Dennison 1984). The development of theory to guide the translation of organizational culture, therefore, is of primary importance to improving organizational performance, espe- cially because the variables which comprise culture have been postulated to be under the control of organizational leaders (Deal and Kennedy 1982, Ouchi 1981, Owens 1987, Siepert and Likert 1973). Despite concern with achieving improved organizational productivity through fo- cusing on the development of cohesive organizational culture, determining the parameters of this construct has been problematic. The literature on organizational culture lights-out essential ideas, but the theory and technology to utilize the theory in improving organizations have remained hirsute (Mackenzie 1986). As Trice and Beyer (1984) have argued, previous research on organizational culture has tended to focus on single, discrete elements of culture, while ignoring the multidimensional nature of culture, that is, a construct composed of several intimately relate variables (Schein 1990). Another problem has been that researchers are still not sure whether the association between culture and organizational performance reflects a cause-effect type of relationship (Saffold 1988). In fact, researchers have not really identified what specific variables comprise an effective organizational culture, nor have they provided convincing empirical evidence to suggest that if leaders in organizations increased the amount of time and quality of energy devoted to developing a particular type of organizational culture, then an organization would perform at a higher level of productivity (Barney 1986). There is presently little agreement, therefore, about what the concept of organizational culture means or how it should be notice and measured (Schein 1990). Because of the lack of agreement concerning theoretical formulations about o rganizational culture, its delineation, and its possible relationship to performance outcomes, no significant body of empirical research exists. Instead, researchers have primarily focused on defining and describing the variables of organizational culture and cautiously suggested a possible relationship between organizational culture and outcomes (Owens 1987). As Mackenzie (1986) argues, organizational culture as a concept may be a useful means of assessing the congruency of the organizations goals, strategies and working class organization, and resulting outcomes. Without valid and reliable measures of the critical aspects of organizational culture, however, state- ments about its importance and effect on performance will continue to be based on speculation, personal observations, and case studies (Uttal 1983). As a consequence, management strategies and programs to score organizational change through under- standing the organizations environment and strategically manipulating as pects of its culture will continue to be poorly focused and difficult to implement and evaluate.