An investigation into the relationship between organisational culture, contemporary business practice and performance

Abstract

This is an empirical study of the relationships between lean practices, environment and social sustainability practices, operational performance, and organisational culture in the UK manufacturing sector. The contingency and socio-technical system theories are the lenses through which these relationships are viewed. Lean methodology focuses on improving process efficiency and operational performance based on the reduction of waste, thereby maximising value for customers and enhancing competitive advantage. It has resulted in a growing area of interest, for practitioners and academics, as organisations seek to do more with less. Similarly, sustainability has also entered literature more recently as a method of waste reduction in seeking operational performance gains, as a method of ensuring organisational compliance with regulation, but also in building corporate citizenship. Indeed, given the complementarities of these approaches, academic attention has also turned to the investigation of what has become known as a ‘lean and sustainable’ approach to business. Research reveals varying levels of success in the implementation of lean and sustainability practices, in the context of performance improvement. It is proposed in literature that organisational culture may be a critical enabler to achieving successful outcomes during the implementation of lean and/or sustainability practices. However, there is a lack of empirical research deconstructing organisational culture into more detailed sub-dimensions in this setting, to test these hypotheses and propositions.

This thesis therefore investigates the direct relationships that lean practices, and environmental and social sustainability practices, have on operational performance. In addition, the direct relationship that lean practices have on the implementation of sustainability practices is tested. Further, this study explores the moderating and mediating effect of lean practices on the relationship between sustainability practices and operational performance, before examining how organisational culture, both defined as a unitary and multi-dimensional construct, mediates the effect of lean, environmental sustainability, and social sustainability practices on operational performance. To explore the relationships between the four constructs a set of five conceptual models are developed testing six research hypotheses. Data was collected through online questionnaires from operations (or equivalent) managers in UK manufacturing firms. 568 useable responses were received. These were divided into two, randomly selected, sub-samples. Sub-sample 1 was used to complete exploratory factor analysis on the measurement constructs, with the Sub-sample 2 subjected to Structural Equation Modelling (SEM) analysis in relation to the hypothesised relationships.

The findings show that lean practices have a positive, and significant, direct effect on operational performance, as do social sustainability practices. However environmental sustainability practices were not found to have a significant effect on operational performance. Further, lean practices were shown to have a positive effect on sustainability practices (both environmental and social) and, while lean practices are not a prerequisite for a positive relationship between sustainability practices and operational performance (no mediation exists), they do have a moderating effect upon it. The size of this effect was found to change as an organisation’s lean experience, or maturity, grows.

Exploratory Factor Analysis (EFA) on the data resulted in a revised model for the measurement of the organisational culture construct, thus reducing the original model from six factors to three cultural dimensions, 1. openness v being closed to criticism, 2. a focus on individual management vs task management, and 3. an external/customer orientation vs internal focus.

On introduction of this revised, more robust model it was found that only the customer/external dimension had a mediating effect on the relationship between operational performance and lean or sustainability practices, with the openness and individual-management dimensions having no significant mediating effect. Lean practices significantly influenced dimensions towards individual management, openness, and external orientations, while social sustainability practices influenced only the individual-management and external dimensions. Environmental sustainability practices were not found to have any significant effects on the organisational culture dimensions.

This study is relevant for practitioners and academics as it provides greater depth of insight into the nuanced relationships between lean and sustainability in the context of operational performance. It contributes to research streams in operations management, sustainability, and organisational behaviour seeking to better understand how organisations can be lean, and environmentally and socially sustainable, ultimately proposing an optimal organisational culture. In addition, this research furthers knowledge in the area of social sustainability, which has thus far been neglected in literature, in relation to its link to lean practices, its effect on operational performance, and their interplay with organisational culture. Finally, a new model for the measurement of the organisational culture construct has been developed for future research.

Date of Award	Oct 2024
Original language	English
Supervisor	Paul Humphreys (Supervisor) & Trevor Cadden (Supervisor)