Validation of organizational practice statements in the Indonesian work environment: towards a quantitative assessment of organisational culture

Organizational culture has been reported as being one of the top 5 topics of greatest interest in managerial circles. Over the past three decades the importance of culture has been linked to performance, effectiveness, leadership, change and strategy. Now, with a global market place and operational setting the transfer of corporate culture from the head office in a Western, developed country to a regional office in an Eastern, developing country is an issue worthy of managerial concern. While there exists a multitude of methods and tools for assessing the organizational culture of companies in the West, these instruments may not be valid in a country such as Indonesia. This study was designed to establish validity for a set of organizational practice statements which could be used to profile the organizational culture of Indonesian companies. The study was carried out in two phases. The first phase involved establishing content validity for a set of items. The literature of every major work on organizational culture was reviewed and a set of statements describing organizational practices was compiled. Next, a panel of 6 Indonesian judges consisting of academics, practitioners and owners reviewed the statements to determine the appropriateness for identifying aspects of organizational culture as defined by Schein (1994). The result of this phase was a set of 87 organizational practice statements. The second phase was concerned with construct validation through the testing of hypothesis relating to factors known to influence culture. Previous research has found that industry, organizational subcultures and leadership all influence the culture of organizations. If the instrument is to be considered valid, it must be able to detect the variance caused by these factors. Thirty nine companies were sampled representing 3 industries as classified by Thompson’s typology. Owners, managers and employees from every department of each company rated the statements. Factor analysis revealed 17 independent dimensions consistent with previous research of culture and the specific nuances of Indonesian culture. An analysis of variance revealed that the instrument was able to detect differences in culture scores across industry, departmental and administrative subcultures. Additionally, the instrument was able to identify the relationship known to exist between leader and follower at both the departmental and organizational level. The thesis concludes with implications for managerial practices and suggestions for future research. Because this is one of the first academic research projects of its kind to be conducted in Indonesia, it provides a foundation for further exploration in other areas of organizational behaviour