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IJCHM
22,4 Influence of leadership
competency and organizational
culture on responsiveness and
500
performance of firms
Received 3 February 2009
Revised 22 April 2009,
Susita Asree
6 July 2009, Department of Management, Marketing and Business Administration,
10 August 2009 College of Business and Public Affairs, Murray State University, Murray,
Accepted 7 September 2009 Kentucky, USA
Mohamed Zain
College of Business and Economics, Qatar University, Doha, Qatar, and
Mohd Rizal Razalli
College of Business, Northern University of Malaysia, Kedah, Malaysia
Abstract
Purpose – The purpose of this paper is to investigate the operations strategy of service firms (hotels)
in order to determine whether the infrastructural aspects of their operational practices, i.e. leadership
competency and organizational culture, would affect their responsiveness (as a cumulative capability)
to their employees and customers and eventually their performance (increase in revenue).
Design/methodology/approach – The approach takes the form of an empirical analysis of data
(using structural equation modeling) obtained via a questionnaire survey involving 88 hotels of
various ratings in Malaysia.
Findings – The findings indicate that leadership competency and organizational culture have
positive relationships with responsiveness. In addition, responsiveness has a positive relationship
with hotel revenue. These findings imply that leadership competency and organizational culture are
important factors for hotels to be responsive to their customers, and in turn responsiveness to
customers would improve hotel revenue
Research limitations/implications – Some limitations include those that come with cross-sectional
analysis, the use of perceptual measures, and low response rate.
Practical implications – Hotel managers need not only to improve their leadership competency but
also to instil an organizational culture that is supportive of their employees. These operations practices
would make their hotel more responsive to customer needs, which in turn would help to improve their
hotel performance.
Originality/value – There are differences between this study and prior studies. Leadership
competency was examined in the context of service operations practices where evidence was provided
that leadership competency would affect cumulative capability of responsiveness of service firms.
Organizational culture was viewed in the context of operations practices, where the finding implies
that organizational culture practices, such as attentive listening to staff, giving reward and recognition
International Journal of
Contemporary Hospitality
for their performance, and taking care of their welfare, would lead to a positive effect on the ability of a
Management hotel to be responsive toward their customer needs.
Vol. 22 No. 4, 2010
pp. 500-516 Keywords Leadership, Organizational culture, Organizational performance, Hospitality services,
q Emerald Group Publishing Limited Corporate strategy, Malaysia
0959-6119
DOI 10.1108/09596111011042712 Paper type Research paper
1. Introduction Influence of
Tourism is an important industry that has contributed to the growth of the economy of leadership
Malaysia (Mahendran et al, 2006). As an illustration, the tourism receipts have
increased steadily from RM8,580.5 million in 1998 to RM49,561.2 million in 2008 competency
(Table I). As shown in Table I, the tourist arrivals to Malaysia had also increased from
5.5 million in 1998 to 22 million in 2008.
Strategy plays a major role in global competition of a service industry. In order to 501
compete effectively, service organizations such as hotels that were investigated in this
research have to link and incorporate their operations strategy to their business
strategy (Skinner, 1969). Failing to do this may sacrifice their competitive advantage
(Dangayach and Deshmukh, 2001).
Just as in any industry, a service industry requires an effective operations strategy.
The primary purpose of the service operations strategy is to create value to customers
in terms of quality, price, and time (Haksever et al., 2000). Therefore, in order to provide
these values, a service operations strategy should consider the management process
within the firm across a broad range of practices as well as the outcomes of the process
(Meyer et al., 1999). A practice refers to established systems and behaviors in an
organization (Morita and Flynn, 1997). In other words, in order to understand the
service operations strategy, the current practices used by hotel management should be
examined since they reflect the operations strategy of the service firms. This approach
corresponds to that of Mintzberg and Waters (1985) who see strategy as “a pattern in a
stream of actions, not decisions.” In fact, in operational strategy there are two
approaches for framework development:
(1) based on actions (practice); and
(2) based on decisions.
Research suggests that it is actions rather than decisions that should be included in the
operational strategy framework (as cited in Christiansen et al., 2003). By focusing on
the practices that are implemented in an organization, the operations strategy
framework represents a framework that can assist the organization in improving its
2. Theoretical background
2.1 Organizational performance
The concept of organizational performance is related to the survival and success of an
organization. The measurement of the organizational performance is critical in service
organizations as well as in manufacturing organizations (Brynjolfson, 1993; Atkinson
and Brown, 2001). Grönroos (1992) stressed that service firms must concentrate more
on building customer relationships rather than on short-term transactions (cited in
Paulin et al., 1999). Furthermore, in service organizations such as hotels, this is even
more critical because of the nature of their business which is more focused on human
skills and intangible assets (Bharadwaj et al., 1993).
There are two ways of measuring performance, i.e. using objective and subjective
measures. The objective measure uses real figures from organizations while the
subjective measure uses perception of respondents (Johannessen et al., 1999; Pizam and
Ellis, 1999). In this study, we decided to use a perceptual or subjective measure to
assess organizational performance (Ackelsberg and Arlow, 1985), because:
(1) it is a more consistent measure of performance and it does not vary broadly
from the objective measures in terms of accuracy; and
(2) asking respondents for specific financial measures may generate anxiety in
them over the confidentiality of the information they provide.
The leader behavior investigation is related to the actual acts or behaviors of the leaders. 503
Meanwhile situational and reciprocal causations assess the influence of situational
factors on leader’s behavior and the causes of his/her behavior on subordinates’
activities. Further, leadership effectiveness theories are related to the effectiveness of a
certain leadership style in an appropriate situation. Finally, normative leadership
approach is described as an effective action in any given situation. Barrow (1977) also
indicates that the leadership framework should consist three variables: leader’s
characteristic, leader’s behavior and the environment. Also, Zaccaro (2007) defines
leadership practices as “the extent of leaders’ behavior in making decisions related to
operational systems” of the hotels under study. Interestingly, Church (1995) found that
managers’ leadership behaviors in an airline services organization were significantly
related to indicators of service quality and business unit performance.
In drawing the line between this study and other leadership research, this study
identifies leadership practices that are related to responsiveness, particularly in the
hotel industry. A study on behavior of lodging industry leaders by Chung-Herrera et al.
(2003) found eight types of competency factors of leaders in the lodging industry. In
their study they used 99 statements to assess the following eight leadership
competency factors:
(1) Self-management, which comprises ethics and integrity, time management,
flexibility and adaptability, and self-development dimensions.
(2) Strategic positioning, which comprises awareness of customer needs,
commitment to quality, managing stakeholders management, and concern for
community dimensions.
(3) Implementation, which includes the dimensions of planning, directing others,
and re-engineering.
(4) Critical thinking, which includes strategic orientation, decision making,
analysis, and risk taking and innovation dimensions.
(5) Communication, which includes the dimensions of speaking with impact,
facilitating open communication, active listening, and written communication.
(6) Interpersonal, which comprises the dimensions of building networks, managing
conflict, and embracing diversity.
(7) Leadership, which comprises the dimensions of teamwork orientation, fostering
motivation, fortitude, developing others, embracing change and leadership
versatility.
(8) Industry knowledge, which is the business and industry expertise dimension.
Furthermore, Trefry (2006) noted that among the researchers who defined
organizational culture at the level of underlying values include Davis et al. (2002),
Schein (1985) and Hofstede (1997). In similar thought, Paulin et al. (1999) categorized
these two levels as visible and invisible; the visible level includes the behavior patterns,
the physical and social environment, and the written and spoken language used by the
group while the invisible level relates to the group’s values or the group’s basic
assumptions. In line with this contention, Hofstede (1997) defines organizational
culture as a collective programming of the mind that distinguishes the members of one
organization from another. He also indicated that shared perceptions of daily practices
should be included in the organizational culture. Besides these two broad categories,
generally, organizational culture is defined as the set of common norms and values
shared by people in an organization (Deshpandé and Webster, 1989). Among the
examples of organization and culture practices include the way organization
communicate with, develops, empowers and involves its staff (Prabhu et al., 2002).
Following Deshpandé and Webster’s (1989) definition mentioned above, this study
defines organizational culture practices as “the extent of shared values and beliefs that
are related to operational systems practiced by a hotel”. Again, to draw the line
between this research and other organizational culture researches, this research only
considers organizational culture practices that are related to responsiveness, which is
discussed in the next section. The responsiveness-related organizational culture
practices were adapted from Coughlan and Harbison’s (1998) study that emphasizes
employee management, flexibility and performance standards and measurement,
leadership, process management, quality management, service culture, service design,
service recovery, understanding customers, and value creation in contributing to the
performance of Irish service firms. In their research, responses to 80 questions were
rated on a five-point Likert-type scale.
Figure 1.
Framework of the study
IJCHM quality is a potential source of sustainable competitive advantage (Castanias and
Helfat, 1991) and for effective service (Armistead and Kiely, 2003). These studies,
22,4 however, only examined the link between leadership practices and organizational
performance. Thus, the link between leadership practices and responsiveness still
needs to be explored. This is because, for a firm to become a responsive competitor, it
requires a clear and an attractive vision from its leaders (Stalk and Hout, 1990). In other
506 words, leadership is important for responsiveness to occur. Other studies also suggest
a significant positive relationship between leadership and responsiveness (in terms of
quality, speed and flexibility) (e.g. Crocitto and Youssef, 2003; Crosby, 2002; Jabnoun
and Rasasi, 2005). Hence, based on the above findings, this study posits that:
H1. The leadership competency is positively related to the level of responsiveness.
2.5.2 Relationship between organizational culture and responsiveness. As pointed out
earlier, organizational culture practices refer to the shared values and beliefs that are
related to operational systems practiced by an organization. A prior research has found
a direct relationship between organizational factors and culture and organizational
performance (Coughlan and Harbison, 1998). Meanwhile, relationships between
organizational culture and responsiveness (in terms of quality, speed and flexibility)
are suggested by a variety of studies. Organizational culture is important for providing
consistency and flexibility in order to be responsive to customer demands (Crocitto and
Youssef, 2003). In order to be responsive and to achieve sustainable competitive
advantage, the culture of learning is found to be an important organizational capability
(Smith et al., 1996). Furthermore, for an organization to be effective, an organizational
culture that is compatible with client-orientation (responsiveness) is essential (Paulin
et al., 1999). More recent studies also suggest some relationship between organization
and culture and responsiveness. For example, Theoharakis and Hooley (2003) found
that the organizational resources such as commitment to learning and planning
flexibility are positively related to responsiveness. In another study, Kritchanchai
(2004) found that organizational structure would influence the responsiveness of firms.
Finally, a more recent study by Fang and Wang (2006) found a positive relationship
between organizational culture and operations performance such as quality and
flexibility. Thus, based on these findings, this study hypothesizes that:
H2. The organizational culture is positively related to the level of responsiveness.
2.5.3 Relationship between responsiveness and performance. As mentioned above,
responsiveness refers to the ability of an organization to respond to its customer needs
in terms of quality, speed, and flexibility. Stalk (1988) proposed that a responsive
organization would achieve competitive advantage in terms of business performance,
customer satisfaction, innovation, and financial performance. In relation to this,
responsiveness (in terms of quality) has been found to have positive associations with
costs, financial performance, customer satisfaction, and customer retention
(Sureshchandar et al., 2002). In addition, another study found that market-oriented
organizations achieved better performance in terms of sales growth (Gray et al., 2000).
More recent studies also uncovered positive relationships between responsiveness and
financial as well as non-financial performances (Chen et al., 2004; Kritchanchai, 2004;
Theoharakis and Hooley, 2003). Therefore, this study hypothesizes that:
H3. Responsiveness is positively related to performance (revenue).
3. Methodology Influence of
3.1 Survey instrument leadership
The factors investigated in this study were measured on a five-point Likert scale with
anchors ranging from strongly disagree (1) to strongly agree (5) for the independent competency
variables of leadership, organizational culture, and responsiveness (mediating
variable). The respondents were asked to rate their hotel’s current practices in
relation to leadership practices, organizational culture practices and level of 507
responsiveness. The eight factors used to measure leadership competency were
adapted from Chung-Herrera et al. (2003), while the organizational culture variable was
adapted from Coughlan and Harbison (1998). As for the dependent variable, hotel
revenue, the Likert-type scale with anchors ranging from decreased significantly (1) to
increased significantly (5) was also used. The respondents were asked to indicate the
changes in their hotel revenue over the past three years. The items used for assessing
revenue change were adapted from Evans (2005). Finally, our conceptualization and
operationalization of the responsiveness variable was based on studies by
Parasuraman et al. (1988) and Stalk and Hout (1990). Owing to the limitations of the
measurement of responsiveness in prior studies a new measurement scale called the
Responsiveness Index (RI) was designed for this study.
In designing the RI, we followed the guidelines suggested by Phillips and Moutinho
(1999). The responsiveness was assessed at each of the five service encounters (a point
where customers meet a service provider) which are common in the process of service
delivery in a hotel:
(1) before check-in;
(2) at check-in;
(3) after check-in;
(4) at check-out; and
(5) after check-out.
In order to assess the validity of the instrument, a within-scale factor analysis was
carried out separately for each encounter. The justification for this was that the five
encounters represent a process, hence they were distinct dimensions. Furthermore, if
factor analyses were done simultaneously for all the encounters, responsiveness could
not be assessed according to the process mentioned above. Besides that, this within
scale factor analysis also provided the convergent validity for responsiveness. The test
showed that all variables had Cronbach alphas that exceeded the cut-off point of 0.7
(Nunnally, 1978).
In assessing the level of responsiveness, the studies by Parasuraman et al. (1988)
and Stalk and Hout (1990) were used as the main guidance. The responsiveness
variable in this study was measured by three constructs, i.e. speed, variety, and
willingness. Then, responsiveness of the hotel was assessed according to the process
encountered by customers. This categorization of service encounters was offered by
Danaher and Mattsson (1994), i.e. the encounters at check-in, room, restaurant,
breakfast, and checkout. This study added two additional dimensions (before check-in
and after check-out) to depict the entire process of customer encounter. The
respondents were asked to rate their current hotel’s responsiveness on the scale of 1 to
5 (strongly disagree to strongly agree). The RI was developed from the data. Basically,
IJCHM the index was obtained through the assessment of 25 indicator variables (statements)
22,4 of responsiveness by the respondents at the five service encounters mentioned above.
Two main steps were involved in calculating the RI: calculating the weighting of each
of the items at each service encounter; and calculating the RI.The values obtained at
the five encounters were converted into a single index ranging from 0 (low
responsiveness) to 1 (high responsiveness). Detailed descriptions of how the RI is
508 calculated can be found in Razalli et al. (2007).
3.4 Findings
The hypotheses of the structural equations model were tested using VisualPLS. This
particular tool was chosen to analyze SEM because of its applicability to our small
sample size (88 respondents).
The significance of the hypothesized relationships was determined by t-statistic. As
shown in Figure 2 and Table III, all relationships were found to be significant.
Specifically, H1, which tested the relationship between leadership competency and
responsiveness was found to be positively significant (b ¼ 0.47, p , 0.01). Furthermore,
Figure 2.
A causal model of
leadership and
organizational culture
practices on
responsiveness and
performance
Hypothesis b p-value
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Zaccaro, S.J. (2007), “Trait-based perspectives of leadership”, American Psychologist, Vol. 62
No. 1, pp. 6-16.
Further reading
Armistead, C. and Clark, G. (1993), “Resource activity mapping: the value chain in service
operations strategy”, The Service Industries Journal, Vol. 13 No. 4, pp. 221-39.
Ferdows, K. and de Mayer, A. (1990), “Lasting improvements in manufacturing performance:
in search of a new theory”, Journal of Operations Management, Vol. 9 No. 2, pp. 168-84.
Hair, F.H. Jr, Black, W.C., Babin, B.J., Anderson, R.E. and Tatham, R.L. (2006), Multivariate Data
Analysis, 6th ed., Pearson Education International, Harlow.
Verma, R. and Young, S.T. (2000), “Configurations of low-contact services”, Journal of Operations
Management, Vol. 18 No. 6, pp. 643-61.
Corresponding author
Susita Asree can be contacted at: sasree@murraystate.edu