The Relationship between Organizational Culture and Performance of SME’s: Empirical Study from a Developing Country

Abstract

This article explores the link between organizational culture and effectiveness for SMEs in transitional socio-economic environment in Serbia. By analyzing the data from the survey gathered from 760 senior executives and employees from 86 SMEs in Serbia this study empirically evaluates the dimensions of OCTAPACE model of organizational culture, and presents a multi method analysis of the link between culture and growth of SMEs in a transitional economy. This study also examines whether the level of organizational culture depends on the type of the industry that SMEs belong to (knowledge or capital intensive). Furthermore, as a legacy of economic transition we have workforce with a unique set of subcultures. By analyzing the data from the second survey gathered from 257 senior executives and employees from SMEs in Serbia and Southern California we explore the differences in cultures of SMEs from transitional economy and developed economy. Given that strong culture brings competitive advantage, the results of the second study provide basis for understanding competitive position of SMEs in Serbia, and could propose directions for development of culture in SMEs in Serbia that should help them overcome problems of the transition and reach better business results more quickly.

Keywords

• effectiveness
• organizational culture
• Serbia
• SMEs
• transition economies