Influence of Organizational Culture on Construction Firms’ Performance: The Mediating Roles of Innovation and Marketing Capabilities

Abstract

Local Ghanaian construction firms have been accused of underperformance due to inadequate resources and capabilities, lack of market information, poor managerial skills, and other external factors. While construction firms may be unable to control external challenges, how they mobilize internal resources to confront them may be crucial for their performance and survival. An emerging consensus is that how organizations use their resources to respond to externalities is related to their organizational culture (OC). We contend that the unique contribution of organizational culture to firm performance (FP) may diminish in the absence of appropriate firm capabilities. Drawing on the resource-based view and capability theories, we attempt to investigate (a) how the types of OC influence FP and (b) whether innovation and marketing capabilities mediate the link between types of OC and construction firm performance. Results of partial least squares structural equation modelling show that clan, adhocracy, and market culture have significant positive association with FP, while hierarchy culture is negatively related to FP. Furthermore, innovation and marketing capabilities demonstrate a combination of full and partial mediation effects on the link between OC types and FP. Thus, the results direct senior managers’ attention towards the significance of soft assets in construction firm performance outcomes, signaling a shift from a purely technical and rationalistic approach to a more adaptable and humanistic approach. It implies that while emphasizing cultural values, managers should also give priority to these two capability dimensions.

Keywords

• organizational culture
• innovation capability
• marketing capability
• construction firm performance
• Ghanaian construction industry
• partial least squares structural equation modelling