Academic journal article Indian Journal of Industrial Relations

Organizational Culture & Transformational Leadership as Predictors of Employee Performance

Academic journal article Indian Journal of Industrial Relations

Organizational Culture & Transformational Leadership as Predictors of Employee Performance

Article excerpt

Introduction

The era of globalization has made the business environment increasingly challenging and unstable (Burke 2004). In India, this era started with the introduction of the New Economic Policy (NEP) in 1991. It is worth noting that India holds a prominent place among the new emergent economies and as such, the forces of globalization have had a definitive impact on firm practices here (Biswas, Giri, & Srivastava 2006, Budhwar & Boyne 2004). According to Ulrich (1997), some of the major challenges facing the emerging economies of today are globalization, changes in customer expectations, changing structures of revenues and costs, a greater concern for organizational capability development, capacity to keep pace with environmental changes, innovations in the technological arena, attracting, developing, and retaining skilful and knowledgeable human resource capital, and ensuring the sustainability of long-term changes. Organizations can duplicate technology, processes, products, and strategy. As noted by Barney (1996), a firm's intangible assets such as human resources and related processes and practices are unique and inimitable. Thus, intangible factors such as organizational culture and leadership practices may form tangible outcomes in terms of individual performance and organizational excellence by forming the basis for framing organization wide policies and procedures. Chauhan, (2005) noted that change has become inherent in the contemporary business scenario. Chauhan et al. (2005) also observed that these environmental changes required greater levels of managerial effectiveness in order to keep organizations competent on the face of such swift changes. Goldman Sachs Investment Bank (2003) and World Bank (2001) placed India alongside Brazil, Russia, and China as the four major players in the world business scenario.

It is important to investigate the cultural facets that make up effective managerial behaviour within an organizational framework (Biswas 2006). Zurcher (1968) backs up this point of view wherein it was mentioned that with the worldwide growth in trade and commerce, it is necessary to study such behavioural aspects, especially in a cross-cultural situation.

Traditionally India's national culture has been collectivist and underlines human actions within the broader social ambit (Hofstede 2001). These aspects of national culture are deeply embedded in the individual psyche of the average Indian and are germane towards their affective and cognitive behaviour in a work-life context (Rao & Abraham 2003). Paradoxically though, the nature and flexibility of the Indian culture and the value system are such that often it has absorbed alien customs and adapted them to indigenous norms and practices, thus maintaining the distinct ethos of the society while at the same time globalizing it (Biswas et al. 2006). This has placed the Indian society in a unique position in the oriental world whereby its culture is marked by a philosophy of 'crossvergence'. India plays the role of a leader in establishing the standards of cultural ideals in the contemporary boundary-less business environment (Ralston, Holt, Terpestra, Kai-Cheng 1997). Varma, Budhwar, Biswas, and Toh (2005) put the Indian traditional cultural system into perspective by terming it as the fulcrum of the South-East Asian business milieu. England and Lee (1974) suggest that during periods of environmental turbulence, societies in developing economies such as India tend to take recourse to a path to stability. This implies that organizations in such countries happen to configure their centre of attention towards behavioural and cultural aspects that are indigenous and time tested as well as adapt to foreign norms that meets the bill of the situation. This is done to maintain internal harmony as well as external adaptability. Given that organizations operate within societal bounds, it is clear that behavioural aspects of organizational management requires attention and thus calls for further investigation. …

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