Faculty Scholarship 1994 - Present

Corporate Culture and Performance: A Study of Firms in Bahrain

Although the extant literature widely recognizes the impact of corporate culture on performance, such findings are mostly based on the U.S. companies, thus may not be generalizable to other national settings. Gordon (1991) first addresses the issue of industry effect on the relationship between culture and performance, nevertheless, it is based solely on the U.S. data. To our best knowledge, Calori & Sarnin (1991) and Haddad et al. (1998) are the only two studies investigating this relationship based on companies outside of the U.S. However, the data collected by Calori & Sarnin (1991) are not directly comparable to those of other studies, whereas Haddad et al. (1998) does not consider the industry effect. While this line of research is proliferated in the West, it is still in its infancy in the Middle East region (Ali 1995). With the increasing interactions between the West and the Middle East in various financial, political, and educational areas among others, we need to understand the corporate culture in the Middle East's setting and how its culture affects corporate performance in order to maximize our competitive advantage. Bahrain is the financial hub of the Arab World. This study examines whether the relationship of corporate culture and performance documented in prior U.S. studies, specifically whether the results reported in Gordon & Christensen (1993) and Haddad et al. (1998) also apply to the cultures in Bahrain. Our results indicate that as in the West, corporate culture in Bahrain does have a significant impact on corporate performance. Similarly, as in Haddad et al. (1998), this link is moderated by other factors such as industry, environmental uncertainty and firm size.