Netnomics (2012) 13:1–23 DOI 10.1007/s11066-012-9066-0
The relationship between organizational culture and market orientation in the Greek telecommunication companies Athanasios Papadimitriou · Antonios Kargas
Accepted: 8 April 2012 / Published online: 26 May 2012 © Springer Science+Business Media New York 2012
Abstract The modern business environment is characterized by intense competition, which has led telecommunication companies to a continuous race towards gaining and maintaining a competitive advantage. In order to succeed, telecommunication companies “cultivate” market orientation and market oriented cultures as non-imitable characteristics, capable to ensure long– term corporate viability and growth. This paper provides an insight into the Greek telecommunication industry by: a) revealing the coordination between market orientation strategies with corresponding culture, b) the relationship between extrovert-type cultures with performance and c) how special traits of telecommunication providers (size and age) influence the degree of market orientation and the dominant culture type (introvert or extrovert). The paper contributes: a) to the creation of national cultural profile in the telecommunication industry, which can become a starting point in a wider trial to create a European industry profile, b) to the empirical testing of the correlation between culture and market orientation and c) to the examination of the extent to which background factors (such as firms’ age and size) should be taken into account during the implementation of a business strategy. Keywords Organizational culture · Market orientation · Performance · Greek telecommunication providers
A. Papadimitriou (B) · A. Kargas University of Athens, Athens, Greece e-mail:
[email protected]
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1 Introduction The Greek telecommunications market has come a long way over the past twenty years. Until 1992, Greece’s public telecommunication provider was a state–owned monopoly without a restructured institutional framework for the development of the telecommunication sector [20]. A Coopers, Lybrand & Deloitte’s study conducted in 1991 revealed poor quality of telecommunication infrastructure, lack of clear objectives and persistent underinvestment [20]. A government privatization plan was set for parliamentary vote in 1993 in order to sell off 35% of company’s shares to a strategic investor and a further 14% to employees and general public [21]. The plan attracted the interest of international companies, such as AT&T, Cable & Wireless, France telecom, NTT and others, but was placed on the shelf as a result of extended strikes [21]. The mobile telephony market started out dominated by two private companies, meeting consumer needs [12], while the subsidiary of the state-owned provider entered the market much later. As far as mobile telecommunications are concerned, it is worth mentioning that Greece was the first European country to award licenses through a sealed bid auction procedure [35]. The first two GSM 900 licenses were awarded in August 1992 for a $160 million fee each. They both started operating during the following year with an exclusivity period for all mobile telecommunications frequencies, including GSM 1800 services, until 2000 [65]. The liberalization of the fixed market officially began, with significant delay in comparison to the other member states, in the beginning of 2001 [69], about three years later than other EU countries [91]. It took a few years for effective competition to arise, with the former state-owned monopoly losing market share and bouncing back only after 2004. Foreign firms, international acquisitions and strategic alliances have created a particularly competitive environment in which all providers where called upon to rise to the challenge in order to maintain their market shares, successfully compete and even survive. Moving from a state monopoly to a free market was neither easy nor fast for many European member states, including Greece [32]. Putting regulatory and state interventions aside, staff and management mentality proved a lot more resistant to change. The telecommunication companies had to make a transition from treating the public as subscribers to treating them as customers. They had to abandon their bureaucratic organizations towards more flexible structures, focusing on customer needs and providing quality services at competitive prices to their client base [12]. At the same time the ever-evolving consumer profiles forced companies to pay particular attention to their market and the corporate environment in which they operated. The main goal was the development of a market intelligence system, signifying a turn towards market orientation [83]. The transition towards market orientation among telecommunication companies was unavoidable within the Greek market, signaled by structural and value-set changes as well as organizational culture changes aiming at meeting modernday demands.
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The paper provides a cultural orientation insight into the Greek telecommunication industry and demonstrates firms’ tendency to deploy market orientation strategies in coordination with their corresponding culture. The telecommunication industry is a rather complicated market and its complexity arises from its nature which involves several players, such as customers, business, and technology [79]. The national telecommunication industry, as a whole, has been studied in order to define its unique characteristics and its cultural traits. Until now culture has been studied only as a factor of success or failure in a series of business cases, while its relationship with market orientation was underestimated. Moreover, the telecommunication companies’ tendency to deploy market orientation strategies in a national environment is put under empirical investigation as a research problem of the present study. Finally, the paper contributes: a) to the creation of national cultural profile in the telecommunication industry (both fixed and mobile operators), which can become a starting point in a wider trial to create a European industry profile, b) to the empirical testing of the correlation between culture and market orientation and c) to the examination of the extent to which background factors (such as firms’ age and size) should be taken into account during the implementation of a business strategy. The results have theoretical and practical value: a) for existing firms as benchmarks in their efforts to gain superior performance, b) for new-coming competitors as a basic knowledge of existing market orientation strategies, c) for any firm which tries to develop a non-imitable competitive advantage and d) for policy makers during their trials to ensure healthy competition. The research and the conclusions presented are not without limitations. However, these limitations do not reduce the findings’ importance, while future research can address them. The first limitation concerns the size of the sample used. The conducted interviews on managers and staff outline the overall tendencies as a representative sample of the Greek telecommunication market, but the whole sample represents a total of seven operators. A second limitation concerns the national context of the study. A specific national context puts constraints on the ability to generalize findings in different national contexts. The relationship between national and organizational culture is still a matter under great scientific research, while their borders are difficult to observe. Language is a specialized national characteristic, which has been recognized as a key parameter [39] and moreover as a symbolic device [1] which expresses values, social ideas and beliefs [86]. Even though language can have a significant impact on cultural observations, there are no empirical results on the extent of this relationship. For example, one of the most recent large scale projects, GLOBE [41, 46], emphasizes that the relationship between national culture and organization culture is strong (with organizations mirroring the countries where they are found), no empirical research to date actually provides a direct estimate of the magnitude of the relationship between national culture and organization culture. The paper is organized as follows; the theoretical and academic relationship of market orientation and organizational culture are presented in Section 2;
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Section 3 presents a thorough analysis on telecommunication companies and their recent business movements. Additionally, this section includes the presentation of the data collection methodology (Subsection 3.1) as well as used methodologies and empirical findings about firms’ market orientation (Subsection 3.2) and their organizational culture (Subsection 3.3). Section 4 includes the discussion on the cultural results and sets research questions about the way firms’ performance can be affected from business factors such as age and size; In Section 5 the results are evaluated and further discussed, while in Section 6 managerial implications and limitations are presented.
2 Background In the early 1980’s, the majority of the companies within the Western world’s developed markets used financial tools in order to present their strength to the markets and increase client and shareholder expectations in the long run. Most telecommunication companies avoided using this practice since they were operating as state monopolies and their aim was to increase society’s benefit rather than their own profits. The deregulation of the telecommunication market and the resulted dramatic increase in competition forced the existing situation to change. Financial and performance metrics started to get widely used and dispute arose about their significance. Concentrating on such measures may lead to the achievement of short-term financial performance but ignoring factors such as culture or quality can undermine any firm’s potential for future growth and viability [8]. Gradually, non-financial information started an increasingly significant role in a variety of business sectors including telecommunications [3]. Within this operating framework, US-based telecommunication companies were among the first to adopt a variety of mixed competitive strategies [7]. These strategies included the use of financial and non-financial data in order to ensure a longterm business perspective [8] and to gain competitive advantage. According to D’Aveni [23] no company can maintain a long-term competitive advantage in a super-competitive industry such as the telecommunication industry. This is attributed to the fact that competitor initiatives are quickly responded to by other competitors. Thus, any competitive advantage gained from new operational models or technological achievement is copied or surpassed or substituted within a short period of time. The organizational culture is one of the few corporate traits that are unique and cannot be copied, as it is indicated by Onken’s [75] research conclusions, who studied the links between culture and effectiveness of super-competitive industries (such as telecommunications and publishing industries). Even though culture’s importance has been recognized, scarce attempts have been made for it to be recorded and analyzed in the telecommunication industry. In most cases, organizational culture has been studied as a performance factor, as an obstacle in structural changes and as a determinant of failure in cases of mergers and acquisitions.
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Majumdar [62] studied the American telecommunication market over a period of sixteen years (1975–1990) and recognized organizational culture as one of the leading factors for performance increase in the telecommunication sector, as a result of antitrust law (AT&T’s separation in seven companies). Sivananthiran and Venkata [84] studied Sri Lanka Telecom as a characteristic case of a telecommunication company that tried to change its structures and faced employees’ denial, until a widely accepted cultural redirection was achieved. Claver et al. [19] studied the case of Telefonica Group, one of the larger telecommunication companies, which was forced to change its culture and management style in order to keep its market share and to compete successfully. Fang et al. [30] recognized concealed cultural differences as one of the leading factors of failure in Telia’s (Norway) and Telenor’s (Sweden) attempts to merge in 1997. The lack of organizational culture measurement in the telecommunication industry has been a major motivation in order to expand researches upon the understanding of competition and business strategies adopted in this sector. Market orientation is such a strategy, including behavioral and cultural aspects. It is an internal process, an internal force that is not clear or transferable [33]. Day [24, 25] states some characteristics of market orientated firms: good market sense, mentality and operations oriented to market needs. These organizational abilities and operational conditions are directly related to a firm’s underlying values, in other words its culture, and constitute a significant strength for those firms that have attained them as well as a key in order to gain a competitive advantage [42–44]. The importance of market orientation led researchers to investigate its relationship with organizational culture. Deshpande and Webster [28] and Deshpande et al. [29] focused on the link between organizational culture and performance through factors such as market orientation. In a Japan-based study [29] it was shown that culture linked to market orientation, results in the best performance in comparison to the other three cultural types (innovation culture, race culture and hierarchy culture). A parallel study in five countries (Japan, USA, France, Germany and United Kingdom) empirically confirmed that marketing cultures result in the best performance, while race cultures the lowest. These two studies gave evidence that market orientation can fulfill better a firm’s operational needs in comparison with elements coming from: a) research and development efficiency (innovation culture), b) operational structures (hierarchical culture) and c) managerial routes (race–clan cultures). In 1999, Deshpande and Farley [27] studied the relationship between culture, degree of market orientation and performance examining Japanese and Indian firms, while similar research was conducted by Hurley and Hult [45] focusing their approach on the link between marketing and innovation [60]. Almost all studies on market orientation and its link to organizational culture, examine a wide spectrum of marketing practices in different national contexts [4, 5, 49, 51, 54, 73, 89]. Some researchers revealed a positive link between market orientation and market oriented culture [4], while others focused on the relationship between cultural elements, such as cooperative structure and
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entrepreneurial culture, with market orientation [54]. There were researchers who tried to explore the relationship between the two elements in order to explain how organizational performance can be achieved. O’Cass and Viet [73] created a triangular model, connecting market orientation, innovative culture and brand’s performance. Todorovic and Ma [89] examined the role culture plays on the relationship between entrepreneurial orientation and market orientation, as well as its consequent impact on firm’s performance. Finally, Kirca and Hult [51] concentrated on the moderating role of national culture on the intra–organizational factors that cultivate and develop market orientation. The fact that such practices exist is a sign that a market orientated culture exists, but the relationship between market orientation and organizational culture should be empirically demonstrated in order to be widely accepted. All the presented studies are mainly focusing on specific cultural elements or marketing practices. A more holistic approach is demonstrated in the current paper, by examining and determining both, culture and market orientation, as two parallel organizational phenomena. The research has been conducted in the whole Greek telecommunication industry in order to put emphasis on the impact on organizational culture instead of national culture. Moreover, the research is based on company–specific indicators, such as firms’ age and size, which are common under any national context.
3 Greek telecommunication service providers The Greek telecommunications market has grown considerably since 2001, when the fixed telephony market was deregulated. New players appeared, gaining market share and so did new clients, within an intensively competitive environment. During this period, private companies seemed reluctant to invest in new technologies and initially settled on trying to build their own clientele by offering the same narrowband services (mainly voice) as the incumbent [69]. The mobile telephony market originally comprised of only two companies until 1998, when a third player entered the scene; this was no other than the subsidiary of the state-owned fixed telephony service provider. At that point, the penetration of mobile telephony across the country reached unprecedented levels, leading this newly-formed company to the top of the mobile telephony market in Greece [36]. For the purpose of this research, empirical findings from four telecommunication service providers (Fixed 1, Fixed 2, Fixed 3 and Fixed 4) as well as three mobile telephony providers will be presented (Mobile 1, Mobile 2 and Mobile 3). Fixed 1 is the largest fixed telephony provider and controls the market to a significant degree, based on its privately-owned network which is the largest in the country [38]. The provider in question was under state control and acted as a monopoly until 2001. Today it has been privatized with the Greek state and Deutsche Telekom being the biggest shareholders. The company has invested in the Balkans and has managed to successfully compete against alternative providers especially after 2004. Mobile 1 is Fixed
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1’s subsidiary and provides services and products in the mobile telephony market. The company was initially excluded from the bidding for a license and its network was established no sooner than 1998. The company managed to catch up with competitors and was the first example in Europe where a third entrant was able to become to dominate the market so rapidly [65]. Nowadays, it is the biggest mobile telephony provider in Greece, based on market share and revenues. Mobile 2 is an international mobile telephony provider. The company has been active in the Greek market since 1994 and is currently the second largest provider based on number of subscribers and market share. The company owns an extensive network of stores selling its products and services and its client service approach as well as its general customer-focused mentality are counted as key strengths. It competes with Mobile 1 in market share and customer numbers but in parallel it tries to fend off the offensive marketing staged by Mobile 3 [38]. In this setting, the company acquired part of an alternative fixed telephony provider in order to improve its market positioning and provide its customers with complete telecommunication service packages, including fixed and mobile telephony services. Mobile 3 is the third largest provider of mobile telephony services. The company was recently acquired by a large investment group and has since then set off a market oriented strategy in order to gain market share and clients. Furthermore, the company is trying to expand its store network, is very competitive in its billing strategy and recently moved into the fixed telephony market by acquiring Fixed 2 [37]. Fixed 2 started operations as a state-company subsidiary with the parent company operating outside the telecommunications market. The challenges facing the company revolve mostly around its ability to meet its set targets and gain a substantial market share in the fixed telephony market and the need to better exploit the synergies created through the merger with Mobile 3. Fixed 3 is a fixed telephony service provider. Its strategy focuses on market share expansion based on marketing strategies geared towards increasing its brand identity and its credibility. During the time frame of the research, it dynamically competes with Fixed 1, placing an emphasis on customer satisfaction but also product differentiation compared to its competitors. Finally, Fixed 4 is a fixed telephony provider with a client base of over 250,000 people. It recently acquired a privately-owned subscription-only TV channel increasing its customers to 350,000 and getting ahead of the competition with a brand new platform for the Greek telecommunications market. The analysis above helps readers understand the environment into which Greek telecommunication companies operate and the conditions under which their cultures are cultivated. The Greek market moved from a monopolistic condition with relatively poor telecommunications infrastructure [21] into competition and technological development. National Telecommunications and Post Commission, the regulatory authority, was established in 1994, although it did not become actually operational until 1998 [65]. Market regulator’s scope was to protect customers and to drive competition, but a series of
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market pathogeneses have never been cured. Competition rules were applied in the market but practically not on modern services, not even within the spirit of investing [69]. This dynamic environment affects firm’s market orientation and their organizational culture. 3.1 Data collection methodology Data regarding the marketing orientation level and the types of organizational culture prevalent in the Greek telecommunication companies were collected using two questionnaires. No judgmental criteria have been used because of the relatively small number of telecommunication companies operating in the Greek market. The survey only includes companies that achieved the settled target of ten (10) questionnaires. The target was set in order to gain a satisfactory view of how each company regards marketing orientation and culture in telecommunications. The first questionnaire (marketing orientation) comprised of twenty (20) closed-type multiple choice questions, while the second of twenty one (21). The company representatives were asked to fill out the questionnaires and return them. A trial survey was conducted in the last trimester of 2008 to establish whether the answering procedure could be easily understood and complied with. The research questionnaires were made available a few months later at 2009. The questionnaires targeted company managers and marketing department managers. The department that was chosen as the focus of the empirical research was closely related to the sales division of those companies, given that this specific set of employees are well aware of their companies’ internal strategy and processes, as well as the external strategy with respect to the market and the competition. Out of the 125 questionnaires posted, a total of 80 usable questionnaires were finally obtained, giving a response rate of 64 per cent. Although the analysis conducted in this paper was at firm level, the characteristics of respondents are also provided in Table 1 to reflect a better profile of the sample. Almost 64 per cent of respondents are male against 36 per cent of women, revealing a tendency in Greek telecommunication market to entrust males for managerial positions. The majority of respondents are between 40 and 49 years old (51.25 per cent), holding a master (61.25 per cent). As far as firms are concerned, their vast majority is aged less than 25 years (85.72 per cent), while this majority can be characterized as medium enterprises (42.86 per cent). The research methodologies that were conducted in order to collect the data are presented in the next two subsections. 3.2 Greek telecoms’ market orientation There is a variety of definitions referring to the term “market orientation”, within marketing science [27, 31, 47, 70, 76, 77, 87, 90]. In the present study,
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Table 1 Sample’s main characteristics Firms’ characteristics (N = 7) Fixed operators Mobile operators Firm’s age >25 years Firm’s age 13–25 years Firm’s age <13 Firm’s size = large (over 3.000 employees) Firm’s size = medium (up to 3.000 employees) Firm’s size = small (up to 1.500 employees) Firm’s size = very small (under 500 employees) Respondents main characteristics (N = 80) Gender Male Female Respondents’ age 30–39 40–49 50 and above Respondents’ education Bachelor Master PhD
4 3 1 3 3 1 3 1 2
57,14% 42,86% 14,28% 42,86% 42,86% 14,28% 42,86% 14,28% 28,58%
51 29
63,75% 36,25%
26 41 13
32,50% 51,25% 16,25%
26 49 5
32,50% 61,25% 6,25%
the Narver and Slater’s [70] definition was adopted, supporting that market orientation includes the following: 1. Competition orientation: including all the actions for intelligence collection on the activities of the competitors and the internal dissemination of the collected intelligence. 2. Customer orientation: including all the actions for intelligence collection on customers and the internal dissemination of the collected intelligence. 3. Interdepartmental cooperation: including all coordinated actions that seek to incorporate departments outside marketing with the aim to provide added value to the customer [54]. A firm is considered market oriented when it successfully applies the marketing concept, which focuses on customer orientation and innovation for all business planning and strategy. The term “market orientation” is preferred over the term “marketing orientation”, since the former includes application and activities throughout the firm, while the latter essentially describes the activities of the marketing department only [4]. Papadimitriou et al. [78] studied the extent to which Greek telecommunication companies are market oriented and whether this orientation is linked to specific organizational indicators, like performance and innovative capacity. In order to reach a conclusion they relied on the MARKOR scale [17, 47, 81] and the criteria that were set by Narver and Slater [70]. A total of five (5) criteria were used: 1. Customer Intelligence Generation
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2. 3. 4. 5.
A. Papadimitriou, A. Kargas
Competitor Intelligence Generation Intelligence Dissemination Responsiveness to acquired intelligence Innovativeness
Their results, presented in Fig. 1 [78], indicated that Greek telecommunication providers’ management places a greater emphasis on competitor intelligence generation, while the lowest scores were observed for the criteria relating to intelligence dissemination and innovativeness. The findings show uniformity in products and services provided in Greece. Even though there is a great degree of regulation across Europe (and Greece), there are differences between member states in a series of telecommunication products and services. For instance, subscribers claim that broadband services in Greece are too expensive and limited, as compared to the rest of European member states [55]. The Observatory for the Greek IS [72] claims that the reason for this slow development is probably the lack of co-operation between the state itself, the private sector and the citizens. The presented results indicate that slow development can be further related with cultural characteristics and the degree of market orientation. Furthermore, the dissemination criterion ranks last confirming the view that Greek companies remain introvert. Finally, the recent financial crisis appears to influence Greek telecommunication companies, given that the importance of innovativeness appears less prominent than expected. The low rank of the intelligence dissemination and innovativeness criteria influenced the overall score of the Greek telecommunication providers’ market orientation (3.43). The final score emerged from the sum of the individual criteria scores which was then divided by the total number of answers. The overall score for the sector was 3.43 out of 5.00 which is considered low compared to the European Union average of 4.03 for the mobile telephony
Fig. 1 Assessment of the criteria relating to the market orientation of the Greek telecommunication providers
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market as estimated by Kurtinaitiene [53]. This lower score can be interpreted in two ways. On the one hand, the present analysis also included fixed telephony providers, which are on average considered to be less market oriented compared to mobile telephony providers. On the other hand, the resulting score is attributed to the structure of the Greek telecommunications market and the employee culture. Greek managers focus to a greater degree on the internal functions of their companies compared to their European counterparts, in an attempt to minimize internal risks. The average market orientation score for each provider is presented in Fig. 2. Fixed telephony providers carry an average score of 3.30. The two providers that were set up from the onset as private companies scored higher than that (Fixed 3 and 4), while the two that emerged as state initiatives fell short of the average score among fixed telephony providers. Specifically, the lowest scoring provider is Fixed 1, the former telecommunications state monopoly. The average fixed telephony score is lower than that of the mobile telephony providers which was estimated at 3.60. This indicates that mobile telephony providers because of competition are more market oriented in an attempt to maintain and increase their market shares. As in fixed telephony, the lowest scoring provider is Mobile 1 (part of the Fixed 1 group of companies) in spite of retaining the highest market shares. It is indeed paradoxical that the companies with the lowest scores in market orientation retain the highest market shares. 3.3 Greek telecoms’ organizational culture In order to examine the types of organizational culture prevalent in the Greek telecommunication companies an internationally-recognized tool, the OCAI (Organizational Culture Assessment Instrument) was used; it is based on the theoretical foundation referred to in the bibliography as Competing Values Framework (CVF) developed by Quinn and Cameron [80].
Fig. 2 Average market orientation score of Greek telecommunication providers
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This particular tool is based upon thirty (30) grouped indicators that have been directly or indirectly linked to effective firm operation [13]. These indicators essentially shape four key dimensions, which in turn give rise to four distinct types of organizational culture. These dimensions describe the control flexibility and the internal trend towards external orientation. The four dimensions as presented in Fig. 3 create four quadrants, each representing a different organizational culture type. Each of these four types carries its own traits, strengths and weaknesses. Naturally, each firm can incorporate elements from all culture types, but it is more likely that one type will prevail over the others, revealing its key characteristics. The top left quadrant represents the Clan Culture. This culture is characterized by intense internal orientation and flexibility. This is a culture that sets as its main goal the respect to the employee and the buyer, while profitability comes through the building of trust-based relationships. Efforts are geared towards the development of the human resources. The bottom left quadrant represents the Hierarchical Culture. Firms with that culture have a strong introverted orientation but at the same time are focused towards maintaining stability and control. Survival is the main goal and development comes next, while change is regarded with skepticism and avoided if possible. Within firms of this culture formally structured processes and rules are often observed. The top right quadrant represents the Adhocracy Culture. It is characterized by a great degree of flexibility and outward orientation. Such firms make an effort to grasp any changes in their environment and respond in time. The bottom right quadrant represents the Market Culture. This type of organizational culture is focused on the environment in which the firm operates with a parallel need to ensure control. Emphasis is placed in goal reaching and high effectiveness in the realization of any function within the firm. The underlying concept that defines all firms with this culture is competitiveness. In order to define the culture of the Greek telecommunication companies a total of 125 personal interviews were conducted, mainly targeting managers.
Fig. 3 The CVF model [80]
Clan
Adhocracy
Hierarchy
Market
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The participants were asked to outline the profile of their company, by assessing characteristics from all four culture types, instead of choosing only one. That allowed for a multiple-perspective view of the companies with a dominant culture, but at the same time the presence of cultural traits from other types could be identified. The findings are presented in Fig. 4. Based on the results, Greek telecommunication companies’ culture appears to be market oriented with the exception of Fixed 1 that displays hierarchical culture. The former state monopoly provider (Fixed 1) and the provider that was originally set up by the National Electricity Company (Fixed 2) display cultures with the lowest degree of market orientation, well below the average of the fixed telephony providers (31.49). High scores were observed for Fixed 3, which entered the market last in order to compete with well established entities; Fixed 3 orientated itself to the market straight after that. The degree of this market orientation exceeds even that of the mobile telephony providers, which even though operating in a more competitive environment seem to have stabilized their market shares without significant changes. The mobile telephony companies display organizational cultures that on average score higher in terms of market orientation compared to fixed telephony providers (33.89 compared to 31.49). From an organizational culture perspective, Mobile 3 tends towards a market culture compared to its other two competitors. As in the fixed telephony arena, the provider with the strongest desire to change the current terms of the market and increase its market share and/or number of clients appears to be more oriented towards the market. Mobile 3 recently became part of a large investment group, which soon discerned that the provider was falling behind the competition. To reverse this situation an extensive advertising campaign was carried out in order to increase the degree of brand identification, while at the same time points of sale and customer service increased. As part of the same strategy, the fixed telephony provider of the National Electricity Company was acquired in an effort to boost credibility. This intense drive was reflected in the company’s organizational culture.
Fig. 4 Average market culture score among the Greek telecommunication providers
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4 Culture, orientation and firm’s performance Overall, the theoretical foundation of firms’ market orientation has been consolidated and its influence on corporate performance accepted. Over the last few years, however, an increasing number of researchers claim that even though market orientation is a crucial element in every firm, it does not guarantee long-term competitive advantage [6, 48, 63, 68]. Based on the above, an attempt was made to theoretically and empirically link market orientation and organizational culture or other firm elements. Although some researchers believe that firm behavior in terms of marketing forms part of their culture [40], most treat those as distinct, albeit interrelated, elements in the function of the firm [14, 26]. In this section an attempt is made to expand on these specific models, through the addition, as independent variables, of the size and age of the companies in order to ascertain their role in companies of different backgrounds and evolution over the years (ex-state monopoly compared to large private multinational groups). Although the international literature does not seem to clearly make reference to size-based criteria, the dominant view dictates the use of the employee numbers as the key size criterion for firms. Besides, firms’ goals depend on their sizes and cost structures [59], leading to use employees number as basic indicator. In this present study, the categorization was made taking into consideration the sector’s specific traits: • • • •
companies with up to 500 employees companies with up to 1.500 employees companies with up to 3.000 employees companies with over 3.000 employees
As far as the age criterion is concerned it was defined based on the international literature and the models of other researchers [2, 22, 66, 67, 82]. A number of researchers [11, 15, 22, 56, 57] have looked into the link between marketing and size and also firm age. Coviello et al. [22] in particular, focused on New Zealand firms and showed quite clearly that marketing practices differ, depending on firm size. For example, marketing planning within large firms is a more formalized process and market measurements and analyses more detailed and frequent. Differences are attributed to the characteristics of the smaller firms [16, 64]. The direct way in which organizational culture and market orientation are linked will also be examined. The specific traits of each culture are expected to be clearly linked to the degree to which the firm is oriented to the market. The clan culture which focuses on tradition, loyalty and internal stability, naturally leads to lower attention paid to market needs, which translates to lower market orientation. Hierarchical culture, focused on strict procedures within a bureaucratic system, was expected to show a greater degree of market orientation compared to clan culture, since the well structured procedures often include elements of market effectiveness.
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Adhocracy culture was expected to be linked to a greater degree of market orientation compared to hierarchical culture, since it focuses on entrepreneurship, innovation and risk uptake, which demand the internalisation of external stimuli from the environment and the market. Finally the market culture, which is based on the concepts of competitive advantage and differentiation, was expected to score the highest in terms of market orientation, since this is the area that the culture focuses on for the firm’s success. In general terms, firms dominated by extrovert culture types (adhocracy– market) are expected to be market oriented to a greater degree compared to firms with introvert-type cultures (clan–hierarchy). Based on the above, three working hypotheses were formulated, which the present study sets out to address: H1. The degree of market orientation among the Greek telecommunication providers varies from highest to lowest depending on the dominant culture type. In other words, the greater the prevalence of the market culture, the highest the degree of market orientation. H2. If H1 holds true then extrovert-type cultures (adhocracy–market) will result in improved performance compared to introvert-type cultures (clan–hierarchy). H3. The special traits of telecommunication providers (size and age) influence the degree of market orientation and the dominant culture type (introvert or extrovert).
5 Results The internal consistency of the questionnaire variables was controlled with the Cronbach α consistency coefficient and use of the SPSS statistical package. The Cronbach α consistency coefficient constitutes one of the most widely-acknowledged methods for consistency control defining the consistency coefficient for each individual variable but also for the set of variables as a whole. Based on Kurtinaitiene [53] and Nunnaly [71], a tool is considered consistent when the “α” coefficient, ranging between 0 and 1, exceeds 0.7. As illustrated in Table 2 the “α” coefficient for the research tools ranges between 0.691 and 0.703, satisfying the set criterion. Given the number of companies comprising the sample and the fact that results do not follow normal distribution at all times, the Kendall coefficient was used in order to examine the possible correlation between the different
Table 2 Consistency results
Criteria
Number of questions
Cronbach α
Clan culture Adhocracy culture Market culture Hierarchical culture
6 6 6 6
0.700 0.691 0.778 0.703
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Table 3 Link between market orientation and culture type
Market orientation
Clan culture
Adhocracy culture
Market culture
Hierarchical culture
−0.524
0.238a
0.429
0.143
All correlations are significant (α = 0.01) except the one marked by a which is only significant at an α = 0.05
variables in the samples. The findings that emerged are statistically significant and are presented below. The first research hypothesis examines the link between market orientation among the Greek telecommunication companies and the dominant culture type. The results indicate that extrovert culture types (market and adhocracy) are positively correlated with the degree of market orientation, with the correlation index reaching values of 0.429 and 0.238, respectively, compared to other two types. The Research Hypothesis H1 is therefore confirmed. Market orientation among Greek telecommunication companies is indeed influenced by the dominant culture within the company. In particular, companies with extrovert culture types display the greatest extent of market orientation, compared to those with dominant cultures with introvert characteristics. Furthermore, comparing culture types in sets of two (clan and hierarchical to adhocracy and market) it is observed that when companies tend towards ‘control’ as opposed to ‘flexibility’ they are market orientated to a greater degree. It is therefore derived that the more Greek telecommunication companies tend towards control, the greater their degree of market orientation. In fact, the only culture type negatively correlated to market orientation is the clan culture, which displays a great degree of flexibility and introvert characteristics. The findings linked to this research hypothesis are presented in Table 3. The second research hypothesis attempts to shed light on the link between performance and dominant culture type. In order to examine this link, two indicators were used, profitability and financial growth, as observed among the Greek telecommunication companies. The findings indicate positive correlation between the adhocracy and market culture types with the two indicators of financial performance and a negative correlation between the other two culture types and the indicators used. These empirical findings confirm Research Hypothesis H2 and underline the earlier results obtained
Table 4 Link between performance and culture type
Profitability Growth
Clan culture
Adhocracy culture
Market culture
Hierarchical culture
−0, 048 −0.143
0.810 0.714
0.143a 0.048
−0.238a −0.524
All correlations are significant (α = 0.01) except those marked by a which are only significant at an α = 0.05
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Table 5 Link between market orientation, culture type, age and size
Size Age
Clan culture
Adhocracy culture
Market culture
Hierarchical culture
Market orientation
−0.048a −0.390
−0.238 −0.390
−0.238 −0.098a
0.619 0.781
0.143a 0.390
All correlations are significant (α = 0.01) except those marked by a which are only significant at an α = 0.05
by Papadimitriou et al. [78] on the Greek telecommunication companies and confirm the second research hypothesis. It is interesting to note that in regards to performance, the greater tendency is observed among the telecommunication companies with extrovert characteristics and also greater flexibility. Therefore, the companies with an adhocracy culture display higher performance levels (Profitability 0.810 and Growth 0.714) in comparison to those with market culture (Profitability 0.143 and Growth 0.048) and decidedly improved are the results for clan culture companies (Profitability −0.048 and Growth −0.143) compared to those with hierarchical cultures (Profitability −0.238 and Growth −0.524). The findings linked to the second research hypothesis are presented in Table 4. The third research hypothesis focuses on whether the dominant culture type and the degree of market orientation are influenced by company-specific indicators, like size and age. It emerged that the larger the company the more dominant the hierarchical culture (0.619), somewhat expected for large companies where operational control demands bureaucratic structures compared to smaller and more flexible companies [15, 16, 64]. The same findings are observed in the links between culture and company age. Finally, the correlation between market orientation and the two company-specific indicators is positive confirming Research Hypothesis H3. This finding is mainly attributed to the fact that in these companies the application of marketing approaches is a formalized process that is carried out on a frequent basis [11, 15, 22, 56, 57]. The findings linked to the third research hypothesis are presented in Table 5.
6 Conclusion and managerial implications The present study made use of two different methodologies in order to investigate the degree of market orientation among the Greek telecommunication companies. The MARKOR scale was used in order to identify a satisfactory level of market orientation in the telecommunications sector and the OCAI (Organizational Culture Assessment Instrument) was used in order to examine whether the degree of market orientation of each company is the result of circumstance or whether it forms part of the corporate strategy of every company, in other words part of its culture. It was observed that mobile telephony providers display a greater degree of market orientation compared to fixed telephony providers. This is attributed
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to the circumstances in which these companies were created and the type of competition that shapes the market in question. Fixed telephony was developed within a regulated environment under state rule and management. On the other hand, the mobile telephony market in Greece was deregulated and competitive from the onset, forcing management and staff from early on to adapt to market demands and customer satisfaction. This is not quite surprising given that previous research confirms a positive trend towards market orientation for mobile network operators [53]. The former state monopoly and also every other company that was created under state regulation or under the authority of any other public entity displays market orientation of a lower degree compared to the market average. The bureaucratic operations of the state and their philosophy appears to have been infused in these telecommunication companies, diminishing their external orientation and instead leading them towards attempts to manage internal issues. Three research hypotheses were examined in order to ascertain the links between culture type and market orientation, culture type and performance, as well as the links between culture type and telecommunication company age and size. Telecommunication companies giving emphasis to their external environment (market and adhocracy oriented cultures) tend to have higher degree of market orientation. In other words, there are indications that clan and hierarchy cultures do not match the demands of their competitive environment, as it has been stated in other researches [74]. Moreover, these companies operate in a more effective manner in terms of profitability and growth, while size and age seems to affect negatively market orientation. These results concur with Coviello et al. [22], Laforet [56], Liu [61] findings that marketing practices differ depending on firm size. The results indicate that telecommunication companies are heavily affected by factors such as age and size. As far as firms’ size is concerned, the results are supportive of Cameron and Quinn [14], who related the internal process model to large organizational size, and are consistent with many scholars who reported that larger organizations are characterized by standardized procedures, limited flexibility and bureaucratic control [18, 50, 58]. As regards firms’ age, the results are consistent with organizational life cycle theories where it is proposed that more hierarchical structures emerge as organizations grow and age [34, 52], since the growing firms might develop more complex management systems [10]. These factors cultivate the organizational orientation (internal versus external, flexibility versus control) and at a final stage they are shaping telecoms’ culture. The Greek telecommunication companies have cultural types which are mainly “control–oriented”, which confirms Hofstede’s [39] results about a high degree of uncertainty avoidance in this specific national business environment. The type of organizational culture affects the overall performance in terms of profitability and growth and affects companies’ viability and future expansion, while cultural type is heavily connected with market orientation. All these facts give evidence of the fragile circumstances under which
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organizational culture is cultivated and its rising importance in coordination with its connectivity with market orientation. Growing competition, reduced market shares and profitability can create a tough business environment. In such an environment market oriented culture can become a non-imitable characteristic [9], capable to ensure corporate viability, as it is directly related with profitability and growth [85]. The emerging findings can provide executives with new market opportunities to be considered during their long-term planning determination. Firstly, management should take into account background factors such as corporate age and size. Such factors can become obstacles to the adoption of an appropriate business strategy, by affecting both market orientation and cultural type. Moreover, policy makers should take into account these factors when regulating markets. The more concentrated the telecommunication industry (firms with great size) and the more aged (few new firms)—the more hierarchical it will be. Secondly, matching marketing orientation with a culture oriented to external environment can lead to superior performance. Since it is expected that a market orientation can influence performance, managers would do well to adopt behaviours that are associated with a market orientation. Moreover, they could set up formal programs to improve customer orientation and monitor the competition, while ensuring that organizational goals, culture and strategy have been adopted from the majority of employees. In general, firms should strive for a culture that emphasizes customer service and quality, while marketing strategies should be applied in order to demonstrate the new enterprising profile. As part of a future research, the presented limitations should be taken into account. The study provides support for the importance and the relationship between organizational culture and market orientation. A significant research objective is to identify the corporate process that takes full advantage of a market–oriented culture in the telecommunication sector. In order to achieve that, a business analysis must be conducted on environmental variables (such as market turbulence, competitive hostility, market growth etc.) and cultural factors (such as national culture, language, sectoral characteristics etc.). In addition, it is important to develop a time-series database and to test both market orientation and organizational culture in a longitudinal framework, in order to provide more insights into the probable causation. The time sequence of the relationships between market orientation and organizational culture could not be determined unambiguously, by using cross–sectional data only. The given results might not be interpreted as proof of a causal relationship, but rather, as lending support to a prior causal scheme. Moreover, data for this study were collected by using managers as key informants. This method is adequate for producing reliable and valid data [88], but a future study on market orientation and organizational culture in the telecommunication industry could attempt to use multiple informants, in order to validate results. Finally, the sample used for analysis was drawn only from Greek operators and the generalizability of the results remains to be tested. Future research, therefore, can also expand on the present study by
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using samples from European operators or telecoms, located in countries with varying business and national environments.
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