Relationship between Organizational Culture and Service Innovation: An Empirical Case Study in Insurance Industry

Author Name(s): *Parisa Ansari, Hasan Atri
Author Email:

 Abstract

Today, service is one of the important competitive advantages of organization in today’s competitive environment and different organizations attempt to move to this goal in the organization. For optimal use of this, we need to recognize its capabilities and true understanding of strategic needs and organization culture. The present study aims to evaluate the relationship between organizational culture and innovation capability of services in Novin insurance company. The study population is employees of Novin insurance in Tehran province. The study sample is selected via Morgan Table as 186. The data are collected using questionnaire. The data are analyzed using regression analysis and correlation using SPSS, version 16 software. The results show that organizational culture variables have significant relationship with innovation of services. Market culture, adhocracy and clan culture have direct relationship and hierarchy culture has inverse relationship with innovation capability. We find that among different types of culture, market culture is highly associated with innovation capability of services.

Keywords

Organizational culture, Service innovation, Strategic direction

Introduction

Now, a few studies have been conducted on service innovation and most researches focus on goods innovation. Also, innovation in services is mostly evaluated in terms of theory not empirical studies (Johne and Storey, 1997; de Berentani, 2001; Scott J. Grawe et al., 2009; Gremyr et al., 2010). Services can create value for organizations. The companies enter a new competition to present new products. Under these conditions, service-based competition can be the best response (Daugherty et al.; Sahin et al., 2012). According to Berry et al., (1999), services innovation attracts much attention from the researchers.

Conclusion

In this study, the relationship between organizational culture and innovation is evaluated. As it was said regarding the data analysis and relevant conclusion and theoretical basics in the second chapter, the clear results are achieved. Adhocracy culture and market have positive relationship with service innovation. Clan culture has positive and significant relationship with service innovation. Hierarchy culture has negative and significant relationship with innovation of services. This type of culture focuses on external environment during the control of employees and processes and the result of employees in final goals of organization is the main criterion of this culture. Among different types of culture, market culture has positive relationship with service innovation. In terms of innovation of adhocracy is in the best ranks (review of literature), in this study market culture is high and this shows that market culture has high share. This shows that lack of control, freedom and flexibility are not used according to the high goals of organization as general and specifically improving the strategic dimensions of organization and increasing innovation of services as optimized. This shows that top managers have no accurate perception of guiding the strategies leading to the high service innovation. If this perception is true, it can have positive effect on strong culture on strategic direction. This result supports the findings of some studies that strategic direction of application of strategic instructions is for continuous performance and if it is development in organization, it is converted to organization culture (Gatignon and Xuereb; Menguc and Auh; Narver and Slater, 1990). The mean response to four types of clan, adhocracy, market and hierarchy cutlure is 1.85, 1.38, 2.55, 2.71, respectively. Hierarchy culture is the dominant culture in the study population and adhocracy culture has the lowest share. Based on the results of the main hypothesis and sub-hypothesis, we can raise the following recommendations to the managers of Novin insurance company in Tehran province:

  • Encourage the employees to high participation in organization and providing the required facilities to develop the ideas.
  • Create balance between moving to organic culture and motivation for innovation and control of employees and processes for effectiveness and efficiency.
  • High development of capabilities in service innovation to achieve competitive advantage.
  • Investment on capabilities and allocation of organizational resources to use strategies as market development and develop new services.
  • Increase the organizational facilities and planning to modify the current services and change of services with low quality
  • Increase the competition in services namely via the notes 1,2.

742 total views, no views today

Download PDF File

About the author: tej