Organizational Values: The Inside View of Service Productivity

Dawn Dobni
UNIVERSITY OF SASKATCHEWAN

J. R. Brent Ritchie
UNIVERSITY OF CALGARY

Wilf Zerbe
UNIVERSITY OF CALGARY

In this study, we examined relations between organizational value systems and the productivity of service workers. Research was conducted in 92 service firms to construct an empirical taxonomy of organizational value systems based on the content focus of values, and the resulting taxonomy was used as a framework to examine the relationship between value system types and individual productivity, conceptualized in terms of jobrelated behaviors, attachment, and affect. Four value system types were identified, and, as predicted, were shown to be differentially associated with all three ingredients of service productivity. These findings indicate the importance of the value system as a marketing and management tool, and underscore the need for services managers to determine the behavioral and psychological responses that define productive performance in their organizations and to diagnose and develop the value systems that will reinforce them. J BUSN RES 2000. 47.91107. 1999 Elsevier Science Inc.

udging by contemporary services management and marketing theory, organizational values are almost beyond hyperbole. An appropriately managed value system has been characterized as an essential mechanism that exists between service quality specifications and the service actually delivered (Zeithaml, Parasuraman, and Berry, 1990), an important source for guiding and controlling the behavior of service employees (OReilly, 1989), a prerequisite to competitive excellence (Parasuraman, 1987), a lever for increasing service quality and employee productivity (Pickworth, 1987), and a vital element in the implementation of a service strategy (Gronroos, 1990). Despite this support at the theoretical level, services scholars have undertaken relatively few empirical studies of organizational values. The purpose of this research is, therefore, to
Address correspondence to Dawn Dobni, 25 Campus Drive, University of Saskatchewan, Saskatoon, SK S7N 5A7, Canada. Journal of Business Research 47, 91107 (2000) 1999 Elsevier Science Inc. All rights reserved. 655 Avenue of the Americas, New York, NY 10010

assess empirically the presumption that organizational values promote higher performance in service firms. To do this, we investigate the relationship between organizational value systems and service worker productivity. Because the competitive performance of service firms is driven largely by the performance of the individuals who staff them, Peter Drucker (1991) predicts that the challenge of raising the productivity of service workers will dominate the management agenda for the next several decades. Incongruously, productivity is a concept that has also been underexamined in the services context (Filiatrault, Harvey, and Chebat, 1996). We begin by examining the morphology of organizational value systems. Then, we elaborate the concept of productivity as it relates to service employees, suggesting that its primary ingredients are job-related behaviors, attachment, and affect (Kopelman, Brief, and Guzzo, 1990). In so doing, we recognize that productive performance in service work is largely a function of how individuals think, feel, and behave on the job. Next, the relationship between organizational values and productivity is explored, and the methodology and results of research conducted to examine it are presented. Specifically, a taxonomy of organizational value systems is developed based on the content focus of values, and the resulting classifications are used to compare employee behavioral and psychological responses across value system types. We conclude by discussing implications for services marketing and management practice.

Morphology of Organizational Value Systems

Organizational values are about the means and ends that matter most to organizations. Just as personal values define what individuals consider to be intrinsically desirable and guide their actions and judgments to these ends, organizaISSN 0148-2963/00/$see front matter PII S0148-2963(98)00058-7

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tional values play an important guiding and directing role in the functioning of the organization. Defined as enduring preferences for certain modes of conduct and end states (Enz, 1986), organizational values give direction to the hundreds of decisions made at all levels of the organization every day (Schmidt and Posner, 1983). Attesting to their impact, organizational values are often used interchangeably with or as a proxy for organizational culture. There are several reasons for this, among them that this level of the multilayered and enigmatic culture construct is deep yet accessible (Rousseau, 1990a), is tractable to operational definition and measurement (Badovick and Beatty, 1987; Wiener, 1988), and is considered to be an absolutely fundamental component of organizational culture (Enz, 1986; Rousseau, 1990a). At the risk of oversimplifying, an organizations value system can be described using three dimensions: direction, pervasiveness, and intensity. These refer, respectively, to the content and combination of values that comprise the value system, the degree of consensus among organizational members regarding what the value system emphasizes, and the extent to which the value system dominates the organizations control mechanisms. Collectively, these dimensions are manifest in the course the organization follows and its methods of operation, its tendency to develop value systems in layers that are less than organizationwide, and the level of pressure put on employees to behave in value-prescribed ways (Kilmann, Saxton, and Serpa, 1985).

Nature of Service Productivity

Although an organizations values have been widely credited with affecting the productivity of its workers (Deal and Kennedy, 1982; Ouchi, 1981; Parasuraman, 1987; Peters and Waterman, 1982; Pickworth, 1987), in the services sector, there has been little systematic research on this link. This may be because the conceptualization and measurement of productivity is complicated by the inherent characteristics of services. Their intangibility and variability preclude the counting of a finished goods inventory, and customer participation in the service process complicates control of and accountability for output (Shiffler and Coye, 1987). Similarly, the service encounter has a human element as well as a technical one, which is very difficult to dissect and discuss in precise operational terms. As a result, most strategies for enhancing service productivity have come straight from the industrial engineering camp. These include working employees harder, investing in more efficient equipment, automating labor tasks, eliminating bottlenecks, using activity-reporting systems, standardizing the service delivery process, and instituting tighter control across the board (Lovelock, 1990; Smith, 1985). Other productivity strategies focus on capability management techniques, such as off-loading work to customers and subcontractors, or modifying

demand irregularities through price changes and influences on consumer behavior (Filiatrault, Harvey, and Chebat, 1996). Unfortunately, the primary emphasis of these strategies on cost or quantity of output often involves a trade-off with quality. This has led such experts as Peter Drucker (1991) to suggest that increases in service worker productivity can only come from working smarter. This can be done, he says, be defining the essential task of any given service job, by concentrating work on that task, and by understanding what productive performance in a job actually represents. Depending upon the organizations strategic direction, the latter might be defined anywhere on a continuum ranging from quantity of output to quality of output. Cleghorn (1992) similarly emphasizes the symbiosis between productivity and quality, suggesting that both can be maximized if organizations concentrate on doing what is important and on doing the right things right. He consequently urges organizations to reexamine the way they work and the thousands of processes that animate organizational life. In an approach that subsumes this focus on key tasks, Kopelman, Brief, and Guzzo (1990) propose that organizational productivity is a function of individuals behavior, and that individual productivity is, in turn, the combination of performance, attachment, and citizenship-related behaviors. These refer, respectively, to carrying out ones formal organizational role, to minimizing absenteeism and turnover from work, and to exhibiting nonmandatory constructive or cooperative gestures that contribute to organizational effectiveness. If employees engage enthusiastically in role-prescribed and constructive extra-role activities and maximize their tenure with the organization, it is expected that gains in productivity will occur through increases in the quality or quantity of output or decreases in labor costs. Intuitively, this focus on behavioral and affective responses as the primary ingredients of productivity seems particularly appropriate for service firms, where often the only product that is produced is literally the demeanor and decorum of individual employees. Theoretically, it is supported by a collection of works that links the ways in which people think, feel, and behave at work to their own role and extra-role performance and longevity on the job and, consequently, to the performance of the organizations to which they belong (Carlson, Charlin, and Miller, 1988; Isen and Baron, 1991; Kopelman, Brief, and Guzzo, 1990; OReilly and Chatman, 1986; Schuler and Jackson, 1987; Shore and Martin, 1989).

Linkages Between Value Systems and Service Productivity

In examining the linkages between value systems and service worker productivity, we are concerned with the influence of the context on individuals in organizations. The context encompasses stimuli and phenomena that surround and thus exist in the environment external to the individual, most often

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at a different level of analysis (Mowday and Sutton, 1993, p. 189). As a specific feature of its social context, an organizations value system has been found to influence a wide range of individual perceptions, behaviors, and psychological states (Hochschild, 1983; OReilly, Chatman, and Caldwell, 1991; Sutton, 1991). Fundamentally, these links are based on the notion that organizational members do not think, feel, or behave in isolation (Cappelli and Sherer, 1991; Mowday and Sutton, 1993; OReilly, 1991). Under this logic, organizational values have been systematically related to both affect and attachment at the individual level. Studies have found that such outcomes as job satisfaction, organizational commitment, inclination to quit, and actual turnover are derived from the fit between an individuals values and those prevalent in his or her organization (Meglino, Ravlin, and Adkins, 1989; OReilly, Chatman and Caldwell, 1991; Schneider and Bowen, 1985). Considerable evidence and theory also tie these outcomes to the direction of the value system. Rousseau (1990b) found that such norms as achievement and self-expression correlated strongly and positively with individual satisfaction and intention to remain in the organization, and Ouchi (1981) suggested that a Theory Z culture increases the intrinsic reward orientation of employees and thus their propensity to do their jobs well. Others have observed that an employee-friendly culture may lead to enhanced affect among the work force (Isen and Baron, 1991). There is also consensus that organizational value systems have an impact on individual behavior (Beyer, 1981; Hochschild, 1983; Kelley, 1992; Rousseau, 1990a; Sutton, 1991). In this regard, it is believed that organizational values perform dual duty as a unifying theme that provides meaning and direction for organizational members (James, James, and Ashe, 1990) and as a tool of social control that informally approves, constrains, or prohibits behaviors (OReilly, 1989). These effects are also known as informational and normative influences. Capturing the essence of informational influence, Akin and Hopelain (1986, p. 20) described an organizations culture as the insiders view of the fundamental structures and processes that constitute productivity in a particular setting. In this capacity, an organizations value system is a sense-making device for its members, spelling out what is important, how and why things happen, and how work is expected to be done (OReilly, 1989). It does so by making certain features of the environment salient to employees and through them, influencing their perceptions and interpretations of organizational functioning. It also facilitates social contagion, a process by which individuals depend on co-workers for information to interpret and understand the organizational condition. In a related sense, an organizations values represent an implicit agreement among its members about what constitutes appropriate behavior (OReilly, 1989). Normative influence is operative when organizational members conform to this code of behavior in order to gain social acceptance, out of fear of social reprisal, or generally to avoid feeling guilty (Blau, 1960).

For example, Hochschild (1983) recognized that the emotions that employees express on the job are not always a reflection of their true feelings, but rather are often socially constructed to reflect existing organizational norms. This form of influence is believed to have impact whether agreement about the underlying value system is real or only perceived. Calling the latter a co-orientation approach to consensus, Scheff (1967, p. 33) explains that if no one agrees with a view, but everyone thinks that everyone else does, the effect on behavior is sometimes the same as if everyone actually agreed. Normative influence is particularly relevant in services organizations because of the distinctive characteristics of services described earlier. These make the organizations operations nonroutine and unpredictable, and consequently less susceptible to such conventional control mechanisms as rules and procedures, behavioral control, output control, supervisory surveillance, and formalized goal setting (OReilly, 1989).

Methodology
The primary concern of this research was with the relationship between organizational values and the productivity of service workers. To study it, an empirical taxonomy of value systems was developed based on the content focus of values, and the resulting classifications were used to examine whether different value system types were associated with different productivity outcomes. Underlying this research was the assumption that, although values that are considered important may vary from one organization to the next, there is a tendency for them to group together in observable and recurring configurations (Cooke and Rousseau, 1988; Deal and Kennedy, 1982; McDonald and Gandz, 1992). In light of the literature reviewed above, relationships between the resulting system types and service worker productivity were expected, because value systems that vary in direction support different perceived role behaviors, different levels of enthusiasm and willingness to invest effort in them, and different propensities for individual attachment to the organization.

Sample
Data for this study were collected within 92 service firms operating in Western Canada. These organizations were recruited on a convenience basis, using contacts through university and professional affiliations where possible to enhance participation rates. To qualify for inclusion in the sample, organizations had to meet the broad definition of services provided by the AMA Services Marketing Division, which includes intangibles, professional services, and tangible products that have a critical service component. Also, because organizational values are by definition a group-level phenomenon, it was decided that each organization required a minimum of three members to qualify for participation in the research. Table 1 provides some relevant statistics on the participating organizations. As can be seen, although nonran-

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dom, the sample showed good variation in terms of firm size, technology, and service category. Data were collected using self-administered questionnaires. These were coded by organization and distributed as a package to the chief executive officer of each participating organization or a contact person otherwise designated. Accompanying instructions requested that the questionnaires be distributed to respondents drawn randomly from all levels and positions in these organizations. Participation in the study was voluntary, and confidentiality was assured at all stages of the research. At the conclusion of the recruitment process, a total of 114 organizations had confirmed their agreement to participate in this research. A total of 931 questionnaires was distributed to these organizations, and the data reported here reflect the responses from a total of 415 individuals who returned completed questionnaires. This represented a response rate of 44.57% by individual and 80.7% by organization.

Table 1. Characteristics of Sample Organizations Frequency Type of Organization Accounting firm Airline service Automobile sales and dealership Automotive service, supplies, and repair Bank Beauty salon Business machine sales and service Car rental agency Carpet/drapery cleaning and restoration Communications and marketing agency Community-based service agency Computer software consultants Computer hardware sales and service Courier service Data/information management consultants Dental office Drapery manufacture and installation Drug store Drycleaner Educational institution Employment referral agency Fabric store Fire department Fitness center Furniture store Hospital pharmacy department Hydraulic equipment sales and service Industrial safety service Investment and stock brokers Law firm Life insurance agents and brokers Management and marketing consultants Menswear store Office equipment and supplies Optical supplies and services Paging service Paint sales and supplies Pest control Photography studio Plumbing and heating sales and service Precision instrument sales and service Printing and reproduction services Property management firm Real estate appraisal and evaluation Restaurants, takeout, and nightclubs Screen printing service Special care home Television station Temporary help, office services Trade show and convention marketing Transportation and freight service Travel agency Truck leasing, sales, and service Trust company Utilities (telephone, electric) Wholesale industrial distributors Number of Employees 110 1125 2650 51100 1011,000 More than 1,000 4 1 1 4 6 2 1 1 1 1 1 3 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 2 1 3 1 4 1 1 1 1 1 2 1 3 3 1 3 1 1 1 1 1 2 2 1 1 3 3 21 26 22 7 10 6

Measurement
The list of 31 value statements described in Table 2 formed the basis for the taxonomic inquiry. Derived from a content analysis of academic and practitioner-oriented writings on organizational values (cf. Badovick and Beatty, 1987; Enz, 1986; OReilly, 1989; Peters and Waterman, 1982; Sashkin and Fulmer, 1985; Treacy and Wiersema, 1993; Wiener, 1988), the development of this list was guided by the need to tap a broad range of content so that the value systems could be characterized in detail, to have a value inventory that was widely applicable across firms but also capable of discriminating among individual organizations, and to examine values that were identified as being strongly related to organizational effectiveness. Respondents were asked to indicate on an eight-point response scale the degree to which they believed each of these values was a priority to the people in their organizations. In labeling the response categories the intent was to measure the extent to which organizational values were implemented rather than simply espoused. Respondents were instructed to distance themselves when answering, stressing that the question did not measure anything about them personally, but rather, about the people in their organization in general. In doing this, the intent was to obtain a co-orientation assessment of value consensus rather than the aggregation of value preferences and priorities of individual organizational members (Scheff, 1967).
ORGANIZATIONAL VALUES.

Adapting the approach advanced by Kopelman, Brief, and Guzzo (1990), service productivity was operationalized by three variables assessing perceived role behaviors, organizational commitment, and employee affect.
SERVICE PRODUCTIVITY.

(1) Perceived Role Behaviors. To measure perceived role behaviors, respondents were presented with 16 seven-point bipolar scales that described contrasting behaviors and personal styles, such as be reliable and predictable versus be creative and innova-

Table 2. Value Genres Factor Loading Eigenvalues 8.53726 0.82537 0.77800 0.77679 0.77610 0.74326 0.74228 0.70636 0.60228 0.41889 3.2212 0.76678 0.77202 0.66041 0.57964 0.57457 0.49342 0.42347 1.94889 0.73180 0.68003 0.66557 0.64184 1.56769 0.72176 0.60371 0.58302 0.52238
(continued)

Scale Name Itemc 0.9100 0.5210

Organizational Values

Alpha Coefficient

Interitem Correlation

Employee mutualism: Respect for employees: valuing employees as human beings, not just as cogs in a machine or hired help Employee satisfaction: improving employee motivation, job satisfaction and morale Supporting failures: creating an atmosphere in which people can explore and experiment without feeling they will be punished if they fail Openness: ensuring that it is easy to give and get information in the organization; encouraging employees at all levels to voice their ideas and opinions about the way things are done Equality: removing status distinctions and treating all employees at all levels as equals Enjoyment: having fun at work Employee responsibility: giving employees the authority to use their own judgment in dealing with customer concerns or acting on work-related problems Employee development: expanding the skills and abilities of employees Innovation: seeking innovative new ways of doing things; constantly searching for new and distinctive goods, services, and productsa 0.8060

Competitive consciousness: Industry leadership: being at the forefront of industry developments Aggressiveness: being considered a bold, enterprising company; actively hustling in the marketplace Outperforming competitors: meeting competitive threats or beating the competition Growth: increasing sales and/or market share Company identity: having a unique identity as a company; being seen as different from the competition Adaptability: responding quickly to changes in the outside environment Risk taking: taking risks to get ahead

0.3725

Customer intimacy: Customer satisfaction: bending over backward to satisfy each and every customer Customer relationships: winning the loyalty of customers, building long-term relationships with them Quality: providing products and services of the very highest quality Zero customer defections: keeping each and every customer that the organization can profitably serve

0.8083

0.5132

Operational efficiency: Efficiency: providing the organizations goods and services with minimal effort, waste, and expense Perfectionism: doing things perfectly, avoiding mistakes High productivity: increasing the output of employees Cost reduction: cutting costsa

0.6186

0.3588

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Table 2. continued Factor Loading Eigenvalues 1.41940 0.76269 0.58921 0.54552 1.07730 0.78726 0.69753 0.97950b 0.79567 0.51188 0.5490 0.3784 0.5298 0.3604 0.5453 Alpha Coefficient Interitem Correlation 0.2856

Scale Name Itemc

Organizational preservation: Short-term focus: focusing on the maximization of current profits and earnings more so than on growth and profitability over the coming 510 years Profit maximization: making as much money as a company can Survival: staying in business

Change aversion: Stability: maintaining the organization and its operations as is Caution: being cautious and conservative; playing it slow, safe, and sure

Social responsibility: Service to community: having concern for and being actively involved in the community Concern for the environment: protecting and caring for the natural environment on which the organization has an impact

Indicates items that were eliminated to improve the internal consistency of the scales. It will be noted that the seventh factor resulted in an eigenvalue of marginally less than 1.0. The seven-factor solution was nonetheless favored over the six-factor solution, because it produced components that were more intellectually consonant and that resulted in scales with higher interitem correlations and internal reliability consistencies. c Respondents were asked to indicate the degree to which they believed each of these items was a priority to the people in their organizations, using the following response categories: 2 3 4 It is a moderately important priority; it is reinforced by the actions of many people in the organization. 5 6 7 It is an obsession; it dictates almost every step taken by people in this organization.

0 It is not a priority at all.

1 People say it is a priority, but it is not given much support in practice.

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tive, be concerned with quality versus be concerned with quantity, and be good team players versus perform well individually. Respondents were asked to indicate the point on each scale that best described their perceptions of how employees must behave in order to fit in and meet expectations in their respective work environments. This emphasis on role perceptions is prevalent in the role theory literature, primarily because the perceived role is thought to be the most immediate antecedent of behavior (Naylor, Pritchard, and Ilgen, 1980). The descriptive anchors for these scales were constructed by the researchers on the basis of findings and theories in the literature concerning behaviors that were presumed to be instrumental to organizational effectiveness in a wide range of service situations, that have been postulated to vary as a function of an organizations cultural or value system makeup and that collectively gave a detailed and rich description of potential behavioral styles within service organizations (cf. Drucker, 1991; Gronroos, 1990; Kelley, 1992; Kopelman, Brief, and Guzzo, 1990; Reichheld and Sasser, 1990; Rousseau, 1990b; Schneider and Bowen, 1985; Schuler and Jackson, 1987). These scales are reproduced in Figure 1. (2) Organizational Commitment. Commitment was measured using Mowday, Steers, and Porters (1979) 15-item summated scale. This scale assesses an individuals identification with and involvement in an organization by tapping three related factors: a strong belief in and acceptance of its goals and values, a willingness to exert considerable effort on its behalf, and a strong desire to maintain membership in it. Respondents were asked to indicate the extent of agreement or disagreement that each item was descriptive of their feelings toward their organizations. Typical scale items are I am willing to put a great deal of effort beyond that normally required in order to help this organization be successful and I really care about the future of this organization. After eliminating one item that exhibited a low interitem correlation, a Cronbachs alpha reliability coefficient of 0.9163 was recorded for this scale, indicating that it can be regarded as highly reliable. (3) Employee Affect. To measure affect, the Positive and Negative Affect Schedule (PANAS) developed by Watson, Clark, and Tellegen (1988) was used. This instrument consists of two 10-item scales that measure the two primary dimensions of mood. Positive affect is a state of high energy, full concentration, and pleasurable engagement, and is tapped by such descriptors as attentive, interested, alert, excited, and enthusiastic. Negative affect is a general dimension of subjective distress and unpleasurable engagement that is measured by such items as distressed, upset, hostile, irritable, and scared. Respondents were asked to respond to the PANAS scales on the basis of the way they generally feel when they are at work. All items in these scales exhibited high interitem correlations and the alpha reliabilities were also acceptably high, being 0.8950 for the positive affect scale and 0.8730 for the negative affect scale.

Data Analysis
The data analysis consisted of four distinct stages: data reduction, data aggregation, cluster analysis, and multivariate analysis of variance.
DATA REDUCTION.

Principal components analysis and varimax rotation were used to transform the 31 value statements into a reduced number of components, hereafter called value genres. The seven-factor solution shown in Table 2 was accepted as the most interpretable, and it accounted for slightly more than 60% of the total variation in the data. Value genre scores were calculated by taking the mean of items with high loadings on the respective seven factors. The internal consistency reliability of each value genre was then estimated by computing its coefficient alpha. Items that exhibited low interitem correlations were eliminated to improve the internal consistency of the scales. The final value genres, number of items comprising each scale, and associated internal consistency reliabilities are: 1. Employee Mutualism (8 items, 0.9100): the extent to which organizations provide opportunities for employees to grow and develop within the company and in turn expect their employees to support their activities with evidence of progress; 2. Competitive Consciousness (7 items, 0.8060): the extent to which an organization is aggressive in the marketplace and constantly seeks to exploit the dynamics of its macroenvironment and task environments; 3. Customer Intimacy (4 items, 0.8083): the extent to which organizations strive to engender customer loyalty and continually tailor and shape products and services to fit an increasingly fine definition of the customer; 4. Operational Efficiency (3 items, 0.6186): the extent to which companies concentrate on minimizing overhead costs and making their operations lean and efficient; 5. Organizational Preservation (3 items, 0.5453): the extent to which an organization is preoccupied with the maintenance and survival of its business; 6. Change Aversion (2 items, 0.5298): the extent to which an organization is averse to change and taking risks; and 7. Social Responsibility (2 items, 0.5490): the extent to which an organization is concerned with being a good citizen in the community.

Coefficient alpha is a reliability estimate that increases monotonically with the number of scale items. When this number is small, the mean interitem correlations are thought to be a better test of internal consistency (Joyce and Slocum, 1984). As reported in Table 2, all mean interitem correlations for these scales exceed 0.25, the minimum level recommended by Nunnally (1978).

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Figure 1. Value system scores on expected on-the-job behaviors.

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Table 3. Analysis of Variance for Value Genres by Organization Value Genre Employee mutualism Market leadership Customer intimacy Operational efficiency Organizational preservation Change aversion Social responsibility Eta-Squared 0.4784 0.4620 0.4841 0.3811 0.3504 0.3645 0.4357 F 3.2103 2.9957 3.2953 2.1758 1.8877 2.0522 2.7113 p 0.000 0.000 0.000 0.000 0.000 0.000 0.000

DATA AGGREGATION. Because of the essence of organizational value systems, the organization was selected as the primary unit of analysis for this portion of the study. To arrive at organizational scores for the value genres, the responses of individual organizational members were transferred into an organization mean. In establishing organization scores, all respondents scores were included and equal weights were given to all individual responses. Two criteria were used to justify the use of aggregated data as organizational variables: low within-group variation in the variables and significant between-group differences in the averaged scores (Rousseau 1990b). Assessing the first criterion, analysis of variance (ANOVA) contrasted mean value genre scores across organizations and, as reported in Table 3, indicates significant differences. To test the second criterion, the eta-squared statistic for each value genre was computed. It similarly indicates organizational consensus regarding the value genres, with the observed level of agreement matching or exceeding that found for perceptual measures of other organizational characteristics (Cooke and Rousseau, 1988; Joyce and Slocum, 1984). CLUSTER ANALYSIS. Cluster analysis was used to develop the taxonomy of organizational value systems. Cluster analysis consists of a family of algorithms designed to identify similar objects and to classify them into groups. Four key methodological issues arose in the use of this technique: selecting the clustering variables, choosing a clustering algorithm to classify objects, selecting the number of clusters, and testing for differences among clusters (Ketchen and Shook, 1996). The variables used as criteria for clustering were the seven value genres identified in Table 2. Multicollinearity was examined by constructing a pair-wise correlation matrix including all of these clustering variables. An inspection of the matrix revealed that the majority of intercorrelations were of small magnitude and that all were well within the limitations recommended by Tabachnick and Fidell (1989). It was, therefore, concluded that relatively little multicollinearity existed. To sort organizations into clusters based on similarities on these value genres, a two-stage procedure combining hierarchical and nonhierarchical clustering algorithms was used.

First, the HIERARCHICAL CLUSTER procedure in SPSS for Windows was used to establish the number of clusters that best portrayed the data and to profile cluster centroids. Hierarchical clustering techniques begin by viewing each object as a separate cluster and then aggregate them into successively smaller numbers of groups until the entire dataset is clustered into one final group. Initial clusters were identified using both the group-average linkage and Wards joining methods, two of the more popular hierarchical clustering algorithms. Because Wards method provided better insight into the data and performed much better in terms of the ratio of within-group distance to between-group distance, it was selected for the generation of the taxonomy. To decide how many clusters provided the most meaningful portrayal of the data, a procedure recommended by Hair, Anderson, Tatham, and Black (1992) was followed. Specifically, solutions were computed for several different numbers of clusters using Wards method, and the cluster centroids, variabilities, and sizes were examined and compared to determine which solution performed best in terms of manageability, communicability, and discriminatory ability. Based on this examination, it was decided that the four-cluster solution provided the upper limit on what could be conveyed usefully and insightfully in this analysis. The K-MEANS CLUSTER procedure in SPSS for Windows was then used to optimize the results from the four-cluster solution. This is a nonhierarchical procedure based on nearest centroid sorting; a case is assigned to a cluster for which the distance between the case and the center of the cluster (the centroid) is the smallest. Each case was removed from its initial cluster and clustered with K-MEANS CLUSTER using the cluster centers from the hierarchical results as the initial seed points. If reallocation to an alternative cluster improved the solution (by reducing the pooled within-group variance), the case was assigned to this subject, and the new cluster means were computed. This procedure was repeated until cluster assignments were stable, and subsequent iterations of the procedure failed to produce a decrease in pooled withincluster variance. The optimum solution was achieved on the sixth iteration. Multivariate analysis of variance (MANOVA) was used to test for differences among the final clusters profiles. Table 4 contains the mean scores on the value genres for each of the four clusters, and the results of the significance tests used to determine if differences existed among them. As indicated, the multivariate tests showed significant main effects. Table 4 also reports the results of univariate analyses of variance for each of the value genres and the Duncan multiple range test for paired comparisons. The results indicate that each of the four clusters was statistically different from each of the others on at least one clustering criterion, and this was considered to be good evidence that the four clusters were distinct. External validation was provided by comparing the clusters on the measures of service productivity described earlier (Aldenderfer and Blashfield, 1984).

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Table 4. Value Genres by Value System Type Mean Score by Value System Type (1) Entrepreneurial (n 30) 4.2253 4.8465 5.3613 4.6646 2.6984 4.6184 2.8509 (2) PerformancePressured (n 15) 2.3852 4.1224 4.0243 4.2770 3.1140 5.4213 3.4406 (3) Integrated (n 32) 4.7510 5.1308 5.9357 5.2281 3.9896 5.0210 4.3331 (4) Temperate (n 15) 3.3247 3.4948 4.5383 4.5667 3.5389 4.0026 2.1833

Value Genre Employee mutualism Competitive consciousness Customer intimacy Operational efficiency Change aversion Organizational preservation Social responsibility Multivariate tests Pillais Hotellings Wilks
*p 0.05.

F Statistic 43.0986* 26.0558* 30.9463* 7.2544* 11.7082* 10.0869* 27.820* 14.03794* 17.69813* 16.10073*

Significant (p 0.05) Duncan Paired Comparisons 12, 13, 14, 23, 24, 34 13, 14, 23, 24, 34 12, 13, 14, 23, 24, 34 13, 23, 34 13, 14, 23 12, 13, 14, 24, 34 12, 13, 14, 23, 24, 34

Interpretations of the Value System Types

The clusters derived from this analysis appear to form four distinct types of organizational value systems, characterized by their relative emphases on customers, internal operations, human resources, and the macroenvironment. Table 5 presents the resulting taxonomy and identifies the key features of each cluster. The clusters are also named: the entrepreneurial system, the performance-pressured system, the integrated system, and the temperate system. Each value system type is described in more detail below, using the results presented in Tables 4 and 5. This taxonomy confirms the arguments of previous authors that distinct, consistent, and recurring patterns of organizational values exist, and bears a good resemblance to value system and cultural types classified by such other researchers as Cooke and Rousseau (1988), Deal and Kennedy (1982), and McDonald and Gandz (1992).

someness, and pro-activity, and that is likely to be typical of companies that not only respond rapidly to environmental influences, but also work hard to influence the environment to their advantage. This type tends to be one that is driven by a philosophy of being first in in new product and market areas, and that places a high priority on distinguishing itself from and staying out in front of the competition. Organizations in this group score very low on the social responsibility discipline. This may be the result of an unrelenting focus on growth, which consumes much of the organizations energy and resources and may be single-mindedly pursued with little regard for the greater societal good.

Type 2The Performance-Pressured Value System

The second type, the performance-pressured value system, is one that puts organizational survival and operational efficiency first and the people who deliver service to customers last. This system is probably best described as following an industrial model, based largely on the principles of traditional massproduction manufacturing, which emphasize hierarchical control, quantity of output, and bottom-line results. It accounts for 16.3% of the total sample. Organizations that exhibit this value profile are likely to be under strain caused by recession or unrelenting competition, and as such are in a mode of survival and consolidation. They look at the world as a rough-and-tumble place where profit margins dominate decision making and correspondingly place a high emphasis on maximizing current returns, grabbing more market share, working harder, or wringing more profits out of their businesses. Preoccupied with day-to-day survival, they are likely to view a quick victory as far more

Type 1The Entrepreneurial Value System

This system represents 32.6% of the sample and possesses those traits typically associated with entrepreneurship. Morris and Paul (1987) define an entrepreneurial orientation as one in which a company has a propensity to take calculated risks, to be innovative, and to demonstrate pro-activeness. In keeping with this description, this system type scores high on the competitive consciousness genre and lowest over all on change aversion. The keynotes of this configuration include an emphasis on growth and market sensitivity, meeting competitive threats, and adapting to changing economic or social environments. This is a value system that stresses risk-taking, venture-

Table 5. Key Features of the Value System Taxonomy Key Features Concerned primarily with external factors Emphasis on action Conducts active opportunity scans and responds rapidly to early signals Takes calculated risks Meets competitive threats and adapts to changing economic or social environments Is aggressive, bold, growth oriented, innovative, proactive Dominated by concerns of survival Driven by a short-term time horizon Subjugates the importance of the organizations human resources to operational efficiency Responds with caution to developments in the marketplace Tendency to minimize the impact of the customer Blends external and internal operational considerations Seeks to maximize pure efficiency goals (e.g., low cost, routinized production) and to concurrently increase effectiveness (e.g., increased customer responsiveness or improved quality) Places particular emphasis on customer consciousness, customization of service exchange, and service quality Emphasizes the importance of the person and employee empowerment Profit driven and financially disciplined Middle-of-the-road orientation that places a moderate priority on all values rather than embracing any in the extreme Not a particularly distinctive value system May have a weak influence on organizational life Without clearly ordered priorities, organization is likely to be apathetic, confused, and manipulated by environmental pressures Example Firms Information management consultants, Automobile sales, Travel agency, Advertising and marketing agency, Computer software consultants, Property management firm, Plumbing and heating service, Drapery manufacture and installation, Bank

Organizational Values

Value System Type

Frequency

1. Entrepreneurial system

30

2. Performance-pressured system

15

Automotive service and repair, Furniture and office supplies, Pest control, Chartered accountants, Investment and stock brokers, Airline service

3. Integrated system

32

Temporary help and office services, Mens wear store, Automotive service and repair, Carpet/drapery cleaning and restoration, Beauty salon, Car rental agency

4. Temperate system

15

Furniture and office supplies, Fabric store, Property management firm, Dental office, Bank, Hospital pharmacy

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important than building long-term loyalty. Human relationships are given a last priority, and consequently, the organizations employees may feel that they are given little respect as human beings and instead are simply treated as one more factor of production. As if concerned that one false move could precipitate the organizations downfall, this system type scores relatively high on the genre of change aversion. This means that there are likely to be few rewards for innovation and risk-taking and substantial punishments for failure in these organizations. Understandably, timidity and maintenance of the status quo are strong temptations in a complex and competitive world. On the downside, they can cause organizations to be functional laggards and less aggressive than competitors in pursuing new product and market opportunities.

Type 3The Integrated Value System

The third type is labeled the integrated value system because of its emphasis on functional integration and its focus on the customer and external environments, while simultaneously being internally oriented. This is a system in which the common goal is total quality, and in which it is apparently understood that all parts of the organization are important to the achievement of that goal. It comprises 34.8% of the sample. As shown in Tables 4 and 5, in this system roughly as much emphasis is placed on the growth, contribution, and satisfaction of the employee as it is on the value of a smooth and efficient running plant. Members of the organization describe a supportive organization characterized by teamwork, personal development, and high-performance goals. At the same time, customer sovereignty is a central priority, and members of the organization clearly understand the importance placed on developing lifetime customers. It is clear, therefore, that this system seeks a balance between an outand-out aggressive environment and a human environment. Organizations in this group seem not to be intent merely on their own profits and growth, but also measure success based on the realization that they operate to benefit people customers, employees, and the members of the surrounding society. They are similarly aware of the need to care for integral publics and could be expected to be highly ethical, law abiding, good community citizens, and to operate with great respect for the natural environment. Comparatively speaking, this system scores high on both the genres of change aversion and competitive consciousness. This suggests that, although these organizations exercise a high level of adaptiveness and market aggressiveness, they do so with a high priority placed on well-conceived strategic moves, steady, sure growth, and financial discipline.

16.3% of the sample, organizations falling into this type place a moderate importance on all value genres rather than indicating clear preferences for specific means and ends. Consequently, they represent rather ambiguous work environments in which employees are probably never required to push the envelope. Without highly understood goals and values, these organizations might also be interpreted as being apathetic, confused, or unable to find a clear route to business success. If so, employees may not understand the priorities in the corporation, and, lacking a rudder, the organization is likely to be pushed by environmental pressures rather than charting its own course. Competitively speaking, the temperate system represents a more reactive model, and organizations of this nature may be vulnerable to threats from those that demonstrate more distinct methods of operation at either end of the spectrum. With few basic or ordered assumptions guiding the behavior of organizational members, this system may also have a weak influence on organizational life and perhaps be more susceptible than others to the rise of competing countercultures.

Relationship With Service Productivity

The analysis to explore the relationships between value system types and the measures of service productivity was performed in two parts. First, profile analyses were performed on the 16 scales that comprised the role behavior measure to assess whether there were significant differences in the profiles of role behavior scores among the value system types. Then, multivariate analysis of variance (MANOVA) was used to examine the effect of value system membership on organizational commitment and employee affect. All analyses in this portion of the study were performed at the individual employee level of analysis. A random sampling procedure was used to equalize membership sizes across all four value system types to increase robustness to potential violations of the assumptions for MANOVA (Tabachnick and Fidell, 1989). This resulted in the assignment of 59 cases to each cell, well in excess of the minimum cell sizes required for MANOVA and profile analysis.

Role Behaviors
Profiles of mean scores on the role behavior scales for the four value system types are presented in Figure 1. Using Wilks criterion (F 1.89, p 0.001), these profiles were found to deviate significantly from parallelism, indicating differences across the value system types. To test the specific nature of the differences, confidence intervals were calculated around the mean of the profile for all clusters combined, and individual clusters were evaluated in terms of whether they fell outside the confidence interval of the pooled profile (Tabachnick and Fidell, 1989). Alpha error for each confidence interval was set at 0.000781 to achieve an experimentwise error rate of 5%. Therefore, 99.92% limits were evaluated for the pooled

Type 4The Temperate Value System

Whereas the previous three systems have clearly defined value orientations, the temperate value system is labeled as such because of its middle-of-the-road orientation. Comprising

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profile. For several of the scales, one or more groups had means that fell outside these limits, indicating that the role profiles differed considerably across the four value system types. The entrepreneurial value system exhibited reliably different means from the pooled group on five scales. Comparatively speaking, its behavioral profile was characterized by: (1) creativity and innovativeness; (2) enjoyment of work; (3) tolerance for unpredictability; (4) the onus to initiate improvements continually on the job; and (5) the requirement to be supercapable technically. With the underlying emphasis on provocative thinking, employees are called upon to question the old ways of doing things, to tackle ill-structured tasks and engage in nonroutine problem solving, and to input new ideas and possibilities continuously. These characteristics call to mind an organization such as Microsoft, which has been described as raw, predatory, confrontational, aggressive, fast, creative, organized, and impatient. The Microsoft way, it has been said, demands that you be on top of your material, know your stuff, think through every angle, have a changethe-world esprit, and enjoy the hard work, the excitement, the energy, and the growth that comes with being a marketdriving organization (Meyer, 1994). The performance-pressured value system differed from the pooled means on six of the behavior scales. Primary among these differences were: (1) a relatively high concern for quantity of output; (2) the requirement to take work very seriously; (3) an eagerness to get things done; (4) acceptance of things the way they are at work; (5) a relatively high emphasis on the maximization of sales and profits; and (6) the need to have good people skills. Collectively, this is a code of behavior based on increasing the output per person and a preoccupation with bottom-line results. Because there are indications of limited discretionary action for personnel, this is expected to be accomplished not through working smarter or differently, but through pure hard work. Respondents from this system do not describe it as one that nurtures fun or any sense of esprit des corps. This may be because the working environment is like a sweatshop, with the emphasis on relentlessly pushing sales or maximizing financial indicators. The requirement to sell may also account for the emphasis placed on having strong people skills. Recording reliably different means from the pooled statistic on four of the behavioral scales, the profile for the integrated system was distinguished by: (1) a high concern for quality of output; (2) a high emphasis on achieving perfection; (3) the requirement to initiate improvements continually on the job; and (4) a high emphasis on satisfying customer needs. Notable for its focus on excellence, this profile stresses quality, responsiveness, and ultrareliability. Employees are expected to be sensitive to the preferences and needs of customers, and to deliver the required service accurately, dependably, and with the utmost attention to detail. At the same time, they must constantly be on the lookout for ways to do things better, which, it is presumed, may include refinements both in the

service infrastructure and in their face-to-face encounters with customers. The temperate system had different means than those of the pooled groups on five behaviors, all of which indicate a dont rock the boat orientation. This behavioral profile was distinguished by: (1) reliability and predictability; (2) caution in decision making; (3) conforming behavior; (4) an emphasis on stability rather than unpredictability; and (5) close adherence to formally laid down procedures. Cumulatively, there is the sense that individual contributions by organizational members are neither valued nor encouraged, because employees are discouraged from taking initiative in figuring out what can be done to move the company ahead. The mentality seems to be one that favors a stable, conservative, slow-moving organization marked by impediments to action and that places limitations on the ability of any individual to move the company off on a tangent. Employees are expected to do things the way they have always done things and to do them within the confines of established rules and regulations.

Commitment and Affect

Multivariate analysis was used to determine whether the value system types differed statistically on the measures of organizational commitment and employee affect. The results of these analyses are presented in Table 6. As indicated by the multivariate tests reported, omnibus MANOVA showed significant main effects of value system type. Table 6 also reports the results of the univariate analyses of variance for each of the measures and the Duncan multiple range test for paired comparisons. The results indicate the congruence between value system type and individual-level commitment and affect. The Duncans test of differences among pairs of means on the organizational commitment and positive affect scales revealed a general hierarchical ordering. The mean scores on these measures were greater for integrated systems than for entrepreneurial systems, for entrepreneurial systems than for performance-pressured systems, and for performance-pressured systems than for temperate systems. These differences were not significant in every case, but the over-all pattern did persist across all comparisons. Interestingly, the poor performance of the temperate system indicates that employee commitment and enthusiasm may be stifled more by a value system that has no clear priorities than one in which values are clear but place the well-being of employees as a last priority. Concerning the negative dimension of affect, Duncans mean comparisons revealed the entrepreneurial and performance-pressured value systems to be inferior. Individuals in these system types recorded the highest mean scores on this dimension, indicating a high level of workplace agitation, frustration, and anxiety when compared to the integrated and temperate value systems. One explanation for these results may be that the challenges, pressures, and do-or-die philosophies inherent in the entrepreneurial and performance-pressured systems present a considerable source of stress for orga-

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Significant (p 0.05) Duncan Paired Comparisons

12, 14, 23, 34 13, 23, 24 13, 14, 23, 24, 34

nizational members. Although these value system types approach their goals from different perspectives, conceivably they both subscribe to the no-pain-no-gain school of thought.

Discussion and Implications

Whatever is said about productivity, Akin and Hopelain (1986) suggest that the meaning of the term finally comes down to what those who do work accomplish. In this research, we have focused on uncovering value systems as they are understood by organizational insiders, and on exploring the connections of these systems with service productivity. The results indicate the relevance of an organizations mix of values to how and what work gets done, primarily by affecting levels of employee commitment and affect and influencing perceptions about expected workplace behaviors.

F Statistic

14.1291* 6.9375* 8.3425*

7.20967* 7.42586* 7.38847*

Limitations
Further research is needed, in part because of the limitations of this study. First, the organizational values on which the taxonomy was based can be regarded as general ones, applicable to varying degrees across organizations. Although efforts were made to select a value inventory that was theoretically justified and would facilitate the detailed characterization of the value system types, future research might examine organizational value systems at a more microscopic level. The range of behavioral responses examined could likewise be enlarged, and efforts could be made to break down the relationship between specific values and specific behavioral and affective responses more precisely. Second, although cluster analysis is a widely accepted classification technique, it does have limitations. Apparent cluster structures depend upon the clustering algorithm and decision rules employed, and a heavy amount of managerial judgment is needed to interpret the cluster results. In this research, these concerns were mitigated by the validation procedures that were performed on the cluster solution and the ready interpretability of the resulting taxonomy and its consistency with classifications offered by other researchers. Productivity is a complex, integrative concept that means different things to different people. Other researchers may, therefore, choose to examine its relationship with organizational value systems using other measures, methods, and perspectives (Guzzo, 1988) or to look more intimately at the ingredients of productivity examined in this investigation. For example, differing conceptualizations and types of organizational commitment exist, and some researchers have found the organizational commitment instrument used in this research to have multiple factors rather than a unidimensional structure (Tetrick and Farkas, 1988). It would be useful to learn whether these different types and components of commitment have different productivity-relevant outcomes. A fourth limitation of this study concerns the sample. A convenience sample was used; therefore, it is not representa(4) Temperate Mean Score by Membership in Value System Type (3) Integrated (2) PerformancePressured (1) Entrepreneurial Table 6. Relationship Between System Type and Individual Affect 4.7121 1.7661 4.6137 Organizational commitment Negative affect Positive affect 5.3814 1.9119 5.0981 Multivariate tests Pillais Hotellings Wilks 4.7399 2.1390 5.0104 5.6822 1.5403 5.4546

Variable

*p

0.05.

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tive of the population of all service organizations. This was compounded by the relatively small sample size and geographic concentration of sample members. Further research is needed using a larger, random sample less constrained by geography. Also, the size of the sample did not permit exploration within value system types to uncover value subsystems or subcultures. This analysis would have generated too many clusters with too few members. The likelihood is high, however, that most organizations have one or more value subsystems that impact productivity. A larger sample might have permitted them to be identified and studied. Finally, this study relied on self-report questionnaires as the sole means of data collection, indicating the possibility of perceptpercept inflation. Although a recent investigation suggests this outcome is likely more the exception than the rule where such external referents as organizational culture are being measured (Crampton and Wagner, 1994), an appropriate future research strategy would, nonetheless, be to collect multiple or more objective measures of the variables being studied. Organizational value systems might be measured by reputational methods or ethnographic studies, or employee behaviors through such independent sources as customers, suppliers, or supervisors.

Implications
Despite these limitations, this study has important managerial implications. Among them, it provides insight into productivity as it relates to service work and suggests some approaches that organizations might take to improve it. As with others who study this phenomenon, we believe that productivity occurs when workers focus on doing the right things right. At a minimum, this means that managers must take a deliberate approach to job design, isolating the high-impact behaviors in each job that define productive performance. This entails developing better models of performance for jobs and aligning them specifically with organizational goals (Campbell and Campbell, 1988). Given the support for the relationship between values and the measures of productivity found in this research, we believe that managers must become more active orchestrators of their value systems. Having said this, we do recognize that managing an organizations value system is not as easy as it sounds. By nature, organizational values are enduring preference states, and managing and changing them can require large investments of energy and long periods of time (Kilmann, Saxton and Serpa, 1985; Schneider and Rentsch, 1988). However, because an organizations value system can either be managed or left to grow on its own, we believe it is worth the time and effort to take an interventionist approach. The extent to which an organizations value system will influence the productivity of its members will ultimately be a function of the systems direction, pervasiveness, and intensity. These dimensions reflect, and are reflected by, myriad decisions about the organizations physical environment, its

structure, and its policies and processes around planning, staffing, appraising, compensating, training and development, socialization practices, decision making, and communicating. Managers can indicate organizational values by what they teach, reward, support, model, and so on, and it is important that they do these things in a way that communicates consistent and appropriate messages. This study indicates that value systems that emphasize conventionality, risk aversion, or behavior inhibition may hurt productivity, because they have a negative impact on attachment and affect. To counteract these dysfunctional effects, managers may want to manage the attractionselection attrition cycle better to ensure that organization members understand and are willing to accept the organizations values and do not have unrealistic expectations about what goes on in it (Bowen and Schneider, 1988). It is also believed that enhanced positive affect and employee commitment can be induced by improving the physical work environment, isolating and alleviating the negative aspects of the value system, or shifting toward a more participative management style (Isen and Baron, 1991; Schneider and Rentsch, 1988). Because the value system is used as a sense-making device, managers should be obsessive about ensuring that it is understood and accurately interpreted by employees. As Goldstein (1986) observed, we often fail to learn how the context is perceived by the people working in it, and then we are surprised when their behaviors and responses are different from those anticipated. We recommend that managers frequently collect information on employees perceptions of the value system through such vehicles as surveys, personal interviews, and roundtable discussions, and invest considerable time and energy in clarifying expectations and communicating and reinforcing any modifications that may be required. Obviously, we see this as a situation in which information and communication can be put to productive use.

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