The mediating role of innovation in the relationship between organizational culture and organizational performance in Pakistan's banking sector

Abstract

This study explores the mediating role of innovation in the relationship between the dimensions of organizational culture and organizational performance. The study used questionnaire data taken from 250 managers of banks in Pakistan. Structural equation modeling was used to test hypotheses. The results indicate that while the dimensions of organizational culture and innovation have a clear and positive influence on organizational performance, organizational culture and mission have an insignificant relationship with organizational performance in the presence of innovation. These results give organizations valuable insights to compete against environmental changes by effectively implementing innovations, especially in Pakistan's banking sector. The findings illustrate that mechanisms to boost an organization's innovative culture can enable the implementation of innovation, that in turn, can contribute to superior organizational performance. In extant literature, organizational culture has been examined as one of the factors that influences organizational performance. However, there is a lack of empirical studies on the relationship between organizational culture and organizational performance. Besides, as a factor of organizational performance, several investigators have considered innovation, but few have studied organizational innovation as being affected by organizational culture. This study explores the link between organizational culture, organizational performance and the role of innovation in this relationship.