IDEAS home Printed from https://ideas.repec.org/a/mth/jsss88/v7y2020i2p86-114.html
   My bibliography  Save this article

Diagnosing the Organizational Culture of Rural Community Banks in Ghana and Its Effects on Their Financial Performance

Author

Listed:
  • Jenkins A. Asaah
  • Beatrice L. Asaah
  • Austin W. Luguterah

Abstract

Rural Community Banks (RCBs) are important rural development partners in Ghana. They are the lifeline of credit to small businesses and individuals who do not have the necessary collateral and capacity to borrow from the traditional commercial banks. However, the RCBs are confronted with increasing customers’ demands, keen competition, and poor financial performance which has led to 26% of the country’s RCBs earmarked for liquidation. This is a serious threat to the sustainability of the country’s RCBs prompting serious concern among stakeholders of rural banking. Previous studies have looked at the issue from the perspective of regulations, corporate governance, and ownership structure. This paper seeks to look at the problem from the organizational culture and product innovation point of views. Based on the Competing Values Framework and empirical studies, hypotheses were stated and tested using data collected from 92 RCBs.The data were analyzed using the Smart PLS of SEM. The findings are that RCBs in Ghana exhibit four different cultural types but the dominant culture is control-oriented. Product innovation has a strong impact on financial performance. Cultural orientations such as compete-oriented and innovate-oriented can support RCBs to introduce innovative financial products (product innovation) while control-oriented cannot. Based on the findings, the RCBs are encouraged to create a Research and Product Development (RPD) unit. This unit should develop a cultural orientation that values and encourages freedom of thought, and experimentation of innovative ideas. The bank as an institution should value customer and competitor interactions which serve as a feedback platform for the development of innovative financial products and services. The theoretical contribution of this paper is that organizational cultural orientations that value and focus on customer satisfaction, and interaction with competitors nurture product innovation.

Suggested Citation

  • Jenkins A. Asaah & Beatrice L. Asaah & Austin W. Luguterah, 2020. "Diagnosing the Organizational Culture of Rural Community Banks in Ghana and Its Effects on Their Financial Performance," Journal of Social Science Studies, Macrothink Institute, vol. 7(2), pages 86-114, December.
    • Handle: RePEc:mth:jsss88:v:7:y:2020:i:2:p:86-114
    as

    Download full text from publisher

    File URL: https://www.macrothink.org/journal/index.php/jsss/article/view/15805
    Download Restriction: no
    File URL: https://www.macrothink.org/journal/index.php/jsss/article/view/15805
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    2. Jenkins Atarisigna Asaah & Shao Yunfei & Kwame Ansong Wadei & Kofi Frimpong Adasa Nkrumah, 2020. "Cultural orientations and product innovation in the Ghanaian banking sector," The Service Industries Journal, Taylor & Francis Journals, vol. 40(7-8), pages 518-541, June.
    3. Sayedeh Parastoo Saeidi & Mohd Shahwahid Haji Othman & Parvaneh Saeidi & Sayyedeh Parisa Saeidi, 2018. "The moderating role of environmental management accounting between environmental innovation and firm financial performance," International Journal of Business Performance Management, Inderscience Enterprises Ltd, vol. 19(3), pages 326-348.
    4. Gumusluoglu, Lale & Ilsev, Arzu, 2009. "Transformational leadership, creativity, and organizational innovation," Journal of Business Research, Elsevier, vol. 62(4), pages 461-473, April.
    5. Lau, Chung-Ming & Ngo, Hang-Yue, 2004. "The HR system, organizational culture, and product innovation," International Business Review, Elsevier, vol. 13(6), pages 685-703, December.
    6. Kwaku Atuahene-Gima & Anthony Ko, 2001. "An Empirical Investigation of the Effect of Market Orientation and Entrepreneurship Orientation Alignment on Product Innovation," Organization Science, INFORMS, vol. 12(1), pages 54-74, February.
    7. G Tomas M Hult & David J Ketchen & David A Griffith & Brian R Chabowski & Mary K Hamman & Bernadine Johnson Dykes & Wesley A Pollitte & S Tamer Cavusgil, 2008. "An assessment of the measurement of performance in international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(6), pages 1064-1080, September.
    8. Stock, Gregory N. & McFadden, Kathleen L. & Gowen III, Charles R., 2007. "Organizational culture, critical success factors, and the reduction of hospital errors," International Journal of Production Economics, Elsevier, vol. 106(2), pages 368-392, April.
    9. Michael Adusei & Caroline Elliott, 2015. "Bank profitability: Insights from the rural banking industry in Ghana," Cogent Economics & Finance, Taylor & Francis Journals, vol. 3(1), pages 1078270-107, December.
    10. John Hulland, 1999. "Use of partial least squares (PLS) in strategic management research: a review of four recent studies," Strategic Management Journal, Wiley Blackwell, vol. 20(2), pages 195-204, February.
    11. Anjan V. Thakor, 2016. "Corporate culture in banking," Economic Policy Review, Federal Reserve Bank of New York, issue Aug, pages 5-16.
    12. Ogbeibu, Samuel & Senadjki, Abdelhak & Gaskin, James, 2018. "The moderating effect of benevolence on the impact of organisational culture on employee creativity," Journal of Business Research, Elsevier, vol. 90(C), pages 334-346.
    13. Ito, Satoshi & Fujimura, Shuzo & Tamiya, Toshihiko, 2012. "Does cultural assimilation affect organizational decision-making on quality-related incidents? — A company's post-M&A experience," Journal of International Management, Elsevier, vol. 18(2), pages 160-179.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:wsi:acsxxx:v:21:y:2019:i:08:n:s1363919619500117 is not listed on IDEAS
    2. Nguyen, Thi Thu & Mia, Lokman & Winata, Lanita & Chong, Vincent K., 2017. "Effect of transformational-leadership style and management control system on managerial performance," Journal of Business Research, Elsevier, vol. 70(C), pages 202-213.
    3. Chen, Yen-Chun & Lin, Ya-Hui & Li, Po-Chien & Chen, Chung-Jen, 2022. "Understanding the interplay between competitor and alliance orientations in product innovativeness: An integrative framework," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    4. Jörg Freiling & Christoph Lütke Schelhowe, 2014. "The Impact of Entrepreneurial Orientation on the Performance and Speed of Internationalization," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 10(4), pages 169-199.
    5. Yaqun Yi & Yuan Li & Michael A. Hitt & Yi Liu & Zelong Wei, 2016. "The influence of resource bundling on the speed of strategic change: Moderating effects of relational capital," Asia Pacific Journal of Management, Springer, vol. 33(2), pages 435-467, June.
    6. Behzad Shoghi & Morteza Asgarani & Najmiyeh Ashnagohar, 2013. "Mediating Effect of Organizational structure on the Relationship between Managers' Leadership Style and Employees' Creativity (Case study: Metal Industries of Kaveh Industrial City)," International Journal of Learning and Development, Macrothink Institute, vol. 3(3), pages 63-80, June.
    7. García-Granero, Ana & Llopis, Óscar & Fernández-Mesa, Anabel & Alegre, Joaquín, 2015. "Unraveling the link between managerial risk-taking and innovation: The mediating role of a risk-taking climate," Journal of Business Research, Elsevier, vol. 68(5), pages 1094-1104.
    8. Luís Marques & João J. Ferreira & Sascha Kraus & Raj Mahto, 2022. "Organizational Antecedents of Corporate Entrepreneurship: A Quantitative Investigation from Portugal," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 31(3), pages 483-513, November.
    9. Hanne Knight & Phil Megicks & Sheela Agarwal & M.A.A.M. Leenders, 2019. "Firm resources and the development of environmental sustainability among small and medium‐sized enterprises: Evidence from the Australian wine industry," Business Strategy and the Environment, Wiley Blackwell, vol. 28(1), pages 25-39, January.
    10. Katarzyna Szczepanska-Woszczyna & Mohammed Nadeem, 2016. "Multi-level Approach to the ¡°Social Marketing¡± Context for Innovation: Impact on Organizational Relationships," International Journal of Marketing Studies, Canadian Center of Science and Education, vol. 8(2), pages 24-37, April.
    11. Kristina Risom Jespersen & Rune Bysted, 2016. "Implementing New Product Development: A Study Of Personal Characteristics Among Managers," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(03), pages 1-23, April.
    12. Aurora Irma Maynez-Guaderrama & Judith Cavazos-Arroyo & Vianey Torres-Arguelles & Maria Teresa Escobedo-Portillo, 2013. "Capabilities To Customize Production And Reconfigure Internally: Do Capabilities Influence Perceived Operating Performance And Competitive Advantage?, Las Capacidades De La Empresa Para Personalizar S," Revista Internacional Administracion & Finanzas, The Institute for Business and Finance Research, vol. 6(7), pages 47-65.
    13. Camisón, César & Villar-López, Ana, 2014. "Organizational innovation as an enabler of technological innovation capabilities and firm performance," Journal of Business Research, Elsevier, vol. 67(1), pages 2891-2902.
    14. Edgar Antonio Sánchez‐Báez & José Fernández‐Serrano & Isidoro Romero, 2020. "Organizational culture and innovation in small businesses in Paraguay," Regional Science Policy & Practice, Wiley Blackwell, vol. 12(2), pages 233-247, April.
    15. Strobl, Andreas & Bauer, Florian & Matzler, Kurt, 2020. "The impact of industry-wide and target market environmental hostility on entrepreneurial leadership in mergers and acquisitions," Journal of World Business, Elsevier, vol. 55(2).
    16. Engelen, Andreas & Kube, Harald & Schmidt, Susanne & Flatten, Tessa Christina, 2014. "Entrepreneurial orientation in turbulent environments: The moderating role of absorptive capacity," Research Policy, Elsevier, vol. 43(8), pages 1353-1369.
    17. Lettice, Fiona & Tschida, Markus & Forstenlechner, Ingo, 2014. "Managing in an economic crisis: The role of market orientation in an international law firm," Journal of Business Research, Elsevier, vol. 67(1), pages 2693-2700.
    18. Frederick Owusu Agyapong & Ahmed Agyapong & Kofi Poku, 2017. "Nexus between social capital and performance of micro and small firms in an emerging economy: The mediating role of innovation," Cogent Business & Management, Taylor & Francis Journals, vol. 4(1), pages 1309784-130, January.
    19. Xiaoyu Yu & Yi. Chen & Bang Nguyen, 2014. "Knowledge Management, Learning Behavior from Failure and New Product Development in New Technology Ventures," Systems Research and Behavioral Science, Wiley Blackwell, vol. 31(3), pages 405-423, May.
    20. Marius Stoffels & Jens Leker, 2018. "The Impact Of It Assets On Innovation Performance – The Mediating Role Of Developmental Culture And Absorptive Capacity," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 22(08), pages 1-21, December.
    21. Larissa Marchiori Pacheco & Marlon Fernandes Rodrigues Alves & Lara Bartocci Liboni, 2018. "Green absorptive capacity: A mediation‐moderation model of knowledge for innovation," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1502-1513, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mth:jsss88:v:7:y:2020:i:2:p:86-114. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Technical Support Office (email available below). General contact details of provider: http://www.macrothink.org/journal/index.php/jsss .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.