The Effect of Organizational Culture on Organizational Performance of
Saudi Higher Education: The Mediating Role of Human Resource
Development
ALI AL NASSER, JURAIFA JAIS
College of Business Management and Accounting,
Universiti Tenaga Nasional,
MALAYSIA
Abstract: - Organizational culture is essential to implement organizational policies and strategies. In addition,
human resource development (HRM) is critical for the success of any organization. However, most of previous
studies have focused on these variables in developed nations. In Saudi Arabia, the number of non-Saudis
employed as academic staff is greater than Saudis and these issues are related to organizational culture and
HRD. The purpose of this study is to examine the effect of organizational culture on HRD and organizational
performance (OP). The study also aims at examining the effect of HRD on OP. The study also discusses the
mediating role of HRD between organizational culture and OP. Public universities in Riyadh, Saudi Arabia
were chosen as the population of this study. Using a stratified random sampling, 425 responses were collected.
The data have been analysed using the Partial Least Square (PLS). This study has found that organizational
culture affected the HRD and OP. HRD affected the OP and mediated the effect of organizational culture on
OP. The findings of this study could foster a strategic plan for the achievement of HRD and improve the OP of
universities.
Key-Words: - Organizational culture, Human resource development, Organizational performance
Received: July 9, 2021. Revised: May 5, 2022. Accepted: May 27, 2022. Published: June 15, 2022.
1 Introduction
As Organizational performance (OP) is one of the
widely researched variables in the context of
management and human resource (HR). The
variable is critical to evaluate and suggest corrective
action in handling the organizational processes and
activities. The literature of OP is dominated by
business organizations which strive to enhance the
financial performance. However, the OP from an
educational context perspective has been examined
by few studies. OP is defined as the achievement of
the organizational objectives within specific
timeframe and limited resources [1]. Important
variables that can be linked to the OP is the
organizational culture. Organizational culture has
the potential to improve the implementation and the
effectiveness of organizational activities [2].
However, previous studies link the practices of
organizational culture to the development of
employees in business organizations while the link
between organizational culture with organizational
outcome in higher education remains under
researched [3]–[5] and more studies are needed to
understand the effect of organizational culture on
human development and OP in the context of higher
education [6], [7].
Along with organizational culture, human
resource development (HRD) is critical to the
success of organizations. HRD fosters and supports
creativity and innovation in organizations (Gilley et
al., 2011), engaging stakeholders and their
involvement in the organizational change efforts [9],
and high performance organization cannot be
achieved without focusing and implementing an
effective HRD [10]. It is also important for
transforming the organization and creating more
effective and creative employees [11]. There is a
strong link between HRD initiatives and the
outcomes in OP [12]. HRD is defined as a process
of developing and utilizing the employees’ expertise
aiming to improve the individual and organizational
outcome [8]. This achievement cannot be done
without a proper and effective culture. Previous
studies indicated that a supportive organizational
culture enables the HRD and increases its
effectiveness [13]–[15]. Prior literature indicated
that there is a gap in the HRD literature related to
learning organizational culture, and a dearth of
empirical studies within HRD [16].
Few studies examined the effect of HRD as a
mediating variables. For instance, [17], examined
the mediating role of HRM between organizational
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culture and organizational commitment and found
that HRD can mediate the effect of HRM on
organizational performance. The enhancement in
HRD is critical to improving the performance of
organizations. However, previous studies indicated
that the HRD has been examined intensively in the
context of business organization while studies that
pertain to higher education are still limited. In
addition, the research on HRD is dominated by
western countries while few examined this term in
non-western countries [18].
In a non-western country such as the Kingdom of
Saudi Arabia, the educational system has been
undergoing several changes. Education is seen as a
crucial tool for Saudi Arabia’s national growth that
could foster collaboration and enhance the country’s
ability to compete with other nations [19]–[21].
Although Saudi Arabia is rich in oil and other
natural resources, it is classified as a resource-rich,
labour-importing area due to the lack of skilled
labour force to meet demand [22]–[24], particularly
in the education sector.
The Saudi government has made numerous
attempts to employ Saudi citizens and foster
national economic development by offering
scholarships [25]–[27]. However, there is an
increasing need to align HR functions with
corporate priorities [28]. Due to the importance of
higher education, the government targeted to
employ nationals as academic staff in the local
universities. However, recent reports of the Ministry
of higher education (Ministry of Higher Education)
indicated that the number of non-Saudi academic
staff in 30 public universities has reached 56% of
the academic staff while the Saudis accounted for
46% [29]. A report of the educational committee in
the parliament of Saudi Arabia indicates that there is
a mismatch between qualified academic staff are
needed and between what is available. This
increases the need to bring non-Saudis to fill in
positions in science, education, literature, and
medicine [30]. This situation has created the
importance of understanding how human resources
are trained, selected, and attained in Saudi Arabia
[31]. In addition, the reasons behind this shortage of
local academic staff are attributed to several factors
such as the organizational culture. In Saudi Arabia,
organisational culture is not being deployed
effectively especially in the public sector [32] and
few studies are related to HRD and organizational
culture in the higher education in developing
countries [18], [33], [34], and there are a few studies
that are related to HRD and organizational culture in
the higher education in developing countries.
The purpose of this study is to examine the effect
of organizational culture and HRD on organizational
performance. The study also aims to examine the
mediating role of HRD. This section has introduced
the topic of this paper and highlighted the main
issue, in the next sections, the literature, research
methodology, findings as well as implications and
conclusion are discussed.
2 Literature Review
This section discusses the literature on OP and
culture along with HRD. It also presents the
theoretical background and the development of the
conceptual framework and hypotheses.
2.1 Organisational Performance
OP is a multifaceted and dynamic term and it is
described by [35] as an organisation actual results or
outputs compared to the expected results.
Performance can be measured using financial
indicators or non-financial indicators or both [36],
[37]. OP has been measured differently by
researchers. Cotora (2007) discussed the challenges
in measuring the performance because it includes
intangible such as knowledge and competencies and
external factors. [39] pointed out that there are five
indices to measure the performance, and these
include financial indicators, customers, process, and
people development as well as future performance.
[40] criticized the use of financial indicators which
might not measure the real performance. Therefore,
there is a need to include financial and non-financial
indicators. Balance Scorecard (BSC) is widely used
in evaluating performance. As a result, the elements
of BSC were considered in developing the
measurement of the OP of this study. These
elements of OP include profit making, current
growth, and competitive advantage which has been
adopted from [41].
2.2 Critical Analysis
A review of related studies to organizational culture,
HRD, and OP showed that there is a focus in the
literature toward studying these variables in
developed countries [16], [18], [50], [42]–[49]. On
the other hand, few of the previous reviewed studies
have focused on the practices of HRD in developing
countries [51]–[53].
In term of industry, the previous studies focused
more into business organizations in general [42],
[44], [45], [47], [49], or hotels [52], [54] , healthcare
[16], [46], [55] manufacturing [56], [57],
telecommunication [58], [59] while few has
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examined the HRD in the educational sector and in
particular the public sector [17], [51]. Previous
studies also focused more into the practice of human
resource management (HRM) [16], [18], [51], [53],
[60] rather than the HRD [43], [44].
In term of the variables of this study, the findings
of previous studies are inconclusive. In the study of
[56], organizational culture did not affect the
knowledge and skills development while the other
studies, organizational culture affected the HRM
[16], [43], [51]. Further, most of the previous
studies examined the effect of organizational culture
on variables such as HRM, performance,
innovation, safety improvement, learning
organization [45], [54], [58], [61]. However, the
studies that have examined the link between
organizational culture and HRD are limited [43].
Therefore, there are several gaps, and this paper
attempts to fill in these gaps.
2.3 Conceptual Framework
This study addresses these existing gaps by
developing a model based on the theory of system
and human capital theory. The study proposes that
there is a direct link between organizational culture
and its components on the organizational
performance. In addition, study proposes that the
HRD will affect the OP and mediates the effect of
organizational culture on OP.
Fig. 1: Conceptual Framework
2.4 Hypothesis Development
This section discusses the direct and mediating
effect that are used in this study.
2.4.1 Organizational Culture and OP
Organizational culture is an essential predictor of
several individual and organizational outcomes.
Several works of literature explore the relationship
between organisational cultures on the growth and
development of human resources in organizations.
Organisational culture brought a strong influence on
human resources management due to the possibility
and broad structure it offers for the growth of
human resources in an organizations [16], [51].
Researchers agreed that organisational culture is
associated with several factors of organisational
efficacy and effectiveness (Aktaş et al., 2011; Otoo,
2019). It is assumed that an organisation could
increase productivity with positive organisational
culture. The culture of organisations has an
important function of determining success and
failure [54], [63]. Elements of organizational culture
such as family orientation [64], [65], open
communication [66]–[68], team approach [69], [70],
and knowledge [71], [72] were found to have
significant effect on the organizational outcomes.
Thus, implementing effective organizational culture
will have a significant effect on the OP of higher
learning organizations in Saudi Arabia.
H1: There is a positive relationship between
organizational culture and OP.
H1a: There is a positive relationship between
family orientation and OP.
H1b: There is a positive relationship between
open communication and OP.
H1c: There is a positive relationship between
team approach and OP.
H1d: There is a positive relationship between
knowledge and OP.
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2.4.2 Organizational Culture and HRM
Osibanjo and Adeniji (2013) agreed that
organisational culture influenced HRM. The authors
suggested that employees and job seeker should
familiarise themselves with organisational culture.
New employees were expected to be capable of
adapting to cultural practices in organisations to
reduce conflicts in working environments, thus
improving teamwork and communications among
employee and employers [61], [73]. [74] recorded
the direct effect of organisational culture on HRM.
It was also demonstrated that HRM was influenced
by organisational culture, which led to
organisational efficiency and productivity.
Moreover, [75] highlighted the substantial
relationship between organisational culture and
HRM and encouraged improved practices in the
management strategies. The result of the research by
[76] indicated there is a significant influence of
organisational culture on HRM. Following these
arguments, the following hypothesis is proposed.
H2: There is a positive relationship between
organizational culture and HRD.
2.4.3 Human Resource Development and
Organisational Performance
HRD has an impact on OP, as demonstrated in the
study by [77] which suggested that there is a
positive association between HRD and OP. The
study of [78] found that HRDs which includes
development, job security, and appraisal system
were the elements influencing OP. Giauque et al.
(2013) found that the effect of HRD on OP is
positive. [78] found that HRD activities including
training and growth, organisational development,
and career development increase OP by enhancing
person and group awareness, skills, attitudes, and
actions. Furthermore, Otoo et al. (2019) stated that
HRD activities such as performance assessment,
career growth, and training and development have a
substantial impact on organisational success due to
their impact on employee performance. Similarly,
[77] highlighted that HRD activities such as
training, career growth, and performance
management affect the development of employee
competencies, which increase organisational
performance. Based on the above argument, the
following hypotheses are proposed:
H3: There is a positive relationship between HRM
and OP.
H3a: There is a positive relationship between
training and development and OP.
H3b: There is a positive relationship between
performance appraisal and OP.
H3c: There is a positive relationship between career
development and OP.
2.4.4 Mediating Role of Human Resource
Development
HRM is critical to improve the implementation of an
effective organizational culture which leads to
substantial organizational performance. The
mediating role of HRM has been examined in a
limited number of studies. For example, [80]
pointed out that there is no agreement among
researchers regarding the role of HRM in OP and
found that HRM has a mediating role between
organizational variables and the OP. Similarly,
HRM mediated the effect of seasonal and permanent
employee contract on employee’s commitment [81].
The effect of organizational culture on
organizational outcome was found to be mediated
by HRM [17]. Thus, this study proposed that HRM
will mediate the effect of organizational culture on
the OP.
3 Methodology
This study is using the quantitative research
design and has collected data using a
questionnaire. This approach is preferrable
since it allows researchers to collect large
amount of data in comparatively shorter time [82].
The target population in the current study is the
academician at higher education in Saudi Arabia.
The Kingdom of Saudi Arabia reported 80,000
academicians at 25 colleges, 14 private universities,
and 30 public universities [31]. However, due to the
problem of Saudization and the lack of employment
of nationals is more severe in public universities
compared to private universities, this study focuses
on public universities. The study selected the area of
Riyadh because it is the capital of Saudi Arabia and
has the largest number of academic staff. In public
universities, there are 18,883 academic staff.
However, the study focuses on Saudi nationals.
Saudi nationals account for 46% of the academic
staff. Thus, the population of this study include
8,686 respondents (18,883*46%). [83] suggested
that the sample size should be a minimum of 368 for
a population of 8,686. To prevent any issues from a
small sample size, this study followed the
suggestion of previous studies to add additional
30% [84] to account for a low response rate. This
has increased the sample size to 478 respondents.
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A stratified random sampling approach was
employed in this analysis to choose a sample from
the population. A stratified random sample was
created by dividing the population into strata,
followed by the selection of a simple random
sample from every stratum [85]. This sampling
method has a number of benefits. Compared to a
simple random sample of a similar size, this
sampling technique could produce a lower bound on
estimation error (Richard et al., 2012). The variables
of this study were measured using established
measurement. Organisational culture was measured
using 15 items adopted from Tang et al. (2000).
Human resource development was measured using
three dimensions, including training development,
performance appraisal, and career development.
Training and development were adopted from
Santos and Stuart (2003) and Singh (2004),
performance appraisal adapted from Walker et al.
(2011) and Amin and Atta (2013), and career
development was adopted from Otoo and Mishra
(2018).
Organizational performance was adopted from
Bakker et al. (2004). The data was collected by
sending emails to the academic staff based on the
quota of each university. This has resulted in 429
responses. The response rate of this study is 89.7%.
None of the responses has missed any value due to
the use of the required function. The outliers were
examined by checking the boxplot and this showed
the existence of four outliers’ values, and they were
removed. Data is normally distributed because the
value of skewness and kurtosis is less than 2 [86].
Multicollinearity issues were examined by utilizing
the value of variation inflation factor (VIF) and
tolerance. No collinearity issues were identified.
4 Findings
This section shows the demographics information
and the analyses of Smart PLS which include the
measurement model and the structural model.
4.1 Demographic Profile
A total of 425 respondents have participated in this
study. In terms of the duration of work (year),
75.53% (321) of respondents had worked for less
than five years, 24.47% (104) of respondents had
worked for five to 10 years. Furthermore, the
majority of academicians who responded to the
survey are Ph.D. holders (44.24% or 188), 28.71%
hold a master’s degree (122), and 27.05% are degree
holders (115). In terms of the field of study, the
majority of 87.53% of the academicians are in the
non-science field (372), while 12.47% of them are
in the science field (53).
4.2 Measurement Model
The factor loading as well as the reliabilities and the
validities of the variables were checked using the
outcome of the measurement model. Items from
current growth, Table 1 shows the results of
assessing the measurement model. It shows that
Cronbach’s Alpha (CA) and the composite
reliability (CR) are larger than 0.70. The average
variance extracted (AVE) is greater than 0.50
indicating that the convergent validity is achieved.
Further, the discriminant validity is achieved
because the value in bold are larger than the row and
column. These are in line with the suggestions of
[87], [88]. By this, it can be concluded that the
measurement model is fit as shown in Table 1.
Table 1. Assessment of Measurement Model
Variables
CA
CR
AVE
Career Development
0.92
0.94
0.82
0.90
Competitive
Advantage
0.88
0.91
0.69
0.26
0.83
Current Growth
0.89
0.93
0.82
0.45
0.26
0.90
Family Orientation
0.95
0.96
0.85
0.44
0.32
0.24
0.92
Knowledge
Management
0.95
0.96
0.91
0.33
0.30
0.27
0.75
0.95
Open
communication
0.92
0.94
0.81
0.40
0.32
0.35
0.83
0.81
0.90
Performance
Appraisal
0.91
0.93
0.79
0.56
0.33
0.51
0.30
0.25
0.32
0.89
Profit Making
0.92
0.95
0.86
0.52
0.29
0.51
0.34
0.32
0.40
0.48
0.93
Team Approach
0.88
0.93
0.81
0.36
0.31
0.23
0.87
0.83
0.78
0.28
0.34
0.90
Training and
development
0.92
0.94
0.78
0.55
0.32
0.51
0.32
0.27
0.36
0.72
0.45
0.32
0.88
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4.3 Structural Model
The hypotheses are tested in the structural model.
However, there are other criteria that can be
assessed. The R-square of the model is .459 which
indicates that 45.9% of the variation in OP can be
explained by organizational culture and HRM. The
Q-square showed that the value is greater than zero.
Q-square value is 0.180. The F-square for all paths
are greater than 0.02 except for the family
orientation organizational performance,
knowledge management organizational
performance, and team approach organizational
performance. For the result of path coefficient,
Figure 2 shows the result of testing the model of this
study.
Fig. 2: Structural Model
Table 1 shows the results of the direct and
mediating hypotheses. It shows the hypothesis (H),
path coefficient (B), standard deviation (Std.), t-
value (T), P-value (P).
Table 1. Result of Hypotheses Testing
H
Path
B
Std.
T
P
H1
Organizational Culture -> OP
0.207
0.044
4.683
0.000
H1a
Family Orientation -> OP
-0.111
0.082
1.343
0.180
H1b
Open communication -> OP
0.294
0.069
4.294
0.000
H1c
Team Approach -> OP
0.003
0.074
0.037
0.971
H1d
Knowledge Management -> OP
0.033
0.056
0.594
0.553
H2
Organizational Culture -> HRD
0.419
0.046
9.076
0.000
H3
HRD -> OP
0.569
0.048
11.856
0.000
H3a
Training and development -> OP
0.165
0.050
3.322
0.001
H3b
Performance Appraisal -> OP
0.282
0.050
5.605
0.000
H3c
Career Development -> OP
0.227
0.046
4.911
0.000
H4
Organizational Culture -> HRD -> OP
0.239
0.038
6.216
0.000
The results of hypothesis as shown in Table 1
indicate that the effect of organizational culture on
OP is positive and significant (B=0.207, P<0.001).
Thus, H1 is supported. For sub hypotheses, H1a is
rejected because the P-value is less than 0.180 thus,
H1a is rejected and the effect of family orientation
on OP is insignificant. Open communication has a
significant effect on OP (B=0.294, P<0.001). Thus,
H1b is supported. For H1c and H1d, they are
rejected because P-value is larger than 0.05. Thus,
team approach and knowledge have no effect on
OP. For H2, it is accepted because the P-value is
less than 0.05. Thus, organizational culture affected
the HRD. For H3, the effect of HRM affected the
OP because the P-value is less than 0.05. In term of
H3a, H3b, and H3c are accepted because the p-value
is less than 0.05. Accordingly, the effect of training
and development, performance appraisal, and career
development affected the OP.
HRD can play a mediating role between the
organizational culture and OP. The direct effect of
organizational culture on OP is confirmed to be
positive and significant. In addition, the HRD has
mediated partially the effect of the organizational
culture on OP. HRD mediated partially the effect of
organizational culture on OP (Organizational
Culture -> HRD -> OP).
5 Discussion
The organisational culture was proposed as a critical
factor in this study. It was proposed as affecting the
OP and HRD. The findings showed that
organizational culture affected the OP and HRM.
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This indicates that the organizational culture of the
universities in Saudi Arabia is critical in enhancing
the HRD and OP. The enhancement in the level of
organizational culture will result in a positive
increase in the effectiveness of HRD and OP. This
will enhance the effectiveness of academic staff in
the universities as well as the effectiveness of the
universities. This positive effect of organizational
culture on HRD could be related to the practices of
management and HR of the university to create a
friendly, unique atmosphere and to emphasize
loyalty and dedication of the academic staff.
Previous studies are in line with the findings of this
study [16], [51], [53], [62].
The effect of HRD on OP was found to be
significant. This could be due to the fact that
developing human capital in Saudi universities will
have a positive impact on the efficiency and the
effectiveness of academic staff which, and this can
be reflected on the OP of the universities. Training
of academic staff as well as improving their skills
and capabilities are critical to improving the level of
HRD. Further, a fair process of performance
appraisal and effective career guidance are also
contributing to the development of HRD among
academic staff. These developments are affecting
the OP of the universities in Saudi Arabia. The
findings in term of the positive effect of HRD on OP
is supported by previous studies [8], [10].
The mediating role of HRD between
organizational culture and OP is confirmed. This
indicates that part of the relationship between the
two variables can be explained using HRD. Having
effective HRD can foster the culture and enhance
the implementation of the organizational policies,
plans and strategies which in turn will affect the
overall performance of universities in Saudi Arabia.
The findings are in agreement with the findings of
researchers who found that HRD is a mediating
variable ([17], [80], [81]
6 Implications
This research has offered contributions to the
theoretical literature in the areas of organisational
culture, HRD and OP by providing an empirical
research model in these areas. It developed a model
to explain the direct association between
organisational culture, HRD and organisational
performance, and the mediating effect of HRD. The
study contributed to the role of HRD as a mediating
variable and highlighted its interrelationship with
culture and performance. By highlighting the role of
HRD and culture in the context of Saudi academic
staff and universities, the study contributed to the
literature of emerging economies. All of the
proposed relationships were validated by the results
of a structural equation modelling method. Few of
the previous studies has done so and there is a gap
in the literature related to the effect of HRD on
performance and this study fills this gap.
Generally, this research recorded the empirical
evidence for the theoretical associations highlighted
in the research framework. Using the individual
constructs involved in this study, the present
findings contributed to literature and development
of theory, which included (1) establishing the
positive influence of organisational culture and
HRD; (2) the positive influence of organizational
culture and OP; (3) the positive impact HRD on OP;
and (4) establishing the mediating role of HRM in
the relationship between organisational cultural and
OP. Practically, the study offers important insights
and demonstrates a strong understanding of HRD
and OP in the Saudi Arabia context of higher
education. The results of this study may be useful
for assisting the decision-makers and practitioner in
designing HRD activities that lead to improved OP.
The study has enhanced the understanding among
university management regarding the importance of
organisational culture in integrating, building, and
reconfiguring internal and external competence to
manage rapidly evolving environments and create
better decisions within the organisation.
Regulatory bodies and management of the
university are recommended to gain an
understanding of the implication of their
commitment to design a holistic HRD to enhance
OP, given that practical recommendation was drawn
logically from the statistical findings. Following
that, this research has provided empirical evidence
that organisational culture is significantly related to
HRD and OP. Therefore, it is indicated that
regulatory authorities and management of university
should have stronger awareness regarding designing
procedures and approaches that will reduce the
issues of HRD and improve its influence on OP.
7 Conclusion
This study examines the effect of organizational
culture on HRD and OP. It also discusses the
mediating role of HRD. The findings show that the
effects of organizational culture on HRD and OP are
positive and significant. The effect of HRD on OP is
useful and remarkable. The findings also showed
that the mediating role of HRD is confirmed
between organizational culture and OP.
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There are some limitations that should be
highlighted. First, this study only examined higher
education. Future research is suggested to examine
other industries to provide more in-depth results.
The current analysis applied the quantitative
approach and a single data collection tool, where the
questionnaire was the only instrument used to
collect data. It is recommended that future studies
incorporate quantitative and qualitative approaches
and perform an in-depth investigation into HRD,
organizational culture and OP in Saudi Arabia.
The survey was conducted using a cross-
sectional method, which collected respondents’
views at a single point in time. As a result of the
cross-sectional existence of this analysis, causal
inferences from the population were not possible
(Sekaran & Bougie, 2009). Given that the data
collection was performed at once, it might not
accurately represent the academicians’ long-term
conduct in Saudi Arabia. Thus, a different approach
such as longitudinal is suggested for future work.
The study collected data from academic staff
working in public universities in Riyadh, Saudi
Arabia. Thus, the study is limited to the academic
staff in public universities in the capital. Future
studies are recommended to examine the perception
of non-academic staff or the academic staff in
private universities. Further studies are also
suggested to enlarge the sample to include more
geographical areas in Saudi Arabia or in different
countries.
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