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The Effect of Corporate Culture and Strategic Orientation on Financial Performance: An Analysis of South Korean Upscale and Luxury Hotels
Center for Hospitality Research Publications
  • HyunJeong S. Han, Ph.D.
  • Rohit Verma, Ph.D., Cornell University
Document Type
Article
Publication Date
1-2-2012
Abstract

Researchers have been studying the importance of an appropriate and effective culture to business success for over thirty years. A successful culture combined with a congruent strategic orientation is now considered essential for a business to maintain its edge in a fiercely competitive environment. So far, however, little research has focused directly on how the hospitality industry can maximize performance through the combination of a corporate culture and a strategic action plan. In this study, we explore the relationship between strategic orientation, corporate culture, and financial performance for hotels, using data from 211 managers of 99 upscale and luxury (4- or 5-star) hotels in South Korea. The study shows that corporate culture directly affects financial performance, but for this group of hotels not all cultures performed equally. The transaction-oriented Market culture did not promote financial performance, as compared to the family-oriented Clan culture or the innovative “Adhocracy” culture. The tradition-bound Hierarchical culture actually cost hotels in terms of financial performance. Certain strategic orientations moderated and improved financial results for some of the cultures, but not all. The opportunity-seeking approach of a Leading strategic orientation drove financial results for the Clan and Adhocracy cultures, but did not help the Market or Hierarchy cultures. Other strategic orientations also drove financial results, including Future-analytic and Defensive.

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Citation Information
Han, H., & Verma, R. (2012). The effect of corporate culture and strategic orientation on financial performance: An analysis of South Korean upscale and luxury hotels [Electronic article]. Cornell Hospitality Report, 12(4), 6-14.