Organisational Climate and Performance: A Case Study of Nigerian High Growth SMEs

There have been extensive explorations of organisational climate (OC) and performance in large organisational contexts but predominantly in western economies. Despite the rich and growing body of literature on the topic, there is considerable lacuna in the understanding of how the composites of organisational climate factors coalesce into business enablement and performance outcomes especially in economically resurgent African economies of which Nigeria is one. More fundamentally, the dimension of High Growth Small and Medium Enterprises (HGSMEs) exemplify the dearth of knowledge of the intricate role of OC in reconfiguring strategic positioning and performance of organisations, especially the genre of SMEs attributed as the main driver of economic growth. Against this backcloth, this study explores the dynamic interaction between OC and HGSME performance in Nigeria with a view to providing situated understandings of how organisational performance is moderated by variabilities of OC. This relationship is investigated empirically using as conceptual prisms four principal constructs distilled from the extant literature; leadership, organisational strategy, HRM practices and entrepreneurial orientation.
Methodologically, a triangulation procedure was applied in order to afford both rich-context and scaled datasets. From a sample of HGSME drawn from the national database maintained by Small Medium Enterprises Development Agency of Nigeria (SMEDAN), the mixed method approach used encompassed data gathered through (a) in-depth interviews conducted with senior executives of sample organisations and (b) survey questionnaires administered to 300 employees within two Nigerian HGSMEs. Qualitative data was analysed through thematic analysis. The quantitative data treatment rigour was achieved through descriptive statistics; correlation and multivariate regression analysis. OC was measured at the firm level using the validated instrument (Organisational Climate Measurement instrument, OCM, Patterson et al., 2005), while the organisational performance was measured subjectively using efficiency and quality as performance proxies.
Results show direct effects of organisational factors (leadership, strategy, HR practices and entrepreneurial orientation) on organisational climate configuration. The relationship between organisational climate and performance is significantly positive while the direct effect of some HR practices on organisational outcomes such as efficiency (training vs. efficiency, employee involvement vs. efficiency) was negative. The results are robust in indentifying the nature of internal organisational systems and networks that triggers growth and sustainability of HGSMEs.