The Effect of Organizational Culture on Client Satisfaction Mediated by Market Orientation in Social Services Organizations in Korea

Background and Purpose:

The purpose of this study is to empirically investigate whether organizational culture affects client satisfaction among social services organizations, with a particular focus on the mediating effect of market orientation.

Market orientation is organizational behaviors or activities practicing the theoretical marketing concept with a strong focus on customers (Kohli & Jaworski, 1990; Gainer & Padanyi, 2005). Now is the time that organizations can make progress, profits and finally create competitive advantages by fulfilling customer needs. In non-profit organizations including social services organizations, client needs have become an important factor to take seriously and try to fulfill.

In this context, this study hypothesizes that market orientation can contribute to client satisfaction. Furthermore, this study also considers organizational culture as an antecedent of market orientation. Organizational culture, as the shared values and beliefs, common perceptions, and common premises (Deal & Kennedy, 1982; Schein, 1985; Deshpande & Webster, 1989), can influence the thinking, communications and behaviors of the organization employees (Chung, 2007).

Methods:

This study uses secondary data collected by the social inclusion research team, the Center for Social Welfare Research, Yonsei University in 2006, basically including all kinds of social services organizations in Korea. The questionnaires ware mailed to the 1,569 social services organizations in Korea, requesting senior manager or executive director to answer because they are generally in charge of organization management as well as in close proximity to clients. A total of 920 organizations answered and 569 out of them (19.7% for the youth, 20.6% for the old, 31.6% for the disabled, 28.1% community centers) were finally analyzed after excluding organizations with short history less than 3 years and small-scale less than 10 staffs.

The organizational culture scale was adapted from Kimberly & Quinn(1984), Quinn & McGrath(1985), and Dension & Spreitzer(1991), composed of four different cultural types divided by two key dimensions such as flexibility vs. stability and internal maintenance vs. external adaptation. The market orientation scale was adapted to a nonprofit context on the basis of Narver & Slater(1990) and Kohli et al.(1993), which was tested in a prior study (Choi & Choi, 2008). The client satisfaction scale, developed and tested by the social inclusion research team, the Center for Social Welfare Research, Yonsei University (2006), was used.

Structural equation model was constructed to identify the impact of four different organizational cultures on client satisfaction, with the mediating effect of market orientation.

Results:

SEM analysis showed that the effects of rational/ entrepreneur (γ=2.271, p=0.00) and group (γ=1.105, p=0.00) cultures on market orientation were significant. Subsequently, the effect of market orientation on client satisfaction was significant (γ=0.129, p=0.00).

Conclusions and Implications:

The results of this study showed that the higher market orientation of social services organization, the higher client satisfaction. Additionally, rational/ entrepreneur and group cultures positively affect market orientation.

This implies that to promote market orientation and eventually increase client satisfaction, social services organizations need to put more emphasis on rational/entrepreneur and group cultures.