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CHAPTER I INTRODUCTION 1.1 Background of the Study Ergun Ozen, CEO of Turkish Garanti Bank once stated that the superior performance of firm such as IBM, GE, P&G and Intel might be at least partly or moderately due to their strong culture. Change is one of many characteristics in todays dynamics world. The need to adapt to changes has pushed individual and organizations alike discover the need for learning (Ashton, 2004). To adapt with new changes, organization should provide ground for organizational growth and development. These organizations are called learning organization (McClelland, 1987). Consumer retailing has been inseparable in our daily lives. In Indonesia, consumer spending is accounted for 12% of Indonesias gross domestic product; hence it can be regarded as lucrative sector. This research is conducted because this study will show that organizational culture no matter how big or small the company is. The object of this study is a company that is was recently established in the past few years; hence the dominant organizational culture is not known yet. To survive in highly competitive market, all organizations no matter of its sizes must be adaptive in dealing with the dynamic environment. The key of survival is organization learning, not individual learning (Dymock and McCarty, 2006). Thus researchers have studied on applicability of learning organization in real life practices and its antecedents (Dymock and McCarty 2006; Change and Lee, 2007; Huber 1991; Jacobs, 1995). According to Coutu (2002), organizational learning is relatively new concept, hence there is little known about it, but whats certain is researcher dont know exactly on how to intervene in culture to create transformational learning across the organization. This statement supports the need to study culture as an antecedent variable towards shaping of learning organizations. Previous researches showed that the benefits of a that learning organization include: improved quality of outputs at all level, improving corporate image by becoming more people oriented (Pedler and Boydell, 1997), maintained

levels of innovation, and remaining competitive, being better placed to external pressure (McHugh and Alker, 1998). The object of this study is a company located in Jakarta. The company specializes in managing foreign food and beverage franchises in Indonesia. As of 2012, the company holds 3 licenses, 2 are beverages franchise and 1 food franchise. There are numerous studies regarding on how to improve performance of an organization but only a few studies use organization culture as its variable. Based on the description above, the researcher is intrigued to conduct a further study about organizational culture in a limited liability company in Jakarta. The researcher wanted to find out the relationship between types of culture as an independent variable and learning organization as dependent variable. Therefore the researcher conducts a study entitled: The Effect of Organizational Cultures in Shaping Learning Organization in Company X. 1.2 Research problem The proposed research problem for this study is: 1. What is the dominant type of organizational culture in Company X? 2. How does organizational culture contribute in Company X as learning organization? 1.3 Research Objectives The objective of this proposes research are: 1. To identify the dominant type of organizational culture in Company X; and 2. To determine how the types of organizational culture contribute in shaping the learning organization in Company X. 1.4 Research Contributions This research expects to give benefits: 1.4.1 For the Company

The company can use the result of this study for management direction and strategy formulations

1.4.2

For the Researcher

The researcher can gain knowledge on how organizational cultures contribute towards shaping the learning organization. 1.5 Research Limitation This study is limited only to one object; hence its findings might not be applicable if it is applied to other organization. This study will test organizational culture as the independent variable in shaping learning organization. 1.6 Research Outline Chapter I This chapter sets up the research problem of this study entitled The Effect of Organizational Cultures in Shaping Company X As Learning Organization. this chapter also provides background information defining the importance of organizational culture. This chapter specifies the research objectives of the study in detail to contribute to understanding the effect of organizational culture in shaping Company X as learning organization. Chapter II This chapter summarizes the previous studies and findings that have been published regarding organizational cultures and learning organization. This chapter also covers on how it will contribute or add to what has already been studied. This chapter also states a clear description of organizational culture and learning organization that apply to the research problem, an explanation of why it is relevant, and how the framework addresses the hypothesis to be tested. Chapter III This chapter explains the detailed technical and scientific activities, which include the research design, sampling plan, instrumentation, statistical tools (pretest, classical assumption test, simple regression). Chapter IV This chapter discusses the presentation of the findings that addresses the research problem and focus on how these findings relate to the theory and previous researches.

Chapter V This chapter discusses the conclusion, implication and recommendation to advance the study of the research topic in terms of theoretical, methodological and managerial contribution that may be necessary to eliminate limitation of this study.

CHAPTER II REVIEW OR RELATED LITERATURE 2.1 Organizational Culture According to Schein (1992), organizational culture can be defined as a pattern of shared basic assumption invented, discovered, or developed by a given group that are taught to new organizational members as way of perceiving, and even thinking and feeling. Other researchers defined organizational culture in more detailed statement; organization member engage in rituals, pass along corporate myths and stories, and use arcane jargon and these informal practices may foster or impede organizations goals (Baker, 1980; Deal and Kennedy, 1982; Peters and Waterman, 1982). Kotter and Heskett (1992) described the need of good organizational culture as the optimal organizational culture and later stated that only cultures that can help organizations anticipate and adapt to environmental change will be associated with superior performance over periods of long time. Organizational culture is vital because it has measurable impact on organizations ability to achieve their goals. Director-HR of Microsoft India, Joji Gill stated that culture is the values and beliefs of the organization that describes the organization works. She added that values are the foundation of any company. If the foundation is weak, it wont be able to grow, hence it is important to build strong foundation these values should be focus on how resources are utilized and creates vision of the organization. Strong culture is considered to be driven force to improve the performance of the employees because it enhances self-confidence and commitment of employees and reduces jobs stress and improve ethical behavior of employees (Saffold, 1998). Schein (1990) divided organizational culture into two layers of concept; visible and invisible characteristics. The visible layer means external building, clothing, behavior modes, regulations, stories, myths, language and rites. Invisible layer on the other hand means common values, norms, faith and assumption of business organizational members.

In contemporary managers view, Schein (1990), organizational culture is widely understood as an instrument to be used by management to shape and control in some way the belief, understandings and behaviors of individuals, and thus the organization to reach specific goals. Bluedorn and Lundgren (2003) further emphasize the impact of organizational culture by stating organizational culture is integral to effective change initiatives and strategies. Previous studies have been conducted and the result shows that organizational culture has numerous impacts both directly and indirectly towards various outcomes. A study by Harvard Business School on 2003 examined management practices at 160 organizations and discovered that culture can enhance performance and has significant impact toward long-term economic performance. Peters and Waterman (1982) also found out that organizational culture proved to be detrimental toward positive economic performances. However, according to Denison, Haaland and Goelzer (2004) not all dimensions of organizational culture contribute to success in economic performance. Empirical evidence shows that there is several outcomes that can be associated either directly or indirectly with strong organizational culture. Alicia Bosnier from UC Berkeley stated the benefits include the following: competitive edge from innovation and customer service, efficient employee performance, increased team cohesiveness, high employee morale and strong company alignment towards goal achievement. Kotter and Hesket (1992) conduct a study and found out that strong culture raised the income of organization up to 765% between 1977 to 1988 and only 1% increase in the same period for firms without strong culture. According to Ergun Ozen, CEO of Garanti Bank, the superior performance of firms like IBM, GE, P&G and Intel may be, at least partly or moderately, a reflection of their strong organizational culture. In this study, the researcher uses organizational culture typology developed by Hellriegel and Slocum

Figure 1 Four Types of Organizational Culture

Source: Hellriegel and Slocum, 1994. Management, 6e. New York: Addison Wesley

Figure 1: Four Types of Organizational Culture 1. Bureaucratic culture: This types of organization is highly structured, values rules and formalization and standard operating procedures to ensure predictability and stability. In this culture, the tasks and responsibilities of employees are clearly stated. For this organization success means dependable delivery and smooth scheduling (Hellriegel et al., 2004: 365366). 2. Participative culture: This type of organization is an open place to work. This type of organization is assumed to depend on teamwork and participation. Great importance is given to group consensus and long term benefits of human resource development. For this organization, success means achieving customers need and concern for people (Hellriegel et al., 2004: 366). 3. Learning culture: This type of culture emphasize on dynamic and creative place to work. Innovation and risk-taking are characterized in this organization. Organization with this type of culture reacts quickly to changes. Formal control is flexible to foster innovation and change. For

this organization success means gaining new and unique product or services (Hellriegel et al., 2004: 367). 4. Competitive culture: This type of culture is result-driven focused mainly on job completion. In this culture relationship of employee and organization is contractual. Competitiveness exists in every level of management because performance is rewarded through increased compensation from organization. For this organization success means market leadership (Hellriegel et al., 2004: 367). When an organizational culture is deemed unhealthy, it requires organizational culture change. This change process can be very daunting but necessary nonetheless because organizational culture change may lead to reduced employee turnover, improve companys performance and achieve organizational goals. According to Edgar Schein, culture is the most difficult organizational attribute to change, because organizational culture outlast organizational products, services, founders, and leadership, and all other physical attributes of the organization. There are numerous ways to change organizational culture such as mergers and acquisition, however strong cultures can provide organizations with significant advantages, but when the basis for survival rests on organizations ability to change and adapt, a strong culture can be liability 2.2 Learning Organization According to Senge (1990), learning organization is a group of people working together to collectively enhance their capabilities to create results they really care about. Nevis et al (1995), define learning organization as capacity within an organization to maintain or improve performance based on experience. Dixon (1999) defines learning organization as organization that facilitates the learning of all its members and which continuously transforms itself. Other previous studies stated that learning organization covers individual, group and organizational learning to increase organizational and individual learning (Small and Irvine, 2006; Argris and Schon, 1978). Many research papers have been published about the impact of various variables on learning organization such as increase competitiveness, responsive to external pressure, improve quality at all

levels, etc. (Gardiner and Whiting, 1997; Hall, 2001; Edmondson and Moingeon, 1998). Senge et al (1994), suggested, for an organization to transform into learning organization, it must undergo five steps. First step was to build shared vision that can be achieved through empowering individuals to create shared image of the future of the organization and all employees would contribute know and share the vision. Second step is to engage in whole team learning and transfer of new knowledge. Senge suggested that collective learning is outweighs the benefit of individual learning. Third model is to allow new view of the future to be shared and new vision to develop what is necessary and can be done. Fourth step, individual need to know their weaknesses and internalize their learning. Final step is to view things in big picture; meaning how each pieces interact with each other and the environment According to Applebaum and Reichart, there are 3 key characteristics of learning organization. Those 3 key characteristics are learning process, learning orientation and facilitating factors within the organization. In order to cope with rapid changes learning is seen as continuous activities wherein employee need to learn quickly in order to support organization (Slater and Narver, 1995). Stata (1989), stated that by learning quickly, employee can discover innovative ways of working and make it easier to adopt new technology, which in turn give the organization competitive advantage over other competitors. In their work, Sambrook and Stewart (2000) stated that learning organization is necessary to enable employee become proficient in at a certain task by allocating resources to facilitate communication platform and training programs to create more opportunities for continuous employee learning through teamwork and empowerment. In this study, the researcher used learning organization typology developed by Senge (1990). 1. Systems thinking: Organizations are system of interrelationships. Hence to become more successful people need to analyze these relationships and

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find the problems, this will allow organizations to eliminate obstacles to learning (Senge, The Fifth Discipline, 1990). 2. Personal mastery: There is a competitive advantage for an organization whose employee can learn more quickly that other workforce in other organizations. Learning organization has been described as sum of individual learning, hence there must be medium for individual learning to be transferred into organizational learning (Senge, The Fifth Discipline, 1990). 3. Mental models: This is the company culture and act as framework for the functioning of the organization. To be a learning organization, these frameworks must be challenged; unwanted values need to be deleted (Senge, The Fifth Discipline, 1990). 4. Shared vision: A learning organizations employees must all share common vision. Personal goals must be congruence with organizational goals, hence learning organization tend to have decentralized

organizational structures (Senge, The Fifth Discipline, 1990). 5. Team learning: The sum of individual learning is called team learning. The benefit of team learning is that staffs grow quicker and the problem solving capacity is improved because of better access to knowledge and expertise. Learning organization has structure that nurture team learning (Senge, The Fifth Discipline, 1990).

2.3 Theoretical Framework Figure 2 Theoretical Framework of this study Organizational Culture Competitive Culture Bureaucratic Culture Participative Culture Learning Culture Learning Organization Personal Mastery Mental Models Shared Vision Systemic Thinking Team Learning

This study focused only in five typologies of learning organization developed by Senge (1990), which are: personal mastery, mental models, shared

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vision, systemic thinking and team learning. This study focused only in dimension of organizational culture proposed by Hellriegel and Slocum (1994), which are: competitive culture, bureaucratic culture, participative culture and learning culture. In this study, researcher studies the relationship between organizational cultures towards shaping learning organization. 2.4 Hypothesis of the Study Based on the theoretical framework, the following research hypotheses are defined as: H1: There is a significant relationship towards shaping learning organizations. 2.5 Operational Framework The operational framework of the study adopted theoretical framework presented in Figure 3 taken from Fard, Rasmy, and Taghiloo (2011). The measurement of this study consists of several dimensions. The researcher wants to observe whether there is a relationship between organizational cultures towards shaping learning organization. between organizational cultures

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Figure 3 Operational Framework


Organizational Culture Competitive Culture 1. High flexibility 2. Low integration 3. Contract relations between employee and the organization 4. Low loyalty 5. Low cultural identity 6. Achieving to quantitative objects Bureaucratic Culture 1. Inflexibility 2. Rigid regulations and use 3. High level of centralization 4. Affirmative leadership style Participative Culture 1. Low flexibility 2. High integration 3. Loyalty 4. Personal commitment 5. Team working 6. High level of society acceptance 7. Tendency to satiability Learning Culture 1. Trend to change 2. Knowledge expansion 3. Sensitive and responsive to external changes 4. Complex environment 5. Competitive advantage 6. Informed about the environment 7. Gathering environmental information and process 8. Service development 9. Encourage innovation, creativity and learning 10. Organizational commitment
Learning Organization Personal Mastery 1. Try to achieve the goals 2. Try to improve the ability 3. Skill and ability 4. Be informed of the updated knowledge 5. Continuous improvement of the activities 6. Skill development Mental Models 1. Simple opinion about the performance 2. Serotype view points 3. Accepting other opinions 4. Rationality in problem solving 5. Believe to find better alternative 6. Irrational advocacy Shared Vision 1. Common objective 2. Commitment to the vision 3. Participating in defining organizational objectives 4. Commitment to achieve organizational objectives 5. Homogeneity of individual and organizational objectives 6. Clear organizational objectives Systemic Thinking 1. Use of system thinking 2. Attention to the effect of decisions 3. Try to find causes of the problems 4. Considering and monitoring changes in external environment 5. Able to make comprehensive decisions Team Learning 1. Tend to dialogue and discussion 2. Information exchange in decisionmaking 3. Group assessment and evaluation 4. Commitment to group decision making 5. Importance of team learning and training 6. Using others experiences

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CHAPTER III RESEARCH METHODOLOGY 3.1 Research Design In this study, the author used quantitative method and the purpose of this study is hypothesis testing. Types of investigation were cause-effect relationship among organizational cultures (bureaucratic culture, participative culture, learning culture and competitive culture) and shaping learning organization. Sekaran (2003) stated that the advantage of hypothesis testing is it offers understanding of relationship among variables. Researcher interference is minimal and the study was conducted in natural environment. Time horizon of this study is cross-sectional. 3.2 Research Variable 3.2.1 Operational Definitions Organizational culture is a pattern of shared basic assumption invented, discovered or developed by a given group that are taught to new organizational member as way of perceiving and even thinking and feeling. This study uses organizational culture typologies developed by Hellriegel and Slocum (1994), which are bureaucratic culture, competitive culture, participative culture and learning culture. Bureaucratic culture will be measure by indicators developed by Hellriegel and Slocum (1994), which are: (1) Inflexibility; (2) Rigid regulations and use; (3) High level of centralization; (4) Affirmative leadership style. Competitive culture will be measured by indicators developed by Hellriegel and Slocum (1994) which are: (1) High flexibility; (2) Low integration; (3) Contract relations between employee and organization; (4) Low loyalty; (5) Low cultural identity; (6) Achieving to quantitative objects. Participative culture will be measured by indicators developed by Hellriegel and Slocum (1994), which are: (1) Low flexibility; (2) High integration; (3) Loyalty; (4) Personal commitment (5) Team working; (6) High level of society acceptance; (7) Tendency to satiability. Learning culture will be measured using indicators developed by Hellriegel and Slocum (1994), which are: (1) Trend to change; (2) Knowledge expansion; (3) Sensitive and responsive to change; (4) Complex environment; (5) Competitive advantage; (6) Informed about the environment; (7) Gathering environmental information and processes; (8) Service development; (9) Encourage innovation, creativity and learning; (10) Organizational commitment.

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Learning organization is a group of people working together to collectively enhance their capabilities to create result they really care about (Senge, 1990). This study uses learning organization typology developed by Senge (1990), which are personal mastery, mental models, shared vision, systemic thinking and team learning. List of operational variables can be seen in Table 1. Table 2 List of Operational Variables Hypothesis H1: Organizational cultures Learning organization Flexibility Regulations Centralization Leadership style Flexibility Integration Contract relations Loyalty Cultural identity Companys objectives Flexibility Integration Loyalty Personal commitment Teamwork Society acceptance Satiability Trend to change Knowledge expansion Response to external changes Environment Competitive advantage Knowledge of environment Service development Innovation Commitment Achieve goals Improved ability Skill and ability Updated knowledge Continuous improvement Skill development Simple opinion Stereotype viewpoints Accepting opinions Indicators Scale 6-points Likert scale

Learning organization

6-points Likert scale

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3.2.2 Variables to be tested

Problem solving Looking for alternative Advocacy Common objective Commit to vision Participate in defining organizational objectives Commit to achieve objectives Homogeneity of individual and objectives Clear objectives Use of systemic thinking Attention to effect of decisions Try to find cause of problem Consider and monitor changes in external environment Able to make comprehensive decision Dialogue and discussion Information exchange in decision making Assessment and evaluation Commitment to group decision making Importance of tem learning and training Using others experiences

The source of information in this research is from primary and secondary data. 1. Primary data: data obtained directly from the object under research by researcher. The source for primary data came from the questionnaires that were distributed to the employees of Company X. 2. Secondary data: secondary data in this study is list of employee from Company X and necessary online resources such as online-posted journals, and related previous research and many guideline books 3.2.3 Levels of Measurement In this study, level of measurement used was interval measurement. This measurement allowed researcher to measure the difference between points in scale and will also help in measure dispersion of range, standard deviation and also the variance This study used 6-points Likert scale. Even number Likert scale was chosen because researcher can make respondent to convey their real position rather than choosing a neutral position, which is available in odd number Likert scale. To measure

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the respondents response in organizational culture variable, each number will represent the following statement: Table 2 Likert Scale Representations
Score 1 2 3 4 5 6 Answers Strongly Disagree (SD)/ Sangat Tidak Setuju (STD) Disagree (D)/ Tidak Setuju (TS) Moderately Disagree (MD)/ Agak Tidak Setuju (ATS) Moderately Agree (MA)/ Agak Setuju (AS) Agree (A)/ Setuju (S) Strongly Agree (SA)/ Sangat Setuju (SS)

To measure learning organization, each number will represent following statement: Table 3 Likert Scale Representations
Score 1 2 3 4 5 6 Answers Never (N)/ Tidak Pernah (TP) Almost Never (D)/ Hampir Tidak Pernah (HTP) Sometimes Never (SN)/ Kadang Tidak Pernah (KTP) Sometimes Always (SA)/ Kadang Pernah (KP) Almost Always (AA)/ Hampir Setiap Saat (HSS) Always (A)/ Setiap Saat (SS)

3.3 Methods of Data Collection 3.3.1 Sources of Data In this study, the researcher will use primary data and secondary data. Primary data will be firsthand information collected from all employees of Company X in form of questionnaire. Secondary data will be previous studies from books, journals and reports. 3.3.2 Sample and Sampling Plan As the research conducted toward a company, which is Company X, the population for this research is all employees of Company X. The quantity of the population in this research is known, which is 138 employees, 11 are managerial level and 127 are staff and cook. Population is taken regardless of gender education and work experience. Later on, population will be divided into two groups, managerial level and non-managerial level respectively. Out of 138 employees, the research gets 124

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employees (89.8%) as respondent. The incomplete sampling is caused by the different working shifts, unavailability of employee during the data collection 3.3.3 Research Instruments In this study, the research instrument used will be questionnaire. Questionnaire will be divided into two parts. First part of questionnaire is to know general information of respondent based on demographic and position in Company X. this data will be analyzed to know whether there is distinct characteristic that can differentiate respondent choice. This part will consist of gender, age and position, years of employment, educational background and work experience. Second part of questionnaire is necessary to get data needed in analyzing relationship between variables. The questionnaire will use 6-points Likert scale and will be closed questionnaire to help respondent in answering it quickly and it will also help researcher to code the answer for further analysis (Sekaran, 2003). 3.4 Methods of Data Analysis In this study, quantitative method will be used in analyzing data relative to answering the proposed research objectives and operational framework 3.4.1 Descriptive Statistics In order to know respondents general profile or demographic characteristic, several questions need to be answered the demographic data of respondents is processed using Statistical Package for Social Scientists (SPSS) version 16.0. The demographic data are: 1. Age 2. Gender 3. Position 4. Years of employment 5. Latest educational background 6. Work experience prior joining Company X 3.4.2 Validity and Reliability Test a. Validity Test Validity will be used as well to measure if the indicators of the research will really be able to measure the concept. As the author will use SPSS 16.00 as the software to analyze the research data, technique that will be use is Bivariate Pearson. Bivariate Pearson will analyze by correlating each item score with total score it will show that the items are able to support in measuring the concept. Indicator are considered valid when the value of its coefficient is greater than 0.4.

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b. Reliability Test Reliability test is a test of consistency in data acquired and whether it is dependable and can be used for further testing. In measuring reliability test, one way is to use Cronbachs Alpha. If the data has Cronbachs Alpha on standardize items greater than 0.06 then it can be considered as reliable (Hair et al, 2006). 3.4.3 Classical Assumption Test a. Normality test The objective of this test is to test whether the independent variable and dependent variable used in this study is normally distributed. This study will use probability plot. If the plot is scattered along the diagonal line, then the model is considered to be normally distributed b. Homoscedasticity Test The objective of this test is to know whether there exist inconsistent covariance or not in a model. It can cause inefficient estimator, which will affect the result. This study uses Spearmans Rho coefficient in which the significance value must be greater than 0.05. c. Linear test The purpose of linearity test is to examine whether or not there exist a relationship between independent and dependent variables. The variables have significant relationship if significance level of linearity is less than 0,05 d. Autocorrelation test The objective of autocorrelation test is to test the relationship between values separated from each other given a certain time of period in the residuals or prediction errors from an analysis. This study uses Durbin-Watson statistics to detect presence of autocorrelation. According to Wijaya (2009), data can be considered to pass the test if the Durbin-Watson coefficient is between du < dw < (4-u). The table below shows that the Durbin-Watson statistics is higher than the du, hence there is no autocorrelation in the model of this study 3.4.4 Simple Regression Analysis The objective of multiple regression analysis is to test the relationship between independent and dependent variable. The standardized beta coefficient will reflect how strong the relationship of independent to dependent variable According to Hair et al. (2003), regression models should use standardized regression coefficient. The researcher will examine the standardized coefficient, which ranges from 0.00 to 1.00.

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3.4.5 Correlation Coefficient In this study, correlation coefficient is done using Product Moment Pearson. If the correlation coefficient is +1, then the relationship of X and Y is positive and perfect. If X increase, then Y increases and vice versa. However if correlation coefficient is negative, then relationship of X and Y is negative and perfect. If X increase, then Y decreases and vice versa. In this study, the researcher will find the correlation between: Organizational Culture (X) and Learning Organization (Y)

The interpretation of correlation coefficient can be seen in Table 5. Table 5 Correlation Coefficient (r) Interpretation Coefficient Interval 0.800 1.000 0.600 0.799 0.400 0.599 0.200 0.399 0.000 0.199 Source: Sugiyono (2007) Relationship Level Very Strong Strong Moderately Weak Very Weak

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CHAPTER IV RESULTS AND DISCUSSIONS 4.1 Research Object Description 4.1.1. Company Description Company X is a company specializes in managing international franchises in Indonesia, which was founded in mid 2008. At first the company hold license of 1 franchise with 4 outlets. The business was improving and expanding until on early 2012, wherein the company holds licenses of 3 franchises with 25 outlets in Jakarta. In 2011, Company X ownership structure was changed from. At first one person only funded the company, but since 2012 the company was funded by four people and one of its partner act as managing partner. The transition of ownership proves to be beneficial for Company X. As of July 2012, the company had holds 3 licenses with 25 outlets in various locations in Jakarta and headquartered in Total Building Jakarta. The Company control license of 3 international franchises which are a ramen restaurant bringing authentic bowls Tokyo food, with its signature dish such as ramen topped with pork mean and bamboo shoots; Fresh tea and juice, a tea and juice bar serving tea combined with urban varieties; a gelato bar where in introduces hand crafter gelato made with traditional ingredients Company X business is mainly focuses on the field of food and beverages. The companys core key retail business is in service industry through numerous outlets. Since this company was established 4 years ago, the brand name cant be leveraged, however the company relies on popularity of franchises the company holds. 4.2 Respondent Description The respondent of this study is all employees of Company X, which means all employees in every outlet in every franchise. The respondents are taken by using complete enumeration method. From total employee of 138 questionnaires distributed in this company, 124 are returned and used for study, the characteristic description of the respondents can be known through classification of data or personal data acquired based on gender, age, position, years of employment, educational background and work experience. The results of each classification are explained as follows: 4.2.1 Respondent Description based on Age The respondents are not given series of answer, hence respondent write their age. However for convenience purposes, the age will be classified into four groups as follows

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Table 4 Respondent based on age


Age 20-24 25-29 30-34 >35 Total Total 17 59 26 22 124 Percentage 13.7% 47.5% 20.9% 17.7% 100%

From the table above, it is known that almost half of the companys employee composition is ranged around 25-29 (47.5%). The rest are distributed to 20-24 (13.7%), 30-34 (20.9%) and >35 (17.7%). 4.2.2 Respondent based on Gender The respondents are given option to choose their gender. The result of gender are shown as follows: Table 5 Respondent based on gender
Gender M F Total Total 65 59 124 Percentage 52.4% 47.6% 100%

From the table above, it is known that the companys employee composition in terms of gender is distributed almost equally. Male employee is 65 (52.4%) and female employee is 59 (47.6%) 4.2.3 Respondent based on Position The respondents are given option to choose their position. The result of the gender are shown as follows: Table 6 Respondent based on position
Position Manager Staff Total Total 11 113 124 Percentage 8.9% 91.1% 100%

From the table above, it is known that the companys manager consist of only 11 (8.9%) of its total employee. 113 (91.1%) are employees consisting of cook, waiter and office staffs.

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4.2.4 Respondent based on Years of Employment The respondents are given classified into four groups of range with years of employment basis as follows: Table 7 Respondent based on years of employment
Years of employment 6 months 1 year 1 year 2 years 3 years 4 years Total Total 48 70 6 124 Percentage 38.7% 56.4% 4.8% 100%

From the table above, it is known that most of employee in Company X have worked for the company for 1 year to 2 years (56.4%). 47 (38.7%) employees have worked for 6 months to 1 year and only 7 (4.8%) employee have worked for 3 years to 4 years. 4.2.5 Respondent based on Educational Background The respondent are given options of educational background to fill in as follows: Table 8 Respondent based on educational background
Educational Background High School Bachelors Degree Masters Degree Total Total 52 70 2 124 Percentage 41.9% 56.4% 1.6% 100%

From the table above, it is known that most employees (56.4%) in the company is educated until level of S1. Second highest is high school level (41.9%) and third is S2 level (1.6%) 4.2.6 Respondent based on Prior Work Experience The respondents are given options of yes and no to fill in. The results are as follows:

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Table 9 Respondent based on prior work experience


Prior Work Experience Yes No Total Total 98 26 124 Percentage 79% 21% 100%

From the table above, it is known that majority of employee (79%) in the company has work experience prior joining Company X. 26 employee (21%) has no work experience prior joining Company X 4.3 Mean Rating and Standard Deviation Descriptive statistics of research variables describes the mean and standard deviation of each organizational culture. This study uses 6-point likers scale, hence 6 being the highest minus 1 being the lowest divided by 6. Interpretation of the ratings used class intervals from given formula

The classification of each ratings are shown below Table 10 Categories of respondents answer
Interval 1 x < 1.833 1.833 x < 2.666 2.666 x < 3.499 3.499 x < 4.332 4.332 x < 5.166 5.166 x < 6 Statement Strongly disagree Disagree Moderately disagree Moderately agree Agree Strongly agree

4.3.1 Mean Rating and Standard Deviation of Organizational Culture Organizational culture is measured by 4 types of organizational culture in which each culture has their own indicators. Learning culture has the highest overall mean among all types of culture; hence it is perceived by respondent as the most dominant culture in the company. Learning culture has overall mean of 4.38, this finding suggest that most employee perceived the culture of the company is learning culture.

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Table 11 Mean Rating and Standard Deviation of Each Dimension of Organizational Culture
Indicator Competitive Culture Bureaucratic Culture Participative Culture Learning Culture Mean 4.25 3.82 4.19 4.38 Standard Deviation 0.52 0.32 1.50 0.43 Statement Moderately Agree Moderately disagree Moderately agree Agree

Table 12 Mean Rating and Standard Deviation of Each Indicator of Learning Culture
Indicator Mean Standard Deviation Trend to change Knowledge expansion Response to external changes Informed about environment Competitive advantage Knowledge environment Service development Innovation Commitment Overall Mean and Standard Deviation 4.31 4.30 4.28 4.38 4.42 4.24 4.28 4.27 4.41 4.33 0.62 0.61 0.63 0.63 0.58 0.62 0.67 0.63 0.66 0.60 Moderately Agree Moderately Agree Moderately Agree Agree Moderately Agree Moderately Agree Moderately Agree Agree Agree Agree Statement

Most employees agreed on the idea of company being informed about environment with a mean rating of 4.38, the company has several competitive advantages with a mean rating of 4.42 and commitment with a mean rating of 4.41. Most employee moderately agree that the company is adaptable to change with a mean rating of 4.31, the company encourage knowledge expansion with a mean rating of 4.30, the company is responsive to external changes with a mean rating of 4.28, the company has competitive advantage over other companies with a mean rating of 4.27, the company tries to develop their services with a mean rating of 4.42 and the company has knowledge of the environment with a mean rating of 4.28 being the lowest.

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4.3.2 Mean Rating and Standard Deviation of Each Indicator of Learning Organization Learning organization is measured using 5 dimensions with total indicators of 22 indicators. The overall mean rating for all indicators is 4.63, hence most employees percieved that the company can transform into learning organization. Table 13 Mean Rating and Standard Deviation of Each Indicator of Learning Organization
Indicator Mean Standard Deviation Achieve Goals 4.11 0.61 Moderately Agree Improved ability 5.26 0.65 Strongly Agree Updated Knowledge Simple opinion about performance Stereotype viewpoints Accepting other opinions Rationality in problem solving Believe to find better alternative Commitment to vision Participate in defining organizational objectives Commitment to achieve organizational objectives Share same organizational objectives Clear organizational objectives Use of system thinking Attention to effect of decisions Try to find causes of problem Consider external changes Make comprehensive decision Tend to dialogue and discussion Information exchange in decision making Group assessment and evaluation Commitment to group decision making Overall Mean and Standard Deviation 4.69 4.69 4.60 4.59 4.65 4.82 4.85 4.66 4.50 4.66 4.78 5.10 0.78 0.84 0.86 0.82 0.80 0.77 0.74 0.89 0.86 0.88 0.84 0.85 Agree Agree Agree Agree Agree Agree Agree Agree Agree Agree Agree Agree 4.58 0.82 Agree 4.51 4.58 4.56 4.50 5.15 4.66 4.74 4.67 0.69 0.75 0.76 0.70 0.75 0.75 0.74 0.78 Agree Agree Agree Agree Agree Agree Agree Agree Statement

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Based on Table 13, most employees perceived that employees try to improve their ability with mean rating of 5.26 being the highest. On the other hand, most employees perceived that employee try to achieve organizational goals with mean rating of 4.11 being the lowest. 4.4 Data Analysis 4.4.1 Pretest a. Validity Test The validity used in this study is Pearson Correlation Coefficients computed using SPSS software. The data is considered valid when the Pearson correlation for each indicator is higher than R table at significance level of 0.05 (Priyanto, 2012). Table 14 Validity test result on Learning Culture variable
Variable Learning Culture Indicator Trend to change Knowledge expansion Response to external changes Informed about environment Competitive advantage Knowledge environment Service development Innovation Commitment Pearson coefficient 0.723 0.758 0.715 0.714 0.819 0.759 0.733 0.749 1 Criteria Valid Valid Valid Valid Valid Valid Valid Valid Valid

Table 15 Validity test result on Learning Organization


Variable Learning Organization Indicator Achieve Goals Improved ability Updated Knowledge Simple opinion about performance Stereotype viewpoints Accepting other opinions Rationality in problem solving Believe to find better alternative 0.771 0.751 0.789 0.807 Valid Valid Valid Valid Pearson coefficient 0.630 0.583 0.658 0.747 Criteria Valid Valid Valid Valid

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Commitment to vision Participate in defining organizational objectives Commitment to achieve organizational objectives Share same organizational objectives Clear organizational objectives Use of system thinking Attention to effect of decisions Try to find causes of problem Consider external changes Make comprehensive decision Tend to dialogue and discussion Information exchange in decision making Group assessment and evaluation Commitment to group decision making

0.777 0.802

Valid Valid

0.799

Valid

0.780

Valid

0.804 0.835 0.791 0.801 0.831 0.833 0.815 0.814

Valid Valid Valid Valid Valid Valid Valid Valid

0.797 0.838

Valid Valid

From the tables above, all the component matrix values for each indicators are more than R table, which indicates validity, hence it can be concluded that all the indicators in this study are valid. b. Reliability Analysis This study uses Cronbachs Alpha to test the reliability. Cronbachs Alpha is a coefficient that indicates how well the indicator positively correlated to one another. A variable is considered reliable when the Cronbachs Alpha of a variables greater than 0.6 (Priyatno, 2012). Table 16 Reliability test result on the research variables
Variable Competitive Culture Bureaucratic Culture Participative Culture Learning Culture Learning Organization Cronbachs Alpha 0.883 0.643 0.823 0.967 0.706 Criteria Reliable Reliable Reliable Reliable Reliable

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From the table above, it can be concluded that all variables have Cronbachs Alpha coefficient greater than 0.6, hence it can be regarded as variable 4.4.2 Classical Assumption Test a. Normality test The objective of normality test is to test whether the data is normally distributed or not. This study will uses scatterplot to test normality of data. If the dots are forming a diagonal line, it can be concluded as normally distributed

Figure 4. Normal probability plot for normality test Source: Data analysis, 2012 From the scatterplot above, it can be concluded that the data is normally distributed because the dots are separated near the diagonal line and forms a formation along the diagonal line. b. Homoscedasticity Test The test is conducted using Spearmans Rho coefficient. Homoscedasticity is fulfilled when the Spearmans Rho significance value is greater than 0.05.

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Table 17 Homoscedasticity test result


Variables Tested H1 Organizational culture has an impact towards shaping learning organization Spearmans Rho Significance .372 Statement No Homoscedasticity

From the table above, it can be concluded that the research variables is free of homoscedasticity because the Spearmans Rho significance value is greater than 0.05. c. Linearity Test Linearity test is conducted to know whether there is or isnt a relationship between independent and dependent variables. To pass the test, linearity significance must be lesser than 0.05. Table below shows that there exist a significance relationship between independent and dependent variables Table 18 Linearity result on research variables
Variables Tested H1 Organizational culture has an impact towards shaping learning organization Linearity Significance .000 Statement Have significant linear relationship

d. Autocorrelation test The objective of test is to analyze the relationship of values given a certain time lag. This study uses Durbin-Watson statistic to measure autocorrelation. No auto correlation is detected if DW statistic is du < dw < (4-du). The table below shows that there are no autocorrelation detected Table 19 Results of Autocorrelation test
Variables Tested H1 Organizational culture has an impact towards shaping learning organization k 1 du 1,691 Durbin-Watson statistics 1,918 2,082 Absence of autocorrelation 4-du Statement

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4.4.3 Regression analysis Simple regression analysis is used to analyze linear relationship between independent and dependent variables by estimating coefficients for the equation. Table 20 Regression analysis result
Independe nt Variable (s) Organizati onal Culture Depende nt Variable Learning Organiza tion Standardized Beta coeff ,793 tstatstics Sig R2 Adj R2 Statement

H
1

15,163

,000

,628

,626

Accepted

From the table above, it can be concluded that learning culture positively influences dependent variable with value of 0.793. In other words if the company improve learning culture by 1 unit, it will shapes Company X as learning organization by 0.793 units. The value also shows that the independent variable has significant relationship towards dependent variable. The hypotheses testing shows that organizational culture has a impact towards shaping learning organization. This means that the effect of learning culture towards learning organization exist, hence the equation is as follows: Y= 0,793X Where: Y = Learning Organization X= Learning culture 4.4.4 Coefficient of Determination and R2 Analysis Coefficient of determination calculates the strength correlation between the dependent and independent variables. On the other hand, R2 calculate the amount of variance in dependent variable related to independent variable. From the table above, it can be concluded that there is a positive and strong correlation between independent and dependent variable. Adjusted R2 value is 0.626, which means that 62.6% variance in dependent variables in influenced by independent variables, the other 37.4% is explained by other variables outside the proposed research model. 4.5 Discussion Based on the pretest step, it can be concluded that data of this study is valid where in the Pearson correlation value must be greater than R table, hence indicators measure the variable correctly. This shows that respondents understand the questions

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given. Pretest step also shows that data used in this research is reliable with Cronbachs Alpha coefficient greater than 0.6, hence indicators on each variable are free of bias and ensures consistency of measurement across all questions. From the Bivariate Pearson analysis, the strongest indicators influenced learning culture is commitment with r value of 1 and the least dominant is informed about environment with r value of 0.714. Commitment and competitive advantages as dominant factors influencing learning culture has been perceived highly by respondents. The weaker factors are explained by informed about environment and response to external changes. Due to early establishment of the company, being only 4 years in operation, the network of the company is relatively small. If it is possible, the company should conduct company visit as to absorb knowledge and assign third party to conduct market survey in order to keep updated with recent changes. The company can also create benchmarking, which will be costly but necessary nonetheless. Competitive being the second most dominant gives high mean rating probably because most employee working in the company are relatively young, hence theyre more passionate and aims for result and incentives are given for over-achievers. The most dominant factor in shaping learning organization, commitment to group decision-making has been perceived highly by respondents. The weaker factor are explained by achieve goals and improved ability. This outcome is probably because due to early establishment of the company, employee cant learn as much as they expected. To improve this, the company can hire experienced people to occupy strategic position, so they can improve the overall ability of their respective subordinates. The classical assumption step shows that the regression model in this study is good and acceptable. From the normality scatterplot, it can be concluded that the data is normally distributed. The result of homoscedasticity test also shows that Spearmans Rho significance coefficient is greater than 0.05 hence independent variables are free from homoscedasticity. Linearity also shows that the data acquire is linear. Autocorrelation test also shows that the data is free of autocorrelation Regression step shows that independent variables have strong positive effect on shaping learning organization, which means when the independent variables are increased, so does the dependent variables. However, learning culture only contributes 62.6% to shaping learning organization. This shows that there are other factors that influences shaping learning organization besides learning culture. This means that

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learning culture is barely enough to shape learning organization. There are others factors influencing the variance of shaping learning organization

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CHAPTER V SUMMARY, CONCLUSION AND RECOMMENDATION


5.1 Summary With the increasing competition both domestic and foreign, organization must be adaptable with changes in dynamic world. The researcher wants to apply the theory in this study, which consist of dimensions organizational culture and shaping learning organization in Company X. This study used SPSS to test the relationship between variables. Based on the data analysis the result of the analyses can be explained as follows: The data acquired based on questionnaire. This study used the 124 respondents. Based on the results characteristics of respondent, it can be concluded that all employee of Company X is centralized on 25-29 years old (47.5%) and the rest are distributed to 20-24 years old (13.7%), 30-34% years old (20.9) and >35 years old (17.7%). Gender of customers is also distributed almost equally with male 52.4% and female 47.6%. Most employee in Company X is employed as staff (91.1%) while managers is accounted for 8.9%. Most employees have been employed for 1 to 2 years (56.4%) and the rest are 6 months to 1 year (38.7%) and 3 to 4 years (4.8%). Most employees in Company X have educational background of S1 (56.4%) while the rest are high school graduates (41.9%) and S2 (1.6%). 79% of employees has work experience prior joining company X and 21% has no experience prior joining company X. Hughes (2002) in his work explained that gender differences might influence organizational culture in many different ways. Ismail (2008) suggest that differences in education background, age and gender can also influence organizational culture. Studies by Kahn (2010) suggest that differences in job position might also affect the employee behavior From the descriptive analysis of respondents, the respondents evaluate that the organizational culture from most dominant to least dominant in the company are learning culture followed by competitive culture, participative culture and bureaucratic culture. This study uses pretest step to test the validity and reliability of data. Second step is the classical assumption test, which consist of normality test, homoscedasticity test, linearity test and autocorrelation test. Last step is the regression analysis and correlation test

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From this study, it can be concluded that correlation between independent variables and dependent variables is positive and strong. 62.6% of shaping learning organization is associated with learning culture. The rest are factors outside of the scope of this study that are not discussed such as leadership, procedural justice, etc. 5.2 Conclusion The result can be concluded as H1: Organizational culture has a relationship towards shaping Company X as learning organization. It means that when a specific organizational culture is emphasized it can shape a company to become a learning organization. In this study it is proved that learning culture is the dominant culture and with increase of 0.793 unit of learning culture will help shaping Company X as learning organization by 1 unit 5.3 Recommendation Based on the result of this study, it is known that organizational culture has a significant effect towards degree of shaping learning organization. This indicates that management of Company X should pay attention to this variable because it significantly influences degree of shaping learning organization. It is known that organizational culture can determine the survival of an organization. The most dominant culture in this study is learning culture, means that the organization should focus on improving their learning culture by adapting to environment. This research shows that learning organization has an effect shaping Company X as learning organization. The improvement of learning culture can be implemented by adopting less centralized control in which all employees can contribute and shared their ideas freely. Company can also develop programs that improve organizational learning culture, learning and creativity, system thinking, team working and participation level in their organization. Company should also remove obstacles to creativity by removing unnecessary bureaucracy and start to use participative management system and delegation of authority to subordinates. Also, in order to provide services that is on time, relevant and accurate information necessary for decision making, company need to design an information system flow and documentation system that allows information to be shared by those who needed it Even though learning culture is the most dominant types of culture, it doesnt mean that all other aspects need to be neglected. Competitive culture is important to a certain extent to keep employee competitive. With financial incentive, employees are

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expected to perform beyond their usual pay grade; hence it will increase the companys outcome. This research may become a suggestion for other companies big or small to not underestimate the role of culture in determining the success of an organization. Organization should not randomly operate because it will be inefficient. The study results shows that the statement in my organization people are committed to groups decision making has the highest Pearson coefficient in measuring learning organization. It shows that most of employees are committed to decision made by the company. In order to maintain this, the company should invite all necessary employees in decision-making process. In real life, this can be translated as having all departments manager sit in one room and give feedback regarding the companys performance. On the other hand, statement in my organization, people try to improve their ability has the lowest Pearson coefficient in measuring learning organization. It means that the employee think their employment there; do not increase their overall ability. This statement might be vital to companys survival since no matter how good a company is, it can only be as good as the people running it since this company isnt only consist of managers, but also staffs and cooks. So, the company has to ensure the employee that their employment there is not just for them to receive paychecks. The solution is to held necessary training and seminars to ensure that all employees their growth is essential for the company In order to shape learning organization, learning culture must be fostered. The result of learning organization is an organization that is adaptable to changes. When a company is adaptable to changes, that company can perform better because theyre always keeping up with changes. Furthermore, according to Fard et al (2011) by being adaptable, it can lead to efficiency. Commitment and competitive advantage are the two most dominant indicators in learning culture, hence managers should maintain and improve this achievement. However there are some factors such as informed about knowledge must be improved. The result of this study confirms that organizational culture has an impact towards shaping Company X as learning organization. The result from previous studies by Fard et al (2011) also confirms this finding. In addition, organizational culture is proven have significant positive impact towards shaping learning organization. Empirical suggestion of this study, Company X has to increase learning culture in order to be adaptable with changes.