STRATEGY

ORGANIZATIONAL CULTURE OF SMALL RETAIL FIRMS

Patricia M. Kosters
Small Business Owner

Mary Lynn Damhorst
Grace I. Kunz

iowa State University

ABSTRACT

tt case study approach was used to examine organi ational culture dimensions of small
apparel retail firms located m small towns within the trading area of a regional shopping
center. A long interview schedule was developed to obtain information from owners and
employees. Contentanalysisofthequalitativeresponses revealed that l2culturedimensions
identifed in previous research could be applied to the small firms. In addition, a dimension
not clearly identified in previous research emerged in relation to influence of

employees'amily

relationships on organizational culture. Suggestions for further research and
application of the findings to management consultation are provided.

INTRODUCTION

In today' complicated marketplace, having a good product or service and a well planned
strategy for marketing to the final consumer is oAen no longer sufficient for companies to
survive and prosper. Tremendous changes in the economic environment and the enormous
increase in competition in recent years in the United States have resulted in a major search for
new models for etTective business management. Understanding and managing organizational
culture is proposed by some authors to be crucial for optimizing a firm's performance (Deal &
Kennedy, 1982; Kotter & Heskett, 1992). However, management and marketing scholars have
concentrated their research efforts on cultures of large companies; as a result, a sizable and
important segment of the business population across the U.S. has been notably neglected.

The potential significance of this neglect becomes apparent when trends related to small
business and, in particular, small retailers are examined. Robinson and Pearce (1984) reported
that small business firms dominate the United States'ervice, construction, and retailing
sectors; approximately 82% of all retailing outlets are sole proprietorships. A small retailer is
usually defined as a store having fewer than 100 employees. In the state of iowa, where the
present study was conducted, approximately 90% of all businesses have gross sales of less than
$250,000 (iowa Dept. of Revenue, 1989) and employ an average of less than 12 persons
(Stone, 1989). The significance of small business in terms of employment and total state
revenues for Iowa is much greater than for the country as a whole.

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The current situation of increased competition from giant retailers such as Wal-Mart,
outshopping in regional mails, and increased competition from catalog and mail-order retailing
makes survival difficult for small apparel firms in any state. There is tremendous pressure on
retailers, panicularly small retailers, to find pertinent and current strategies to help them
develop effective ways to compete in today's marketplace.

r inization Culture Conce t

Each human group and organization, regardless of size, whether it is a family, school,
church, civic association, or business, has a particular way of functioning-i.e., culture —that
distinguishes it from other organizations. According to Spradley (1980), culture is "the
acquired knowledge that people use to interpret experience and generate social behavior" (p.
6). This knowledge is reflected in how the cultural group thinks and organizes itself, in what
it makes or produces, and in the processes used to produce goods and services (cf. Spradley,
1980). Culture includes physical artifacts and behavioral patterns that provide visible
manifestation of and support the beliefs and meanings socially constructed by organization
meinbers (Rousseau, 1990).

Any organization has systems or patterns of values, symbols, rituals, myths, and
practices that have been developed over time since it was founded (Enz, 1986; Smi reich, 1983).
An organization's particular way of functioning is the manitestation of underlying values,
be I ie fs, and attitudes concerning what is important to that group and what behavior is expected
from its members (Schein, 1989). These underlying elements give meaning to and confer
identity on the organization; collectively the elements define the organization's culture.

Culture, as applied to the businessorganization,has been called "corporate culture". We
prefer the term "organizational culture" to emphasize that culture is not solely handed down
and imposed by the corporation leadership; it is shaped and constructed by all members of the
organization (Hofstede, Neuijen, Ohayv, & Sanders, 1990).

Culture, expressed as "shared values" in the McKinsey framework for manageinent, is
central to the business organization and has impact on all functions and activity in the
organization(see Peters & Waterman, 1982). Pascale and Athos (1981)suggested that shared
values in the framework are superordinate goals that provide the glue holding the other six
elements —strategy, structure, systems, style, staff, and skills —together. The central role of
organizational culture is to provide consistency of meaning for the primary activity of a
business organization. All corporate practices, structures,and behaviors are made sense of and
shaped within the context of culture (Deal & Kennedy, 1982). Deal and Kennedy (1982)
contended that the rational aspects of organizational functioning, such as structure, strategy,
budgeting, and operations, are not as ultimately important to the firm's performance as the
shared understandings of employees. However, Hofstede et al. (1990)clarified that it is shartxl
understanding of organizational practices, shaped of course by top executive values, that
identifies organizational culture as it is understood by employees.

While critics of corporate culture suggest that the concept of organizational values is too
abstract and global and prefer to use more tangible concepts as management tools, Posner,

30



Kouzes, and Schmidt(1985) were convinced that shared values make a significant difference
in the lives of employees as well as in the performance of the firm. Kotter and Heskett (1992)
presented evidence that in the long run organizational culture can have a significant impact on
economic performance of a firm.

According to Schein (1989), "There is no such thing as a culture-free concept of
management" (p. 315). Culture is analogous to a script; it is normative in that it sets forth
general and specific rules and guidelines, written and unwritten, that guide the firm's members
in their daily activities and routines(Schein, 1989). The shared meanings supplied by a culture
are typically applied to needs and problems commonly faced by managers and employees as

they carry out everyday business activities. Schein further suggested that a firm's culture helps
determine I ) the way business strategy is carried out, 2) the nature of interaction with external
publics such as customers, suppliers and financial advisors, 3) the kinds of people hired, how
they are trained, and how they are compensated, and 4) the nature of internal interaction
between management and employees that influences both atmosphere and climate of the
workplace. Culture constrains choices by conveying to employees which behavior and
practices are acceptable and unacceptable in the firm; formal and informal manifestations of
culture provide rules and norms for behavior in the organization (Davis, 1984; Deshpande &
Webster, 1989; Robbins, 1988).

Profilin Or anizational Culture

A number of attempts have been made to identify and categorize dimensions of
organization culture in an effort to develop a system for measurement and evaluation. While
organizational cultures vary widely according to factors such as company size, industry,
strategy,and financial performance, cultural dimensions that have been identilied by various
authors as common to all business environments were summarized by Robbins (1988) to
include individual initiative, risk tolerance, direction, integration, management support,
control, identity, reward system, conflict tolerance, and communication patterns. Reynolds
(1986)classifiedorganizationalculturedimensionsand isolated dimensions similar in overall
content to those summarized by Robbins. In addition, Reynolds identified external vs. internal
emphasisoforganizationeffort,an importantdimensionin the study of retail lirms with strong
customer service missions. Robbins'ummary of dimensions as well as

Reynolds'ontributions

served as a point of departure for the present study. We used their dimensions
for development of qualitative measures of organizational culture.

PURPOSE

As no research has focusedonorganizationalcultureofsmall businesses in general and
on apparel retailing businesses specifically the present research was exploratory: I ) to identify
common cultural dimensions across small apparel retail firms, 2) to develop hypotheses that
can be tested further for understanding of small business culture profiles, and 3) to assess the
eITectiveness of applying existing corporate culture theory to small apparel retail flrms. The
procedure and findings can be used for for making recommendations about developing or
refining a small firm's business strategies.

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METHOD

The case study approach was selected to facilitate investigation of a small number of
firms on a large number of variables. The long interview(McCracken, 1988) was the primary
method of eliciting information related to previously identified dimensions of corporate
culture. The open-ended response format allowed for the potential emergence of cultural
dimensions unique to small apparel retail firms. The qualitative data were analyzed for
thematic content and synthesized to form a cultural composite of each firm investigated. It was
expected that each situation of proprietorship might manifest itself in a distinctive
organizational culture profile. Similarities and differences across firms were examined.

Rousseau (1990) outlined the benefits of qualitative methods that afford a flexible,
interactive approach to exploring the social constructionsof business cultures. The case study
approach(Yin, 1984) facilitated in-depth study of the multifaceted concept of organizational
culture. Lack of previous study of cultures of small apparel retail firms warranted the use of
qualitative exploratory techniques. However, the small sample inherent in case study
approaches limits general izeabilityof the findings. We use the findings to generate hypotheses
for testing in further research of small businesses and apparel retail firms.

~C. S 8 P

A multiple case study protocol was prepared according to procedures outlined by Yin
(1984). Four sources of data were collected; I) the long interview, 2) a short personal data
questionnaire, 3) non-obtrusive observations of employee/customer interactions, and 4)
photographs of the physical aspects of the linns. Only the first two sources of data are reported
for this analysis. The observations and photographic evidence facilitated description of the
firms and informally confirmed some findings from the interview data.

Robbins'(1988) summary of corporate cultural dimensions provided the initial basis for
developing the interview schedules for owners and employees. However, his "control" and
"direction" dimensions were highly overlapping and merged as one Direction dimension for
this study.

While Robbins'dimensions incorporate internal factors that have impact on values and
behavior in the business organization,he does not include external dimensions which may be
important factors influencing the overall culture of a firm. Retailing, which involves the
primary activities ofbuying goods from suppliers and selling them to the ultimate consumer,
implies a strong focus on external publics. Therefore, Reynolds (1986) dimension of external
vs. internal emphasis was expanded into two dimensions labelled as Firm Image and
Orien/a/ivrr/o External Prriilicx The final list of twelve organization cultural dimensions (see
Table I) was used as the basis for developing the interview schedules.

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Table I
Summa of Or anizational Culture Dimensions Identifled in Previous Research

Dimension Description

Direction Leadership, supervision; written or implied rules,
regulations, or expectations for behavior

Identity Characteristics of owner personified in firm;
employees'dentification

with organization or specific role within
the firm

Individual Initiative Employees'erceived freedom to act independently

Firm Image Image and market positioning in terms of product quality,
price, and styling; what firm represents through physical
structure, location, and services offered

Communication Patterns Freedom in interpersonal communications

Conflict Tolerance Tolerance for differences of opinion or human
characteristics

Integration Cooperation and team spirit

Management Support Assistance, support, concern for employees provided by
manager

Orientation to External Quality and characteristics of interactions with customers,
Publics community, suppliers, and others

Reward System Type and manner of reward allocations as salary, etc.

Risk Tolerance Innovativeness in behavior and toleration of risk taking

A list of potential questions which might be used to elicit information related to each
cultural dimension was prepared. These questions were refined by four scholars of
merchandising and organizational communication. Other questions were designed to glean
information on a broad scope of management operations of the firm. The organizational
culture and management operations questions were integrated into two structured, open-ended
interview schedules, one for owner/managers and one for employees. (See Appendix A and

33



B for interview schedules.) In addition, techniques for developing interviewer/interviewee
rapport,objectivedistanceof the interviewer,and probing fordepth ofthinkingwere included.

Res ondents and Data ollection

Agreeing to participate in the study were the owners of three firms in towns with
populations less than 15,000 and situated within the trading area of a regional mall in Iowa.
As the three towns were at least 30 miles in distance from each other, the three stores were not
close competitors. However, the regional mall was perceived by each owner to offer
substantial competition.

The three owners were sole proprietors and managers of their respective Iirms. Each
owner (40 to 55 years old) and all employees (14 to 67 years old) interviewed were women.
Business ownership by women, particularly small business, comprises one of the fastest
growing segments of the U S. economy (Aburdene & Naisbitt, 1992; Gaskill et al., 1996; U S.
Small Business Administration, 1993). Study of women-owned businesses is therefore timely
and pertinent. Female owners and employees are common among small apparel retailers in
particular (Bowen & Kisrich, 1986).

At the time of this investigation, each firm had been under its current management in its
current location between three and seven years. None of the stores was in the initial start-up
phase of the retail 1 ifecycle. In addition, each owner alleged that her business was a profitable
operation at the time. Previous net earnings reported by two of the owners were $450 000 and
$275,000 in 1989. The three firms all employed five to nine full and part-time workers. One
store stocked men', women', and children's apparel; the two other stores carried only women'
apparel.

Initial data collection took place over a 12-week period during which time the owners
and four to five employees from each of the three firms were interviewed, each at the place of
business but one at a time and in a private room. All interviews were carrifxl out by one of the
researchers who has had considerable retailing experience. Each interviewee completed the
personal data form first; then the interviews, ranging from thirty minutes to three hours, were
recorded on audiotape with permission of the respondents. All staff respondents knew that
their employers had approved participation in the study.

A~l. l f O.

Approximately 20 hours of audiotaped interviews were transcribed verbatim onto a
computer sol'tware word filing system (File Maker Plus) for managing qualitative data. The
twelve dimensions of organization culture identified in Table I were developed as coding
themes for content analysis of the interview data. Two researchers, with diverse backgrounds
in business practice and communication theory, coded all transcripts and negotiated all
differences in category assignments. Throughout the negotiation process, understanding of the
categories evolved, and the corporate culture dimensions were refined to arrive at the final
version of the coding guide and assignment of data to themes. This process of continued code
refinement and negotiation by coders borrows procedures from the constant comparative

34



technique of qualitative data analysis (Strauss & Corbin, 1990). A miscellaneous category
was included to contain responses not Iitting previously identified corporate culture
dimensions. New dimensions were formulated from some of the miscellaneous information.

Before negotiation, reliability between coders was measured using a calculation of
percent agreement recommended by Holsti (1969). Ten pages of transcripts were randomly
selected for three checks —at the beginning of coding, at the middle half, and at the end of all
coding. Percent agreements for content assignment were 60%, 74.4%, and 76.6% respectively.

A descriptive overview ofeach individual firm was shaped from the data. Findings were
also compared across firms, resulting in identificationof characteristicsof the cultures common
and varied across the three firms. The comparisons across firms are focused upon in this
analysis.

RESULTS AND DISCUSSION

General Descri tion of Stores

Firm A. Firm A was a family business in a small city, population 6,009 (Bureau of the
Census, 1990). The firm was recently taken over by the retiring founder's daughter who had
some college education and nearly 30 years of sporadic experience with the firm. The store
was the largest in physical size of the three studied but, from all evidence, generated the lowest
volume of sales of the three firms investigated. The owner declined specific report of earnings,
but indicated that the business had both declining sales and declining profits.

Firm A carried apparel for women, men, and children in budget to moderate price lines.
Basics rather than current fashion trends were emphasized. Inventory on the tables and racks
was in many instancesseveral years old. Services such as home delivery, free giR wrapping,
liberal return policy, and store charge accounts were offered.

Observation and photographs yielded a general description of the physical environment
of the store as haphazard in organization and cluttered with merchandise. Several employees
expressed frustration with the clutter. Old tables, racks, and other Iixtures gave a dated
appearance to the store; the fixtures did not appear to have been strategically managed to give
a decorative theme of "old fashioned" or trendy antique restoration. All employees dressed
casually in pants, jeans, shorts, and t-shirts or sweatshirts.

In 1995 Firm A went out of business aRer 46 years in operation. The owner claimed that
she could no longer afford to keep the business open. Close-out business advertisements
heralded the final opportunity to experience "a most unique old-fashioned department store".

Firm B. Firm B had been purchased from the retiring founder by the current owner who
was a former employee of the firm. The current owner had a university degree in business and
25 years of experience in retailing, 18 of those in apparel.

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Firm B was the smallest in physical size but the largest in sales staff(9 employees) and
the largest in sales volume, generating approximately $450 000 in 1989. The owner indicated
that her business was growing and profitable. By 1996 the store had expanded its operation
by purchasing a nearby, locally owned shoe store. The small city where the store was located
had a population of 12,392 (Bureau of the Census, 1990).

The specialty store for women carried moderate- to better-priced apparel with an
emphasis on better quality and conservative but updated styling. While the bulk of the
merchandise was career and better apparel and accessories, some lloor space was allocated to
casual wear for high school and college, junior sized, younger women. Services such as
wardrobe consultation, customer profiles for gift advice, free gift wrapping, liberal returns, and
on-approval take home of merchadise were offered.

Firm B was the only store of the three studied that employed a part-time staff member
responsible for visual merchandising and display. Merchandise in the windows and on the
interior walls was well displayed. Floor displays were neat and organized. All employees
wore dresses, skirts, or suits similar in style to the merchandise carried in the store.

Firm B had the highest paid retail employees in the community. Its employees had more
formal education and apparel retail experience prior to working for Firm B than did employees
in the other two firms.

~Firm . The owner of Store C was a civic minded individual who purchased the store
in the late 1980s to prevent the loss of a business in her small town. The owner had no
previous business experience, but had extensive experience in charitable and civic volunteer
work. Although the small town had a population of less than 1300 (Bureau of the Census,
1990),the firm generated approximately$ 275,000 in sales in 1989. The owner indicated that
the business was growing and profitable. By 1995 the store relocated in a larger town
(population 25,178 in 1990) within 30 miles from its original location to expand the retail
operation.

The firm targeted its moderate- to better-priced apparel to women over 35 years old.
This was the only store of the three that did not currently employ any sales person under 34.
Only a limited amount of merchandise that tended to attract younger women was offered.
Services offered included garments in a wide array of sizes, free giA wrapping, liberal returns
policy, and store charge.

Firm C had high ceilings and a bright, open space. Wall displays and merchandise were
neatly arranged. Employees were dressed in skirts, dresses, or suits in conservative yet
contemporary styling.

Anal sis of Or anizational Culture Dimensions

Su art of A Priori Dimensions All the organizationalculturedimensionspreviously
identified in large firms applied to the small apparel retail firms studied. Table 2 reports
incidence of dimensions across the three firms. Frequencies merely illustrate incidence and

36



cannot be interpreted to indicate relative importance of the dimensions. Loquacity and
individual interests of respondentsaffects frequencies of themes. In addition, some dimensions
may be important, but the nature of questions asked and the lack of tendency for some
dimensions to be verbalized extensively influences occurrence. Frequently occurring themes
as well as minor or infrequent themes were deemed important for understanding apparel retail
culture.

Table 2
Fre uenc of Or anizational Cuture Dimensions Across Stores

Dimension Store A'tore B'tore C'll Stores
Direction 37 38 21 96

Identity 43 60 38 141

Individual Initiative 27 22 24 73

Firm Image 66 84 72 222

Communication Patterns 25 33 21 79

Conflict Tolerance 9 4 5 18

Integration 32 50 26 108

Management Support 21 31 21 73

Orientation to External 79 102 86 267
Publics

Reward System 6 21 ll 38

Risk Tolerance 10 4 3 17

Miscellaneous ll 20 16 47

'ummed across owner and 4 employees
'Summed across owner and 5 employees
'Summed across owner and 5 employees

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Three cultural dimensions —Direction, Identity, and Indi vir/rra/ In//ia/ive —reflected the
personal characteristics, knowledge, beliefs, and values of owners of these firms. These
dimensions related respectively to clarity of leadership, attitude of employees toward owner-
managers, and degree of independence accorded to employees by the manager. Findings
related to these three dimensions were considerably diverse across firms. This diversity was
directly associated with differences in owners'ersonal management styles; in knowledge,
experience, and beliefs that each brought to their businesses; and in owners'ersonal
aspirations and visions for their firms.

An interesting finding related to vision and values was that these owner/managers were
not necessarily in business to maximize profit.

I don't require big money.... I don't allow myself to put in all my time to earn
money for which I have no time left to spend it on to enjoy my life. (Owner, Store
A)

As described previously, Firm C was purchased by a civic-minded individual who had no
previous business education or experience. She purchased the small town retail firm in an
explicit attempt to prevent the loss of another of her community's businesses. She stated a
further advantage in achieving autonomy:

...one of the reasons I went into business, I guess, is that I never thought
anybody'd pay me what I thought I was worth... If you are your own boss, you
make your own destiny. What I really would like to do now is go around as a
consultant to some of these people who would like to do what I'e done...

These findings of personal growth through ownership and community altruism suggest that
traditional economic theory which emphasizes profitability of the firm may not be completely
adequate for explaining firm behavior or for measuring firm success in small businesses in
small towns. Intangible rewards were just as or more important than monetary rewards of the
finn. Flumphreys and McClung (1981) found low emphasis on business growth and more
emphasis on feeling of personal achievement and responsibility among female entrepreneurs.
The female retailers in this study were consistent with that trend, but owners of Firms B and
C were clearly committed to making a reasonable profit in addition to less tangible benefits.

The owners of Firms A and C had similar directional styles. They had no written rules
and regulations for employee performance or for procedures. Little or no formal training was
given when a new person began employment. The owner of Firm A would show new
employees each department and train them on running the cash register and reading
merchandise tickets. "Then the most important thing I say is to move out and straighten so you
learn where stuff is." The owner of Firm C gave no formal training.

You don't have to train 'em cause they'e all customers. I do not hire anybody
that's never shopped here. I don't hire them if they don't know what this store is
all about...

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By contrast, Firm B was the only firm with a store manual which outlined expectations
for behavior on the floor, dress rules, and procedures for customer transactions and running the
cash register. The owner spent an average of four hours each day on the sales floor where she
felt she was always involved in training. On-going training occurred regularly at Saturday
morning store meetings for all employees. Training might include hands-on practice in selling
techniques or practice at coordinating clothing and accessories for the season. Despite the
structure, employees felt the rules were flexible. One employee stated, "...if we find a better
way to go about it, we usually change it."

Employees at afl three stores felt that the owners were flexible in considering changes
when suggested. Potential for taking initiative to make substantial organizational changes or
learn advanced skills such as buying was limited, however, a factor that disappointed a few
employees. At all three stores, employee activities were focused primarily on selling
merchandise or specific clerical tasks.

Positive feelings expressed by employees reflected a strong identification with the
owners. Employees described their boss's with phrases such as "easy going", "friendly and
outgoing", "personable",and "fun to work for". Unique identity traits of the owners also were
clearly reflected. The owner of Firm A was consistently described as disorganized and limited
in business management skills. She described herself as not energetic enough to put in extra
time to get organized or to upgrade her business knowledge. Nevertheless, employees liked
her and accepted her idiosyncrasies. "She's crazy, but she knows it. It's a good crazy."

The owner of Firm B was perceived as well-organized, a skilled businessperson,
energetic, and committed to her business. While highly motivating and demanding of good
work from afl employees, she was seen as considerate and fair. Some employees thought of
her as a mentor. Firm C's owner was also considered skilled at building a stable business.
However, she was frequently absent from the store in pursuit of new goals and
accomplishments for herself, leaving some employees wishing for more ofher presence and
guidance.

Firm Image was a complex dimension which was descriptive of the physical
surroundings, services, and more tangible aspects of the business procedures of the apparel
retail firm. Organizationalcultureshapesselectionofbusinessprocedures,serviceclimate,and
atmosphere projected by employees and physical features of the firm. Of particular interest
were the findings related to marketing communications and promotions management. The two
owners of Firms 8 and C recognized that, because of the small sizes of their towns, local
customers alone could not sustain their businesses. These two owners did not focus their
promotion and advertising efforts solely on local customers but used a variety of marketing
techniques, such as fashion shows in surrounding communities and creative in-store

promotions, to draw customers from a large area outside their own towns. Firm B mailed
promotional information to about 2300 customers within a 75 mile radius of the store. The
firm now advertises to the regional market via television. Firm C sent a newsletter to about
2000 customers in a 60-mile radius. A continuous elfort to reach out to and expand the base
of customers was characteristic of Firms B and C. The owner of Firm A, in contrast,

39



complained that her advertising efforts placed solely in the local newspaper never seemed to
generate much business.

The owners of Firms B and C and their employees had clear knowledge of their target
inarkets and commitment to customer service beyond what the mass merchandisers and mall
stores offered. As Dcshpande, Farley, and Webster (1993) pointed out, customer orientation
is a fundamental component of organization culture. For these small apparel firms off the
beaten path from major trade centers, customer service may be the orientation that keeps
customers coming to them. Firm A, in contrast, did not clearly differentiate its merchandise
from nearby mass merchandisers and could not offer items at competitive prices. The owner
had a broad and imprecise definition of its clientele. Firm A's most loyal customers were
elderly individualswho frequented the store for items diAicult to find elsewhere, such as house
dresses and nursing gowns. The store offered services such as horne delivery that were
attractive to the elder clientele.

Five of the cultural dimensions —Communication Pauerns, Conflict Tolerance,
integration, Management Support, and Orientation to External Pubfics-were similar across
the three stores and may be related to the small size of the firms and their location in small
towns. In all three firms interpersonal communication patterns were unrestricted by
hierarchical barriers. There were strong efforts on the part of all employees and owners to
readily resolve minor conf)icts and tolerate difyerences of opinion or personal characteristics,
and quirks of individual workers. An overall spirit of cooperation and integration prevailed.
Management was unanimously perceived as highly supportive in all three firms. A personal
and personable orientation to customers and community on the part of owners and employees
helped to anchor these firms as establishments integral to their towns. In addition, personal
relationships with local and repeat customers seemed to be an enjoyable component of the
work role and an intangible benefit of employment in a local apparel retail firm.

These five dimensions common across the three firms are similar to characteristics of
healthy, nurturing families identified by Lewis and Beavers (1976), Stinnett, Chesser and
DeFrain(l 979), and Curran (1983). The fact that most of the owners and employees of these
firms had known each other or their families all of their lives suggests a sense of community
and shared history which carried over into and could not be separated from the organizational
culture. Employee comments such as,

We get along great. Everybody just helps everybody. We all basically do
everything... if things need to be done, you just kind of pitch in and get it done.

and

We'e all known each other for a long time, and we all seem to get along really
well, and we all work with each other one day or another... we'e like family
around here.

were common across all three firms. Without exception, owners and employees talked of
confiding in each other frequently, sharing family and personal information, as well as openly

40



discussing the general financial, merchandising, and customer aspects of the business. Firm
B used its weekly meetings of all employees for sharing reports of problems and of successful
sales techniques as well as for report from the owner of current sales and inventory status.

In general, all three firms were found to have owners who were very supportive of their
employees. All owners were perceived as open and easy to talk with when there was a

personal or family matter that required time oIYor juggling of schedules. In return, employees
of all three Iirms gave back substantial support to management. This support from employees
did not go unnoticed. One owner, referring to her employees, said, "...they'l look out for me
and the business."

Overall, each owner/manager, regardless of earnings of the firm, exhibited
characteristics of managers in what Kotter and Heskett (1992) called "adaptive" (vs.
"unadaptive") corporate cultures. Adaptive managers care deeply about customers and

employees. They pay close attention to employees and customers and readily initiate changes
to serve these constituencies. Unadaptive managers remain somewhat insular from their

employees and are more comfortable with order and risk-reducing policies.

Reward System related to methods of compensation for work performed. Because of the
small size and owner management of these firms, there were few opportunities for promotion
and limited resources for salary differential. In Firm B, the benefits accrued from use of a
commission pay system were tempered by the interpersonal conflicts created by it. An

employee of that firm commented that,

lf I had a choice, I would rather just be paid by the hour. Sometimes the
competition [for sales] is obvious... it's kind of tense on the floor.

Strong management support, integration, and identity could be incentive enough for strong

employee performance. The conflict resulting from employee competitivenessmay ultimately

be unproductive or unnecessary in small firms in small towns. Dubinsky and Levy (1989)
proposed that salary rather than commission pay may attenuate retail salespersons concerns

about job security and fairness of organizational policy and supervisors; commission pay may
increase quality of performance in larger firms, however.

The data related to the theme of Risk Tolerance were not substantial in number. Risk
taking may not be a relevant engrossment on the part of employees primarily involved in sales
work. Only in one instance did an employee of Firm A describe problems that arose when a
young protege of the manager was allowed to make line decisions for children's wear and
purchased stock too highly priced for the store's clientele. Owners were the risk takers when

making financial and buying decisions, and indeed did most of the decision making for their
small firms. However, they did not describe their business ventures as risky. This may be

related to previous findings of avoidance of innovation in products and services on the part of
female entrepreneurs (Bowen Ec Hisrich, 1986). Fincham and Minshall (1995) also found a
fairly low level of risk taking on the part small town independent apparel retailers in Kansas.
Further development of measures of risk taking and comparisons between large and small retail
establishments would be required before any clear interpretations of the data can be made.

41



Substantial financial risk was involved in the eventual business expansion and movement of
Firms B and C (after this data collection). These two owners may have become more
comfortable with financial risk taking after their businesses had been successful for a number
of years, a trend found by Fincham and Minshall (1995).

Emer ent Or anizational Culture Dimension

A dimension of culture that was not emphasized in previous research of larger firms
emerged from the data in relation to the significance of family relationships and the firm's
proximity to home. Emphasis placed on family considerationsaffected not only an employee's
decision to work, but oflen the conditions under which she would work. As long as many of
these female employees could work part-time in a business located near home and had flexible
schedules and an accommodatingowner, they found little difficulty managing work and family
demands and were able to experience personal enrichment derived from working outside their
homes. One employee suggested that she could work other places for greater pay but "...this
is handy for me because I live just up the street." Another employee said,

It' just a job and it's in town. My family time... that's why I choose to work in
town. Like I said, my kids are here, my husband is here... I'm in town, you
know.

Apparel retail owners operating in small towns must recognize that their likely labor
pool is female and that female employees in small towns oflen have strong family demands that
must be flexibly accommodated in maintaining a productive and loyal work force. These
accommodations substitute, to some extent, for larger salaries. The Family Orientation
dimension might be categorized by other researchers with the Orientaiion to External Publics,
Management Suppori, or possibly Reward Systems dimensions. We prefer to conceptualize
this organizational cultural component as related to, but distinct from, other dimensions. The
family is not an external public for the respective employee nor an entity that management
accommodates merely as a reward to employees. The family was intricately involved in these
small town apparel retail organizations as a source of personal identity for the employees and
a primary motivation for the employees in choosing to work for the particular firm. As
described for the Integration dimension, discussions of family matters and inter-employee
knowingof family members is an interpersonal glue that helps to bind the firm together. In a
sense, the work staff becomes an extension of the family for employees and management.
Perhaps with increasing demands in the U. S, for employer-assisted child care, family health
plans, and parental leaves, the family relations dimensions will become a more apparent
component of larger corporations'ultures (Hanks & Sussman, 1990).

Contribution of Gender

As becomes apparent in the discussion of the Family Orientaiian dimension, gender of
the owners and employees must be considered as a potential determinant of the direction of
findings. Fischer, Reuber, and Dyke (1993)make use of social feminist theory to propose that
women have been socialized differently than men and therefore approach business
development differently in some ways. The owners of the stores in this study were al I female,

42



which may have contributed to the nurturing personal climate of the small organizations. The
nurturing approach to management may reflect traditional female socialization patterns (Hood
& Koberg, 1994; Shively, Rudolph, & De Cecco, 1978; Spence, Deaux, & Helmreich, 1985)
or may be a characteristic present in all successful small town small businesses. Bowen and
Hisrich (1986)review conflicting evidence that female managers emphasize feminine values
of cooperation, support, and concern in leadership style. The impact of gender versus
community size requires further research. Comparative study of small apparel firms headed
by male owners could facilitate understanding of underlying reasons for the organizational
cultures of stores run by women.

Regardless of causation, the focus on collaborative and constructive social relations
among employees and with customers may be a highly functional strategy for small town
service businesses such as apparel firms. The service orientation fits with the more
Gemeinshafiorientationofsmall communitiesand rural areas in which familiarity and family
orientation are emphasized and expected (see Redfield, 1930). Emphasis on personal service
also helps to differentiate the store from larger retail competitors and bring in customers that
value excellence in service.

ln addition, the female employees, socialized to develop many traditional female role
norm attitudes and orientations, may also prefer adaptive organizational cultures in which
interpersonal relationships are of primary importance. It is highly likely that the emergence
of the Family Orientation dimension and findings related to iniegruiion, Communication
Parterns, and Conflict Tolerance occurred due to the prevalence of female employees and
owners of the firms.

SUMMARY AND IMPLICATIONS

In summary, the interpersonalcommunicationpatternsunrestrictedby rigid hierarchical
divisions, high degree of conflict minimization through open communication, highly
supportive management, a high degree of work team integration, low recognition of risk as a
problem, and the committment to personal orientation to customers that characterized these
small apparel retail firms probably facilitated the strong employee Identity, which resulted in

loyalty and support given back to management and the firm. Despite very low wages, every
one of the interviewed employees said they definitely liked their jobs. Recognition of and
support for the importance of family relationships and employee cooperation and friendships
with staff and customers appeared to be significant factors in employee satisfaction with the
reward system in these small businesses. Emergence of the dimension of Family Orientation
adds significantly to understanding of the culture of small retail firms, which have not been
previously studied using an organizational culture framework. The dimensional themes
common across the firms help in understanding and building a model of corporate culture in
small apparel retail firms.

H othesis Generation

This investigation generated a considerable amount of meaningful data related to
cultural dimensions of small apparel retail firms located in small towns. The sample of firms

43



and employees was small, however, and prevents generalization beyond the three firms.
Nevertheless, the exploratory nature of this research provides a foundation for further research
of a much larger scope. Several pertinent research questions have emerged. A series of
hypotheses can be generated from the findings for testing in further inferential research of
apparel stores and other types of retailers. Hypotheses are formulated for tests of "success" of
small firms. The operational definition of success we tentatively adopt refers to ability to
remain in business for a number of years and to earn a reasonable profit. Future researchers
of these hypotheses would need to clarify the number of years distinguishing viability and what
constitutes a "reasonable profit". We propose hypotheses for the study of small retailers in
small towns (SRST), but also propose that the hypotheses are applicable to the study of any
small retailers, not only apparel firms.

A significant portion of the findings pointed to the specialized character that may be
required of the owner/managers of small town retailers.

H,: Managers of more successful SRST's are higher on adaptive rather than unadaptive
characteristics of managers than are managers of less successful retailers.

H,: Managers of more successful SRST's are more attentive to family needs and other
issues of concern to employees than are managers of less successful SRST's.

H,: Managers of more successful SRST's are more involved in community organizatiors
and activities than are managers of less successful SRST's.

H,: Managers of more successful SRST's are less interested in maximizing profit than
are managers of retailers in larger communities.

Adaptive characteristics are discussed previously in this paper and outlined by Rotter and
lteskett(1992). In summary, adaptive managers care deeply about customers and employees
(i e., are high on management supportdimension),readily initiate changes and

flexible

policie
to serve these constituencies, and are not high on risk-avoidance while implementing these
changes. Furthermore, managers of SRST's may need to hold intrinsic goals beyond
maximizing profit to feel satisfied as a business person in a small town community. Intrinsic
rewards from involvement in the community and closeness to extended families of employees
may shape ultimate success of the small retail firm.

Among the three organizations in this case study, Firm A did not focus promotional
efforts toward surrounding counties whereas Firms B and C promoted beyond their local
towns. We have only intangible evidence that the locally focused firm (unwilling to report
earnings) was not as profitable as the other two firms; ultimately, the locally focused store
closed in 1995. We tentatively propose the following directional hypothesis:

H,: More successful SRST's target promotional efforts to reach beyond the customer
base of their local towns; less successful SRST's have a narrower local customer base.

44



A number of findings defined the communication climate and hierarchical structure of
the small firms. These cultural dimensions may be crucial to small retail firms, in that:

H,: EmployeesandmanagersofmoresuccessfulSRST'sarehigheronconflicttolerance
than are employees and managers of less successful SRST's.

H,: A high level of integration permeates staff of more successful SRST's.
H,: Hierarchicalboundariesdo not impede Iiowofcommunicationsin more successful
SRST's; more rigid communication boundaries contribute to lesser success of SRST's.

H,: Employees of more successful SRST's report higher degree of intangible reward
from interaction with customers.

Further research could clarify other questions arising from the findings. An
investigation of the effects of a commission pay system on other dimensions of corporate
culture is needed to determine if commission is necessary or effective in a small town small
firm. Is strong management support, integration, and identity in such firms self motivatingand
perhaps degraded by emphasis on inter-employee competitiveness? Or does the competitive
environment increase prestige of and motivation to work in a profitable retail organization,
regardless of size?

Other research questions generated through the findings suggest the need for further
studies that I ) increase the scope of this research to develop a model of organizational culture
for existing versus new apparel retail firms and for firms of varying sizes and 2) examine
differences, if any, between firms owned by men versus those owned by women.

~CI I P
Of specific interest for small business consultants is the usefulness of the data collection

instruments developed to profile small apparel retail firms. An analysis of a firm's culture
profile can be used as a basis for making recommendations for refining the firm's management
systems. Understandinga small store'sculture may provide a basis for management action to
reinforce those dimensions identified as productive and to change those dimensions identified
as counterproductive to the overall objectives of the firm.

Recommendationssuch as modifying personal communication style between a manager
and employees; adding or improving employee training programs related to selling, product
knowledge, or customerservice; providing merchandisingsuggestions for improving the firm's
image; focusing buying strategies for a defined target customer; and suggesting eITective
promotion management strategies to external publics are just some examples of possibilities
for diagnostic profiling.

While this investigation involved only three retail firms, the Iindings were somewhat

consistent across firms. Replication of this study on a larger and more representative number
of firms and in other geographic locations is necessary before generalizations of results and
implications for managers of small apparel retail firms as a whole can be confidently

45



undertaken. Nevertheless, the Iindings of this research provided insight into the culture and
operation of small apparel retail businesses and, possibly, other types of retail businesses.

Organizational culture is not the only determinant of successful performance of a small
apparel retailer. We suspect that lack of financial planning and inventory control (i.e.,
excessive inventory accumulation)along with focus on local rather than regional customer base
(the Errernal Publics dimension) were strong factors forcing Firm A to eventually fail and
close. Lack of strategic planning has been identified as characteristic of small businesses that
fail (Gask ill. Van Auken, & Manning, 1993). However, a positive and adaptive organizational
culture can help a well planned business to thrive and do better in the long run (Kotter &
Heskett, l 992). Based on our data, we specifically propose that small retailers attentive to
employee concerns and scheduling needs will develop a loyal and supportive workforce.
Owner and employee commitment to customer service and identification of target customer
tastes and needs will develop a loyal customer base. Recognition that a regional rather than
local target market must be attracted can expand the customer base and increase sales and
resultant longevity of the small firm.

In summary, this approach to studying a business organization has both scholarly and
practical iinplicationsas a point of departure for further research and in providing a means to
qualitatively profile organizational culture for consultation purposes. Analysis of a firm's
cultural profile can be used to make recommendations for refinement or change in inanagement
systems and to help owner/managers better achieve the overall objectives they have set for
their small businesses.

q6



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48



Appendix A

(Probe cues or prompts to ask for information not inn/ally covered by respondent are /tali ci sad
in parentheses)

Interview Schedule For Owner/Mana ers
l. I'd like to begin by having you tell me about your typical day/week.... What kinds of

things are you likely to be doing? (time with customers, with employees, in business
activity, in travel, at market)

2. Tell me about your background... What kind of experience, jobs, education or training
do you have?

3. How did you get involved with this firm?
4. What do you like most about being in the apparel business? (special apparel expertise

or inrerest?)
5. Apparel retailing is a little different in that fashions change radically and otten

rapidly....How do you deal with this aspect of the business? (sources of fashion
information used)

6. What do you think are your personal strengths in terms of running this business?...Any
areas you might like to improve on?

7. What have been some of your greatestsatisfactions/achievement/triumphs from having
this business?

8. What are your greatestchallenges/problems/frustrationgn running this business today?

Target Market/ Community Relations:

9. Does your store have a typical/usual customer?.....Can you describe her/him for me?
(Does your target customer differ from the typical customer? Do you have
regnlarlrepeat customers? From what distance do your customers come?)

10. Why do you think your customers come here to shop?
11. What kind of strategies do you use to attract your customers?
12. Can you tell me about your customer service policies? (returns, charge(checks/credit,

alterations, personal calls)
13. What do you think of the statement: " The customer is always right"?
14. Do you think the people in this community support your business?
15. Are you involved in any community activities, organizations, etc?
16. Are you a member of any professional/trade organizations?
17. Do you network with/know other apparel retailers in small towns or cities in this

area?....Is this helpful for you in running this business?

Buying Practices:

18. How do you do your buying?.....Do you go to market or do vendors come to you?
19. What kind of relationships do you have with your vendors?

49



Staff Relations:

20. How many employees do you have?....What are their responsibilities? (iurnover, who
handles merchandising, bookkeeping, displays)

2 I. What type of pay system do you use?....hourly, salary, other? (coinmissions, quotas,
bonuses, discoimts, other benefits or incentives)

22. Do you talk to your employees about your business operations? (sales voliime achievetl
financial, inerchandise ordered)

23. Do your employees help with information about customer requests, new merchandise,
suggestions to improve sales, markdowns, best sellers, etc?

24. Do your employees receive training for their job?....What kind of training do they get?
(new or ongoinss wlio (rains?)

25. What kind of things do your einployees do well/are they good at?....What, if any, would
you like to see them improve?

26, Do any of your employees ever ask to take on new responsibilities?........How do you
feel about that?

27. Do you have any rules and regulations, written or unwritten, for employee behavior at
work? (dress code, lateness; casli liandling, food on sales floor, personal phone calls)

28. Do you ever have problems with any of these things?....How do you deal with these
employee problems?

29. What kind of relationships do you have with your employees? (personal confidences,
social interaction)

30. I'd like you to try to imagine how your employees might describe you as "the
boss".....How do you think they would describe you?

3I. How well do you think your employee get along with each other?....Do they
support/help each other?....the business?

Personal Vision:

32. I'd like you to tell me, if you can, about your vision for where you see your business
going from here?

33. In thinking back over the topics we have touched today, is there anything you might like
to add or comment on?

50



Appendix B

Interview Schedule for Em lo ees

1. I'd like to begin by having you tell me about your typical day/week.... What kinds of
things are you likely to be doing? (iime with customers/selling, owner/manager,
handling merchandiseJdisplay, paper work or bookkeeping, house-keeping)

2. Tell me about your background. What kinds of experience, jobs, education or training
have you had? (special apparel expertise or inieresij

3. How did you get involved with this firm? (personal connections, newspaper ad, help
wanted sign)

4. How do you feel about working here?....Do you like it or do you not like it? (why?
problemslfrusiraiions, good aspecis, personal goals, other demands on your time)

5. How do you think your family/friends feel about your working here?

Customer Relations:

6. Does your store have a typical/usual customer?.....Can you describe her/him for me?
(Do you have regulailrepeaicusiomers? From what distance do your customers come?)

7. Why do you think your customers come here to shop? Do you do anything special to
attract/bring these customers here?

8. Can you tell me about your store's customer service policies? (rearms, charge/
checkslcredii, alieraiioiis, personal calls)

9. What kinds of problems, if any, do you generally have with customers?
10. What do you think of the statement: "The customer is always right"?
11. Do you think the people in this community support this business?
12. How do you think your family/friends feel about this firm?....Do they shop here?

Vendors:

13. Do suppliers/vendorsever come into the store?....Whatdo you think of them? (How do
/hey ireai you? How do you gei along with them?)

Reward System and Relationship with Owner:

14. How do you get paid?....hourly, salary?,...How do you feel about this? (commissions,
sales quotas, discounts, bonuses, other system you would prefer?)

15. Does your owner/managertalk to you about the business? (howii is doing, sales volume
goals and achievemenis, financial health, new merchandise on order)

16. Does the owner/manager ever ask for suggestions for or your opinion about business
operations? (customer requesis, bestsellers, merchandise direciions, promoiion ideas,

display ideas)
17. Did you receive or are you receiving any kind of training for this job?....What kind of

training did/do you do? (new or ongoing, who trains?)
18. What kind of things do you do well/are you good at?....What. if any, would you like to

learn more about or improve on?

51



19. Does the owner/manager encourage you or complement you when you do something
well/do a good gob?

20. I-lave you ever been asked to take on new responsibilities?....How do you feel about
that?

21. Have you ever asked the owner/manager if you could learn about some new business
procedures or to take on new responsibilities?

22. Do you or some employees have more management or supervisory responsibility than
others'?.... What are they?

23. Are there any rules and regulations, written or unwritten, for employee behavior at
work? (dress code, luteness, cash handli irg, food on sales floor, personal phone calls,
caslr handling)

24. Have you or another employee ever had problems with any of these rules?....How did
the owner/manager deal with these problems?

25. What kind of relationships do you have with the owner?....the manager (if different)?
(persoiral confidences, social inieraciion, business only relatioirship)

26. How would you describe the owner as "boss"?....the manager (if different)?
(personality, likesldislikes, business management abilities)

Employee Relations:

27. How do you get along with the other employees?....How do you think they feel about
you? (support eaclr otlier, work as a team, conjlicts)

28. How do think the other employees get along with each other?
29. How do you think the other employees get along with or think about the owner?

Future Plans:

30. I'd like you to tell me, if you can. about your plans for the future or where you see
yourself going from here?....Do you plan to stay with this firm?

31. In thinking back over the topics we have touched today, is there anything you might like
to add or comment on?

52