Managerial skills and performance in small businesses: the mediating role of organizational climate
| DOI | https://doi.org/10.1108/JABS-02-2019-0041 |
| Published date | 08 February 2020 |
| Pages | 361-377 |
| Date | 08 February 2020 |
| Author | Gholamhossein Mehralian,Mohammad Peikanpour,Maryam Rangchian,Hamed Aghakhani |
| Subject Matter | Strategy,International business |
Managerial skills and performance in
small businesses: the mediating role
of organizational climate
Gholamhossein Mehralian, Mohammad Peikanpour, Maryam Rangchian and
Hamed Aghakhani
Abstract
Purpose –The purpose of this paper is to develop a conceptual model to determine whether
organizational climate (OC) mediates the effect of managerial skills (MSs) on business performance in
small businesses,such as pharmacies.
Design/methodology/approach –The model proposed in this research was tested using separate
questionnaires specifically designed for managers, employees and clients. The data set consists of
responses from 301 managers, 470 clientsand 328 employees from community pharmacies in Tehran,
capitalof Iran, which were analyzed using structural equationmodeling.
Findings –Although the results indicatedno significant direct relationship between MSs and pharmacy
performance(PP), they also confirmed that having a context-appropriate set of MSs can positivelyaffect
PP via the mediatingeffect of OC.
Originality/value –This is the first study investigating how MSs improve performance in retail
pharmacies. Although this research focuses specifically on small businesses in the pharmaceutical
industry,it nevertheless contributes to the literatureby showing the importance of OC.
Keywords Small businesses, Managerial skills, Organizational climate, Pharmacy performance
Paper type Research paper
1. Introduction
During the past decade, increased growth in pharmaceutical expenditures (Levit et al.,
2003;Shah et al., 2003) and the complexity and diversity of pharmaceutical products have
led pharmacies, as small businesses, to become more and more specialized (Duffull et al.,
2017;Tootelian et al., 2012). Pharmacists play a dual role in their business: on the one
hand, they provide customers with health literacy services and instruction on how to use
pharmaceutical products properly(Lima et al., 2017); on the other hand, they are managers
who must ensure their business are runningsmoothly if they are to achieve their business or
social goals. In their roles as managers, pharmacists face a variety of challenges because
of a business environment that is continuously changing in terms of regulations and
standards. In addition, it is obvious that, in today’s world, customers have become well
aware of their rights and needs. To cope with these circumstances effectively, pharmacists
should acquire education and training that will not only provide them with the skills and
knowledge needed to run their business but also that will raise their awareness of the
customer’s critical role in the business’ success (Tootelian et al.,2012). It has been well-
documented that there are certain important managerial skills (MSs) that a practicing
pharmacist should possess and be able to apply effectively (Grimmer et al.,2015). In
particular, innovative leadership and skillful management are two crucial skills that could
Gholamhossein Mehralian
and Mohammad
Peikanpour are both based
at the Department of
Pharmacoeconomics and
Pharma Management,
School of Pharmacy,
Shahid Beheshti University
of Medical Sciences,
Tehran, Iran.
Maryam Rangchian is an
Assistant Professor at
Pharmacoeconomics and
Pharma Management,
Department of Clinical
Pharmacy, School of
Pharmacy, Hamadan
University of Medical
Sciences, Hamadan, Iran.
Hamed Aghakhani is based
at the Rowe School of
Business, Faculty of
Management, Dalhousie
University, Halifax, Canada.
Received 5 February 2019
Revised 30 July 2019
Accepted 26 September 2019
DOI 10.1108/JABS-02-2019-0041 VOL. 14 NO. 3 2020, pp. 361-377, ©Emerald Publishing Limited, ISSN 1558-7894 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 361
potentially improve health-care total costs, clinical outcomes, quality of life and patient
satisfaction (Faris et al.,2005). Furthermore, it has been argued that effective MSs are
contextual; that is successful managers familiarize themselves with the climates of their
organizations and improve their MSs accordingly (Ouakouak et al.,2014). Organizational
climate (OC) is associated with various serious impacts at the individual, group and
organizational levels, and a supportive climate can positively influence both employee
satisfaction and the enterprise’s performance. Therefore, managers can perform more
effectively if they develop a good understanding of their organization’s culture and climate
(Howard-Grenville et al.,2014).
OC comprises all the beliefs, routines and informal connections that exist in an
organizational atmosphere and whichin turn shed light on all of the organization’s activities.
Employees are most influenced by OC, and prior studies have shown that employees’
perceptions of their work environments and their emotions in the workplace depend greatly
on their trust in their managers (Howard-Grenville et al., 2014). According to Avery (2004),
by developing a warm, inclusive climate for employees, managers can more effectively get
them to commit to organizational goals and help in formulating strategies. Thus, managers
play a pivotal role in helping employees understand the purpose of their work, in promoting
a spirit of teamwork and belonging and, ultimately, in improving organizational performance
(Ouakouak et al.,2014). Although employees in larger organizations have a greater chance
of finding refuge from unfavorable work environments, there are less viable options in small
businesses. Drawing on resource-based theory (RBT), it is argued that MSs bring about
more competitive advantages fororganizations through creating more dynamic capabilities
to convert organizational resources to organizational outcomes (Rigove, 2017). We
therefore believe that in a pharmacybusiness, MSs play a pivotal role in providing a climate
in which all technical and nontechnicalemployees have a great chance to be promoted and
are fully engaging in fulfilling customers’ expectations, thereby resulting in achieving
business goals. Accordingly, the contributions of this study are threefold: first, we
theoretically develop a new conceptual model to enrich extant literature in organizational
studies with focus on small businesses. Second, we empirically analyzed our theorized
hypotheses through the data collected by pharmacies competing in a developing country.
Third, in a practical manner, it is believed that the findings of this study echo the key role of
climate in small businesses in today’s competitive market. Specifically, as “organizational
climate” is a new concept within pharmacy management, this study aims to develop a
conceptual model to determine whether OC mediates the effect of MSs on pharmacy
performance (PP). In the following section, the literature relatedto each concept is explored
and different hypotheses are presented accordingly. Following the literature review, the
methods used to collect and analyze the data are explained. Once this has been done, the
results are presented and discussed, and the conclusions and recommendations for
managerial implications are detailed to assist pharmacy managers in improving PP through
more supportive climates.
2. Literature review
This section focuses on the literature related to the three main constructs of interest in this
research: MSs, OC and PP. This study is built on the RBT, as organizations that enjoy
quality managers, they would be more competitive compare to others (Acedo et al., 2006).
This is more pronounced in the small businesses because such managers have been well
qualified to form a constructive culture, leading to superior performance. As RBT says, in
today’s competitive market, human-enhancing practices play a pivotal role in increasing
organizations capabilities to stay more competitive. In fact, MSs provide organizations with
more chance to render the climate in which employees work closely and suggest new
solutions to resolve problems.
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