Review Article
Open Access
Organizational Culture as a Bridge: Linking Governance to Enhanced Performance in Nepal’s Public Sector Enterprises
Abstract
Public sector enterprises (PSEs) play an important role in economic development and public service delivery, especially in developing countries such as Nepal. However, many PSEs still experience challenges in relation to weak governance structures, inefficiencies and limited organizational performance. While corporate governance reforms have been introduced to enhance accountability and transparency, governance mechanisms alone may not be sufficient in explaining variations in organizational performance. Internal factors such as organizational culture and external strategic orientations such as market orientation may influence the governance practices translating into performance outcomes.
This study analyzes the relationships between corporate governance, organizational culture, market orientation and organizational performance. Specifically, it examines the mediating effect of organizational culture and the moderating effect of market orientation in the governance-performance relationship. The approach of this study is systematic literature review in which the synthesis of peer-reviewed studies published between 2010 and 2025 is carried out.
The findings show that corporate governance has a positive impact on organizational performance, while organizational culture serves as an important mechanism to translate the governance practices to advance organizational performance. In addition, market orientation can reinforce the relationship between governance and performance by making organizational behavior more responsive to stakeholder needs. This study adds to the existing literature by presenting an integrated conceptual framework for the relationship between governance, culture, and market orientation to explain the performance in the public sector enterprises.
Keywords
Corporate governance, organizational culture, market orientation, organizational performance, public sector enterprises.
References
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Peláez, A., Clemente-Almendros, J., Londoño-Toro, C., Nieto, C., & Herrera, R. (2026). Does corporate governance improve small-firm performance? The mediating role of organizational culture. Studies in Business and Economics, 20, 151–171. https://doi.org/10.2478/sbe-2025-0048
Pham, V. K., Vu, T. N. Q., Phan, T. T., & Nguyen, N. A. (2024). The impact of organizational culture on employee performance: A case study at foreign-invested logistics service enterprises approaching sustainability development. Sustainability, 16, 6366. https://doi.org/10.3390/su16156366
Sari, M., Lubis, A. F., Maksum, A., Lumbanraja, P., & Muda, I. (2018). The influence of organization’s culture and internal control to corporate governance and its impact on state-owned enterprises corporate performance. Journal of Applied Economic Sciences, 13, 673–684. https://doi.org/10.14505/jarle.v92(32).30
Sirola, D., & Mihanović, Z. (2020). Influence of market orientation and stakeholder management on the performance of Croatian cities. Management, 25(2), 41–66. https://doi.org/10.30924/mjcmi.25.2.3
Tulcanaza-Prieto, A. B., Aguilar-Rodríguez, I. E., & Artieda, C. (2021). Organizational culture and corporate performance in the Ecuadorian environment. Administrative Sciences, 11(4), 132. https://doi.org/10.3390/admsci11040132
Walker, R., Brewer, G. A., Boyne, G., & Avellaneda, C. (2011). Market orientation and public service performance: New public management gone mad? Public Administration Review, 71(5), 707–717. https://doi.org/10.1111/j.1540-6210.2011.02410.x
Widyawati, W., Sulmiah, S., & Nurlaela, N. (2021). Organizational culture and employee performance: Assessing the influence on the implementation of public services during the COVID-19 pandemic. Jurnal Ilmu Administrasi: Media Pengembangan Ilmu dan Praktek Administrasi, 18(2), 176–187. https://doi.org/10.31113/jia.v18i2.754
Xanthopoulou, P., Sahinidis, A., & Bakaki, Z. (2022). The impact of strong cultures on organisational performance in public organisations: The case of the Greek public administration. Social Sciences, 11, 486. https://doi.org/10.3390/socsci11100486.
Abdelwahed, N. A. A., & Soomro, B. A. (2024b). Navigating success: Predicting corporate performance through organizational culture dynamics and governance. Journal of Governance & Regulation, 13(4), 71–82. https://doi.org/10.22495/jgrv13i4art8
Akaakase, T. D., Anchoghol, B. M., & Bako, B. A. (2025). Effect of organizational culture on employee performance in Access Bank PLC, Makurdi Branch. International Journal of Psychology and Organizational Behaviour, 4(1), 76–96.
Almahasneh, Y. A. S., Rahman, M. S. B. A., Omar, K. B., & Zulkiffli, S. N. A. (2023). The impact of organizational culture and leadership styles on the performance of public organizations. Corporate Governance and Organizational Behavior Review, 7(1), 158–165. https://doi.org/10.22495/cgobrv7i1p15
Al-Shourah, A. A. (2021). The impact of market orientation on organizational performance: The moderating role of innovation in medium enterprises. Journal of Management Information and Decision Sciences, 24(4), 1–17.
Baa, A. K. R., & Chattoraj, R. (2023). The psychological importance of market orientation in the public sector enterprise from the viewpoint of an emerging economy. Journal for ReAttach Therapy and Developmental Diversities, 6(7s), 412–418. https://jrtdd.com/index.php/journal/article/view/805
Bavardi, A. Q. (2025). Values-based leadership: The role of organizational culture in business success. International Journal of Social Science Research and Review, 8(7), 33–42. https://doi.org/10.47814/ijssrr.v8i7.2682
Christopher, O. A., & Amah, E. (2022). Organizational culture and corporate performance: A review. Global Academic Journal of Economics and Business, 4(5), 152–162.
Ghumiem, S. H., Alawi, N. A. M., Al-Refaei, A.-A., & Masaud, K. A. R. (2023). Corporate culture and its effects on organizational performance: Multi-group analysis evidence from developing countries. European Journal of Business and Management Research, 8(2), 142–148. https://doi.org/10.24018/ejbmr.2023.8.2.1890
Meidawati, N., Rosida, G., & Hudayati, A. (2025). Corporate governance, organizational culture, and firm performance: A systematic literature review (SLR) and future research opportunities. International Journal of Research in Business and Social Science, 14(3), 333–346. https://doi.org/10.20525/ijrbs.v14i3.4012
Ghazi Ben Saad, & Abbas, M. (2018). The impact of organizational culture on job performance: A study of Saudi Arabian public sector work culture. Problems and Perspectives in Management, 16(3), 207–218. https://doi.org/10.21511/ppm.16(3).2018.17
Jarne-Jarne, J. I., Callao-Gastón, S., Marco-Fondevila, M., & Llena-Macarulla, F. (2022). The impact of organizational culture on the effectiveness of corporate governance to control earnings management. Journal of Risk and Financial Management, 15, 379. https://doi.org/10.3390/jrfm15090379
Juiz, C., Guerrero, C., & Lera, I. (2014). Implementing good governance principles for the public sector in information technology governance frameworks. Open Journal of Accounting, 3(1), 9–27. https://doi.org/10.4236/ojacct.2014.31003
Lamichhane, B. D., Lama, P. B., Hamal, J. B., & Karki, M. (2024). Building blocks on corporate governance in public companies (PCs) in Nepal: A literature review. Journal of Balkumari College, 13(1), 64–72. https://doi.org/10.3126/jbkc.v13i1.69502
Margaretha, C., & Soelaiman, L. (2022). Entrepreneurial orientation, market orientation, and organizational culture on business performance. https://doi.org/10.2991/aebmr.k.220501.058
Michulek, J., Gajanova, L., Krizanova, A., & Nadanyiova, M. (2023). Determinants of improving the relationship between corporate culture and work performance: Illusion or reality of serial mediation of leadership and work engagement in a crisis period. Frontiers in Psychology, 14, 1135199. https://doi.org/10.3389/fpsyg.2023.1135199
M. M., K., Hidayah, I., Pramono, S. E., & Sutopo, Y. (2024). How effective leadership mediates the influence of organizational culture, governance, and integrity on employee performance. Journal of Ecohumanism, 3(8), 1617–1650. https://doi.org/10.62754/joe.v3i8.4844
Paredes-Saavedra, M., Vallejos, M., Huancahuire-Vega, S., Morales-García, W. C., & Geraldo-Campos, L. A. (2024). Work team effectiveness: Importance of organizational culture, work climate, leadership, creative synergy, and emotional intelligence in university employees. Administrative Sciences, 14, 280. https://doi.org/10.3390/admsci14110280
Pathiranage, Y. L. (2019). Organizational culture and business performance: An empirical study. SSRG International Journal of Economics and Management Studies, 6(6), 1–12. https://doi.org/10.14445/23939125/IJEMS-V6I6P101
Peláez, A., Clemente-Almendros, J., Londoño-Toro, C., Nieto, C., & Herrera, R. (2026). Does corporate governance improve small-firm performance? The mediating role of organizational culture. Studies in Business and Economics, 20, 151–171. https://doi.org/10.2478/sbe-2025-0048
Pham, V. K., Vu, T. N. Q., Phan, T. T., & Nguyen, N. A. (2024). The impact of organizational culture on employee performance: A case study at foreign-invested logistics service enterprises approaching sustainability development. Sustainability, 16, 6366. https://doi.org/10.3390/su16156366
Sari, M., Lubis, A. F., Maksum, A., Lumbanraja, P., & Muda, I. (2018). The influence of organization’s culture and internal control to corporate governance and its impact on state-owned enterprises corporate performance. Journal of Applied Economic Sciences, 13, 673–684. https://doi.org/10.14505/jarle.v92(32).30
Sirola, D., & Mihanović, Z. (2020). Influence of market orientation and stakeholder management on the performance of Croatian cities. Management, 25(2), 41–66. https://doi.org/10.30924/mjcmi.25.2.3
Tulcanaza-Prieto, A. B., Aguilar-Rodríguez, I. E., & Artieda, C. (2021). Organizational culture and corporate performance in the Ecuadorian environment. Administrative Sciences, 11(4), 132. https://doi.org/10.3390/admsci11040132
Walker, R., Brewer, G. A., Boyne, G., & Avellaneda, C. (2011). Market orientation and public service performance: New public management gone mad? Public Administration Review, 71(5), 707–717. https://doi.org/10.1111/j.1540-6210.2011.02410.x
Widyawati, W., Sulmiah, S., & Nurlaela, N. (2021). Organizational culture and employee performance: Assessing the influence on the implementation of public services during the COVID-19 pandemic. Jurnal Ilmu Administrasi: Media Pengembangan Ilmu dan Praktek Administrasi, 18(2), 176–187. https://doi.org/10.31113/jia.v18i2.754
Xanthopoulou, P., Sahinidis, A., & Bakaki, Z. (2022). The impact of strong cultures on organisational performance in public organisations: The case of the Greek public administration. Social Sciences, 11, 486. https://doi.org/10.3390/socsci11100486.