Effect of Organizational Excellence on Factors of Organizational Performance in Dubai Freezones

Introduction

Different studies have provided insights into the measurements of organizational excellence and the appropriate measures for Dubai Freezones (Aldarmaki & Kamarul Bahari Yaakub, 2022). The competitive nature of most establishment has motivated organizations to embark on the quest to excel and not just survive (Harrington, 2005). The need to excel has therefore brought the term excellence into more prominent light encouraging more organizations including freezones to pursue excellence and incorporate it in their service provision. In literature, these different excellence terms are used in reference to the quality of service, extraordinary operations, as well as the connection between operation and customer satisfaction (Porter & Tanner, 2013). Freezones in Dubai are very important to the economy of the Emirates as well as the country largely because of the quest for excellence and customer satisfaction. As expected of freezones, boosting economic and international business in Dubai is important, and doing so by offering benefits to investors and businesses is even more needful (Alhubaishi & Ahmad, 2014). Therefore, this paper to assesses the effect of organizational excellence on factors of organizational performance in Dubai Freezones. It provides an insight into application of excellence in freezones and its effect on overall performance of the freezone as an organization. Other aspect of this paper examines the relationship between organizational excellence and organizational performance, with further consideration of testable hypotheses to determine the direct correlation between organizational excellence and factors of organizational performance.

Organizational Excellence in Dubai Freezones

Organizational excellence has been applied to different organizations; private or public, for-profit or not-for-profit and small or large (Prashar, 2017). Freezones have been growing around the world, largely because they compensate for the immobility of land as a factor of production which makes them a preferred platform for global trade and trading (Keshavarzian, 2010). In light of this, Freezones are seen as key ingredient for international business in advancing them and in maximizing trade benefits (AlKhanbouli & Tsagdis, 2017). For examples, Free-trade zone in Dubai (FTZs) are seen as economic zones which are set up to provide tax concessions and customs duty benefits to foreign investors (Alhubaishi & Ahmad, 2014). In Dubai, there are more than 30 Freezones which are governed by special rules and regulations as done for all other Freezones in the UAE (Shayah & Qifeng, 2015). Freezones are developed based on categories with the view to cater for the interest of companies within that category (Cranidge, 1998) and are offer license, trading and services to foreign investors with ambition to setup business (Alhubaishi, & Ahmad, 2014). However, there are challenges to this established order of operation at Freezones. Studies have indicated that the rates of failure, and obstacles to implementing organizational excellence are similar to those of other business strategies (Cândido & Santos, 2011). This have been experienced in United Arab Emirates (UAE) Freezones where there is fierce competition between the Freezones in Dubai, making it challenging for staff to cope with, and meet the demands of customers (AlKhanbouli & Tsagdis, 2017). While this indicate that organizational excellence is important in Dubai Freezones to achieve the purpose of establishing freezones, there is also the demands of customers and direct contribution to the economy that is also important. Organizational excellence is important for organizations especially those committed to excellence goal (Daharat, Sued & Gheisari, 2022).

Organizational excellence has dimensions such as leadership, people (staff), processes and policy and resources which may be challenging to manage by organizations regardless of commitment to excellence (Wahab, Ismail & Muhayiddin 2016; Aldarmaki & Kamarul Bahari Yaakub, 2022). Challenges relating to using organizational excellence dimensions effectively to achieve performance have been experienced in freezones around the world including Dubai freezones. Problem associated with processes have been exposed amidst fierce competition between the freezones in Dubai and the other free zones in the country, revealing the challenges and difficulty coping with, and meeting the demands of customers (Aldarmaki & Kamarul Bahari Yaakub, 2022). These problems and challenges suggest that organizational excellence in Dubai freezones may not be having positive impact on external dimensions of organizational performance like customer satisfaction and overall society. Another problem is that excellence processes in place in freezones are continuously competing with lower cost of operating business (Rodríguez‐Pose et al. 2022; Yu et al., 2022) including in the mainland of Dubai (DFZC, 2018). Fierce competition and continuous demands of clients are key factors that may limit freezones from achieving their organizational goals despite commitment to excellence. These problems that expose the limitations of organizational excellence and its application in freezones. It also indicates that organizational excellence may need to be better aligned with key factors in organizations to ensure that organizational excellence improves the overall performance of freezones including Dubai freezones. Previous work by Aldarmaki and Kamarul Bahari Yaakub (2022) provided insights into measurements of organizational excellence with the view to determine appropriate measures for Dubai Freezones. It is further indicated that it is important to revisit the commitment to excellence goal and how excellence as practiced within Dubai Freezones can be further evaluated. Therefore, this paper focuses on the study conducted based on the recommendations and implications of previous studies to examine the relationship between organizational excellence and other factors within the freezones as an organization.

Relationship Between Organizational Excellence and Performance

Studies have shown that there is positive impact of organizational excellence practices on improved performance (Prashar, 2017; Al-Dhaafri & Alosani, 2020). However, findings on the impact of excellence models on performance have been mixed (Prashar, 2017; Al-Dhaafri & Alosani, 2020). For example, Joiner (2007) found a strong positive relationship between implementation of excellence practices and organizational performance. A study of 20 projects from Asia, Europe and USA found a weaker association between excellence and performance (Ahmad, et al., 2015; Ghafoor et al. 2022). For more than a decade, literature shows that performance is influenced by several factors including both internal and external factors. For example, Gavrea, Ilieş, and Stegerean (2011) reveal in their study that internal and external factors of organizational performance are important in an organization.

Studies exist that focus on factors influencing organizational performance (Cherian & Jacob, 2013; Sultana et al. 2013). Some authors identified organizational innovation (Hui et al. 2013) as key factor that influence or contribute to organizational performance. Supply chain management is also considered as a factor that contribute to organizational performance in a business organization (Deshpande, 2012; Jenatabadi et al. 2013; Sanasam et al. 2022). Other business or corporate sector identify TQM as contributing factor to organizational performance (Igudia, 2022) and enterprise resource planning as another factor (Qutaishat, et al. 2012; Korma et al. 2022). Performance of an organization is directly influenced by its ability to develop and implement plans for achieving its mission and organizational value (Elena-Iuliana & Maria, 2016; Korma et al. 2022). This may be applicable and clear for every business size for organizational performance to be measurable.

Organizational performance also needs to focus on the customers and / or other actors it caters for because they determine the number of resources that the organization devote to achieving its desired results (Gavrea et al., 2011; Sanasam, Pradhan & Mohanty, 2022). Explanations such as this suggest that external factors equally contribute to organizational performance as much as internal or organizational goals. It can then be concluded that both internal and external factors of organizational performance are important to any organization type. Based on explanations of contributing factors to organizational performance, it can be inferred that organizational performance is important to achieving organizational goals, objectives and organizational excellence. Organizational performance concept entails and demonstrates the relationship between setting objectives and achieving beneficial results to the organization (Elena-Iuliana & Maria, 2016; Sanasam, et al. 2022). Identifying resources for achieving objectives of the organization and results that emerge from the process makes organizational performance the result of an effective and efficient use of organizational resources (Elena-Iuliana & Maria, 2016; Kalaitzi & Tsolakis, 2022). According to Perkins, Nightingale, Valerdi, and Rifkin, (2010) and Kueng (2000), the organizational culture and mission tend to drive it to achieve success and positive outcomes.

Combination of contributing factors subsequently improve organizational capacity and constitutes as organizational performance. In summary, factors that contribute to organizational performance can be categorized as external and internal factors, and are known to influence organizational performance (Gavrea et al., 2011; Igudia, 2022). The external factors exist outside of the direct organizational environment and they include factors such as customers, competition and suppliers (Gavrea et al., 2011; Sanasam et al. 2022). Other external factors such as political, technological, ecological or economic may influence outcomes of an organization (Perkins et al. 2010; Kalaitzi & Tsolakis, 2022). Internal environment factors such as leadership, governance, strategy, quality, innovation, and information technology development tend to have more direct impact on survival of the organization (Gavrea et al., 2011; Samson & Bhanugopan, 2022). These factors and others discussed in previous section can hinder the drive for organizational success when not managed appropriately (Qutaishat et al. 2012; Sanasam, et al. 2022). Therefore, internal factors are considered as potential barriers to achieving organizational performance outcomes.

Regardless, both internal and external factors can be barriers to organizational success when not appropriately managed. Alternatively, they can also act as drivers of organizational success when appropriately managed. However, this depends on whether both factors are considered during plan implementation for achieving organizational objectives. Like organizational excellence, it may be challenging to achieve organizational performance effectively without the aid of a model or framework that guides the process or aid the monitoring of organizational activities aimed at improving organizational performance. Therefore, as done for organizational excellence in previous studies, Gavrea et al. (2011) indicate that deciding the actual factors of organizational performance is highly vital for emerging economies because it enables businesses to focus resources on those interventions which may help improve organizational performance as desired.

The knowledge gained by organizations make their management and leadership push their employees to achieve success (Arias Aranda & Molina‐Fernández, 2002; Hameed et al. 2021). This makes the knowledge of excellence and its practices important in an organization. According to Mohamed et al. (2018), the principles and practices of organizational excellence helps employees perform better to deliver productivity for the organization. The influence of organizational excellence on is seen to be stronger on employees than the influence of other organizational factors (Mohamed et al. 2018; Elsafty & Seddek, 2022). Organizational excellence contributes to employee productivity and overall productivity of the organization, thereby leading to organizational performance (Al-Dhaafri & Alosani, 2020). In this study, Al-Dhaafri and Alosani (2020) consider organizational excellence as a culture by itself that is diffused among employees in an organization to ensure that employees are able to achieve key performances or results for the organization. Hussain, et al. (2010) identified that beneficial relationships exists between organizational excellence and dimensions of organizational performance. In light of explanations herein, and those already presented in this chapter regarding organizational excellence and organizational performance, it is established that in organizations that have adopted excellence model, that:

H1: There is a significant positive relationship between organizational excellence and internal factors of organizational performance.

Organizational excellence is also important for external factors within organizational performance. Sethibe and Steyn (2016) highlight that non-financial performance measures are important to stakeholders because stakeholders can be involved in organizations based on their goals, expectations and commitment to excellence. This implies that an organization that has adopted organizational excellence as a core value and also prioritizes the creation and implementation of new or improved services is expected to have higher business results (Jankal, 2014). Organizational excellence is also adopted to improve services or / and products provided to stakeholders or customers who may be involved in the organization (Sethibe & Steyn, 2016) and believe they have stake in the success of the organization. However, service businesses are now feeling the pressure of higher customer expectations. Customers now want customized services with immediate results and thus services, like products need to be refreshed (D’Emidio, Dorton, & Duncan, 2015). The increasing access to mobile and self-service possibilities, the proliferation of smart devices and the use of big data and advanced analytics are also transforming the service delivery (D’Emidio, Dorton, & Duncan, 2015). To keep customers engaged and satisfied organizations ought to explore new and more ideas than their competitors. Carlos Bou‐Llusar et al. (2005) found that all these five criteria contributed to improvements customer and stakeholder results, as well as overall impact on society. Based on literature examined in this chapter and this section, it is deducted that:

H2: There is a significant positive relationship between organizational excellence and external factors of organizational performance.

Therefore, this research investigates the relationship between organizational excellence and external factors of organizational performance, as well as between international factors of organizational performance in Dubai freezones. This is done to better ascertain the extent to which organizational excellence directly and positively influence the factors of organizational performance in Dubai freezones.

Methodology

The study to test the two hypotheses was conducted in Dubai freezones. Random sampling is used to select equal sample from within Dubai freezones to ensure unbiased representation of the total population of 410. Using Qualtrics sample size calculator, a minimum sample size of 199 was determined as required to make objective deduction from this study. This sample size is expected to be sufficient to yield statistical power (Valentine et al., 2010). The link to the questionnaire was sent to all staff and 201 staff completed the questionnaire. 50.2% of the respondents were male while 49.8% are female. The most represented age range was those between 30 – 39 years which was 58.7% while the highest role representation were supervisors (21.3%) followed by those who were administrative assistant (16.4%). Data obtained from the questionnaire is analyzed using Smart PLS 2.0, a PLS structural equation modelling tool (Richter et al., 2016). The structural model in PLS is assessed by examining the path coefficients (standardized betas). P statistics are calculated to determine the significance of the path coefficients, while R2 is used to assess the predictive strength and usefulness of the proposed model. Organizational excellence and organizational performance were tested or assessed by averaging the relationships (correlations) of the organizational excellence variable scores. PLS-SEM is also able to handle data inadequacies such as heterogeneity (Hair et al. 2014). A PLS path model in this study consists of two elements: structural model that shows the relationship between organizational excellence and organizational performance.

Findings and Discussion

The findings revealed that organizational excellence does not have the same effect on internal and external factors of organizational performance in Dubai freezones. As shown in the table.

H1: There is a significant positive relationship between organizational excellence and internal factors of organizational performance. The result obtained showed the p value was p=.302. As the p-value was more than 0.05, hence H1 was not supported.

For the organizations to be successful, it must combat both external and internal factors (Al-Dhaafri & Alosani, 2020). Furthermore, the organization must justify its presence in society via its performance, and through it, the organization must demonstrate its effectiveness for the society (Aladwan & Alshami, 2021). By its performance, the company is able to represent its effective functioning while also creating its image in society. Hence, the organization is expected to sustain and increase its performance since performance improvement is for the organization's dynamic advantage (Alfoqahaa, 2018). It is necessary to comprehend the aspects and characteristics of each area of responsibility in the organization in order to have a proper knowledge of the concept of organizational performance. People results are related to increased work performance, such as employee satisfaction, turnover and absenteeism. Organizational outcomes are connected to the productivity of various organizational activities, with people and key results being essential consequences from internal causes (Ali AlShehail, Khan, & Ajmal, 2022). Top management has a significant impact on the organization's success (Boon Liat, Nikhashemi, & Dent, 2020). Top management should adhere to approved leadership styles and practices measurement. Management's leadership function necessitates attention to both individuals and the organization (Kassem, Ajmal, Gunasekaran, & Helo, 2019). Essentially, management (the leader) is considered as filling the gap between the ambitions and talents of employees on the one hand and organizational goals and needs on the other. In essence, when the gap is closed, employees are pleased, and the organization's performance improves (Kumar, Mamgain, Pasumarti, & Singh, 2022). The organizations need a comprehensive IT strategy. It will be incorporated into the broader organizational plan and will go much beyond typical information technology. In addition to controls, people and processes make significant contributions to organizational performance (Lasrado, 2020). It is beneficial to comprehend what is occurring while employees interact within the firm. It assists management in understanding the environment in which workers work. It enables management to recognize some of the organization's more expressive elements. Previous studies (Al-Abrrow, Abdullah, & Atshan, 2019; Upadhyay et al., 2021; Zhang, Li, Li, Xia, & Skitmore, 2021) found a significant effect of organizational excellence on internal factors of organizational performance. It appears puzzling that no significant relationship was found between them. The results of this study are contrary may be due to the fact that excellence has more powerful impact on the external factors of performance of Dubai freezones. The study, therefore, concludes that there is no significant influence of organizational excellence on internal factors of organizational performance.

H2: There is a significant positive relationship between organizational excellence and external factors of organizational performance. This study showed the results as =-0.140, t=2.940, p=0.003. As p-value was less than 0.05, hence H2 was supported.

Effective performance measures should include all components of performance that are important for the organization's survival as well as its success and growth. A performance measuring system must incorporate more than just financial data (Alkhatib & Valeri, 2022). It is to incorporate the amount to which the organization is oriented toward and grasp the organization's strengths, weaknesses, strategy, and potential (Alblooshi et al. 2021). Customer results are related to competitiveness in terms of customer happiness and retention. A way of determining an organization's performance is measuring the organization's capacity to meet the goals set by its stakeholders (Alfoqahaa, 2018). In this way, the organization's link with society is discovered. The organization's performance is effective when it takes advantage of its surroundings to get high-value and scarce resources to justify its operations. When numerous stakeholders view the organization to be productive, it is effective. Organizations with greater control over excellence are more likely to have the greatest effect on performance (Cabral & Marques, 2022). A high level of collaboration and commitment among stakeholders is demonstrated by work groups and management in a high-performing and successful company (Jabnoun, 2020). The study, thus, concludes that there is a significant positive influence of organizational excellence on external factors of organizational performance.

Implication of Results

The result of this study has contributed to first hand investigations, measurement and analysis of the relationship between the dimensions organizational excellence including leadership, policy and strategy, people, partnerships and processes, and internal and external factors of organizational performance within freezones of the United Arab Emirates. The study has also added to existing knowledge of organizational performance for freezones across the UAE. The current study has added to this theory and body of data to increase organizational performance within the free zones of the UAE. The implication here is that an increase in organizational excellence will lead to an increase in external factors of organizational performance. thus, any positive change in organizational excellence in the organization is likely to cause an increase in external factors of organizational performance. According to this study, there is a positive association between organizational excellence and external factors of organizational performance. This is in line with prior findings that indicated the importance of organizational excellence in increasing organisational performance (Alosani, Yusoff, Al-Ansi, & Al-Dhaafri, 2021). As the UAE market has become saturated, strong competition in the businesses endures. As a result, businesses do not choose to develop strategies to attract new customers or improve societal performance. Instead, they are concentrating on delivering as soon as possible to their already enormous consumer base. The findings, in particular, demonstrate that the freezones in a quickly rising transitional country like UAE may not regard all internal and external features to be equally crucial to boosting market performance. Past literature mentioned earlier in this study indicated that there was a significant relationship between leadership, policy and strategy, people, partnerships and processes and internal and external factors of organizational performance. The present study examined such relationships and contributed towards past literatures in this field. The findings in this research showed a consistency with previous literatures. In terms of practical implications, this study provides many valuable practical contributions not only towards Dubai Freezones, but also for UAE, policy makers and for government as well. It is important for Dubai freezones to improve organizational performance by focusing on internal and external factors in their units or every component of the organization. The heads of Dubai freezones may therefore improve their performance by directly by enhancing leadership, policy and strategy, people, partnerships and processes in the organization.

Conclusion

This study was designed to determine the effect of organizational excellence on factors of organizational performance in the free zones in Dubai. Evaluation of the relationship between organizational excellence and organizational performance indicate that there might be positive relationship between the variables but this was not the case when assessed in Dubai freezones. While one hypothesis was supported and the other not supported, the overall major contribution of this study is that it has shown that there is a relationship between organizational excellence and organizational performance in Dubai freezones. This understanding can would encourage Dubai freezones to improve current practice, as well as organizational strategies to ensure that the overall performance especially for its internal and external factors are significantly improved. Similar practices can then be replicated in other freezones in the country and beyond.

References