Time precedence in the relationship between organizational climate and organizational performance: a cross-lagged study at the business unit level

Abstract

This article presents a two-wave cross-lagged study (average interval of two years) on time precedence in the relationship between organizational climate and organizational performance in 171 branches of a financial services organization in the Netherlands. It is argued that four HR-induced organizational climate dimensions influence organizational performance. Additionally, it was also hypothesized that high organizational performance influences the four organizational climate dimensions through investments in HR practices and through signalling effects. Finally, it was reasoned that possibly both processes are present simultaneously. Results of testing a series of competing models in AMOS showed that organizational climate at time point 1 influenced organizational performance at time point 2 rather than the reverse, or both processes being present simultaneously.