Organizational climate–institutional environment nexus: why context matters

This conceptual paper investigates organizational climates through multiple lenses to highlight the complex web of forces and dynamics that influences the varied perceptions and experiences of organizational climates in any organization. The multi-faceted nature of employee perceptions of organization climates presents complex problems in human resource management and organizational well-being. Using a literature review and institutional environment framework, diverse perspectives and discourse are drawn on how an array of intertwined factors such as context, technology and innovation, ownership, goals and objectives, corporate governance, organizational change and life-cycle, physical conditions, workplace hazards, environmental stressors, organizational process, communication and organization structure can influence and shape organizational climate and resultant group dynamics. Moreover, several empirical results confirm the role institutional environments play in the organizational climate ecosystem. Our finding reveals that organizations could have several layers and types of organizational climates dependent on intervening soft and hard factors. Therefore, studies relating to organizational climates should adopt a holistic and systematic approach to understand the multi-layered dynamics in their context.