Do Local Values Affect Performances? The Study of Tri Hita Karana Culture on Hotel Performance in Bali

It is argued that culture is one of the important sources of competitive advantage for a firm, which serves as a driver for business performance. By “the collective programming of the mind” of its members, organizational culture can generate similar behavior among members, and create harmony among people of different levels or different backgrounds in an organization. For Bali and its people, the philosophy and/or values that guide people to live harmoniously with others as well their surrounding is called Tri Hita Karana. This work is directed to study the influence of these values as the organizational culture of hotels in Bali on their performances by the mediation of dynamic capabilities. Applying structural equation modeling, the Tri Hita Karana culture and hotel performances are positioned as exogenous and endogenous latents, respectively. This study reveals that the Tri Hita Karana culture does not show a direct significant effect on performances; on the contrary, dynamic capabilities act as a mediating variable. However, by the mediation of hotels’ capabilities to face the industry competition, Tri Hita Karana is proven to significantly affect hotel performances in Bali.