Silo Effects and Financial Performance: Evidence from an Emerging Market

Abstract

Focusing on identifying the impact of silos, this article addresses a gap in the literature in terms of the mediating role of collaboration between silo-busting techniques and the productivity and financial performance of Saudi firms. Through an investigation of multiple hypotheses tested via partial least-squares structural equation modelling, the relationship between silo-busting techniques and productivity and financial performance is tested in quantitative terms, thereby providing the first evidence for this relationship in the focal context. On the basis of this modelling approach, silo-busting techniques are shown to be a significant predictor of productivity and financial performance. Further, the results show that silo-busting techniques play an additional related role in shaping productivity and financial performance—that is, these techniques foster collaboration within a given firm. In fact, practicing silo-busting techniques can help improve firm performance. In relation to the present business environment, the results indicate that firms should make significant investments in all five silo-busting factors—values, leadership, collaborative environment, collaborative operating model and people reward and development—in order to improve collaboration results and, therefore, productivity and financial performance. However, particular emphasis should be placed on collaborative operating model and people reward and development as the only two factors shown to strongly support firm performance.