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Chapter 6

Organizational Cultures and Diversity

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Learning Objectives

Define exactly what is meant by organizational culture, and discuss the interaction of national and MNC cultures

Identify the four most common categories of organizational culture that have been found through research, and discuss the characteristics of each

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Learning Objectives (continued)

Provide an overview of the nature and degree of multiculturalism and diversity in today’s MNCs

Discuss common guidelines and principles that are used in building multicultural effectiveness at the team and the organizational levels

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Deloitte: Key Findings regarding Culture and Global Leadership

Cultural diversity

Lies in the eye of the beholder

Positively contributes to professional and personal enjoyment of the project and project outcome

Indirectly encourages project members to rethink their usual working habits and expectations

Dominance amongst team members reduces bias to interact with people who have common characteristics

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Advantages of Global Virtual Teams

Working virtually can reduce team process losses associated with any cliques commonly experienced by face-to-face teams

Having members span many different time zones can literally keep a project moving around the clock

Cohesive teams that are capable of quickly solving complex problems and making effective decisions provide a competitive advantage

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Organizational Culture

Pattern of shared basic assumptions that:

Is learned by the group as it solves problems of external adaptation and internal integration

Have worked well enough to be considered valid

Are to be taught to new members as the correct way to perceive, think, and feel in relation to those experiences

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Characteristics of Organizational Culture

Observed behavioral regularities, as typified by common language, terminology, and rituals

Norms, as reflected by things such as:

Amount of work to be done

Degree of cooperation between management and employees

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Characteristics of Organizational Culture (continued 1)

Dominant values that the organization advocates and expects participants to share

Include high product and service quality, low absenteeism, and high efficiency

Philosophy that is set forth in the MNC’s beliefs regarding how employees and customers should be treated

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Characteristics of Organizational Culture (continued 2)

Rules that dictate the dos and don’ts of employee behavior

Relate to areas such as productivity, customer relations, and intergroup cooperation

Organizational climate or overall atmosphere of the enterprise

Reflected in the participants’ interaction with others, behavior with customers, and perception of how the higher-level management treats them

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Interaction between National and Organizational Cultures

Diagnosing Organizational Culture for Strategic Application (DOCSA)

Set of proprietary cultural-analysis techniques and programs that help identify the dimensions of organizational culture

Proposed by Hofstede

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Table 6.1 - Dimensions of Corporate Culture

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Table 6.1 - Dimensions of Corporate Culture (continued)

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Interaction between National and Organizational Cultures (continued)

Even in the presence of multinational alliances, partners will bring different organizational cultures with them

Difficult for an MNC with a strong organizational culture to break into foreign markets

Unfamiliarity with divergent national cultures

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Steps to Integrate Organizational Cultures

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Determining Organizational Culture

Important aspects

General relationship between the employees and their organization

Hierarchical system of authority that defines the roles of managers and subordinates

General views that employees hold about the MNC’s purpose, destiny, goals, and their place in them

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Figure 6.2 - Organizational Cultures

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Family Culture

Strong emphasis on hierarchy and orientation to the person

Results in a family-type environment that is power-oriented and headed by a leader who is regarded as a caring parent

Management assumes a parental relationship with personnel

Ensures proper treatment of employees and their continued employment

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Family Culture (continued)

Characterized by traditions, customs, and associations

Bind the personnel together

Make it difficult for outsiders to become members

Can catalyze and multiply energies of personnel and appeal to their deepest feelings and aspirations

Foreign to most managers in the United State

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Eiffel Tower Culture

Strong emphasis on hierarchy and orientation to the task

Jobs are well defined, employees know what they are supposed to do, and all activities are coordinated from the top

Culture is narrow at the top and broad at the base

Relationships are specific, and status remains with the job

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Eiffel Tower Culture (continued 1)

Managers seldom create off-the-job relationships with employees

Operates like a formal hierarchy, which is impersonal and efficient

Each role is described, rated for difficulty, complexity, and responsibility and has a salary attached to it

Jobs are awarded to the best fit between role and person

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Eiffel Tower Culture (continued 2)

Learning involves the accumulation of skills necessary to fit a role, and organizations:

Use qualifications in deciding how to schedule, deploy, and reshuffle personnel to meet needs

Employ assessment centers, appraisal systems, training and development programs, and job rotation to manage personnel

Ill-equipped to handle things when changes need to be made

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Guided Missile Culture

Strong emphasis on equality in the workplace and orientation to the task

Work-oriented culture where the work is undertaken by teams or project groups

Egalitarian and task-driven

Changes can happen quickly

Loyalty to profession and project are often greater than loyalty to the organization itself

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Motivation in Guided Missile Culture

Tends to be more intrinsic

Team members become enthusiastic about, and identify with, the struggle toward attaining their goal

Helps minimize both intragroup and intergroup conflicts

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Incubator Culture

Strong emphasis on equality and personal orientation

Little formal structure

Based on the premise that an organization’s role is to serve as incubators for self-expression and self-fulfillment of their members

Participants confirm, criticize, develop, and find resources for, or to help complete, the development of an innovation

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Incubator Culture (continued)

Creates an environment where participants thrive on an intense, emotional commitment to the nature of work

Changes are fast and spontaneous

Motivation remains highly intrinsic and intense

Leadership is achieved and not gained by position

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Table 6.3 - Summary Characteristics of the Four Corporate Cultures

Characteristic	Family	Eiffel Tower	Guided Missile	Incubator
Relationships between employees	Diffuse relationships to organic whole to which one is bonded	Specific role in mechanical system of required interaction	Specific tasks in cybernetic system targeted on shared objectives	Diffuse, spontaneous relationships growing out of shared creative process
Attitude toward authority	Status is ascribed to parent figures who are close and powerful	Status is ascribed to superior roles that are distant yet powerful	Status is achieved by project group members who contribute to targeted goal	Status is achieved by individuals exemplifying creativity and growth

Source: Adapted from Fons Trompenaars and Charles Hampden-Turner, Riding the Waves of Culture: Understanding Diversity in Global Business, 2nd ed. (New York: McGraw-Hill, 1998), p. 183.

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Table 6.3 - Summary Characteristics of the Four Corporate Cultures (continued 1)

Characteristic	Family	Eiffel Tower	Guided Missile	Incubator
Ways of thinking and learning	Intuitive, holistic, lateral, and error correcting	Logical, analytical, vertical, and rationally efficient	Problem centered, professional, practical, and cross-disciplinary	Process oriented, creative, ad hoc, and inspirational
Attitudes toward people	Family members	Human resources	Specialists and experts	Co-creators
Ways of changing	“Father” changes course	Change rules and procedures	Shift aim as target moves	Improvise and attune
Ways of motivating and rewarding	Intrinsic satisfaction in being loved and respected	Promotion to greater position, larger role	Pay or credit for performance and problems solved	Participation in the process of creating new realities

Source: Adapted from Fons Trompenaars and Charles Hampden-Turner, Riding the Waves of Culture: Understanding Diversity in Global Business, 2nd ed. (New York: McGraw-Hill, 1998), p. 183.

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Table 6.3 - Summary Characteristics of the Four Corporate Cultures (continued 2)

Source: Adapted from Fons Trompenaars and Charles Hampden-Turner, Riding the Waves of Culture: Understanding Diversity in Global Business, 2nd ed. (New York: McGraw-Hill, 1998), p. 183.

Characteristic	Family	Eiffel Tower	Guided Missile	Incubator
	Management by subjectives	Management by job description	Management by objectives	Management by enthusiasm
Criticism and conflict resolution	Turn other cheek, save other’s face, do not lose power game	Criticism is accusation of irrationalism unless there are procedures to arbitrate conflicts	Constructive task-related only, then admit error and correct fast	Improve creative idea, not negate it

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Multiculturalism and Diversity

Effect varies depending on the stage of the firm in its international evolution

Phase I - Domestic corporations

Phase II - International corporations

Phase III - Multinational corporations

Phase IV - Global corporations

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Figure 6.4 - International Corporation Evolution

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Figure 6.5 - Locations of International Cross-Cultural Interaction

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Impact of International Cultural Diversity

Domestic firms

Affect neither the firm’s organizational culture nor its relationship with its customers or clients

Can be impacted only by domestic multiculturalism

International firms

Strongly impact external relationships with potential buyers and foreign employees

Diversity focus is from the inside out

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Domestic Multiculturalism

Culturally distinct populations can be found within organizations almost everywhere in the world

Can be examined within the same ethnic groups

Example - Among small Chinese family businesses, the viewpoints of the older generation differ sharply from those of the younger generation

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Group Multiculturalism

Homogeneous groups

Members have similar backgrounds and generally perceive, interpret, and evaluate events in similar ways

Token groups

All members but one have the same background

Bicultural groups

Two or more members represent each of two distinct cultures

Multicultural groups

Composed of individuals from three or more different ethnic backgrounds

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Potential Problems of Diversity

Rooted in people’s attitudes

Include:

Erroneous perceptions caused by preconceived stereotypes

Inaccurate biases

Inaccurate communication or miscommunication

Result of using unclear words, manner in which situations are interpreted, and differences in perceptions of time

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Advantages of Diversity

Enhances creativity, leads to better decisions, and results in more effective and productive performance

Helps generate more and better ideas

Prevents groupthink

Social conformity and pressures on individual members of a group to conform and reach consensus

Enhances relationships with customers

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Figure 6.6 - Group Effectiveness and Culture

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Multicultural Team Effectiveness

Focus of attention must be determined by the stage of team development

Entry stage - Focus on building trust and developing team cohesion

Work stage - Focus is directed toward describing and analyzing the problem or task that has been assigned

Action stage - Focus shifts to decision making and implementation

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Multicultural Team Effectiveness - Guidelines

Select team members based on task-related abilities and not based on ethnicity

Team members must recognize and be prepared to deal with their differences

Team leader must help the group to identify and define its overall goal

Distribute power according to each person’s ability to contribute to the task

Provide the team with positive feedback on their process and output

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In the International Spotlight - Nigeria

If you were a consultant for Filmhouse, how would you advise Kene Mpkaru regarding his next moves in Nigeria?

What specific aspects of the country would be positive for the company? What factors are negatives?

How would you deal with the wealth gap in the country?

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In the International Spotlight - Nigeria (continued)

Would you advise Filmhouse to concentrate on Nollywood productions or would you try to attract Hollywood movies?

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Review and Discuss

Some researchers have found that when Germans work for a U.S. MNC, they become even more German, and when Americans work for a German MNC, they become even more American

Why would this knowledge be important to these MNCs?

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Review and Discuss (continued 1)

When comparing the negotiating styles and strategies of French versus Spanish negotiators, a number of sharp contrasts are evident

What are three of these, and what could MNCs do to improve their position when negotiating with either group?

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Review and Discuss (continued 2)

In which of the four types of organizational cultures—family, Eiffel Tower, guided missile, incubator—would most people in the United States feel comfortable?

In which would most Japanese feel comfortable?

Based on your answers, what conclusions could you draw regarding the importance of understanding organizational culture for international management?

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Review and Discuss (continued 3)

Most MNCs need not enter foreign markets to face challenges of dealing with multiculturalism

Do you agree or disagree with this statement?

Explain your answer

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Review and Discuss (continued 4)

What are some potential problems that must be overcome when using multicultural, diverse teams in today’s organizations?

What are some recognized advantages?

Identify and discuss two of each

A number of guidelines can be valuable in helping MNCs to make diverse teams more effective

What are five of these?

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