What are the likely effects of national culture upon organisations?

University Degree Business and Administrative studies

We live in a multicultural society and because of this national culture is becoming an ongoing concern. In this essay I will try and identify its effects on organisations. National culture basically means a nations culture which includes shared knowledge, beliefs and values as well as common modes of behaviour and ways of thinking, among members of a society.

Factors that contribute to the national cultural environment are shown by the diagram below drawn by Hofstede (1980) and Tayeb (1989)

Looking at this diagram here we can see that each category is common for different nations in the world like language and religions. Take someone who works in Britain. He or she would not find it difficult to adapt to the national culture of firms in Ireland or Canada but it would be difficult if he or she were working in Africa due to major differences in language, culture. Giddy (1978) gives an example of difficulties from differences in culture. He basically talks about an American firm trying to export a ‘company picnic’ idea into its Spanish subsidiary. The US executives dressed up as chefs and were serving people but this embarrassed the Spanish employees and they were unsociable. They stood up every time they were approached at there table. You can see here that there is a huge amount of respect for authority figures in Spain and this is where the culture difference lies in this case. (Managing organisations (2000))

The convergence and divergence model (Lammers and Hickson, 1979) has an impact on national culture. The convergence view says that organisations are basically all the same in terms of structure, technology, bureaucracy etc. Therefore the businesses view will overwrite national culture. The divergence view however gives superiority to the differentiating effects of national culture for example effects of history, beliefs, values and attitudes in society. Pressures on businesses may change the shaping of the organisation but so can certain individuals within an organisation who may have different beliefs, attitudes. Because of this you can get differences in motivation, time and accumulation of wealth and change which can all be identified across all national cultures.

There was research conducted by Aston researchers which was a cross national research using the variables of size, technology, formalisation and specialisation (Hickinson and McMillan, 1981). They concluded was there appeared to be a common logic among many different national cultures despite there being political differences organisations were going towards (converging) the same common purpose of using economics, competition and technology as an imperative tool.

Studies that support the divergence view argue that organisational structures and processes are specific to certain cultures. Ruedi/Lawrence (1970) and Sorge/Warner (1986) conclude national cultural factors which are to do with German and English organisations. They say that there are differences in education levels which are higher in Germany and also power which is more authoritative in Germany and British managers face increased decentralisation.

Looking at figure1. I will take each of the categories into more depth. First we will start with language. Language reflects the content and nature of the culture it represents. There are more than 3000 different languages spoken in the world therefore it is obvious that this is a major part of national culture. Because of the vast amount of different languages managers would find it a challenge to work outside their own market. There would be communication problems to deal with. But with advanced technology coming into the market communication in different languages is very important between the levels of an organisation. In some cases you may need bilingual managers who are diverse to deal with these barriers between subsidiaries.

Take for instance the Caterpillar Tractor Company which had problem communicating parts and repair manuals in a variety of languages. To overcome this barrier Caterpillar developed a system called ‘Caterpillar Fundamental English’ where employees acquire understandings of 800 words.

Next we will look at religion. Religion is defined as ‘an expression of a sense of dependence on a power outside ourselves, a power of which we may speak as a spiritual or moral power’ (Radcliffe- Brown, 1945). Religious belief systems can shape individual behaviour. People are going to behave in a different manner for a particular reason that is ...

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Concerning Hinduism what has had an impact on organisations is ‘The caste system’ which the caste you are when you’re born more closely aligned to species. This would be the main force in controlling an economy and keeping social structure and change. Strong family bonds have meant family owned businesses set up.

Buddhism is more focused on wantlessness and contemplation and not on work and consumption.

Concerning Islam and organisational behaviour we can talk about holidays where normally for Muslims you would get the normal weekend being Thursday and Friday which only leaves three working days and also Ramadan where fasting is involved for a month can led to less productivity.

For Christians we can say that Catholicism and Protestantism can have an impact on organisations due to capitalism but saying that capitalism can create continuity within an economic structure.

We will now look at the legal context which talks about the laws of society created by authorities. This will go towards the norms and attitudes of a society. Because different societies have different attitudes towards behaviour than others there will be different levels of regulation. Three types of law exist: 1) Laws of Host Countries 2) International Law 3) Laws of Home countries. Some organisations do not know all the laws and regulations. Countries with the same beliefs will normally tend to have the same legalities. Also we can say that the history of the country has given the modern world some sort of legal system. Also the creation of an international law which is a similar law between two or more countries gives the tendency to reduce differences and also legalities between countries making it easier fir organisations say for example to import and export goods from one country to another.

The laws that are put in your own country may have an impact on the operations of firms in different countries. These can be exporting where there are many restrictions for example certain countries will not let you trade with other countries for example US with Korea and Cuba and also where a domestic firm acquires a foreign competitor assuming lessened competition which may cause fluctuations in the organisations market share. We can also talk about taxation where different countries have different taxation rates therefore it may be difficult for an organisation to invest in another country.

Lastly we can talk about the political context which is basically where organisations may have to operate in an area of political conflict. The nation state is a political unit.

It can also exist in terms of the culture, history. Nations want to increase their economic power which is one of their goals in relative to other nations. This can be fulfilled by the organisations productivity levels and how the nation as a whole communicates with minimal barriers for example language.

Nationalism is talking about individuals in which there is loyalty towards your country. For example we can talk about the September 11th incident where the Twin Towers were hit but loyalty to the country by citizens and fire fighters and organisations helped bring the nation as close to the economic stature as possible. Managers normally ignore nationalism because it may be a burden to their organisation.

Here we also have to consider the relationship between the business and the government. If the interaction between the organisation and the state is good then there will be a better emphasis on achieving the economic and organisational goals. For example Japan has had a successful economy for sixty years due to its interaction and coordination with the state. But there are problems with multinational companies and host government. If a company based one of its chain companies else where in the world the government may have different objectives in how to run the state therefore your objectives may be distorted if it doesn’t coincide with what the state is saying but most of the time the multi national company is focusing on itself being a strong competitor globally and creating economic benefits to do with itself and nothing of the host state. But because the multi national companies are out for themselves they may exploit the resources in the host country reducing the welfare and in this case the government may then intervene.

It is difficult for multi national firms to operate to the norm if there are many political issues that have to be tackled for example conflict between many Middle Eastern countries results in boycotting taking place to firms who do not comply by rules and are loyal to the country. Multi-national companies need to know the legalities in the host countries or you could be doing something which is alright to do in the domestic market but not in the host market resulting in penalties.

A new issue we can bring up now is the effect of national culture on management. A universal management system (sound management) makes thinking more alike between firms therefore national culture would not matter but in reality cultures and differences will always exist that’s why this view is not feasible.

Nationality is important when it comes to management because you get politics coming into the equation in terms of government, rules and regulations etc. Some institutions can differ because if the informalities that are associated with them for example rights of certain people may be better protected in some countries but if they cannot win in the court these rights are useless e.g. France.

You also have sociological concerns. We all have a nationality and this is normally of high value to us and anything is done to protect our nation. We can also talk about psychological values. All people encounter different experiences within different nations. The view of ‘conditioning’ means that certain experiences form certain views for example if someone has seen violence all their life they may form a view of violence that they think is right.

National culture is said to be ‘mentally programmed’. What we mean by this is that what our beliefs, values, attitudes are we are going to stick to them for example we may be able to share the views of our own nation and not of others e.g. freedom of speech. But this type of culture applies for certain nations and can be changed through certain institutions like the government, legal and education systems, religious organisations etc.

Four dimensions associated with national culture are:

power distance
uncertainty avoidance
individualism and collectivism
Masculinity and Femininity

Relating power distances to organisations, power distance is the degree to which people accept inequality in power. In organisations there may be conflicts as people may not want to accept a higher power for example employees normally tend to hat their bosses because their bosses tell them what to do, which may affect morale and motivation.

The next one is uncertainty avoidance where value is characterised by people’s intolerance for uncertainty and ambiguity and resulting support for beliefs that promise certainty and conformity. Linking this to organisations we can give an example of working in McDonalds where the employees would have no job security whatsoever because if they don’t work up to scratch other people will be waiting to work. This creates great uncertainty for the employee and he or she may want to find work elsewhere with greater security, which may decrease productivity in the short term for McDonalds and also adding to recruitment costs.

The next dimension is individualism and collectivism. Individualism basically is the preference for a loosely knit social framework. In which individuals are expected to take care of their own self interests. Collectivism on the other hand is a tightly knit social framework in which individuals look after one another and organisations protect their member’s interests. Linking this to organisations, individualism will create a framework where there may be a variety of views as people are only looking after themselves and their self interests and may not be doing what’s adequate for the organisation. Linking collectivism to organisations if every employee looks after one another you will get good communication links between them and more input into tasks and objectives. Also everyone would have similar beliefs because everyone is looking after the others self interest. Hofestedes studies show how individualism is linked to a countries wealth for example looking below UK and the US are very individualist. Pakistan and Columbia are very collectivist countries.

It seems that being in between both these views would be the best option for example looking at figure two we can see Japan is in the middle and is one of the wealthiest countries in the world combining both views. Individualism may be better in cases because a variety of people are looking after their own interests therefore creating a spread of risk if some view fails, but if collectivist if some view fails the whole framework is run down.

Looking at the fourth and final dimension of national culture, which is masculinity and femininity. Masculinity is a cultural preference for achievement, heroism, assertiveness and material success. Femininity is a cultural preference for cooperation, group decision making and quality of life. Linking both of these to organisations there are certain jobs that society feel only men could do for example a mechanic and certain jobs for females for example an air hostess. But today both of these jobs are undertaken by men and women as people are learning that it doesn’t matter what type of job it is, if you want to do it then it shouldn’t matter about gender roles. This is what organisations have thought about and found that actually women are better at certain jobs which were originally male orientated.

Linking into the dimensions of national culture we can talk about leadership. This links into individualism and power distance. Take the US for example. It has high individualism and below average on power distance. This means there is a focus on self interest and does not take likely to accept inequality. Concerning collectivism and leadership we would take a third world country like India where working in a group means great loyalty. The leader always calls the shots and allows people below only to participate after he or she has spoken. This is where there is high power distance, common in third world countries. But in a collectivist approach there would be ways in which a subordinate can influence the leaders ways of thinking for example taking initiative of a certain task before the leader even starts to speak.

We can link in the organisations to power distance and uncertainty avoidance. Certain organisations try to avoid uncertainty therefore the employee knows where he or she stands for example working for the government. What Hofestede found was that in different organisations and situations different nationalities were getting different power distance, uncertainty avoidance relationships, for example in Germany setting down rules and guidelines was a way of equalling out this relationship whereas the British said improving communications between department heads with training would help.

The last aspect is motivation, which can be related to individualism-collectivism. The USA has got the highest motivation factor because of individualism therefore workers are fulfilling their needs. In a collectivist approach employees will fulfil their duties towards the group first and in this case self motivation would not be the overriding factor.

We can also link uncertainty and masculinity, femininity. People may take risks and have low uncertainty avoidance in order to gain optimal motivation and the need to perform to a high standard shows masculinity, which is true of the US. But if you go closer to Europe you will get weaker uncertainty avoidance and a more feminine system having interpersonal relations as more of a motivator and less motivation for competition.

Concluding this essay we can say that there are effects of national culture upon organisations because people have certain beliefs about how to do things. These beliefs and attitudes are different for different countries and we have seen the factors that concern this. Both the convergence and divergence view come into play when talking about national culture and management cannot only use one view to answer the question as cultures are diverse. Different nations have different ways to cope with their cultures and because of this you will get different levels of power and uncertainty etc. in organisations.

Bibliography

Managing organisations 2nd Edition (H. Rosenfeld & D.C. Wilson, 2000)

Culture’s consequences & Dimension’s of national cultures in fifty countries (G. Hofestede, 1980 & 1983)

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