Corporate Culture

The effects national culture has on corporate culture
Japan, South Korea, Mexico, India, Germany, and South Africa

Judy Gallagher

IB 8180 – Spring 99

INTRODUCTION

Advances in telecommunications and mass transportation and the breaking down of national borders and cultures have lead to the emergence of a global, information-oriented culture. The globalization of world markets has created the need for understanding and respecting diverse cultures, which can ease the process of doing business with foreign nations. Cultural understanding may minimize the impact of culture shock, and maximize interculturalexperiences and opportunities for collaboration. “Cultural sensitivity should teach us that culture and behavior are relative, and that we should be more tentative, and less absolute, in human interactions.”[1]

In this report I will discuss the meaning of culture and the characteristics associated with this terminology. I will examine cultural specific factors important in conducting business in Japan, South Korea, Mexico, India, Germany, and South Africa. My goal is to have the readers understand that to be truly effective leaders, global managers need to understand the influences national culture can have upon their organizational culture and to use that culture to improve performance, productivity, and service. “The global leader must be sensitive to the broader implication of his or her actions and decisions upon organizational and world cultures.”[2]

CULTURE

Culture is defined as a set of values, beliefs, and habits that are shared by the people in a society or nation, influencing their attitudes and behaviors. Customs, practices, and traditions for survival and development are passed along from generations to generations among a particular people. In time, the group becomes unconscious of the origin of this tradition and subsequent generations are conditioned to accept the “truths” about life.[3] “Culture facilitates living by providing ready-made solutions to problems, by establishing patterns of relations, and ways for preserving group cohesion and consensus. All aspects of culture are interrelated, and to change one part is to change the whole.”[4]

“Within this national culture, people in an organization also share a set of values, beliefs, and attitudes called corporate culture.”[5] [It] “is important because it’s the sum of values, virtues, accepted behaviors (both bad and good), …and political environment of a company.” [6] The corporate culture affects employee, supplier, and customer behavior, as well as community relationships. “Culture influences business attitudes and behaviors including work values, motivation, business socializing, making and keeping commitments, and more.”[7]

The effective global leader must continually broaden his or her understanding of diverse cultures and its impact on our lives. Such learning can arise from the cultural clashes of language and nonverbal communication, time and space orientation, decision-making and information systems, conduct of meetings and training, and motivation. The following are some characteristics of culture that can be used to study a group of people. [8]

Sense of Space: The comfort one has with self can be expressed differently by culture. Some cultures are very structured and formal, while others are flexible and informal. Some cultures are very closed and determine one’s place very precisely, while others are more open and changing.

Communication and Language: The communication system, verbal and nonverbal, distinguishes one group from another. “Words represent 10% of total communication, while the other 90% consists of behavior.”[9]

Dress and Appearance: This includes garments and adornments, as well as body decorations that tend to be distinctive by culture.

Food and Feeding Habits: The manner in which food is selected, prepared, presented, and eaten often differs by culture.

Time and Time Consciousness: Sense of time differs by culture. Time sense differences can cause confusion when doing business in other cultures.

Relationships: Cultures fix human and organizational relationships by gender, age, status, and degree of kindred, as well as by wealth, power, and wisdom. Social Organization in many cultures predetermines who can interact with one another. Geographic society is composed of members of a nation, tribe, or religious sect. Role society is composed of members of a profession or elite group.

Values and Norms: The need systems of cultures vary, as do the priorities they attach to certain behavior in the group. “The globalization process and telecommunications are leading to the development of shared values which cross borders…”[10]

Beliefs and Attitudes: How people view themselves, others, and what happens in their world. Attitudes are the psychological states that predispose us to behave in certain ways. One must understand other people in the context of their unique historical, political, economic, social, and cultural backgrounds.

Mental Process and Learning: Thought patterns or forms of reasoning may differ across cultures. Some cultures prefer abstract thinking and conceptualization, while others favor memorization and learning.

Work Habits and Practices: A group’s attitude towards its work, the dominant types of work present, the division of work, and work habits or practices can be used to examine the group’s culture.

MANAGEMENT CULTURES

In addition to culture and business protocol, global leaders also must understand the national character, management philosophies, and mindsets of the people of other countries.

National culture and economic ideology influence managerial values. “Religion, proximity, history, and education are factors that have been identified as important in defining a culture.”[11] National Culture are those values and beliefs shared by a society. Economic ideology is the “workplace philosophy” that pervades the business environment of a country.[12] Two major ideologies are capitalism and socialism. Capitalism is a self-serving economic system where everyone looks out for his/her own self-interests. Socialism is where there is a collective effort for the good of the society.

Geert Hofstede identified four dimensions of national culture important in assessing the distinctions among nations:

  1. Power Distance – the extent to which a society accepts the power institutions and organizations is distributed unequally.
  2. Uncertainty Avoidance – the extent to which a society feels threatened by uncertain or ambiguous situations.
  3. Individualism – loosely knit social framework in a society. Collectivism – tight social framework in which people expect a group to take care of the other members.
  4. Masculinity and Femininity – the extent to which dominant values in a society are assertiveness; money and material things; not caring for others, quality of life and people.

Global leaders may also apply the following systems of organizations for examining employee values and motivations abroad, for in-country evaluations of effectiveness of multinational personnel policies and programs, and local management’s readiness for change. [13]

The Bureaucratic Culture is characterized by an impersonal style and absolute reliance on standards, norms, and rigid procedures. This culture is mostly found in companies operating in protected and stable markets. Its best supported by pyramid and centralized hierarchies with very little internal competition.

The Managerial Culture is typical of trading countries open to free competition. It is performance oriented and found in highly competitive and innovative industries. It is characterized by a truly managerial style supported by a flexible and adaptive organization.

The Technical Culture is typical of countries with a long tradition of technical expertise, in well-established and traditional industries. The organization is heavily functional, thus can lead to interdepartmental competition. Recognition and power goes to the technicians.

MEXICO

“Improvements in the Mexican economic, social, and political climate have created a more favorable business environment for U.S. companies. Prosperity for foreign firms will depend on a variety of factors, including their willingness to rethink and then reshape business interaction styles ” [14]

Collectivism

Mexicans are a relaxed, hospitable, and warm people who may relate more to their Indian than Spanish heritage.[15] They are proud, patriotic, family oriented, and hard working. In Hofstede’s study of value dimensions that define culture, one of the most important dimensions for understanding Mexico is its collectivism orientation.[16] This characteristic is witnessed in the importance family relations has within society. This emphasis on family has its effects on business by way of strong personal relationships. Managers must acknowledge the strong family ties and its effect on productivity and loyalty. It is generally difficult to relocate Mexicans “because of Mexicans’ strong family ties. A move doesn’t involve just the nuclear family, but often aunts, uncles, and parents.”[17] Simply stated, family is usually of a higher priority than work.

Due to the collectivist culture, “for Mexicans, establishing trust is critical to any business relationship, and winning that trust is the essential prerequisite to producing any business agreement.” [18] Trust must develop through a series of frequent and interpersonal meetings, socially or professionally. The integration of personal and business interests becomes fundamental to doing business in Mexico. These personal/internal issues tend to affect negotiations and business procedures.

“Many Mexicans believe Americans view work as the goal of existence. Mexicans, by contrast value the importance of daily living.”[19] A common saying is Mexicans work to live, while Americans live to work. This sums the importance Mexicans place on enjoying life. There is a relaxed attitude towards time as time spent on building and maintaining relationships are more important than efficient work-related goals. The results are less important than the relationship-based process of doing business. [20]

Uncertainty Avoidance and Power Distance

On Hofstede’s chart, Mexico scored high on both uncertainty avoidance and power distance. Mexicans tend to be risk-avoidant and pessimistic in any situation in which there is some risk involved.[21] Although the Mexican culture tries to avoid risk, they accept that uncertainty as an inevitable part of their life. This acceptance emerges from Mexican history in which death, acceptance of destiny, and survival on a daily basis brings a fatalistic outlook that does not expect progress.[22] Individuals are less willing to believe in progress but are willing to accept their place in life. This willingness parallel the wide social level and power gaps in society translated into a high power distance culture.[23]

Mexican businesses have a vertical orientation where “Mexican Managers tend to be more autocratic and to delegate less responsibility and authority than Americans.” [24] This cultural value of hierarchies and classes can affect employee loyalty. “Loyalty is often forged to one’s immediate supervisors rather than the company as a whole.” [25] This is an important fact for managers who want to create loyalty and retention among workers as it calls for giving the manager special recognition to make him feel worthy. Although the society is collectivist in nature, the Mexican leaders or individuals with palanca (leverage) tend to be well positioned, expressive, and forceful with their opinions and decisions.[26]

Mexicans view formality as a means to recognizing the social status of another person. Therefore, formality and understanding protocol is very important, particularly in the beginning stages of business where parties decide if they can do business together.

Communication

“Mexicans communicate with hand movement, physical contact, and emotional expressions, making Mexicans high-context communicators.”[27] In high-context cultures, doing business involves a vast array of communication styles. This is very important in doing business in Mexico since extended face-to-face communication is required to build rapport before any work can be pursued.

India

The government owns and runs many enterprises, such as airlines, railroads, insurance, power facilities, and irrigation projects. The government also has controlling power in metals, steel, chemicals, and engineering equipment. 85% of the nation’s banking assets are government controlled.[28] The industrial economy of India has a public and private sector, where foreign trade has become an important part of the economy.

“There are positive aspects of doing business in India. English is a major language, there is a large pool of managerial, skilled and semi-skilled labor.”[29] There is a good and developed capital market and a large domestic market. However corruption, bribes, or payments exist in everyday life and is something businesses must acknowledge.

In India, business is based on personal contacts; thus, it is important to know the right people. “Indians have a strong distinction between insiders and outsiders and prefer loyalty and dependability over efficiency and independence.”[30] This can affect hiring practices and business deals.

Culture

Hinduism is not only the principle religion of India, but it dominates the culture, relationships and business practices. According to Hofstede’s study, India ranks high on power distance. This is a result of the rigid caste system in the Hinduism religion practiced for thousands of years, where classes determined what a person did in his or her life. [31]

Indian culture is based on family and caste membership, where long-lasting relationships are valued. In this culture, group and family are considered to be of greater importance than the individual. People may approach work only as a means of satisfying family needs. It may be difficult to instill American profit and goal setting ideals onto Indian culture where fate determines life’s events. Indian tradition is based on the belief that people are born into castes.[32] The belief is that one cannot change his or her destined path; thus, it would be difficult to push Western thinking of goalsetting and job advancement onto workers. It is crucial that American managers understand these cultural and religious differences when trying to do business in India. “While some management ideas are easily transferred across countries, a large number of American management ideas and practices are ‘culture specific’.”[33] American ideals cannot be blindly introduced in countries such as India where cultural, social, political, economical, and judicial environments are different.[34]

“Indians are very tolerant and will completely accept the fact that you are unfamiliar with their customs and procedures.”[35] It is important to understand the role and relationships of women in India. Social freedom among the sexes is not appreciated. A stranger should not speak to a woman if he is not acquainted with her of her family nor should he assist her out of a car. The husband may resent this gesture. There is no need to conform to the Indian behavior, but a respect and appreciation for the culture is recommended to avoid offending anyone.

Japan

Japan has been heavily influenced over the past fifty years by economic ideologies that contrast its cultural values. “Japan has an economic ideology that is more individualistic-oriented and a national culture that is more collectivistic-oriented.” [36] However, this clash has seemed to work for the Japanese as they blend tradition with business efficiencies. The values most commonly emphasized in Japanese organizational behavior are groupism, harmony, hierarchy, amae, on and giri, gambrare, and uncertainty avoidance.

Groupism

Japan is a highly collective society where the good of the whole outweighs the individual. “For the modern Japanese, groupism remains a core value, consciously engendered and encouraged form kindergarten form parents, teachers, and neighbors.”[37]

The emphasis on the group heavily influences the way businesses are run. Japanese companies look for candidates with personalities that will be accepted by other employees because of the emphasis on group effort and team spirit.[38] The members of a group are to conform the expectations of the company, managers, and peers. Japanese firms consider the socialization of new employees to be very important. Through this initial training process into the managerial track recruits emerge with a strong network of relationships. This network will be invaluable the years to come. “They have been inculcated with a sense of shared purpose with these cohorts, a commitment to the group which will serve as an important force in their work motivation in the future.”[39]

Harmony

The Japanese manager’s role and behavior is influenced by the group orientation. “Harmony is an important value in Japan, largely in part because small communities in preindustrial Japan needed to cooperate in the planning and harvesting of rice.”[40] Thus, a great deal of time is spent on building harmony and identification. It is viewed that intragroup conflict would result in decreased cooperation and yields, and consequently to possible starvation.

The Japanese manager must get to know each member to understand and incorporate the concerns of each regarding any decision.

Hierarchy

Japan is a relatively high power distance society. Japanese have a sense of order, proprietary, and appropriate behavior between inferiors and superiors. An individual’s personal identity is derived from his sense or place in the hierarchy. Organizations tend to have finely graded hierarchies and narrow spans of control. This provides a great number of status rankings. Hierarchy affects the way a manager sees his career within the firm. “It represents an orderly progression from one level to another, with the learning of one level imperative to success in the next.”[41] Probably the most important reward that a Japanese manager receives as part of his job is that of the status of manager since one’s place relative to others is a central focus among employees. Japanese workers accept the power distance and are “willing to leave their career path planning totally in the hands of the company, even though company plans are not obvious to them.”[42]