Because learning changes everything.

International
Management:
Culture, Strategy, and
Behavior

Part Two: The Role of

Culture

Chapter 6: Organizational Cultures and

Diversity

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No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
 Chapter Objectives

1. DEFINE what is meant by organizational culture; discuss interaction

of national and MNC culture

2. IDENTIFY four most common categories of organizational culture

and discuss characteristics of each

3. PROVIDE overview of nature and degree of multi-culturalism and

diversity in today’s MNCs.

4. DISCUSS common guidelines and principles used in building team

and organizational multicultural effectiveness.

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The World of International Management: The Fundamentals
of Strong Multinational Teams

1. Why is it important for international managers to be

sensitive to different national and organizational cultures?
2. How cultural differences can influence how managers
approach their responsibilities as well as their management
style?
3. What are the advantages of multicultural teams in an
organization? How they give firms a competitive advantage?

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 The Nature of Organizational Culture

Organizational culture is the shared values and beliefs that enable

members to understand their roles in and the norms of the organization.

Characteristics of an organization’s culture.

• Observed behavioral regularities.
In some cases
• Norms. companies have
• Dominant values are shared. deliberately
• The MNC sets forth a philosophy about the maintained two
treatment of employees and customers. different business
• Rules dictate dos and don’ts. cultures because
they do not want
• Organizational climate is important.
one culture
The major problem is if an MNC’s organizational influencing the
culture in one country’s facility differs sharply from other.
organizational cultures in other country’s facilities.

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 Interaction between National and Organizational Culture

There is a widely held belief that organizational culture tends to moderate

or erase the impact of national culture.
• In fact, evidence is accumulating that just the opposite may be true.
Hofstede’s research found that the national cultural values of employees
have a significant impact on their organizational performance.
• And that the cultural values employees bring to the workplace are not
easily changed by the organization.
Hofstede provided the early database of a set of proprietary cultural-
analysis techniques and programs known as DOCSA.
• Diagnosing Organizational Culture for Strategic Application.

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 Table 6-1: Dimensions of Corporate Culture

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© McGraw-Hill Education Source: Hoecklin, Lisa Adent. Managing Cultural Differences: Strategies for Competitive Advantage. England: Addison-Wesley, 1995, 145. 6
 Figure 6-1: Europeans’ Perception of the Cultural Dimensions of
U.S. Operations (A) and European Operations (B) of the Same MNC

Different cultures often exist among Such differences can reduce the
subsidiaries of the same MNC. ability of units to work well together.

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© McGraw-Hill Education Source: Hoecklin, Lisa Adent. Managing Cultural Differences: Strategies for Competitive Advantage. England: Addison-Wesley, 1995. 7
 European Management Characteristics

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 Cultural Interaction

This analysis is relevant to MNC alliances, showing that though an alliance

exists, the partners bring different organizational cultures with them.

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 Organizational Cultures in MNCs

When one company merges or acquires another:

1. The two must establish the purpose, goal, and focus of the merger.
2. Then develop mechanisms to identify important structures and roles.
3. Then determine who has authority over necessary resources.
4. Also identify all parties’ expectations and facilitate communication.
Three aspects important in determining MNC organizational culture:
1. The general relationship between employee and organization.
2. The hierarchical authority defining manager and subordinate roles.
3. Employees views about the MNC’S purpose, destiny, goals, and their
place in them.

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 Figure 6-2: Organizational Cultures

When examining
dimensions of
organizational
culture, Trompenaars
suggested the use of
two continua—one
distinguishes
between equity and
hierarchy; the other
examines orientation
to the person and the
task.

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© McGraw-Hill Education Source: Trompenaars, Fons. Riding the Waves of Culture: Understanding Cultural Diversity in Global Business. Illinois: Irwin Professional Pub, 1994. 11
 Family Culture

Family Culture is characterized by a strong emphasis on hierarchy and

orientation to the person.

• Leader is regarded as a caring parent.

• Leaders are respected and looked to for Common in Turkey,
guidance and approval. Pakistan,
Venezuela, China,
• Management assumes a paternal relationship.
Hong Kong, and
• It is difficult for outsiders to become members. Singapore.
• When done well, it can catalyze and multiply This type of culture
the energies of the personnel. is foreign to most
• When done poorly, ineffective leaders drain U.S. managers.
employee’s energies and loyalties.

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 Eiffel Tower Culture

Eiffel tower culture is characterized by strong emphasis on hierarchy

and orientation to the task.

Commonly found in
• Well defined jobs, employees know the task, Denmark,
and everything is coordinated from the top. Germany, and the
• The top position could be replaced with no Netherlands.
effect on the work or on the organization. U.S expatriate
• Relationships are specific, status lies in the job. managers often
• The culture operates like a formal hierarchy— have difficulty
impersonal and efficient. initiating change in
this culture.

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 Guided Missile Culture

Guided missile culture is characterized by strong emphasis on equality

in the workplace and orientation to the task.

• Work-oriented, in teams or project groups who This fits well with

do whatever it takes to get the job done. the national
• The best form of synthesis must be used in the cultures of the U.S.
course of working on the project. and the U.K.
• All team members are equal and all teams treat Motivation tends to
each other with respect. be more intrinsic
• Change comes quickly—teams are than just money
reconfigured and assigned new objectives. and benefits.

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 Incubator Culture

Incubator culture is characterized by strong emphasis on equality and

orientation to the person.

• They believe organizations are secondary to

the fulfillment of the individuals within them. Found often among
• Organizations are incubators for members’ self- start-up firms in
fulfillment—so their culture has little structure. Silicon Valley or
Silicon Glen.
• Participants thrive on an intense, emotional
commitment to the nature of the work. Motivation remains
highly intrinsic and
• Change is fast and spontaneous. intense.
• Leadership is achieved, not gained by position.

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 Figure 6-3: National Patterns of Corporate Culture

Trompenaars and
his associates
created a
questionnaire
designed to identify
national patterns of
corporate culture,
results shown here.

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Source: Adapted from Trompenaars, Fons, and Charles Hampden-Turner. Riding the Waves of Culture: Understanding Diversity in Global Business,
© McGraw-Hill Education 2nd ed. New York: McGraw-Hill, 1998. 16
 Figure 6-4: International Corporation Evolution

The effect of
multiculturalism
and diversity will
vary depending on
the stage of the
firm in its
international
evolution.

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© McGraw-Hill Education Source: Adler, Nancy J. International Dimensions of Organizational Behavior. Cengage Learning, Inc., 2008. 17
 Phases of
Multicultural
Development

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 Figure 6-5: Locations of International Cross-Cultural
Interaction

International cultural diversity traditionally affects neither the domestic

firm’s organizational culture nor its relationship with its customers/clients.

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© McGraw-Hill Education Source: Adler, Nancy J. International Dimensions of Organizational Behavior. Cengage Learning, Inc., 2008. 19
 Domestic and Group Multiculturalism

You don’t need to do business in Homogenous group—members

another country to encounter have similar backgrounds and
multiculturalism. generally perceive, interpret, and
evaluate events in similar ways.
Culturally distinct populations can
be found within organizations. Token group—all members but
Managers must consider one have the same background.
employees on an individual basis. Bicultural group—two or more
Managers need to compile members represent each of two
techniques that convey a common distinct cultures.
message. Multicultural group—there are
individuals from three or more
different ethnic backgrounds.

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 Potential Problems Associated with Diversity

Diversity may cause a lack of cohesion, resulting in idleness, unproductive

work, and the inability to be efficient or effective.
• These problems are rooted in people’s attitudes—such as mistrust.
Another potential problem is perceptual—when culturally diverse groups
come together, they often bring preconceived stereotypes with them.
• A related problem is inaccurate biases.
Still another potential problem with diverse groups is miscommunication or
inaccurate communication, which can occur for a number of reasons.
• Misunderstandings can be caused by a speaker using words that are not
clear to other members.
• Another contribution to miscommunication may be the way in which
situations are interpreted.
• Diversity also may lead to communication problems due to perceptions
of time.

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 Advantages of Diversity

Growing evidence shows diverse groups enhance creativity, lead to

better decisions, and result in more effective and productive performance.
• Group members come from a variety of cultures and are able to create
a greater number of unique (creative) solutions and recommendations.
• A second major benefit is that culturally diverse groups can prevent
groupthink.
• Multicultural diverse groups often avoid this problem as members
do not think similarly or feel pressure to conform.
• Diversity in the workplace enhances more than just internal
operations—it enhances relationships to customers as well.
• If the customer base is composed of many cultures, the company
may want to have representatives from corresponding nationalities.

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 Figure 6-6: Group Effectiveness and Culture

Multi-culturally diverse teams have a great deal of potential, depending

on how they are managed.

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© McGraw-Hill Education Source: Adler, Nancy J. International Dimensions of Organizational Behavior. Cengage Learning, Inc., 2008. 23
 Understanding the Conditions for Effectiveness

Multicultural teams are most effective when they face tasks requiring
innovativeness, and far less effective when assigned to routine tasks..

For greatest effectiveness, focus attention by the stage of team

development.
• In the entry stage, the focus should be on building trust and
developing team cohesion.
• In the work stage, attentions may be directed more toward describing
and analyzing the problem or task that has been assigned.
• In the action stage, focus shifts to decision making and implementing
and often requires consensus building among the members.

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 Using the Proper Guidelines

• Team members must be selected for their task-related abilities and not
solely based on ethnicity.
• Team members must recognize and be prepared to deal with their
differences.
• The team leader must help the group to identify and define its overall
goal.
• Members must have equal power so that everyone can participate in
the process.
• It is important that all members have mutual respect for each other.
• Managers must give teams positive feedback on their process and
output.

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 Review and Discuss

1. In which of the four types of organizational cultures – family, Eiffel

Tower, guided missile, incubator – would most people in U.S. feel
comfortable?
2. Most MNCs need not enter foreign markets to face challenges of
dealing with multiculturalism. Do you agree or disagree?
3. What are some problems to be overcome when using multiculturally
diverse teams?
4. What are some basic guidelines for helping make diverse teams
more effective?

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