Country Culture and Its Impact on Organizations

Subject: Corporate Culture
Pages: 10
Words: 2770
Reading time:
11 min
Study level: PhD

Abstract

Culture constitutes the beliefs, values, and aspirations of people. It varies from one community to another and influences people’s behavior, perceptions, and socioeconomic characteristics. Different countries have different cultures which greatly influences international business and management for Multinational Corporations (MNCs). In most cases, the culture of a country reflects the culture of organizations to a great extent because majority of employees for MNCs usually come from the host countries. There is therefore the need for MNCs to have a good understanding of cultures of different countries. Culture influences various organizational processes such as management, work ethics, efficiency, and effectiveness. Expatriate managers should therefore be equipped with the necessary communication skills to manage a culturally diverse workforce for the benefit of organizations.

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Introduction

This paper is based on the topic of international organizational behavior with a special focus on the impact of culture on organizations. It focuses on three areas namely culture and management, how cultural differences affect organizations, and communication across cultures. It is demonstrated that culture plays a crucial role in shaping organizational functions, processes, and procedures. The paper draws examples from Nigeria and India to illustrate how culture may affect expatriate managers. It is argued that expatriate managers must be aware of the Hosftede’s cultural dimensions for them to effectively handle their foreign assignments.

Culture and Organizational Culture

Culture comprises those things which are cherished or are important to us as people. It is defined as a people’s way of life or of doing things and comprises the accepted and patterned behavior of people. It is also a body of common understanding which encompasses attitudes, values, and history shared by a group of people through language, traditions, and music. Culture exists in three levels namely the societal, the sub-cultural, and the universal levels.

According to Hofstede, culture refers to “collective programming of the mind which distinguishes one group from another”. In his research, Hofstede came up with five dimensions which describe cultures for different countries. These dimensions are most applicable in international business because they describe each country’s five cultural dimensions thus giving investors an overview of what they should expect when doing business in a particular country.

Organizational culture refers to shared beliefs, values, norms, and practices which characterize an organization. Norms are informal rules which are institutionalized by organizations. The norms govern the conduct of employees and constitute what is permitted and prohibited in different organizations (Parker, 2000). Organizational culture is learned implicitly through interaction within organizations. New employees learn it by imitating those employees who they find in organizations. This imitation happens unconsciously due to the humans’ instinct to adopt behaviors which make them fit in the social environment which they find themselves in.

Culture and management

Management involves making decisions such as hiring and firing, adopting new market strategies, and developing new human resource policies. Managers of MNCs therefore should be people who exercise authority and leadership employees. In organizations, people are seen as a resource that is relatively flexible and easy to control for organizational gain. Human resource management therefore centers on articulating the needs and aspirations of workers and meeting their needs, giving them challenges, and helping them to move towards self actualization (Vance & Paik, 2011).

The leaders of MNCs may include managers, executive directors, and board members. These leaders are responsible for shaping the culture of their organizations. The reason is that they are the decision makers of their organizations and are therefore best placed to decide what is good and bad behavior in the workplace. Employees are just followers who simply copy what their seniors do or just follow what they are told to do and thus they do not play any role in shaping the culture of organizations (Mathew, 2007). However, it does not mean that managers should completely ignore employees because such and ignorance may result to resistance to organizational change which may ground organizational operations.

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If the leaders of MNCs are not friendly to their employees, then the MNCs are characterized by fear and unending tension among the employees. Such relationship may lead to confusion and inefficiency because employes are not allowed or they are unwilling to consult their colleagues for fear of victimization. The overall result is creation of MNCs which employees are not proud to be associated with. This negative attitude of employees towards their employers may have serious effects such as increased turnover, reduced productivity, and general organizational inefficiency (Dowling & Welch, 2008).

On the other hand, if the leaders of MNCs are open and friendly to their employees, they create what is referred to as cohesive organizational culture. Many organizational researchers agree that a cohesive organizational culture is one in which all members of an organization have similar beliefs and values which hold them together as organizations (Primecz, Romani & Sackmann, 2011). These beliefs and values are implicit or explicit to organizations. In this kind of culture, the organizational structure does not matter but what matters most is the commitment of each member of organizations to these beliefs and values. For example, an organization may value hard work, cohesiveness, and teamwork and believe in transparency, faithfulness, work ethics, and morality (Adler & Gundersen, 2008).

A strong organizational culture is found in MNCs where employees are committed to their work and discharge their duties with little or no supervision. A weak organizational culture on the other hand is found in MNCs where employees are not committed to their work and are closely supervised to discharge their duties effectively (Brown, 1998).

How Cultural Differences Affect Organizations

Cultural diversity is a variety of human cultures or societies which live in different parts of the world. It also refers to the static representation of several cultures in a place and at a particular time. Due to globalization, today’s society is becoming more culturally diverse every other day (Chrysanthopoulos, 2010).

Fon Trompenaars is one of reputable scholars who have written extensively on the topic of culture. He came up with seven dimensions outlining how people interact and what drives their interactions. These dimensions include universalism contrasted with particularism, neutral contrasted with affective relationships, individualism contrasted with collectivism, specific contrasted with diffuse relationships, achievement contrasted with ascription, and time orientation (Gullestrup, 2006).

The cultural differences between people of different countries are sometimes extended to the workplace. The differences are manifested in terms of how different people perceive work, its importance to them, and how to balance or separate work and personal affairs. While citizens of some countries like the United States find it easy to separate work with personal affairs, others like the French find it hard to do so (Steers, Sánchez-Runde & Nardon, 2010).

Hofstede’s Five Cultural Dimensions

In his research on the influence of culture on values in the workplace, Dr. Geert Hofstede came up with five cultural dimensions for different countries. For each country, he analyzed and gave a report on the five dimensions and the average rankings for all the dimensions world-wide. These dimensions include individualism versus collectivism, masculinity, power distance index, long-term orientation and uncertainty avoidance index (Luger, 2009).

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Power Distance Index (PDI)

Power is a concept used to refer to the possession of the ability to direct or influence others to behave in a certain manner either through coercion or dialogue. PDI has to do with equality or inequality between people in a country and the extent to which the citizens of a country embrace or fail to embrace such equality or inequality. A high ranking in PDI is characteristic of caste systems where social upward mobility is highly restrained. A low ranking in the same is an indication that there are no inequalities in distribution of power and wealth in a society and in social institutions. It also means that the citizens of that country do not embrace inequality irrespective of their social, economic, and academic status (Luger, 2009).

Individualism (IDV)

It looks at how the citizens of a country embrace individual or collective success and achievement. A high ranking in IDV signifies that individuality is paramount in that society and that the citizens tend to form very loose interpersonal relationships. A low ranking in IDV means that the society is cohesive and the citizens value collective success more than individual success. This cohesiveness is common in communities which still value extended familial arrangements where almost everything is perceived as a responsibility of all the people (Luger, 2009).

Masculinity (MAS)

It looks at the extent to which gender differences affect the distribution and control of power and wealth among citizens of a country. It also looks at the extent to which men embrace feminine roles and values as well as how women embrace masculine roles and values. In countries where MAS rankings are high, roles are highly differentiated along gender lines where there are jobs for women and jobs for men. The reverse is true for countries with a low ranking in MAS, meaning that both men and women have similar roles and values (Luger, 2009).

Uncertainty Avoidance Index (UAI)

It looks at the extent to which a society embraces ambiguity and uncertainty. A high ranking in UAI means that the country is guided by clear rules and laws while a low ranking means that the country is open to new ideas and it embraces diversity. Such a country is also capable of utilizing diversity to bring positive change in various sectors such as the economy, education, health, and business (Luger, 2009).

Long-term Orientation (LTO)

It looks at the extent to which a society embraces long-term dedication to forward thinking, traditions, and values. A high ranking in LTO implies that the country acknowledges hard work and traditions as the basis for the establishment of long-term benefits. It also means that an outsider may have difficulties in establishing and stabilizing his or her business due to strict adherence to traditions by the people. On the other hand, a low ranking in LTO means that the country does not embrace traditional values which impede change. Such a country is also open to new ideas and innovations which may make it a preferred choice for MNCs (Luger, 2009).

India’s culture and management

In India, there are three secular public holidays which are observed nationally. During these holidays, all businesses and government offices are closed. The holidays include January 26th (Republic Day), August 15th ( Mahatma Gandhi Birth Day), and October 2nd ( Independence Day).There are 14 additional holidays for the public in which offices for central government and banks remain closed.11 of the 14 are compulsory while the other three are decided on state basis and are based on religious orientations. Each of India’s 29 states has its own additional holidays which are marked at different days and months of the year. Holidays may also be declared following a major event like elections, strikes, or death of a prominent person. With holidays, India can be described as very unpredictable and therefore foreigners have to anticipate inconveniences brought about by holidays which are not recognized nationally but by states (India Dept. of Culture, 2002).

As per section 54 of the factory Act of 1948, Indian adult workers are supposed to work for a maximum of 9 hours in a day and not more than 48 hours in a week. Section 66 of the same Act and section 25 of Karnataka shops and commercial establishment Act of 1961do not allow women to work from 7pm to 6am (Sharma, 2006). Indians are not good in time management and in many cases; meetings are postponed, rescheduled or cancelled altogether due to poor time management. Bureaucratic procedures are the order of the day in many organizations. The bureaucratic red tape not only interferes with processing of goods and services but also with organizational efficiency and effectiveness. Many Indians are not happy with the bureaucratic red tape because of the delays and inconveniences it causes to them. Consequently, patience is very crucial for expatriate managers working in India (India business directory, 2011).

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The profiling of India in terms of culture, behavior, and work ethics may be a challenge to an expatriate manager. The holidays and hours of working may be a challenge due to lack of flexibility. If women are not allowed to work beyond 7pm, it means that managers may not be able to maximize on human resources at their disposal, which may interfere with both long-term and short-term planning for organizations. The same applies to the holidays, especially those which are not recognized nationally since they may interfere with service delivery, planning, and coordination of organizational activities (Punnett, 2013).

The culture of poor time management may work against the success of foreign managers because the issue of time management is very central to the success or failure of organizations. The managers may encounter conflict with employees who are used to poor time management. India’s high ranking in PDI at 77% may make new managers to struggle to come to terms with resource distribution, economic growth, and social reality facing them (Aswathappa, 2008).

Nigeria’s culture and management

Nigerians work from 8am to 4pm, while most bankers work from 7am to 10 pm. Compared to other countries, the working hours may seem relatively less, but it should not be translated to mean that Nigerians work for less hours considering the poor road infrastructure in many parts of the country. Most middle class workers are forced to wake up as early as 5am and commute for over 2 hours so as to arrive at the workplace at 8am. After work, they spend over 2 hours commuting back home and therefore, the average Nigerian worker arrives home between 9pm and10pm despite leaving the workplace as early as 4pm.

Nigeria has 13 public holidays, which is among the highest world-wide. Most of the holidays are based on religion. For instance, there are three public holidays on consecutive days from September 29th to October 1st. Many businesses remain closed during all the public holidays. The number of holidays may sound big, but it is worthy for the common Nigerian employees considering the amount of stress they are subjected to as a result of poverty and high standards of living.

The profiling of Nigeria in terms of culture and work ethics may affect management in MNCs especially for an expatriate manager due to the attitude of the people towards work, rewards, and compensation. Since most people in Nigeria believe in giving bribes in order to get something, the expatriate manager may be faced with the challenge of nurturing skills and talents of employees.

Nigeria’s high ranking in PDI at 73% means that there is a big gap between the rich and the poor which may be a challenge to a foreign manager because many employees may not be motivated in their job due to poor payment. However, the relatively low MAS ranking of Nigeria at 41% means that gender differences may not be a cause for discrimination. The political set up in Nigeria may be unpredictable given the tension which usually exists between Christians and Muslims. The political instability may affect long-term planning for managers due to fear of committing resources in an environment which is not predictable in terms of peace and stability.

Communicating Across Cultures

It is the ability of a person to convey information effectively in various cultural contexts. When managers work as expatriates, they usually have a feeling of disorientation due to the experience brought about by their relocation to their new places of work. This feeling is what is referred to as culture shock. It manifests itself differently in terms of time and intensity among different employees, meaning that some employees experience it immediately while others do so after some time (Holden, 2002).

In order for expatriate managers to be able to communicate effectively across cultures, they undergo through a cultural orientation program before they begin their expatriate assignments. The training is aimed at equipping them with a general overview of various cultures for various countries so as to be in a good position to manage a culturally diverse workforce. They are especially trained on the five dimensions of cultural differentiations by Dr. Geert Hofstede (Melkman & Trotman, 2005).

Conclusion

Culture influences many aspects of MNCs such as management, efficiency, and effectiveness. The culture of a country directly reflects the culture of organizations. Various scholars have written about different cultures for different counties. However, Hoftede’s cultural dimensions have been very useful for managers of MNCs because they provide a cultural analysis which helps managers in their expatriate assignments. The understanding of the cultures for different countries enables organizations to do business in foreign countries with high rates of success.

References

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