Abstract
The following paper presents the organizational culture of an SME and its impacts. The analysis majorly surrounds the contextual framework of any organization’s environment that is revealed through the analysis of the Social-cultural, Economic, technological, and political elements of an organization. The analysis of these elements exposes the various internal environments that the organization operates in. These elements are necessary for understanding the culture of any organization and as such, they will form a large part of the discussion in this paper.
While most organizations dwell on external factors, internal environmental factors play a crucial role in ensuring that the firm achieves its set targets and objectives. This is usually done by the fact that the internal environment usually includes the factors that are pertinent to the running of the organization. These internal factors include the organizational structure, organizational culture, and leadership, and so on.
Introduction
The topic of organizational behavior has grown over the recent past to become a major part to consider in organizational management (Newstrom & Davis, 1993). This is because of the fact that there has been an increase in the complexity of organizations and this coupled with the modern-day work dynamics, the organization becomes a very difficult entity to effectively manage (Sosik & Jung, 2002). Organizational culture is a subset of organizational behavior and entails the beliefs and systems that have been inculcated into the minds of the employees and form part of the broad guidelines on how the organizations carry out their activities.
Organizational culture is therefore an important aspect of any organization. This is because first it deals with the organizational members and as such it helps form the behavior patterns of the members of the organization. There are many determinants of organizational culture. Most causes have to do with the repeated or routine activities that have consistently been practiced by the organization until it becomes part of the norms of the organization. Ensuing is a discussion on the various factors that have modeled the organizational culture of SMEs.
Doing Business in Greece
Greece is one of the oldest countries in the world and has a rich and vibrant culture alongside ancient heritage. This makes it quite a fascinating territory when it comes to doing business (Katsios, 2006). It is of paramount importance that any individuals planning to do business or engage in any gainful work in Greece study the culture of this country. Greece is home to the vast diversity of experiences and landscapes from the capital Athens to the Aegean Islands and the ruins of Delphi which offer a rich historic background (Svoronos, 1972). This makes be referred to as the cradle of European culture.
Greece is a member of the European Union and the Euro-zone. These memberships have contributed to the growth and strengthening of its economy. The country is also officially known as the Hellenic Republic and has an estimated population of ten million inhabitants. The country has managed to accommodate the multi-diverse approach to the economy and this has been caused by the cultural tolerance in the country (Katsios, 2006). Though it is a member of the European Union, the country’s official language is and as such, any individual intending to do business in Greece or with a counterpart ought to understand the language alongside any other international language.
The current business environment in Greece
The modern-day business environment in Greece is more like any other European country. The leadership styles employed in Greece are more people-oriented rather than personnel-oriented (Topping, 1961). This means that there is a great emphasis on the personal relationship among people in a typical organization. This aspect is seen in both the large organizations as well as the small and medium enterprises in the country.
The country’s business practices are based more on personal trust than written binding agreements. This insinuates that people doing business in Greece would rather do business with an individual who shares mutual respect and honor than an individual who has an intention to create legal business relationships through the signing of written agreements and covenants.
The major businesses in the Hellenic republic are large conglomerates that are family-owned and managed. The same trend has been observed for SMEs as well. This means that personal relationships and contacts are very important for a successful business undertaking in the country. The SMEs in Greece compose a major part of the business practice in the country and hence the reason for the study of organizational culture in SMEs by this paper.
Literature review on organization culture
Organizational culture has grown to be a critical area of the organizational internal environment and as such, the study of organizational culture presents core culture dimensions that govern the organizational behavior (Newstrom & Davis, 1993). In the wake of the competitive era among the organizations, organizational culture is an important aspect of the organization and if the management of the organization can positively influence the organizational culture, the dimensions of internal relationships among the employees coupled and the perception of the organization as a whole by the employees can go a long way in earning the organizational a comparative advantage over the industry peers (Elloy, 2005).
There are various determinants of organizational culture. These include the leadership style, the social-cultural environment, the organizational structure, the organizational mission, vision and objective, and such other factors (Newstrom & Davis, 1993). Once an organization has established a distinct culture, the management ought to exploit the opportunities that are associated with the culture in order to gain a competitive or comparative advantage over the competitors.
The leadership of any organization is a crucial factor in the formation of organizational culture. This is because the management holds the vision and the mission of any organization. The leadership style employed by organizations is therefore critical in determining the organizational culture (Berger, 1997). A strict and autocratic leadership style will often result in a culture that is a ‘wait and see’ type. This mostly happens when the employees are not empowered to make decisions that can bind the organization and as such, the culture built is usually to wait for directives from the management (Ambrose & Schminke, 2003).
In such a culture, communication is always vertical and business development always happens at the discretion of the management. Organizations that have democratic leadership styles usually have a culture that motivates the employees to take initiative and make decisions.
The importance of a democratic leadership style in organizations cannot be over-emphasized. Organizations that practice democratic leadership usually display rich organizational culture where the employees are motivated to take initiatives when carrying out their duties (Davidson, Lepeak, & Newmann, 2007). The importance of this is that employees are allowed to make decisions in their areas of operations and this means that the decisions made are based on relevant information since they have firsthand knowledge and understanding of the situation at hand (Svornos, 2004).
The social-cultural environment is another important determinant of the type of organizational culture. The social-cultural environment is a remote element that is independent of the internal factors of the organization (Ramayah & Koay, 2003). The significance of the social-cultural environment in the organization management and culture is that it forms the basic models and framework under which the external environment interacts with the internal organizational environment. All organizational members come from a certain social background and as such, the social-cultural environment offers a foundation upon which the organizational culture is built.
Since this is a remote factor, an organization therefore ought to arrange its affairs in such a way that it fits into the social-cultural environment. The organization therefore must understand the social-cultural environment that it operates in since it not only governs the way internal members of the organization perceive the organization but also determines the perception and the relationship between the organization and the external environment as well.
The organizational structure is another important determinant of organizational culture. Organizational structure is defined as the framework that shows how the different roles and responsibilities are shared among the organization members. It includes a blueprint of the leadership and how the communication flows within the organization. The essence of organizational structure is to spell out the different points at which responsibilities are held and decisions are made. The structure of an organization, therefore, influences the culture formation in almost a similar manner with the leadership style.
The only difference arises where there are cases of decentralized structure (Wood & Bandura, 1989). An organization that has a decentralized structure can have more than one culture. This usually happens where there are branches and departments that carry out activities at different locations. This is however not a prevalent condition in most SMEs since most of them operate a centralized structure.
The other factor that influences the organizational culture is the strategic plan of the organization. There are several factors that constitute a firm’s strategy and these include the mission, vision, goals and objectives, and the entire organizational strategy (Elspeth & Peter, 2002). These factors are of pertinent importance to any organization since they spell out the path that the organization intends to follow in order to achieve its long-term goals and objectives.
Of all these, the entire strategy of the organization is the most relevant in determining the culture of the organization. Some firms engage in aggressive strategies such as trying to gain command in the industry or in their niche while others settle for survival strategy and all they aim to do is to remain in business. The ones which adopt an aggressive strategy will portray a more aggressive culture as compared to the ones that want just to remain in business which may display a laissez-faire kind of culture.
The essence of these factors in molding and sustaining the organizational culture is very critical. As such, the organization ought to accurately examine and understand the different elements that influence the organizational culture so as to plan in such a way that they will control the internal determinants and also position the organization in such a way that the external factors mold a favorable and desirable organizational culture (Hellriegel & Slocum, 2011).
The Impact of organizational culture on organizational performance
It has often been claimed that there is a high correlation between organizational culture and organizational effectiveness. This is particularly so when organizations with strong cultures record-high employee motivation while the ones which have weak cultures exhibit low motivation levels among the employees.
The modern-day work environment is characterized by an increased time spent in the work by the employees. While the time spent at work is directly proportional to the output, there are other factors that determine the employee’s output more accurately. One of these factors is employee motivation (Elloy, 2005). An old adage goes by ‘a happy worker is a productive worker. As such, job satisfaction is a critical constituent of a motivated and hence a productive worker. A strong culture will therefore pay a keen emphasis on the environment that the employees are exposed to and as such, strong culture will always promote productivity among the employees and hence enhance the performance of the organization (Rubinyi, 1989).
The other impact of a strong culture is that it will always attract high talents to the organization and hence ensure that the workers are the best that the industry has. This also has a positive impact on the performance of the organization. A strong culture will also help maintain the employees and also alter their view of work. This is an important aspect of any organization since the firm needs to have workers who enjoy what they do and where they do it from.
The analysis of Organizational culture of SMEs in Greece
The study of organizational culture in an SME will involve an analysis of the various determinants of organizational culture that relate to Greece. A more emphasis will be given to the cultural background since the Hellenic republic is popular for its rich culture that is relatively old as compared to other European Union countries (Vacalopoulos, 1975). The analysis will also include the effect the external environmental elements have on the organization and hence the leadership style that consequently plays a major role in determining the organizational culture.
The Socio-cultural elements of SMEs in Greece
This country has people who place high importance on family life and personal relationships. In effect, the entire social environment in Greece is oriented towards personal and mutual relationships. This is a factor that has influenced the way business is done in Greece and any individual wanting to do business or have a business counterpart ought to develop a personal rather than a formal relationship with other people. As such the SMEs in Greece have adopted a relationship and trust-oriented culture and as such most SMEs in Greece exhibit this characteristic. The Greeks almost entirely rely on trust and personal relationships.
The other factors that dictate the culture of SMEs are family life, and religion. Greece is known to be a traditionally religious country with most of the citizens subscribing to the orthodox. The organizational culture of an SME is then highly determined by religion since religion has a wide and deep influence even in the government (Apostolos, 1980). The Greeks faithfully honor religious days and contrary to the other European and countries most organizations work full day only from Monday to Thursday. In Greece, organizations open on Friday only up to mid-day and remain closed on Saturdays. This is done majorly to honor Saturday which is considered a religious day.
They also have a more flexible schedule when it comes to meetings. Time is never strictly observed and in most cases, meeting s start late in most of the SMEs. This shows that people place less emphasis on punctuality and the formal guidelines of organizations’ activities are usually conspicuously missing. An individual should therefore be prepared to adjust to the rather relaxed business environment in Greece as opposed to other countries where such factors as time consciousness are of critical value and importance.
The political/ legal environment in Greece
Religion has played a very important role in molding the culture of the business environment through the government (Flevotomou, 2010). The country is composed of a majority of orthodox and as such the religious values have been inculcated into the system of doing business in the country. This explains more why trust and personal relationships are usually considered superior to formal and legally binding business agreements and contracts. The Greeks look for an opportunity to socialize and get personal with one another and as such, promote the culture of trust among themselves.
Besides, most of the businesses are owned and managed by families. In effect for an individual to be able to do business in Greece or secure a job in the country, personal relationships are very important. A typical SME also practices a group-oriented culture. The establishment of strong bonds enables an individual to work in a more productive and cohesive manner. This makes the Greeks prefer to work in teams and groups and this brings about high success in their endeavors. Individuals who work in solitude are usually given a suspicious look and as such, he fails to connect with the prevailing culture of teamwork.
The mode of communication is another distinct culture among SMEs. The Greeks prefer one on one communication to written and formal agreements. As such, the culture is based on physical contact rather than the conventionally accepted communication channels such as emails, telephone, or even letters. This in effect means that the Greeks value a person’s physical presence when entering business deals. Surprisingly, there is normally distrust in written communication. This makes their contracts rather simple and adjustable without the necessity of entering into a written commitment.
The other organizational culture that characterizes SMEs is the attitude towards work. Family life and welfare take preference over work and this means that have adopted the culture of ‘working to live rather than ‘living to work’. This can be traced to external factors such as the socio-cultural and political-legal since the government recognizes the orthodox as a ‘state religion.’
The Impact of Organizational culture
The country as discussed earlier has a distinct culture from all other European Union countries. As such, the business environment in the country is conducted rather slowly because of the relationship-based culture (Berger, 1997). This has ensured that the organizations have undergone stable but continuous growth and this has been very crucial in the development of the whole economy of the country.
This prevalent culture among SMEs has therefore fostered a relationship-based business environment. The doing of business in Greece is entirely based on a personal relationship with the concerned parties. This has necessitated anyone intending to do business in Greece or with a counterpart o first develop the relationship and as such make it possible for the two parties to agree and do business.
The same case applies to internal organizational culture. The organizations are more people-based rather than system-based due to the importance they place on the personal relationship. Most of the matters are resolved informally and as such, the internal environment remains people-based rather than personnel-based.
Conclusion and further research areas
The above analysis presents the organizational culture in an SME setting. As seen, the Greeks have a strong socio-cultural background that trickles down into the internal culture of the organization. The most prevalent and conspicuous organizational culture is the one that is relationship-based. It has been seen that the country has a strong religious background that influences the government and the business world as well.
While all other European Union community places a huge emphasis on a formal agreement and legally binding contracts when doing business, Greece is more trust-oriented and as such, less emphasis is made on the importance of formal agreement and written contracts. This study only presents the organizational culture of SMEs. More studies need to be done on the entire culture of the country and the business as a whole since this country is known for its distinct cultural heritage that has been inculcated into the business system.
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