International Management

Organizational Culture and DiversityMichael Bartlemay, Emily Evans, JW Whitehorn, Jessica Wilson

The Nature of Organizational Culture

•Shared values and beliefs that enable members to understand their roles and the norms of the organization.▫Behavior regulations▫Norms and dominant values▫Employee/customer relationships▫Dos and don’ts of employees▫Organizational climate

Organizational Cultures

•When individuals join an MNC they carry with them their national culture and also have to enter into an organizational culture.▫Ex: PepsiCo expected to be cheerful,

positive, enthusiastic and have committed optimism

International Organizational Cultures

•Major problem is that not all organizational cultures for a MNC work in different countries▫Must deal with multiculturalism within

various locations of an MNC▫Can be hard to get people of different

nationalities to abide by one standard set of organizational cultures Separate business cultures. Ex: JCPenny

Interaction Between Cultures

•National cultural values of employees have a great impact on their organizational performance and their national culture is not easily changed.

•Stronger cultural differences among foreign employees for same MNC than employees in their native countries

Cultural Differences

•Ex: Upjohn Company of Kalamazoo, Michigan merged with Pharmacia AB of Sweden▫Americans were unaware of the vacation

time in Sweden and Italy▫Instead of solving problems, the

partnership had a major setback▫Both partners had to discuss cultural

differences to better understand

Organizational Culture Clash

•Organizational culture clashes often occur when a company doesn’t fully understand the operations of the business acquired.▫Ex: DaimlerChrysler chose to invest in

Mitsubishi over Nissan, but their reasoning turned out to be a false sense of security. Japanese organizational culture prevented

them from reporting bad news Mitsubishi management never informed

DaimlerChrysler of struggles

Dimensions of Corporate Culture

European’s Perception of MNC

Top: of cultural dimensions in U.S.

Bottom: of European operations

Interpreting the Graphs

•Different partners in a multinational alliance will bring different organizational cultures

•Potential difficulties when dealing with countries that hold different perceptions▫Negotiations▫Corporate climate

•Why it can be hard for an MNC with strong organizational culture to break into foreign markets with national cultures

Organizational Cultures of MNC’s

Integration of Cultures

•Numeroff and Abraham’s 4 steps:▫Establish purposes, goals, and focuses of

the merger▫Identify the most important structures and

management roles▫Determine who has authority over

resources ▫Identify the expectations of the involved

parties and develop communication lines between departments

Determining Organizational Culture

•Three parts:▫Relationship between employees and the

MNC▫The system of authority that defines

managers and subordinates▫Views employees hold on their place in the

overall vision of the MNC

Types of Organizational Culture• Family Culture• Eiffel Tower• Guided Missile• incubator

Family Culture

•Emphasis on hierarchy and the person•Paternal relationship between

management and subordinates▫Management revered

•Characterized by culture and traditions▫Hard to become a member if an outsider

•Examples: Turkey Pakistan, Venezuela, China

Eiffel Tower

•Emphasis on hierarchy and the task•Top of the tower could be gone and

nothing would happen•Very formal

▫Impersonal and efficient•Does not take change well•Examples: Denmark, Germany, the

Netherlands

Guided Missile

•Egalitarian and focused on the task•Work primarily in project teams

▫Hierarchy unimportant•Change is easy and smooth•High-tech markets•Examples: United States and the United

Kingdom

Incubator

•Egalitarian with emphasis on the person•Creative and Entrepreneurial•Change comes fast •Employees are more concerned with the

project than monetary gain•Example: Silicon Valley, California

Business Examples

•Can you think of any Businesses that model these Organizational Cultures?▫Family▫Eiffel Tower▫Guided Missile▫Incubator

Managing Multiculturalism and Diversity

Phases of Multicultural Development

▫Phase 1 (Domestic Corporation)

Focused on the product/service Products are new and unique

▫Phase 2 (International Corporation) Focused on the market Products are more standardized

Phases of Multicultural Development (cont.)

▫Phase 3 (Multinational Corporations) Focused on price Products are completely standardized

(commodity)

▫Phase 4 (Global Corporations) Focused on strategy Products are mass customized

Types of Multiculturalism

▫Domestic Multiculturalism People with diverse cultural backgrounds

▫Group Multiculturalism Homogeneous Group Token Groups Bicultural Groups Multicultural Groups

Problems and Advantages With Diversity

•Problems▫Lack of cohesion (Bad attitudes)▫Stereotypes and inaccurate biases▫Inaccurate communication

•Advantages▫More and better ideas ▫Prevents groupthink: social conformity▫Better serving the customer

http://www.youtube.com/watch?v=VUlNgJfJip4

EU Pro Diversity Ad

Multicultural Team Effectiveness

▫Entry Stage ▫Work Stage ▫Action Stage

Managing a Culturally Diverse Team

▫Select members for task related abilities, do not base on ethnicity

▫Recognize and prepare to deal with cultural differences

▫Leader must keep the group focused on the overall goal

No Stereotyping

•http://www.youtube.com/watch?v=f5mAMDZYElE

Case Study pg. 183

1. What do you think some of the main organizational cultural differences between two companies would be?

2. Why might the cultural diversity in the Spanish firm not be as great as that in the US firm? And what potential problems could this create?

3. What would you recommend be done to effectively merge the two organizational cultures and insure they cooperate harmoniously?