Chapter 5

There are no universal solutions to organization and management problems. .

. . Organizations are symbolic entities; they function according to implicit models in the minds of their members, and these

are culturally determined.

-- Geert HofstedeMaastricht University, The Netherlands

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(p. 126)

Globalization does not mean imposing homogeneous solutions in a pluralistic world. It means having a global vision

and strategy, but it also means cultivating roots and individual identities.

-- Gucharan DasFormer CEO, Procter & Gamble-India

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(p. 126)

Opening question

What is the relationship between strategy, structure, and organizational decision-making across national or regional boundaries? And why should global managers understand such relationships?

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Consider: Strategy and structure at Wipro and Intel

Both Wipro and Intel are successful technology firms, but how do they differ in their global approaches to strategy, structure, and people management?

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(pp. 127-128)

Topic for today: Inside the organizational mind

• Stakeholders and strategic choice

• The strategy-structure nexus

• Organizational decision-making

• Decision strategies across cultures

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(p. 130)

Culture and stakeholder power: Centralized vs. distributed stakeholder models

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(p. 131)

Consider: Volkswagen

1. How did VW’s various stakeholders influence how the firm sought to improve its competitive position in the marketplace?

2. Would you see this same approach in the UK, US, or Japan?

3. In today’s highly competitive global environment, is it still realistic to seek the twin goals of being an sales leader while maintaining a “workers’ paradise” for employees? Why or why not?

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(p. 131)

Culture, business, and institutional support: Examples from Japan and the US

Japan

• Culture: Largely collectivistic, harmony-oriented, and relationship-based.

• Government: Cooperative business-government relations, including joint industrial planning, shared R&D, and public investment capital.

• Laws: Moderate legal constraints and low levels of litigation.

• Investments: Long-term public and private dual investment; stockholders expect long-term growth and market share.

USA

• Culture: Largely individualistic, mastery-oriented, and rule-based.

• Government: Adversarial business-government relations, including extensive government regulations, prohibitions against “non-competitive” behavior, and less public financial support.

• Laws: Extensive legal constraints and high levels of litigation.

• Investments: Short-term private investment; stockholders expect short-term profits or increased equity.

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(p. 133)

Strategy-structure nexus: Culture and structural determinism

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Example: Management strategies of German Mittelstand firms

1. Focus on high-end markets where quality or innovation can command high price.

2. Manufacture superior products using advanced technologies.

3. Hire and train best workers, not cheapest.

4. Use extensive employee involvement.

5. Take long-term perspective to market development.

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(p. 136)

Consider: Germany’s Mittelstand firms

1. Why has this model been so successful for German enterprise?

2. In view of recent and significant changes in global competitive dynamics, what is the future of Germany’s Mittelstand firms?

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Culture 1: Manager’s normative beliefs about power distribution and

social inclusion(e.g., belief in hierarchies)

Culture 1: Manager’s normative beliefs about power distribution and

social inclusion(e.g., belief in hierarchies)

Culturally compatible decision-making style(e.g., preference for top-

down control over decisions)

Culturally compatible decision-making style(e.g., preference for top-

down control over decisions)

Other influences on decision-making style(e.g., managerial and employee preparedness and experience

in decision-making; mutual trust between parties; legal or contractual requirements; personal and situational differences;

realities on the ground)

Other influences on decision-making style(e.g., managerial and employee preparedness and experience

in decision-making; mutual trust between parties; legal or contractual requirements; personal and situational differences;

realities on the ground)

Culture 2: Employees’ normative beliefs about power distribution and

social inclusion (e.g., belief in egalitarianism)

Culturally compatible decision-making style

(e.g., preference for employee involvement in

key decisions)

Culturally compatible decision-making style

(e.g., preference for employee involvement in

key decisions)

Employees’ response(e.g., resistance to autocratic decision-

making; lack of employee buy-in; push for increased

participation)

Employees’ response(e.g., resistance to autocratic decision-

making; lack of employee buy-in; push for increased

participation)

Manager’s decision-making style(e.g., use of autocratic

decision-making)

Manager’s decision-making style(e.g., use of autocratic

decision-making)

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(p. 139)

Participation and decision strategies

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(p. 140)

Centralized decision-making (common in Australia, Canada, UK, USA)

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(p. 141)

Centralized decision-making (common in China and overseas Chinese)

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(p. 142)

Consider:Decision-making at General Motors

1. Why was GM’s CEO allowed make his decision about executive reorganization (and compensation) largely without input from other key organizational stakeholders?

2. In your view, is the GM example the exception or the norm for how decisions are made in U.S. corporations?

3. If decision-making in the U.S. and China both tend to be autocratic in nature, what is the difference between the ways in which they are implemented?

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(p. 141)

Consultative decision-making(common in Japan)

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Consider: Decision-making at Toshiba

1. How was the decision process at Toshiba different from the one at General Motors?

2. How was it different from typical decision-making patterns found in Chinese firms?

3. Would the use of concepts like nemawashi or ringi-sho lead to better decision-making in Western countries? Why or why not?

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(p. 144)

Collaborative decision-making (common in Germany, Netherlands, Sweden)

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(p. 146)

Consider: Decision-making at Volkswagen

1. Why has the codetermination system like the one at Volkswagen worked so effectively in several Western European countries (e.g., Germany, Netherlands, Sweden, Denmark)?

2. Would this system work equally well in Canada, the UK, or the US? Why or why not?

3. In the face of increasing global competition, what is the future of the codetermination system in Europe?

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(p. 146)

MANAGER’S NOTEBOOK:Stakeholders, strategies, and structures

1. Global managers are well advised to focus on relationships, not individual issues, as they attempt to understand the organizational world.

2. Instead of just trying to identify the particular strategies used by various firms, work to understand the cultural and economic milieu in which such strategies are formulated and implemented.

3. Likewise, in efforts to understand why firms differ in their approaches to resource utilization—including human resources—begin with an understanding of the cultural bases of organizational behavior.

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MANAGER’S NOTEBOOK:Operations and TQM

1. Successful technology transfer across nations and regions often depends on cultural factors (e.g., risk orientation).

2. Trends in technological innovation and manufacturing can also differ across cultures (e.g., reliance on technological complexity in Germany, but process simplification in Japan).

3. While managers around the globe tend to agree on what TQM is, their implementation strategies can differ markedly (e.g., emphasis on product standards in Germany, accuracy and precision in Japan, and customer satisfaction in North America).

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MANAGER’S NOTEBOOK:Organizational decision-making

• Acceptable decision-making strategies can be heavily influenced by a society’s normative beliefs about power distribution and social inclusion.

• Conflict and resistance arise when managers and employees hold different views.

• There is probably no perfect decision-making strategy. All the models discussed here have advantages and disadvantages.

• Perhaps the key challenge here is to develop a model of employee involvement and participation that works for all parties—not an easy challenge.

• When this fails, what should managers do?

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Application:Employee involvement

1. Is employee involvement in organizational decision-making an right to which all employees are entitled or is it a practical issue that should be determined on a case-by-case, culture-by-culture basis?

2. What should determine who is (or is not) allowed to participate in key organizational decisions?

3. Should there be a difference in the degree of employee involvement between strategic and operational decisions decisions?

4. When working overseas, how can/should managers determine how much employee involvement to allow in decisions that relate to the future of the firm?

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Think about it: What is your decision-making style?

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