Corporate CultureThe effects national culture has on corporate culture

Japan, South Korea, Mexico, India, Germany, and South Africa

Judy GallagherIB 8180 – Spring 99

j.gallagher@mindspring.com

INTRODUCTION

Advances in telecommunications and mass transportation and the breaking down of national borders and cultures have lead to the emergence of a global, information-oriented culture. The globalization of world markets has created the need for understanding and respecting diverse cultures, which can ease the process of doing business with foreign nations. Cultural understanding may minimize the impact of culture shock, and maximize intercultural experiences and opportunities for collaboration. “Cultural sensitivity should teach us that culture and behavior are relative, and that we should be more tentative, and less absolute, in human interactions.”1

In this report I will discuss the meaning of culture and the characteristics associated with this terminology. I will examine cultural specific factors important in conducting business in Japan, South Korea, Mexico, India, Germany, and South Africa. My goal is to have the readers understand that to be truly effective leaders, global managers need to understand the influences national culture can have upon their organizational culture and to use that culture to improve performance, productivity, and service. “The global leader must be sensitive to the broader implication of his or her actions and decisions upon organizational and world cultures.”2

CULTURE

Culture is defined as a set of values, beliefs, and habits that are shared by the people in a society or nation, influencing their attitudes and behaviors. Customs, practices, and traditions for survival and development are passed along from generations to generations among a particular people. In time, the group becomes unconscious of the origin of this tradition and subsequent generations are conditioned to accept the “truths” about life.3 “Culture facilitates living by providing ready-made solutions to problems, by establishing patterns of relations, and ways for preserving group cohesion and consensus. All aspects of culture are interrelated, and to change one part is to change the whole.”4

“Within this national culture, people in an organization also share a set of values, beliefs, and attitudes called corporate culture.”5 [It] “is important because it’s the sum of values, virtues, accepted behaviors (both bad and good), …and political environment of a company.” 6 The corporate culture affects employee, supplier, and customer behavior, as well as community relationships. “Culture influences business attitudes and behaviors including work values, motivation, business socializing, making and keeping commitments, and more.”7

The effective global leader must continually broaden his or her understanding of diverse cultures and its impact on our lives. Such learning can arise from the cultural clashes of language and nonverbal communication, time and space orientation, decision-making and information systems, conduct of meetings and training, and motivation. The following are some characteristics of culture that can be used to study a group of people. 8

1 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company2 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company3 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company4 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company5 Chung, Lee, and Jung. 1997. Korean Management: globalization and cultural transformation. Berlin: Walter de Gruyter & Co.6 Bliss, William G. Feb. 1999. Why is corporate culture important? Workforce. 8-97 Gutierrez, Santiago. 1993. Can you make it in Mexico? Financial Executive. 20-238 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company

Sense of Space: The comfort one has with self can be expressed differently by culture. Some cultures are very structured and formal, while others are flexible and informal. Some cultures are very closed and determine one’s place very precisely, while others are more open and changing.

Communication and Language: The communication system, verbal and nonverbal, distinguishes one group from another. “Words represent 10% of total communication, while the other 90% consists of behavior.”9

Dress and Appearance: This includes garments and adornments, as well as body decorations that tend to be distinctive by culture.

Food and Feeding Habits: The manner in which food is selected, prepared, presented, and eaten often differs by culture.

Time and Time Consciousness: Sense of time differs by culture. Time sense differences can cause confusion when doing business in other cultures.

Relationships: Cultures fix human and organizational relationships by gender, age, status, and degree of kindred, as well as by wealth, power, and wisdom. Social Organization in many cultures predetermines who can interact with one another. Geographic society is composed of members of a nation, tribe, or religious sect. Role society is composed of members of a profession or elite group.

Values and Norms: The need systems of cultures vary, as do the priorities they attach to certain behavior in the group. “The globalization process and telecommunications are leading to the development of shared values which cross borders…”10

Beliefs and Attitudes: How people view themselves, others, and what happens in their world. Attitudes are the psychological states that predispose us to behave in certain ways. One must understand other people in the context of their unique historical, political, economic, social, and cultural backgrounds.

Mental Process and Learning: Thought patterns or forms of reasoning may differ across cultures. Some cultures prefer abstract thinking and conceptualization, while others favor memorization and learning.

Work Habits and Practices: A group’s attitude towards its work, the dominant types of work present, the division of work, and work habits or practices can be used to examine the group’s culture.

MANAGEMENT CULTURES

In addition to culture and business protocol, global leaders also must understand the national character, management philosophies, and mindsets of the people of other countries.

National culture and economic ideology influence managerial values. “Religion, proximity, history, and education are factors that have been identified as important in defining a culture.”11 National Culture are those values and beliefs shared by a society. Economic ideology is the “workplace philosophy” that pervades the business environment of a country.12 Two major ideologies are capitalism and socialism. Capitalism is a self-serving economic system where everyone looks out for his/her own self-interests. Socialism is where there is a collective effort for the good of the society.

Geert Hofstede identified four dimensions of national culture important in assessing the distinctions among nations:

1. Power Distance – the extent to which a society accepts the power institutions and organizations is distributed unequally.

2. Uncertainty Avoidance – the extent to which a society feels threatened by uncertain or ambiguous situations.3. Individualism – loosely knit social framework in a society. Collectivism – tight social framework in which

people expect a group to take care of the other members.4. Masculinity and Femininity – the extent to which dominant values in a society are assertiveness; money and

material things; not caring for others, quality of life and people.

9 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company10 Bryson, J.M. and Crosby, B.C. 1992. Leadership for the common good. San Francisco: Jossey-Bass Publishers11 Ralston et al. 1997. The impact of national culture and economic ideology on managerial work values. Journal of International Business Studies. v28n1: 177-20712 Ralston et al. 1997. The impact of national culture and economic ideology on managerial work values. Journal of International Business Studies. v28n1: 177-207

Global leaders may also apply the following systems of organizations for examining employee values and motivations abroad, for in-country evaluations of effectiveness of multinational personnel policies and programs, and local management’s readiness for change. 13

The Bureaucratic Culture is characterized by an impersonal style and absolute reliance on standards, norms, and rigid procedures. This culture is mostly found in companies operating in protected and stable markets. Its best supported by pyramid and centralized hierarchies with very little internal competition.

The Managerial Culture is typical of trading countries open to free competition. It is performance oriented and found in highly competitive and innovative industries. It is characterized by a truly managerial style supported by a flexible and adaptive organization.

The Technical Culture is typical of countries with a long tradition of technical expertise, in well-established and traditional industries. The organization is heavily functional, thus can lead to interdepartmental competition. Recognition and power goes to the technicians.

MEXICO

“Improvements in the Mexican economic, social, and political climate have created a more favorable business environment for U.S. companies. Prosperity for foreign firms will depend on a variety of factors, including their willingness to rethink and then reshape business interaction styles ” 14

Collectivism

Mexicans are a relaxed, hospitable, and warm people who may relate more to their Indian than Spanish heritage.15 They are proud, patriotic, family oriented, and hard working. In Hofstede’s study of value dimensions that define culture, one of the most important dimensions for understanding Mexico is its collectivism orientation.16 This characteristic is witnessed in the importance family relations has within society. This emphasis on family has its effects on business by way of strong personal relationships. Managers must acknowledge the strong family ties and its effect on productivity and loyalty. It is generally difficult to relocate Mexicans “because of Mexicans’ strong family ties. A move doesn’t involve just the nuclear family, but often aunts, uncles, and parents.”17 Simply stated, family is usually of a higher priority than work.

Due to the collectivist culture, “for Mexicans, establishing trust is critical to any business relationship, and winning that trust is the essential prerequisite to producing any business agreement.” 18 Trust must develop through a series of frequent and interpersonal meetings, socially or professionally. The integration of personal and business interests becomes fundamental to doing business in Mexico. These personal/internal issues tend to affect negotiations and business procedures.

“Many Mexicans believe Americans view work as the goal of existence. Mexicans, by contrast value the importance of daily living.”19 A common saying is Mexicans work to live, while Americans live to work. This sums the importance Mexicans place on enjoying life. There is a relaxed attitude towards time as time spent on

13 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company14 Gutierrez, Santiago. 1993. Can you make it in Mexico? Financial Executive. 20-2315 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company16 Tebeaux, Elizabeth. Jan 1999. Designing written communication along the shifting cultural continuum: the new face of Mexico. Journal of Business & Technical Communication. v13n1: 49-85.17 Flynn, G. Aug 1994. HR in Mexico: what you should know. Personnel Journal. V73n8: 34-4418 Tebeaux, Elizabeth. Jan 1999. Designing written communication along the shifting cultural continuum: the new face of Mexico. Journal of Business & Technical Communication. v13n1: 49-8519 Tebeaux, Elizabeth. Jan 1999. Designing written communication along the shifting cultural continuum: the new face of Mexico. Journal of Business & Technical Communication. v13n1: 49-85

building and maintaining relationships are more important than efficient work-related goals. The results are less important than the relationship-based process of doing business. 20

Uncertainty Avoidance and Power Distance

On Hofstede’s chart, Mexico scored high on both uncertainty avoidance and power distance. Mexicans tend to be risk-avoidant and pessimistic in any situation in which there is some risk involved.21 Although the Mexican culture tries to avoid risk, they accept that uncertainty as an inevitable part of their life. This acceptance emerges from Mexican history in which death, acceptance of destiny, and survival on a daily basis brings a fatalistic outlook that does not expect progress.22 Individuals are less willing to believe in progress but are willing to accept their place in life. This willingness parallel the wide social level and power gaps in society translated into a high power distance culture.23

Mexican businesses have a vertical orientation where “Mexican Managers tend to be more autocratic and to delegate less responsibility and authority than Americans.” 24 This cultural value of hierarchies and classes can affect employee loyalty. “Loyalty is often forged to one’s immediate supervisors rather than the company as a whole.” 25 This is an important fact for managers who want to create loyalty and retention among workers as it calls for giving the manager special recognition to make him feel worthy. Although the society is collectivist in nature, the Mexican leaders or individuals with palanca (leverage) tend to be well positioned, expressive, and forceful with their opinions and decisions.26

Mexicans view formality as a means to recognizing the social status of another person. Therefore, formality and understanding protocol is very important, particularly in the beginning stages of business where parties decide if they can do business together.

Communication

“Mexicans communicate with hand movement, physical contact, and emotional expressions, making Mexicans high-context communicators.”27 In high-context cultures, doing business involves a vast array of communication styles. This is very important in doing business in Mexico since extended face-to-face communication is required to build rapport before any work can be pursued.

India

The government owns and runs many enterprises, such as airlines, railroads, insurance, power facilities, and irrigation projects. The government also has controlling power in metals, steel, chemicals, and engineering equipment. 85% of the nation’s banking assets are government controlled.28 The industrial economy of India has a public and private sector, where foreign trade has become an important part of the economy.

20 Tebeaux, Elizabeth. Jan 1999. Designing written communication along the shifting cultural continuum: the new face of Mexico. Journal of Business & Technical Communication. v13n1: 49-8521 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company22 Tebeaux, Elizabeth. Jan 1999. Designing written communication along the shifting cultural continuum: the new face of Mexico. Journal of Business & Technical Communication. v13n1: 49-8523 Tebeaux, Elizabeth. Jan 1999. Designing written communication along the shifting cultural continuum: the new face of Mexico. Journal of Business & Technical Communication. v13n1: 49-8524 Gutierrez, Santiago. 1993. Can you make it in Mexico? Financial Executive. 20-2325 Flynn, G. Aug 1994. HR in Mexico: what you should know. Personnel Journal. V73n8: 34-4426 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company27 Tebeaux, Elizabeth. Jan 1999. Designing written communication along the shifting cultural continuum: the new face of Mexico. Journal of Business & Technical Communication. v13n1: 49-8528 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company

“There are positive aspects of doing business in India. English is a major language, there is a large pool of managerial, skilled and semi-skilled labor.”29 There is a good and developed capital market and a large domestic market. However corruption, bribes, or payments exist in everyday life and is something businesses must acknowledge.

In India, business is based on personal contacts; thus, it is important to know the right people. “Indians have a strong distinction between insiders and outsiders and prefer loyalty and dependability over efficiency and independence.”30 This can affect hiring practices and business deals.

Culture

Hinduism is not only the principle religion of India, but it dominates the culture, relationships and business practices. According to Hofstede’s study, India ranks high on power distance. This is a result of the rigid caste system in the Hinduism religion practiced for thousands of years, where classes determined what a person did in his or her life. 31

Indian culture is based on family and caste membership, where long-lasting relationships are valued. In this culture, group and family are considered to be of greater importance than the individual. People may approach work only as a means of satisfying family needs. It may be difficult to instill American profit and goal setting ideals onto Indian culture where fate determines life’s events. Indian tradition is based on the belief that people are born into castes.32 The belief is that one cannot change his or her destined path; thus, it would be difficult to push Western thinking of goalsetting and job advancement onto workers. It is crucial that American managers understand these cultural and religious differences when trying to do business in India. “While some management ideas are easily transferred across countries, a large number of American management ideas and practices are ‘culture specific’.”33 American ideals cannot be blindly introduced in countries such as India where cultural, social, political, economical, and judicial environments are different.34

“Indians are very tolerant and will completely accept the fact that you are unfamiliar with their customs and procedures.”35 It is important to understand the role and relationships of women in India. Social freedom among the sexes is not appreciated. A stranger should not speak to a woman if he is not acquainted with her of her family nor should he assist her out of a car. The husband may resent this gesture. There is no need to conform to the Indian behavior, but a respect and appreciation for the culture is recommended to avoid offending anyone.

Japan

Japan has been heavily influenced over the past fifty years by economic ideologies that contrast its cultural values. “Japan has an economic ideology that is more individualistic-oriented and a national culture that is more collectivistic-oriented.” 36 However, this clash has seemed to work for the Japanese as they blend tradition with

29 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company30 Goplan, S. & Stahl, A. June 1998. Application of American management theories and practices to the Indian business environment: understanding the impact of national culture. American Business Review. V16n2: 30-4131 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company32 Goplan, S. & Stahl, A. June 1998. Application of American management theories and practices to the Indian business environment: understanding the impact of national culture. American Business Review. V16n2: 30-4133 Goplan, S. & Stahl, A. June 1998. Application of American management theories and practices to the Indian business environment: understanding the impact of national culture. American Business Review. V16n2: 30-4134 Goplan, S. & Stahl, A. June 1998. Application of American management theories and practices to the Indian business environment: understanding the impact of national culture. American Business Review. V16n2: 30-4135 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company36 Ralston et al. 1997. The impact of national culture and economic ideology on managerial work values. Journal of International Business Studies. v28n1: 177-207

business efficiencies. The values most commonly emphasized in Japanese organizational behavior are groupism, harmony, hierarchy, amae, on and giri, gambrare, and uncertainty avoidance.Groupism

Japan is a highly collective society where the good of the whole outweighs the individual. “For the modern Japanese, groupism remains a core value, consciously engendered and encouraged form kindergarten form parents, teachers, and neighbors.”37

The emphasis on the group heavily influences the way businesses are run. Japanese companies look for candidates with personalities that will be accepted by other employees because of the emphasis on group effort and team spirit.38 The members of a group are to conform the expectations of the company, managers, and peers. Japanese firms consider the socialization of new employees to be very important. Through this initial training process into the managerial track recruits emerge with a strong network of relationships. This network will be invaluable the years to come. “They have been inculcated with a sense of shared purpose with these cohorts, a commitment to the group which will serve as an important force in their work motivation in the future.”39

Harmony

The Japanese manager’s role and behavior is influenced by the group orientation. “Harmony is an important value in Japan, largely in part because small communities in preindustrial Japan needed to cooperate in the planning and harvesting of rice.”40 Thus, a great deal of time is spent on building harmony and identification. It is viewed that intragroup conflict would result in decreased cooperation and yields, and consequently to possible starvation.

The Japanese manager must get to know each member to understand and incorporate the concerns of each regarding any decision.

Hierarchy

Japan is a relatively high power distance society. Japanese have a sense of order, proprietary, and appropriate behavior between inferiors and superiors. An individual’s personal identity is derived from his sense or place in the hierarchy. Organizations tend to have finely graded hierarchies and narrow spans of control. This provides a great number of status rankings. Hierarchy affects the way a manager sees his career within the firm. “It represents an orderly progression from one level to another, with the learning of one level imperative to success in the next.”41 Probably the most important reward that a Japanese manager receives as part of his job is that of the status of manager since one’s place relative to others is a central focus among employees. Japanese workers accept the power distance and are “willing to leave their career path planning totally in the hands of the company, even though company plans are not obvious to them.”42

Amae43

The word amae means the desire to depend on the love, patience, and tolerance of others. This is the sense of obligation by the dependent parties unto those who encourage the dependence. A Japanese manager has a greater role than an American manager as these social value influences his interactions with subordinates. The manager will have a sense of responsibility for his subordinates, which increases the tendency of dependency.

On and Giri44

37 Taylor, S. 1993. Managers and national culture – a global perspective. Westport. CT: Quorum Books38 Honda. H. et al. Jan. 1992. Working in Japan: an insider’s guide for engineers. Mechanical Engineering. v114n1: 68-72 39 Taylor, S. 1993. Managers and national culture – a global perspective. Westport. CT: Quorum Books40 Taylor, S. 1993. Managers and national culture – a global perspective. Westport. CT: Quorum Books41 Taylor, S. 1993. Managers and national culture – a global perspective. Westport. CT: Quorum Books42 Honda. H. et al. Jan. 1992. Working in Japan: an insider’s guide for engineers. Mechanical Engineering. v114n1: 68-7243 Taylor, S. 1993. Managers and national culture – a global perspective. Westport. CT: Quorum Books44 Taylor, S. 1993. Managers and national culture – a global perspective. Westport. CT: Quorum Books

On and giri are values that also revolve around the idea of obligation and debt for favors of kindness received from others. On is owed to those who have provided significant help, such as a parent or teacher. Giri is based on smaller debts and obligations. For Japanese managers, on and giri are crucial. “A manager is aware of the importance of the personal loyalty he acquires from subordinates as a consequence of granting small favors.” This tie goes both ways as the manager acknowledges the subordinate’s daily efforts to help him perform his job. This sense of giri impels him to do everything he can to ensure his subordinate’s well-being, both on and off the job. Psychological security by the company is in return for loyalty to the company.

Gambare45

Loosely translated, it means to put all one’s effort into a task. Japanese feel that hard work is the most important factor of success. The Japanese manager expects his subordinates to have a gambre attitude. Employees are expected to get the proper training needed and learn from peers, and to put forth the extra time and effort needed to complete the task.

Time Orientation

Japanese are punctual people, but expect patience in group decisions. Japan’s high uncertainty avoidance nature can be characterized in their negotiating styles. They are careful to examine the complete scenario before making any final decisions. This risk aversion means negotiations may take years for a decision to be made, but once approved the Japanese may be ready to go in full production within a few weeks.

The organizational structure in Japan is heavily influenced by the values described above. However, values are changing as greater numbers of women and younger workers are entering the workforce. The shifting values of the younger generation are called shinjinrui.46 This generation was born in an era of economic prosperity, thus do not share the same commitment to work as their elders had. They are more concerned with enjoying their lives now rather than waiting for future rewards. Consequently, they are not willing to give up time and money for the greater good of their firms.47 It is believed by some that the shinjinrui will change the present relationship of subordinates and managers as well as create a need to shift leadership styles.

SOUTH KOREA

“Confucianism has been the dominant influence on modern Korean management systems because is directly addresses matters of bureaucratic administration in minute details in the principal writings that Korea’s ancient scholars studied.” 48 The Confucian ethical codes call for harmony-oriented group culture and education-based social status system. Confucian values reinforce centralized authority, vertical hierarchical order, harmony among employees, diligence and hard work, and seniority-based reward system.

Harmonious interpersonal relationships are considered fundamental for survival in the marketplace. Harmony is achieved in Korea through a paternalistic and authoritarian system. People with lower social status are to respect the authority of people with higher status. In return, people of higher stature have an obligation to take care of those lower than them.49

Vertical Relationship

“Company founders and CEOs are expected to set the moral tone for employees of their organizations through their benevolence, impeccable attention to social ritual, hard work, and lack of preoccupation with personal gain and

45 Taylor, S. 1993. Managers and national culture – a global perspective. Westport. CT: Quorum Books46 Taylor, S. 1993. Managers and national culture – a global perspective. Westport. CT: Quorum Books47 Taylor, S. 1993. Managers and national culture – a global perspective. Westport. CT: Quorum Books48 Meek, B. & Song. Y. 1993. Managers and national culture – a global perspective. Westport. CT: Quorum Books49 Chung, Lee, & Jung. 1997. Korean management: global strategy and cultural transformation. Berlin: Walter de Gruyter & Co.

conspicuous consumption.”50 The vertically differentiated roles of management employees are stated in company constitutions. This vertical structure produces a collectivist or group orientation where all individuals are linked through a continuous chain of senior-junior and superior-subordinate relationships. It is important to know the levels of society and to know one’s place within society since proper interpersonal relationships are important to Koreans.

Status and rank is a crucial aspect within the social and organizational environment. Korean corporations face the challenge of recognizing a person’s seniority and educational achievement with titles and levels. As new employees are hired and the corporation becomes older, new titles are created for those who are already in that position. 51 Although the new positions are not that different in scope, it is to signify an employee’s status ranking based on seniority. This practice is to “save face”, for employees who do not receive vertical promotions are seen as inferior.

Koreans use the word Origwang of Ungsok, similar to Japan’s amae, to express the significance of dependent relationships. In an organization, this translates into a junior’s unconditional obedience to the senior and to show respect for the senior’s social position and credibility in return for the senior’s generosity, deep affection, and willingness to commit to the junior’s needs.52 Filial behavior to one’s senior is believed to product a peaceful and cooperative organizational environment.

Family values

The importance of family affects employee in organizations. Four concepts emerged from Confucianism family values are extended family, blood-based succession, paternalism, and gender roles. Ethical codes that govern relationships between family members also apply to relationships between organizational members as they are considered extended families. In an organization, the owner is expected to take the role of a father figure in leading the company.53

In a blood-based system, succession of managerial power is among family members. Koreans believe in family ownership. The yon-go relation, meaning “relation-based behavior” is promoted to foster trust and closeness among members of one’s family, alumni, and friends. This system contributes to the preservation of family ownership and centralized power in firms.54 Under Confucian culture, the woman’s role is to take care of the household and children. Although, the law guarantees equal employment, discrimination still exists as they are generally paid less and are expected to resign upon getting married.

Corporate Culture

During the 1980s, Korean companies wanted to develop kiup moonwha (corporate culture). “They wanted to identify their unique culture that would promote their public image and improve teamwork and productivity among employees.”55 There are cultural similarities among Korean businesses, but every organization does have its own distinct culture in terms of how it functions. This is why Korean companies do not value job experience at other companies since employees are cultivated to fit one company’s unique culture from the first day of work. “Korean chaebols rarely hire a mid-level executive from another chaebol. Thus, if a junior executive of a chaebol wants a career transition, he has three choices: work for a foreign employer, work for a smaller firm, or start his own business.”56

Such differences in corporate culture are revealed in a 1989 study of the characteristics of top chaebols. The results are as follows: 57

50 Meek, B. & Song. Y. 1993. Managers and national culture – a global perspective. Westport. CT: Quorum Books51 Meek, B. & Song. Y. 1993. Managers and national culture – a global perspective. Westport. CT: Quorum Books52 Meek, B. & Song. Y. 1993. Managers and national culture – a global perspective. Westport. CT: Quorum Books53 Chung, Lee, & Jung. 1997. Korean management: global strategy and cultural transformation. Berlin: Walter de Gruyter & Co.54 Chung, Lee, & Jung. 1997. Korean management: global strategy and cultural transformation. Berlin: Walter de Gruyter & Co.55 Kim, E.Y. 1996. A cross-cultural reference of business practices in a new Korea. Westport, CT: Quorum Books.56 Kim, E.Y. 1996. A cross-cultural reference of business practices in a new Korea. Westport, CT: Quorum Books.57 Kim, E.Y. 1996. A cross-cultural reference of business practices in a new Korea. Westport, CT: Quorum Books.

Samsung: technology, risk-tasking,, excellence Hyundai: can do spirit, discipline, aggressive marketing, profit, efficiency Daewoo: consensus LG: long-term relationship, positive toward change Sunkyong: empowerment, open communication

Since that time, the corporate culture has changed and is still changing. The managers of chaebols are trying to learn from foreign management as well from one another. The goal is to incorporate others’ strengths with their own.

Korean businesses are evolving into a new form of management style with the continued integration and relations with international companies. However, despite these changes there is still a distinct Korean corporate culture compared to that of Western companies. “Most of the companies were founded by one man and are run by family members.” 58 Although there is a trend toward hiring professional managers, the issue of family control prevails. Another dominating trait among Korean corporate culture is the influence Korean cultural patterns have had on issues such as organizational hierarchy, organizational design, management style, and communication practices.

All chaebols are liberalizing the culture by adopting a less authoritative management style. 59 This change is accelerated by the recent emphasis on globalization and regionalization as well as the effects of industrialization and democratization.60 Korean corporations are seeing the need to change its “traditional” attitudes to bring in new, fresher ideas and strategies. The change can also be seen in the work ethics of employees. The rapid economic, social, and technological changes have weakened the bond between employees and their company.61

SOUTH AFRICA

South Africa is a nation of four cultural influences or ethnic groups: the native African majority, the minority populations consisting of the Dutch (Boers), the British, and Asian immigrants mostly from India. It is the opinion of one author that “South African society is in the midst of transformation that could lead to prosperity, if the white citizens who have been in control truly share their political and social institutions and power with the oppressed black majority.”62

There is contrast in the cultures and lifestyles among whites and blacks. In the black community, there are extended families where great respect is given to the elderly, and obedience to the parents. This is in contrast to the white community where the family is nuclear, close-knit, and privileged.63 The lifestyles among the two communities are worlds apart. The white community is comparable to the average European or American relative to socialization, work, and recreation. Whereas, the Africans are more vibrant, natural, and exhibit a bond of brotherhood. The tendency is to be more nationalistic and independent with a sense of superiority and pride.64

With a land so diverse, it is hard to generalize on business practices. The following is a list of common customs and protocol in the area.65

Business is normally discussed in the office or in a bar or restaurant, never at home.

58 Kim, E.Y. 1996. A cross-cultural reference of business practices in a new Korea. Westport, CT: Quorum Books.59 Kim, E.Y. 1996. A cross-cultural reference of business practices in a new Korea. Westport, CT: Quorum Books.60 Chung, Lee, & Jung. 1997. Korean management: global strategy and cultural transformation. Berlin: Walter de Gruyter & Co.61 Chung, Lee, & Jung. 1997. Korean management: global strategy and cultural transformation. Berlin: Walter de Gruyter & Co.62 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company63 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company64 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company65 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company

The host should pay for everyone. Home matters are private and are not discussed in business meetings. When invited to someone’s home, do not discuss business. Age and wisdom are seen as the same, the norms of the elders must be followed.

As international competition intensifies in the region, South Africa will have to shift its organizational structures to bring about change and new competencies. Many organizations have been operating under an authoritarian and bureaucratic hierarchies. To be competitive South African organizations will need to develop world-class thinking and deliver world-class products and services.66 This will only be accomplished through effective leadership. “(Research) has found that a worker commitment and productivity crisis exists in South Africa and that the average business leaders are out of touch with their people. These problems can be attributed to leaders who have failed to instill a vision, a sense of meaning, and trust in their followers.”67

One of the biggest challenges facing leaders is within the organization where corporations are over-managed and underled. 68 The challenge is to combine strong leadership and strong management. The concepts of command and control are no longer acceptable. The changes needed to compete in the new environment are “democratization of the workplace, especially in light of the prevailing South African culture of ‘togetherness’, a simultaneous flattening of the hierarchy, the devolution of power and authority, and the opening up of existing communication channels and creating new ones (Pretorius 1995).”69

GERMANY

In Europe, the concept of just making money is not the foundation of a company; long-term survival is just as important. Almost decade after the unification of Germany, the country is transitioning to a democratic, market-oriented system. The integration of the Western free enterprise/democratic tradition with the Eastern totalitarian/socialistic tradition continues. “However, cultural values, mindsets, as well as customs, and courtesies do not change quickly and endure when political events change.”70

Cultural Values

Germans have a reputation for being industrious, hard working, reserved, and perhaps cold. This may be due to them not being outward people, but private. Germans were described as not being spontaneous or risk takers, but rather as organized and efficiency seekers.71 They are formal in their business dealings and very conscious about titles and etiquette.

Traditional German cultural values have found their way into many aspects of industry and management. Among the people, there has always been sense of collective responsibility of the greater society for the common man. This responsibility is shared among the German State, government, and social institutions. “Industry has many responsibilities for the common man, and these values have been institutionalized in workers’ rights. Industry has the responsibility to implement and administer certain social programs… This reciprocal responsibility for the common good between common man and various social institutions is termed service to the commonwealth.” 72

66 Grobler, P. 1996. In search of excellence: leadership changes facing companies in South Africa. SAM Advances Management Journal. V61n2: 22-3467 Grobler, P. 1996. In search of excellence: leadership changes facing companies in South Africa. SAM Advances Management Journal. V61n2: 22-3468 Grobler, P. 1996. In search of excellence: leadership changes facing companies in South Africa. SAM Advances Management Journal. V61n2: 22-3469 Grobler, P. 1996. In search of excellence: leadership changes facing companies in South Africa. SAM Advances Management Journal. V61n2: 22-3470 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company71 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company72 Molz, R. 1993. Managers and national culture – a global perspective. Westport, CT: Quorum Books.

There exists a paternalistic commitment to the commonwealth. German business practices and laws are directly tied to the regulations and directives of the EU. Government and businesses work closely in industry. The principle of collective good is important in the idea of co-determination. Co-determination allows for managers and workers to work together to shape or define the firm’s goals, objectives, and responsibilities.73 Managers have the moral and legal obligation to be sensitive and responsive to workers’ rights within German culture.74 A works council, Betriebsrat, protects the rights of workers. The works council has legal rights to approve or reject all business decisions affecting workers.75 This is to protect the employees from unilateral management decisions.

Another value is that of pride and personal emphasis on quality and professionalism. Workers take great pride in their work and tend to stay in their profession.

Staffing

Men and women are represented in all levels of management and come from all classes of society. The most important factor of success is not status, but rather education and work experience.76 Entry level managers are selected on individual ability. A distinguishing feature of German companies is that of a sort of lifetime employment. Once employees have completed their one-year probationary period, they are relatively secure in their position. After ten years, a person cannot be fired from a person under normal circumstances, such as poor performance.77

CONCLUSION

As future managers, it is inevitable that we will conduct some type of business in a foreign country through exporting, importing, setting up subsidiaries, or as an expatriate. The diverse regional opinions and way of life have impacted business and corporate culture, so as international managers we must be sensitive to these diversities in implementing strategies and operations. “Culture clashes can occur between the policies of parent headquarters and the norms and values of employees in foreign subsidiaries, between U.S. managers and their foreign counterparts, or between U.S. companies and their potential trading partners abroad.”78 Differences in cultures can lead to miscommunications, employees’ resentment, and poor public relations. The challenge is to use these diversities to strengthen corporate objectives.

As we enter the new millennia, we are sure to experience greater volumes of interactions between nations and the emergence of global corporations. With advancements in technology and research, business has become dependent on speed efficiencies. Companies are pushing to become global in order to realize cost efficiencies and to reach greater markets.

However, globalization is not an easy strategy. “If a multinational is going to become a truly global organization, the diverse individual work values form various geographic locations of a MNC must converge and be integrated into a common set of values to create an universal corporate culture.”79 Culture is everything you do in business. It is how you solve problems, build products, and work in teams. The challenge for global organizations is finding ways to create a common culture throughout the entire organization. How do you do this when corporate culture is a product of national culture? How do you motivate and enforce policies across borders for the common goal?

Social values make doing business across countries complex. For instance, service industries have to be aware of local laws and traditions affecting women employment. Where countries such as the U.S. and Japan use females in

73 Harris and Moran. 1996. Managing cultural differences: leadership strategies for a new world business. (4th ed.) Houston: Gulf Publishing Company74 Molz, R. 1993. Managers and national culture – a global perspective. Westport, CT: Quorum Books.75 Molz, R. 1993. Managers and national culture – a global perspective. Westport, CT: Quorum Books.76 Molz, R. 1993. Managers and national culture – a global perspective. Westport, CT: Quorum Books.77 Molz, R. 1993. Managers and national culture – a global perspective. Westport, CT: Quorum Books.78 Hickens, M. 1998. Reconcilable differences. Management Review. V87n10: 54-5879 Ralston et al. 1997. The impact of national culture and economic ideology on managerial work values. Journal of International Business Studies. v28n1: 177-207

service positions, this may be offensive to the Indian and Middle Eastern cultures where women are limited in their appearance and socialization. Hofstede related four cultural dimensions with organizational characteristics. His study helps to cluster nations on how similar or different they are in terms of cultural values to draw conclusions on organizational tendencies.

Individualistic (capitalistic) societies such as in the United States are goal oriented and place high importance on individual agenda. This is in contrast to collectivism (socialism) where societal growth dominates such as in Japan and Germany. Organizations must be sensitive to the methodologies they follow in any given area. A competitive strategy in the United States may not be successful in a country with different value systems. For example, it would be difficult for U.S. companies to layoff and downsize in Japan and Germany where the culture has strong relational bonds that deter against firing. In addition, the cultural values of groupism, loyalty, and paternalism in Mexico, South Korea, and Japan is not conducive to the flat organization hierarchies of the Unites States. The American ambitious attitude of cost minimization and profit maximization would encounter opponents in countries that value time, relationships, and communalism above business.

Corporate culture must be phased in slowly. “Implementation of corporate culture goes more smoothly if it’s done in steps.”80 First, a company’s core values and its strategic values must be distinguished. Core Values define the company’s existence whereas strategic values are the policies and procedure to fulfill those core values.81 “If a particular policy does not work in a given cultural context, a company should be prepared to replace it with one that does.”82 As managers, we must step back from the operation from the daily operation to see what can be learned from other cultures. In my opinion, it is important to be open to change and find what “they” have to offer in terms of meeting corporate goals. There may be more than one way or better ways to meet core values.

On a final note, changing values and traditions will not happen overnight. The beliefs in many countries have been passed on over thousands of years, where fate and religion dominate societal daily living. In my research, I found many opinions that change is slow. “Evolution of values due to interaction of cultures could take ten years, twenty years, or perhaps generations. Since most individuals form most of their value system by adolescence, it may be the next generation of managers whose work values are truly affected.” 83

80 Flynn, G. Aug 1994. HR in Mexico: what you should know. Personnel Journal. V73n8: 34-4481 Hickens, M. 1998. Reconcilable differences. Management Review. V87n10: 54-5882 Hickens, M. 1998. Reconcilable differences. Management Review. V87n10: 54-5883 Ralston et al. 1997. The impact of national culture and economic ideology on managerial work values. Journal of International Business Studies. v28n1: 177-207

Exhibit 1 Percentile Ranks for Hofstede’s Cultural Dimensions

Country Power Distance

Individualism

Uncertainty Avoidance

Masculinity

USA 30 100 21 74Germany 21 74 47 74Mexico 92 42 68 91India 82 62 17 63Japan 32 55 89 100South Korea*

32 60 80 98

South Africa*

50 65 25 ???

* Estimated numbers based on cultural characteristics found in research.

Exhibit 2 : U.S. Values and Possible Alternatives

To illustrate how culture can affect an individual’s perception and actions in the work environment. It is important to understand that there are no wrong beliefs, just different ones. I have listed examples of countries that exhibit the alternative aspect.

Aspects of U.S. Culture

Alternative Aspect Examples of Management

Function AffectedThe individual can influence the future.

Life follows a preordained course and human action id determined by God. (INDIA)

Planning and Scheduling

The individual can change and improve the environment.

People are intended to adjust to the physical environment rather than alter it. (INDA, MEXICO)

Organizational environment, morale, and productivity

Commitments should be honored. A commitment may be superseded by a conflicting request or an agreement may only signify intention. (JAPAN, SOUTH KOREA)

Negotiating and Bargaining

Primary obligation of an employee is to the company.

The individual employee has a primary obligation to family and friends. (MEXICO, GERMANY)

Loyalty, commitment, and motivation

The employer or employee can terminate their relationship.

Employment is for life. (JAPAN, SOUTH KOREA, GERMANY) Although views are changing.

Motivation and commitment to the company

The best qualified persons should be given the position.

Family considerations, friendships, and other considerations should determine employment. (JAPAN, SOUTH KOREA, MEXICO)

Employment, promotion, and reward

Persons and systems are evaluated. Evaluations are done so individuals not highly evaluated will not “lose face”. (JAPAN and SOUTH KOREA)

Rewards and promotion, performance evaluation and accountability

Source: Harris, P. and Moran, R. 1996. Managing Cultural Differences – Leadership Strategies for a New World Business. Fourth Edition. Houston, TX: Gulf Publishing Company.

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