CHAPTER 5
National Culture Versus Corporate Culture
Contextualizing Background Information
In previous chapters we have explored frameworks for cultural analysis that would contribute to the understanding of intercultural behavior in business. In the following chapters we will discuss the effects of culture in different aspects of business.
Corporate culture is the first business aspect on which the parameters previously described have an impact: businesses and companies are social arenas in which people interact through the use of signs and symbols that could be comparable to those used at national level. In this chapter, we will elaborate on the development of these social tools, their links to national culture, and the consequences of culture in business at office level.
Corporate Culture
Groups of people naturally develop their own cultures, meaning a commonality of beliefs, experiences, values, and expectations that make them unique. Their culture is one important defining factor of their own identity, providing with a sense of belonging, self-awareness, and protection.
In order to simplify the study and understanding of main cultural phenomena, authors like Geert Hofstede have based their classifications upon the restriction of cultures to national belonging. The justification for such simplification makes sense, as inhabitants of the same country in general share the same history, are exposed to the same media, respect the same laws, and have to adapt to similar situations. Such homogeneization, deriving from the sharing of a common space, can explain why people from the same country could in most cases be identified with a common culture.
But as Hofstede himself puts it, national culture is not the only type of culture that exists, as habits commonly accepted in countries are not the only “acculturating” factor we are exposed to. In fact, we are also the result of the influence of other groups we belong to, such as our generation, religion, profession, and others.
Similarly, companies have their own cultures, which are different from those of other companies. The same way we talk about French culture, we could also talk about McDonald’s culture or IBM culture. What we will discuss in this chapter is the influence of this particular acculturating factor: corporate culture.
According to Edgar Schein,1 corporate culture (or organizational culture) is
a pattern of basic assumptions that a given group has invented, discovered or developed in learning to cope with its problems of external adaptation and internal integration, that has worked well enough to be considered valid and therefore good to be instructed to new members as the correct way to perceive, think, and feel in relation to these problems.
The definition of corporate culture, in this sense, does not radically differ from that of national culture, apart from the level of analysis. Authors have defined models that characterize corporate culture, whereas others have questioned its existence or at the very least its relevance.
In the following section we will explore different models of corporate culture. Some will assume this factor appears on its own as the result of corporate living. Others will go so far as to deny it, arguing that corporate culture is just a projection of national culture.
Models to Define and Describe Corporate Culture
The Circular Development of Cultural Patterns
The circular development of cultural patterns model by Hunsaker and Cook2 presents a good explanation on how the corporate culture of an organization is created and constantly reinforced.
Four different components constitute this model and contribute to the sustainability of a set of values that once shared by participants will grant the organization an identity which will comprise and reunite its most particular and personifying characteristics. These elements are: beliefs, norms, data, and analysis.
Beliefs
The model indicates that organizations will develop shared appreciations on what they consider as acceptable or nonacceptable, good or bad, desirable or nondesirable. These common convictions can have as an origin the vision of the founder, characteristics of the market, even the national culture of the country in which the company was created. For example, Facebook culture would suggest that everyone should maximize their capacity to be creative, and therefore smart dressing or formalities that other companies like a Swiss private bank for instance would appreciate as key to communicate seriousness or professionalism, would be naturally rejected. Beliefs in this sense are common values shared by those sharing corporate culture and they contribute to the development of a uniform conception of what is right or wrong to do, what is acceptable and what is not, and what is desirable and what is not.
Norms
Beliefs are usually formalized and institutionalized through the establishment of norms of conduct. These norms can be written in corporate documentation or perhaps even not written at all, but they are in any case shared by those included in the group. Knowing and respecting the norms is a sign of integration to the group. For example, a norm could be that it is acceptable to share aspects of private life in the office, or that it is not. Another norm could be that everyone is expected to have lunch with the other members of his or her department every day.
Data
Norms need to be reinforced in order to be considered as valid. Data means that in the collective memory of the members of the culture, there must be examples of times in which norm infringement was punished and/or the fact that they were respected was saluted. For example, if everyone remembers the time a colleague received a warning because he came to work without a tie, the norm on dress code gets reinforced and its validity is updated.
Analysis
Once data appears, members of the corporate culture start talking about what happened; they analyze facts and make links between norms and data. For example, they assume that coming to work without formal attire is wrong and that it is important to respect this rule (probably because there was much gossip around that fact). They may also seek justification for the norm and project conclusions to other situations, cases, and/or scenarios.
The analysis of data having occurred as a consequence of the respect/disrespect of the norms, which are based on beliefs, actually supports those beliefs, making corporate culture even stronger. Corporate culture evolves and solidifies through time, as the pattern of circular reinforcement takes place in the shared subconsciousness of the group.
The model in Figure 5.1 is in fact the same as the culture stability model presented in chapter 1 (Figure 1.2) to describe the development and self-reinforcement of national culture. Values at national level are the equivalent of beliefs at corporate culture level. The idea of circular reinforcement is what is very specific to these two models.
Geert Hofstede and the Nonexistence of Corporate Culture
Geert Hofstede,3 the famous business anthropologist, presents a very controversial view on corporate culture in his 1999 article in the academic journal Organizational Dynamics, in which he predicts what management in the twenty-first century would look like.
In this publication, Hofstede denies the existence of corporate culture as a set of values, but only understands it as a series of practices that can be imposed by management through the use of power channels, but that will not be the result of natural processes being generated from inside the organization by its members.
According to Hofstede, national culture generates and determines values that are already hardwired in the minds of people by the age of 12 and these values would never change from then on. Therefore, a company cannot shape beliefs or values. An organization can only ask employees and management to act upon rules originated in values that are not necessarily their own. This is a main conceptual difference from the Hunsaker and Cook’s model, in which beliefs are generated within the organization. In Hofstede’s model, they are not, particularly when companies go global or at least international and need to impose uniformity in their operational routines.
For example, a multinational corporation with headquarters in a country with low power distance may have decided that it is good practice to have regional managers institute an open door policy in their offices. This habit may have been the result of beliefs that have turned into norms and then been analyzed, accepted, and reinforced by the local corporate/national culture. When this company internationalizes and attempts to take this practice abroad, issues may come up. The policy can be rejected, ignored, or a hybrid of the practice may be put in place, such as a series of managers who do not close their doors, but make it clear to everyone that it is not well perceived to show up unannounced. Or else the local culture will generate a different practice on the side, which will serve as a message to everyone about power and who really holds it.
Hofstede’s perspective still brings an extra item to the debate. Practices can be imposed by organizations, but these will not affect values. They will be superficially accepted and can be assumed, but in some way, they will end up acting as yet a new way the local community will have found to express their true beliefs and preferred ways of operating.
Postings on Facebook are an interesting example of how a practice can be globalized, whereas people from different cultures will use it according to their own meanings and values. “Friends” from emotional cultures, in which sharing feelings is accepted and even encouraged, will use Facebook to express how they feel and will be very explicit in their displays of emotions. Other cultures will use the same tool as an opportunity to show wit or just to relay facts, share music preferences, etc. In this case, no matter how global the tool and the practice can be, the values remain still very much anchored in the inborn national culture.
The scientific background that Hofstede uses as argument to support his particular point of view lies in the research by Philippe d’Iribarne,4 who studied three different plants of the same industrial corporation in three different locations. In 1980, d’Iribarne compared management in three technically identical production plants of a French-owned aluminum company: one in France, one in the USA, and the third in the Netherlands.
d’Iribarne’s observations concluded that each plant would be managed according to values that could be related to each of the national cultures of the countries in which they were located. The interactions between people in the three locations followed different logics that coincided with what would be expected as behavior occurring in the countries in which they operated rather than with values that could have been generated from a corporate culture created by the organization and then conveyed to everyone involved anywhere in the world.
For instance, in France, where high power distance prevails and there is high uncertainty avoidance, relationships were conducted under the logic of honor. It was a class mini-society, with at least three levels divided by antagonism, but linked by respect. Hierarchy was perceived as a means to preserve honor. In the USA, on the other hand, what prevailed was the logic of fair contract. With low uncertainty avoidance and low power distance, plus high levels of individualism and masculinity, the generalized rule was “let the best one win.” And therefore all relationships were ruled by negotiations and the shared acceptance that all parts were interdependent on each other. In feminine Netherlands, relationships were based on compromise, and relationships were non-antagonist. Conflict was solved through lengthy discussions and decision-making was based on generalized agreements.
Hofstede’s perception leaves little hope for the predicted changes in the world map following globalization, which would foresee the world as organized not according to the current political division, but on networks, economic power, distribution of income, capital, labor, entrepreneurship, knowledge, and corporate risk. It is difficult to understand international operations in which most people have to work in contradiction to their own values, but compelled by imposed practices that do not result from their own traditional response to the environment. On the other hand, the success of international media programs to a similar extent all over the world would suggest that there are common patterns shared by everyone on the planet and that this could be a good start for homogenization of patterns, if there was such a need.
Fons Trompenaars and the Four Main Typologies of Corporate Culture
A second business anthropologist, Fons Trompenaars, developed a model based on power distance and person versus task orientation. Four typologies result from this crossing, allowing the classification of four different types of corporate culture behaviors.
Even if these typologies are not necessarily based on national culture exclusively, because the criteria that defines them could also be attributed to other factors, such as the nature of an industry, the kind of product or service provided, the historical moment of the foundation, and so forth, still there is a strong link between each one of the types of corporate cultures and the national cultures in which these tend to prevail.
Figure 5.2 outlines a scheme to synthesize the four main types of corporate culture according to Trompenaars.
According to the level of hierarchy and to the orientation (either task based or person based) of the organization, corporate cultures can fit into one of the following four types: the family culture (hierarchical and person-oriented), the Eiffel tower culture (role oriented and hierarchical), the missile culture (task oriented and egalitarian), and the incubator (person oriented and of low power distance).
The Family Culture, as described by Trompenaars, would be one characterized by a paternalistic management style, where promotion is granted to a great extent by seniority and in which long-term relationships between the institution and its members are valued. In this type of culture, one does more than what the contract establishes and people appreciate the pleasure derived from harmonious relationships between employees and employers. Pleasing superiors is considered as an important advantage and pressure is moral and social, rather than financial or legal. The loss of affection, recognition, or “a place within the family” can even be considered as a form of punishment in itself.
The Eiffel Tower Culture, even if also hierarchically established, does not find in relationships the structure for its own functioning, but in a set of rules that are pre-established and that constitute the essence of the labor contract. In fact, the Eiffel Tower culture consists basically in the bureaucratic division of labor with various roles and functions prescribed in advance. Power and functions are allocated and coordinated in a top-down manner. The origin and justification of authority in this type of corporate culture comes from the occupancy of a role. And respect is due to the role, not to the person occupying it. The main objective of this system is to make it as impersonal as it could possibly be, making it one in which everyone is subordinate to rules and those rules determine a hierarchy that will make sure they are followed. Managers have power, but only because rules determine that he or she is the power holder.
The Guided Missile Culture, characterized by low power distance and action orientation, is defined around one very specific aim: to catch the customer. Relationships are temporary and based on the need to cooperate on specific projects, as opposed to a means to develop trust. Achievement is celebrated and sometimes the objective justifies the means. Hierarchy is perceived as an obstacle that prevents fast reactions and has to be avoided, but on the other hand, the combination of a Guided Missile structure with an Eiffel Tower one could produce a matrix structure, which could be deemed most appropriate in certain cases. Change is fast in this type of culture, as it happens every time the target moves, which is virtually all the time. Turnover is high in general, and loyalty to projects and professions is higher than loyalty to companies.
The Incubator Culture, which is both personal and equalitarian, is in general a short-term one, as the fulfillment of individuals prevails over the organization. In general there is no structure or very little structure, as these are small organizations. Examples of incubators include: doctors in group practice, legal partners, consultants, and so forth. In general, as soon as these companies grow, they call for other types of structure, which naturally calls for new corporate cultures more appropriate to their shape and form.
As mentioned above, Trompenaars does not link the type of corporate culture exclusively to a national culture, but he does signal national culture characteristics as the main origin for each one of these types of culture. Industry type can certainly have an influence on the type of corporate culture that will develop. For instance, a bank will most probably align with an Eiffel Tower corporate culture, rather than with a Guided Missile Culture and this no matter where the bank is located. Similarly, an IT company would rather need to organize as a Guided Missile or an incubator, in order to be able to quickly respond to the needs of the market before competitors do and to be at the forefront of innovation.
Conclusion
The debate on whether corporate culture exists as such independently from national cultures is ongoing. Culturalists may support the fact that management being mainly a cultural activity, it will not greatly evolve through time because cultures do not greatly evolve through time either.
Reality shows that with globalization there is a need for uniformization of practices across borders, which may be restrictive of the natural expression of people at work, and may perhaps lead to frustration and even to the imposition of practices that would not necessarily be the most effective or the best for each case.
Concrete cases like McDonald’s amongst thousands of others demonstrate that a brand can carry with it the signature of a particular corporate culture and that aligning with it may be symbolic of agreement with at least practices that are global (if not with values that are global).
Hofstede’s view on the nonexistence of such a thing as corporate culture leads one to wonder whether international management is even possible, as he remains very firm in his idea that multinational organizations stand for values that originated in their home country and that will not be shared equally with their employees and managers from other national origins. Would in this case the mere sharing of practices be enough or will this be a very frustrating scenario in which some regret working halfheartedly in an environment they find is imposed on them rather than the result of a natural state of affairs?
The Elements of Corporate Cultures
Four distinctive elements define corporate cultures. These are:
- Values
- Role models
- Habits
- Communication patterns
Values express the philosophy of a company and provide guidelines for directing behavior. They synthesize what people working for or relating to a specific company believe in. The stronger the values and the most widely shared, the stronger the corporate culture.
Role models are the personification of the values shared by people working for the specific company in question. A role model is someone that everyone in the company relates to as a hero. Role models need not be alive. A role model could be the founder of the company, or an eminent character who once worked at it. A role model could also be an employee whose behavior typifies success norms (for example the person who managed to increase sales by a third thanks to the development of a new market), or the celebrity researcher who published a book that brought the whole department of a faculty worldwide recognition.
Habits are activities that take place on a regular basis and that serve as opportunities to reinforce the fact that employees belong to or are part of the culture of an institution. Habits can be formal or informal and include the morning coffee shared by members of a department, the annual Christmas celebration, or taking a pint at the pub as a group after work. Rituals favor communication amongst members and reinforce ties.
Communication patterns are defined as the formal and informal social links and means of expression and feedback that take place within an organization. Formal communication can take place through e-mail, memos, letters, reports, and also through meetings, formal speeches, and newsletters. Informal communication networks include friendships at work, corridor gossip, grapevines, anecdotes, shared stories, and so forth.
Now You Tell Us…
How do you think the elements of corporate culture can be altered by management in order to increase profitability?
Food for Thought…
In the past, when all employees of a company needed to “go to work” in order to join the means of production (e.g., machinery), it was easy to identify and moderate the culture of a company, simply because people saw each other and shared spaces more frequently and on a regular basis.
Nowadays, technology permits distance working and therefore relationships are affected. How do you think new ways of working are altering corporate cultures and the way they develop? Google “Location independent working” and write a few lines on the future of corporate culture once patterns have been altered.
And the Consultant’s View…
Consultants from the firm McKinsey have developed a framework for analysis, which is called “The 7-S” framework. This tool allows consultants to make a fast and effective assessment of the company taking into consideration the main factors that, when interacting in a holistic way, constitute a running company (for an image of the model, see http://www.mindtools.com/media/Diagrams/mckinsey.jpg).
These factors are:
- Shared values: They constitute the core of the company’s beliefs. They keep people together. They give meaning to what the whole group is striving for. In general, these shared values are formalized in the corporate mission statement.
- Strategy: Plan to reach established goals.
- Structure: Establishes how power and resources are allocated, distributed, and administered.
- Systems: Processes and routines indicating how the work should be done.
- Staff: Type of personnel and their qualities, capacities, and qualifications.
- Style: Managerial way of having things done (participative, authoritative, charismatic, etc.)
- Skills: Know-how of the organization.
According to the model, consultants tend to try to change “hard factors” (strategy, structure, and systems) when they try to produce change in the culture of a company. What they often forget is that the soft factors, which are harder to identify (superordinate goals, skills, staff, and style) are the ones that require real input for sustained and sustainable change.
And Now You…
Extend your research on the 7-S framework and determine why the soft factors are more difficult to identify whereas they are the most important to deal with in order to produce sustained and sustainable change.
Using This Information
The understanding of what influences and impacts corporate culture is key to manage subsidiaries abroad. Through a well-generated, strongly reinforced corporate culture it becomes quite easy to disseminate homogeneous practices across countries and overcome deceptive negative reactions from diverse stakeholders when trying to get people to use and perform certain duties and tasks.
Whether corporate culture exists or not, practices are in any case a key component of managerial life and of corporate life in general, therefore it is very convenient to find a way to design processes that facilitate the development and use of the most effective tools in a similar way wherever and whenever required.