Intercultural Management: MBA Masterclass (MBA Masterclass Series)

National Cultures and Corporate Core Values

A classic view about the linkage between national cultures and corporate core values is reflected in the work of Hofstede (2001), a highly respected scholar. However, the view we espouse in this book diverges from the traditional perspective, and will be discussed in this section.

The classical view avers that attempts by a multinational corporation to establish a common culture in all its branches across the globe will be offset by the influences of national cultures. We suggest that especially since different cultures exist, it is important to hold a transnational organization together with core values. Core values are not synonymous with culture. Core values are certain beliefs about what the organization stands for; how it values its customers, both internal and external; the direction in which the organization should move; and the nature of its work ethics. For a transnational corporation to be effective in intercultural management, not only should it have meaningful core values that must be effectively disseminated across all cultures, but also the employees must hold these core values as superordinate to all other beliefs, whether individual, societal, or national. Thus, if a multinational corporation operates in Russia and has as a core value 'respect for time', it should find ways of ensuring that its workforce is punctual and delivers services on time. This can be done, as McDonald's proved. To say that the national culture of Russia precludes the possibility of a Russian workforce respecting time is to err on the side of using cultural stereotypes. In every culture there are people who have received quality professional education, and can work according to internationally acceptable standards. If the skills of the local workforce require upgrading, training should be provided. The training methodology can reflect local culture. The core values, however, need not be modified, as was described in the opening case of this chapter.

The locally hired employees of transnational companies often talk about how they conform to high standards of work ethics at their place of work, and then adjust to different attitudes to work elsewhere. But they do it.

Returning here to the traditional view of national cultures and corporate core values, let us examine the traditional view and juxtapose that view with a modern counterpoint. Fombrun (1984) saw corporate culture as being conditioned by societal forces. That may be true up to a point, and hence it may be useful to examine a commonly cited definition of corporate culture:

Corporate culture is the 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. These have worked well enough to be considered valid, and are therefore taught to new members as the correct way to perceive, think and feel in relation to those problems. (Schein, 1984)

This definition indicates that to some extent, culture follows an evolutionary path . Culture must adapt, alter, enlarge and discard in order to be relevant and functional. A definition of corporate culture normally subsumes some aspects of core values as well. However, core values once articulated have a durable quality, and normally are invariant over time. The core values of a corporation are akin to the constitution of a nation-state. They are amended only occasionally, and after considerable reflection and cogitation. Hence, the core values of a transnational corporation need not change just because the corporation is located in different cultures. Other aspects of culture must be altered suitably as the corporation discovers its own way of achieving external adaptation and internal integration in a new culture.

Laurent (1989) also upholds the traditional view regarding national cultures and corporate core values. Laurent saw national cultures as being more powerful and stable than those of individual companies. National cultures do tend to be powerful. Hence, successful transnational corporations do not seek to influence national cultures. They only try to select managers from other cultures who can accept their core values.

Hofstede (2001) made the most important contribution to the classic view on culture. He looked at the employees of IBM in different cultures to ascertain their similarities and differences. He looked at operations in 50 countries , zeroed in on the differences between employees, and established a means of defining those differences in terms of culture. He identified five dimensions, of which four are classical and the fifth has only recently been added. Hofstede called the four classical dimensions power distance, uncertainty avoidance , individualism -collectivism, and masculinity -femininity. (The fifth dimension is short term versus long term .) Employees of IBM were rated on a scale on each dimension, and the employees of each country were then constituted into a cluster. Ultimately what emerged was a typology vis-  -vis the dimensions for each of the 40 countries in which IBM employees were working. The effects of individual and organizational variables were controlled so that what emerged, Hofstede attributed to the effect of culture. We place here definitions of the four dimensions as presented by Buchanan and Huczynski (1997):

Power distance is the extent to which members of society accept an unequal distribution of power. Uncertainty avoidance is how much members of a society are threatened by uncertain and ambiguous situations. Individualism-collectivism is the tendency to take care of oneself and one's family versus the tendency to work together for the common good. Masculinity-feminity is the extent to which highly assertive masculine values predominate (acquisition of money at the expense of others) versus showing sensitivity and concern for others' welfare.

It is not abundantly clear why Hofstede selected these dimensions as a way of differentiating national cultures. The dimensions also do not reflect the range of cultural variation within a single nation. Generally, competent managers from most countries belong to a subculture that may not be described by Hofstede's categories. The impact of national cultures can be mitigated somewhat, by companies doing what Nestl does: selecting the right people and then reinforcing company core values through ongoing training and development.

Since Hofstede's work has received much notice, and many transnational corporations educate their managers about Hofstede's dimensions, it is desirable that we devote some attention to his four dimensions.

From a management perspective, the power distance dimension assesses the extent to which a culture accommodates the use of power by a boss figure. Nations that rank high on the power distance dimension expect bosses to behave in a directive manner, while the bosses themselves tend to be autocratic. Low trust prevails between bosses and subordinates, so the subordinates prefer to have the bosses take decisions as well as the responsibility for those decisions. Generally, subordinates avoid arguing with their bosses. In nations that register a low score on the power distance dimension, a more collegial relationship exists between bosses and subordinates . Decision making is more participative and there exists a greater degree of mutual trust.

The uncertainty avoidance dimension indicates the extent to which the culture of a nation encourages or inhibits risk taking. According to Hofstede, the people of different cultures vary in their capacity to take risks as well as tolerate ambiguity. Nations that rate high on uncertainty avoidance have employees who prefer jobs for life. These employees work hard to counteract the stress that arises from uncertainty on the job. They expect their co-workers to follow established norms and rules. People from cultures that rate low on uncertainty avoidance take risks, and do not feel uncomfortable when faced with ambiguity. They are not very particular that rules should be followed.

The individualism-collectivism dimension gauges the extent to which a culture emphasizes individual requirements as opposed to group concerns. In cultures where individualism is high, emphasis is placed on individuals achieving their goals and objectives, and rewards being accorded to individual performance. Individuals are concerned primarily with themselves and their immediate families. In collectivist cultures, people are also concerned about their extended family, as well as their community. Employees in companies give their loyalty, in return for which they receive support and protection.

The masculinity-femininity dimension reflects the kind of achievements that are appreciated by a culture. Masculine cultures place an emphasis on the acquisition of material possessions, being ambitious, and on a distinct differentiation between male and female roles. Hofstede averred that masculine cultures value people for their material possessions. In feminine countries, the divide between male and female roles is not rigid, and men and women view each other from the standpoint of equality. Also, considerable importance is accorded to the environment, quality of life, and to caring.

Using his four dimensions, Hofstede constructed a cultural map of the world, and positioned the forty countries he had investigated in this cultural map. This cultural map is depicted in Table 3.1.

Table 3.1: Hofstede's cultural map: national cultures classified by the four dimensions

Each of the four dimensions is measured by a continuum. Hence, a country can be positioned anywhere on a continuum and not merely at either end. For example, Hofstede has assessed Japan as having a culture that allows the moderate exercise of power by bosses. It also accommodates moderate individualism, and by the same token, moderate collectivism.

Hofstede placed the 40 countries he had studied into eight categories. He employed the statistical tool of cluster analysis to arrive at the classification. Each culture cluster comprises countries that are homogeneous with respect to their positioning in Hofstede's typology. Each cluster is also significantly different from the other clusters. The scores for the answers given to questions posed to the IBM managers of a country were arrived at separately for that country. The final score for each culture was the average value of that culture.

Since the scores are averages they have limited predictive value. Most of the managers interviewed for this book found that the managers from other cultures they interacted with did not necessarily behave as suggested by Hofstede's cultural map. When multinational corporations like Nestl stress that sensitivity to intercultural management should be a core value, they are approaching the phenomenon from a different angle from Hofstede. Instead of using models to predict uniform behaviour for an entire nation, they prefer that their employees view all the managers they interact with from the standpoint that they are unique, and that culture is too complex to be pinned down to four dimensions.

Generally in every national culture, there are a large number of subcultures at variance with each other, and with the overall national culture. This makes it all the more vital that transnational corporations articulate and implement core values that enable their employees to have a clear organizational identity. A Nestl manager working in France, for instance, would answer the question 'Who am I?' by emphatically stating , 'In my professional life, I am a Nestl manager. I therefore have to learn how to function as a team player and assume a collegial relationship with my boss and subordinates, even if I belong to a culture that rates high on the power distance index.'

Fons Trompenaars (1993) is another luminary in the field of intercultural management who has developed a typology for assessing the national cultures of countries. Since Trompenaars' typology has generated a fair amount of interest, we will take a look at it.

Just as Hofstede constructed a model on the basis of his four dimensions, Trompenaars advanced four types of corporate cultures, on the basis of which he constructed a typology. According to Trompenaars, 'differences between national cultures help determine the type of corporate culture chosen ' in different countries. In our book, we argue that the branches of an international company do not undergo the kind and extent of differentiation suggested by Trompenaars. Differences in national cultures may lead to some differentiation in the various branches of a transnational corporation. This only serves to highlight the requirement for appropriate core values to hold a transnational corporation together.

Trompenaars has labelled the four types of culture he has described as the family, the Eiffel Tower, the guided missile and the incubator .

• The family: Trompenaars uses the metaphor of the family to describe a type of corporate culture where relationships between managers are personal. There exists a well-defined hierarchy.

• The Eiffel Tower: Trompenaars chooses the metaphor of the Eiffel Tower to symbolize a corporate culture that is bureaucratic. There exists a clear division of labour, with various roles and functions coordinated by the top management.

• The guided missile: The guided missile corporate culture resembles that of project teams used by the National Aeronautics and Space Organization (NASA) to fabricate guided missiles. Organizations that adopt the guided missile culture are egalitarian. When an organization with the guided missile type of culture is superimposed on one with an Eiffel Tower type, the result is a matrix organization.

• The incubator: This type of a corporate culture strives to make organizations serve as incubators where managers can achieve selfexpression and self-fulfilment. Relationships amongst managers are both personal and egalitarian.

Multicultural action points

Neale and Mindel (1992) have described how the British Petroleum office in Brussels developed some core values specifically for enhancing intercultural skills, which they called 'multi-cultural action points'. The office had employees from 40 countries. These multicultural action points include, 'Do not judge people, functions or cultures; Create a climate where people are not embarrassed to ask; Give time to express yourself; You are talking to a person not a country; Give and ask for feedback; Accept the differences; Avoid clique building; Try to eliminate stereotyping.'

According to Neale and Mindel, it takes much more time and effort to get a multicultural team to coalesce than it does for a monoculture. However, it is worth the time and effort involved, because a cohesive multicultural team is capable of exceptional performance. It has to be kept in mind that the team-building effort for a multicultural team requires great planning and skill. Neale and Mindel's specific advice is that multicultural teams have to tolerate and accept a diversity of approaches, while preventing the formation of cliques.

The important learning point is that when accepting of a diversity of approaches is made a core value, the team-building effort in a multicultural corporation becomes that much more simple.

We would like to draw special attention to two of British Petroleum's 'multi-cultural action points' as reported by Neale and Mindel: 'You are talking to a person not a country' and 'Do not prejudge people, functions or cultures.' Intercultural managers are advised against deciding in advance how to interact with a manager from, say, Australia. They might take some pointers from Hofstede's cultural map and decide in robotic fashion to assume a particular style. They might then be tempted to alter their style, again taking pointers from Hofstede's cultural map, when they have to interact next with a manager from Austria.

Neale and Mindel reported that until a multicultural team was established around the multicultural action points, the employees behaved in ways that confirmed cultural stereotypes. The British managers when working late viewed such behaviour as an indication of loyalty and work dedication. The Scandinavian managers felt that by working late, they were displaying their inefficiency and incapacity to complete work on time. The French liked to shake hands every day as an indication of friendliness. The American managers tended to eschew the daily shaking of hands, deeming the gesture to be unnecessarily formal.

We would like to posit here the hypothesis that when a multicultural group of managers is formed from groups of monocultural managers, the managers tend to form subcultures along national lines. Each then tends to exaggerate its national characteristics as a mode of coming to terms with the new environment. This then underscores the need for core values to bring all the subcultures together.