Understanding National and
Organisational Cultures
Learning outcomes
Explore frameworks of national and organisational culture.
Critically evaluate models of cultural mergers.
Seminar tasks
Exercise: Assessing national cultural profiles and its implication for managerial practices.
Video on BMW and Rover
Reading/activity for the week
· Evans, Paul and Pucik,
Recommended reading
· Noe, Raymond A., 2002, Hollenbeck, John R., Gerhart, Barry, Wright, Patrick M. Human Resource Management, 4th edition, McGraw Hill, Chapter 15, p. 620-629
Chapter 4. Understanding National and Organisational Cultures
- What local responsiveness means is changing.
- Traditionally, multi-domestic strategies were driven by market access arguments.
- Increasingly local responsiveness is driven by notions of learning and by access to dispersed know-how or resources. Furthermore, local responsiveness, though once synonymous with country boundaries, now applies to any market with distinctive needs.
- Traditionally, multi-domestic strategies were driven by market access arguments.
- HRM practices are more sensitive to local context than finance, marketing, or manufacturing practices, because HRM deals with people, and people differ across the world. But within HRM, some practices are more sensitive to context than others.
- National values and national business systems shape both the culture of the mother company and the need for adjustment in the host environment.
- Adjusting to local conditions is not just a trade off between mother company practices and host country practices; it is also driven by the practices of international peers. Be aware of how your networks also help to shape your reality.
- When expanding internationally, firms can use the concept of cultural distance as a guide to incremental learning in terms of where to head next, how to enter and what practices to import.
- Differences in culture can be leveraged to generate more strategic insights and alternatives, while differences in national business systems can be used to locate particular business activities in more stimulating environments. Local responsiveness does not just mean adjusting people to jobs, it also implies moving jobs to people.
- Localization involves carefully developing a long-term strategy with commitment at all levels to developing locals and retaining them. As much attention needs to be paid to the expatiates responsible do this task as to the locals themselves. Shortcuts lead to protracted difficulties.
- Localization does not necessarily imply “playing by the local rules”. Ultimately localization means local authority over local decision-making, tapping into the experience of headquarters, expatriates, and other subsidiaries. It is a question of who makes the decision and on what experience base, rather than where the decision is made. Localization is typically only one step toward transnational development, which means knowing which local rules one can break.
- Excessive local responsiveness tends to inhibit collaboration across boundaries and this may be just as detrimental to learning as excessive centralization.
- Adhering to local norms may contravene acceptable ethical standards back home, while imposing centralized standards may remove personal responsibility for distinguishing between practices that are merely different and those that are wrong. The area of ethics is the ultimate test of the ability to cope with the ambiguity of international business.
- Understand diversity
- Know yourself: the cultural perspective (typically focused on the local culture / “country-of-origin” effect)
- Know where you are: the institutional perspective (the key to understanding business behaviour in different countries lies in the interrelationships between economic, educational, financial, legal and political systems)
- Know who you talk to: the network perspective (multinational companies are not only influenced by their origins and the norms in countries where they operate. There are also pressures to conform to international peers or competitors that are called “isomorphic” pressures. Zucker 1988)
- Know yourself: the cultural perspective (typically focused on the local culture / “country-of-origin” effect)
The 4 generic roles of national organizations
Strategic importance of local environment | High | Black Hole | Strategic Leader |
Low | Implementer | Contribution | |
Low | High | ||
Level of local resources and capabilities | |||
Barriers of localizations can be harmed through the finding and developing of the local talents. Problems: retaining local talent / a disproportionate number of local managers trained to take over expatriate positions never actually fill those posts or do so only briefly. These high turnover rates have other consequences. In emerging markets, jealousies between locals and the “pseudo-locals” reproduce the resentments previously caused by lavish expatriate packages.
Expatriates are responsible for localization
When giving expatriates responsibility for implementing localizations, firms must pay close attention to three key areas: their selection, their mandate, and their motivation.
After the correct recruitment the developing process takes its place. This means: when it comes to finding suitable local candidates to take over from expatriates, the effort stats upstream with investments aimed at crating a meaningful presence in the local market. This leads to a professionally managed process spanning recruitment, training and development and retention. Retention (e Aufrechterhaltung). Inevitably , compensation looms large among the mechanisms to retain local technicians and managers.
