Powered by ProofFactor - Social Proof Notifications

Understanding the Impact of Culture on Organizational Practices

Jun 5, 2023 | 0 comments

blog banner

Jun 5, 2023 | Essays | 0 comments

Introduction

Culture governs and affects all life’s facets influencing attitudes, values, and behaviors of a society. An organization’s culture relates to the organization’s unique ways of carrying out their activities. Moreover, the nature of the culture of an organization is majorly influenced by the individual cultural orientations that form it. Hofstede (1998) stated that because it is viewed as the norm, as behavior patterns, values, and beliefs of a given organization or as a community that is socially transmitted. The conflict comes up when individuals of different cultures get to interact with each other. in this light, the organizational culture’s comment, which is either different or in line with their respective cultural orientations, to a large extent would determine, the failure or success of the multinational business. According to Hofstede et al (2000), culture forms the central part I the management of the current dynamics of the global workforce. In their study, Aguilera & Dencker (2004) divided culture into two overlapping but distinct groups that are national cultures and organizational cultures. The organizational and national culture can have a powerful and pervasive influence in organizations and different aspects of multinational management of the workforce. Each culture is unique on its own and the individuals finding themselves in a specific culture imbibe it hence becoming an integral aspect of their daily lives. These cultures may slightly or significantly differ from one organization to the other. Harzing et al (2011) pointed out that in the categorization of the cultures, a more critical issue is that the mergers and acquisition success does not entirely depend on the cultural differences, but how the management of cultural issues is done. The success of the mergers and acquisitions that involve multinational companies depends, to a large extent, on the effective, diverse cultures management that arises from such ventures. Because of this, Krishnan et al (2013) asserted that the organizations that are engaged in cross-border acquisitions and mergers need to consider cultural issues carefully for them to be successful. According to Arnett (2002), the assertion that if the global companies want to maintain a competitive advantage and be successful in any international domain, then they must change and adopt an organizational culture that is suited properly in the national cultural context within which they are operating, is premised on the belief that behaviors and leadership styles are bound by culture. It is on this premise that the essay seeks to examine and discuss cultural issues based on the cultural dimension of Hofstede to explore the contained elements in national cultures impacting the overall performance in a firm or an organization. The essay assesses the influence of culture, both organizational and national, and critically evaluate the relevance of the contribution of Hofstede to our understanding of the influence of culture on global organizational practices. The paper will narrow down and mainly focus on logistics and supply chain management in multinational companies as organizational practices.

 

People Also Read

 

Hofstede’s model

The main research of Hofstede on national culture is described in his book, “culture consequences (1980a and 1984).” however, he has added some information on his model on a few occasions but has never acknowledged any weakness or significant errors in his research. Hofstede extracted his primary data from the pre-existing attitude surveys of bank employees that were undertaken between 1973 and 1967 within the subsidiaries of IBM in 66 countries. Some of the survey questions, in retrospect, to Hofstede seemed too pertinent to understanding the values of the respondents which defined as “broader tendencies preferring particular states of affairs over others, and which for him are the cultures core element” (Cray & Mallory, 1998).

Hofstede statistically analyzed the survey question answers. From the analysis, in conjunction with theoretical reasoning and some additional data, Hofstede came up with four largely independent and central national culture’s bi-polar dimensions (Sondergaard, 1994). According to Robinson (1983), Hofstede carried a wide cross-cultural study and came up with five dimensions of traits or differences between national cultures:

Power distance is the extent to which the organizations and institutions less powerful members expect and also accept that power is unequally distributed, for instance in a family (Hofstede & Peterson, 2000).cultures of high power distance accept respect and inequality for class and social status. On the other hand, societies of low power distance have a higher likelihood of valuing equality.

Uncertainty Avoidance– the intolerance for ambiguity and uncertainty. This indicates the extent to which society or individuals feel threatened by unpredictable or ambiguous circumstances.

Individualism versus Collectivism– this is the extent of an individual’s integration in groups. It represents the varying degree of cultures in their emphasis on collectivistic or individualistic social life views and personal identity. It also encompasses the degree by which they value the ties in a group, which might be strong or loose

Masculinity versus femininity– this is the competitiveness and assertiveness versus caring and modesty. Members of the masculine cultures view the world in terms of losers and winners while the feminine cultures discourage the notion of competition

According to Dorfman & Howell (1988), Hofstede conceptualizes the national culture and treats it as a core, implicit, territorial unique, systematically causal, and shared. These characteristics are described below:

1) Implicit

This is the notion that culture has different and multiple inclusive definitions (Goodstein, 1981). Erez and Gati (2004) indicated that sometimes culture description is exclusively applied to what is recordable or observable. An alternative culture conception is “implicit” or “subjective.” Hofstede firmly supports their view and also describes the culture as “software of the mind,” as “mental programming,” as subjective (Berson, Erez & Adler, 2004). Social systems and cultural systems are treated as distinct analytically but related.

2) Core

The distinctiveness of national culture is characterized in the literature as different absolutely between either (a) complete or total culture of the individuals in one nation and the culture of other people; or (b) more commonly discrete part nationally, a nucleus, a core (Tong & Reuer, 2007; Gimenez et al, 2012). In the latter, Hofstede assumes that the national culture is a component of a wider culture that contains both sub-national and global components (Hofstede, 1988).

3) Systematically causal

According to Garnier (1983), the cultural causal status, within the wider literature, varies from being the superordinate power, the supremely independent variable in society too, and at the other extreme, just a mere powerless superstructure, and mere epiphenomenon. There is a possibility of assuming national culture existence but without attributing unique and significant, social patterning effects to the cultures. However, Hofstede credits strong and absolute causality to national culture and also endorses the national culture determinism (Andersen, 2011).

4) Shared

Hofstede relies inconsistently on two notions shared ness of national culture that is that common to every person within a nation, or alternative statistical averaging components that are heterogeneous. The second definition underlies the primary analysis he applied in the analysis of is principle data which is responses to the questionnaire from some employees of IBM. According to Hofsted (1988), as nations become heterogeneous sub culturally, people do not share all common subcultures, but all or most share a common national culture. He refers to the common characteristics, in multiple instances, as the common traits of the inhabitants of a particular nation. Therefore, a unique national culture is assumed to be carried individually by everybody in the nation.

5) Territorially unique

National culture according to Carter et al (2010), is not theorized as the totality of cultures or the only culture, within a nation. However, by definition, it distinguishes culturally the members of a particular nation from the other. A nation’s population can be differentiated in many areas, but Hofstede thinks that regardless of the divisions, somehow every national population shares unique culture. According to Hofstede, the national culture term means a state or a country’s culture, and not just a nation

Culture and globalization

Christopher (2010) defined globalization as the process was cultured influence each other and then become less alike through immigration, trade, and exchange of ideas and information. Therefore, globalization reach extends to all parts of the world. However, cultures greatly differ in the extent to which they have been affected by considerable differences within countries and regions (Arnet, 2002). According to Ettlinger (2003), culture comprises divergent norms, expectations, and behaviors shared and Are fluid across time and space, and can be viewed as cognitions ad behavior patterns shared by a group. The culture can evolve and manifest in social interactions continuous processes.

Even though the work of Hofstede has received accolades, it has also received criticism in equal measure the major problem with the approach of Hofstede is methodology. Cray and Mallory (1998) argued that the application of the aggregated national data when applying to society’s characteristics to an individual’s behavior can be misleading because there can be a great variance to the degree in which the individuals adhere to any values set. Moreover, the scales of Hofstede have also been criticized especially in terms of their usefulness and validity of their four dimensions during the analysis of the individual level (Goodstein, 1981; Dorfman & Howell, 1988; Robinson, 1983Hunt, 1981; Sondergaard, 1994). Tayeb (1988) argued that it was impossible to discuss the impact of cultures on the organization’s structures if all data sources are from the same study. Dahl (2004) also criticized Hofstede’s work that the underlying values were derived from a measurement instrument where the focus was the ultimate goal, hence the resultant values are a result of minimal data.

The theoretical approaches have proposed a model of culture that is multi-level and incorporates dynamic and structural dimensions, in which the various levels and the analysis units (global culture, national culture, organizational culture, group culture, and individual) are nested with one another, and are interconnected through the reciprocal bottom-up and top-down processes (see Figure 1). According to Erez and Gati (2004), top-down processes transmit the culture effects from the higher levels to lower, while bottom-up processes at the individual level allow behaviors, once the members of a social unit have shared, to emerge to the macro-level. Arnet (2002) pointed out that Within a model, globalization is viewed at cultures ‘macro level and is based upon free-market economies, individualism, individual rights, democracy and freedom of choice, tolerance of differences, and openness to change, reflecting western countries values that provide the driving force behind globalization.

Figure 1: The Top-down-bottom-up Dynamic Processes across Culture Levels

Figure adapted from Erez and Gati (2004)

Globalization provides organizations seeking growth with opportunities, and the dominant strategy from the opportunities is the emergence of multinational companies. According to Berson, Erez, and Adler (2004), the employees who work for multinational companies face potential tension between national and local values and the companies values, as they strive to build horizontal relationships both at the global (multinational company) and national (local) level. Therefore, the challenge for multinational companies is to create managerial role perceptions and global culture without offending the local cultural values.

The strategic decision of managing upstream vertical linkages through co-ordination instead of ownership implies a big challenge, as the global supply chain management will encounter tensions both within and between all culture levels.

The influence of culture on logistics outsourcing

Multinational companies seek profit maximization and minimization of risks (Garnier, 1983). Where multinational companies operate in foreign countries, the risk increase because of issues such as control, economics, and coordination (Anderson, 2011; tong, 2007; Garnier, 1983). The multinational companies with an objective profits maximization are forced often to use the international suppliers for them to remain competitive from the perspective of technology or cost (carter, 2010; Chung, 2008), hence sharpening the international supply chain focus to further success. According to Blocker & Flint (2007), supply chain management incorporates coordination, planning, and product management and flow of information, both downstream and upstream. This also includes relationships with the intermediaries, suppliers, customers, and third party service providers. Similarly, supply chain management also integrates the partners up and down the channel in delivering superior value to the entire channel at a lower cost (Christopher, 2010).

According to Gimenez (2012), it is difficult for business decision-making to benefit the whole supply chain. There are organizational integration, competing objectives, and conflicting motivations required for achievement of decisions. Furthermore, supply chain management decisions making are strained further because increasing the number of supply chains is likely to international boundaries.

Drogendijk & Slangen (2006) pointed out that intra- and inter-company supply chain management across international borders strong relationship bridging the borders, and is that is paramount to the success of the business. Relationships between organizations according to Kogut & Singh (1988) are built on relationships between people. This necessitates the labor consideration and hence culture regarding international lines of supply (Blocker, & Flint 2007). Having compounded that, the organization’s trend of outsourcing their supply chain management and logistics services to third parties, a practice Langley (2010), referred to as third-party logistics outsourcing, becomes the area where the essay will bring into focus the influence of culture in decision making.

Logistics

According to Defee et al (2010), supply chains are complex inherently and have a myriad of customers, suppliers ‘suppliers, suppliers, and the customers’ customers integrating complex functions from the suppliers of the original raw materials to production and eventually to the goods distribution for consumption. Christopher (2010), indicated that supply chains are made up of multiple logistics flows, with each combining parts or raw materials from other flows. In these flows, the nodes are the organizations, with monetary movement, information, and the product being the links connecting the nodes.

 Significance of cultural distance and culture

According to Drogendijk & Slangen (2006), the national cultural distance measures are used in measuring the extent to which shared norms and values differ from one country to the other, that is, as a comparison tool from a particular culture to the other with regards to certain dimensions and characteristics. This was applied by Kogut & Singh (1988) in his study in identifying the differences in the social norms between the home-country culture of the parent company and the culture of the host country of the subsidiary.

Hofstede’s work on the cultural distance measures is the most cited and the most influential. From over 40 countries, four cultural dimensions were classified and they include the Power Distance (PDI), Masculine/Feminine (LTO), Individualism/Collectivism (IDV), and Uncertainty Avoidance (UAI). The dimensions were further expanded by Hofstede to include Long-Term Orientation (LTO) (Hofstede & Bond 1988).

Berry et al (2010) observed that the results of Global Leadership and Organizational Behavior Effectiveness (GLOBE) project research was published in 2004, and it was based partly on the work of Hofstede and concurred with the paradigm that national cultural dimensions could be constructed correlating across nations. The results of project GLOBE were nine values, of which some coincided with the measures of Hofstede.

Criticism of the application of cultural Distance Measures

There have been many observations that concern the different cultural distance models about the typical dichotomous nature of many of the models, according to Hofstede et al (2010), uni-dimensional models have space in the research because they are based on correlations allowing comparisons of the two variables. On the other hand, Bearden et al (2006) argued that these national cultural distance measures uni-dimensionality is just a simplification of the nature of the culture that is complex. Similarly, the GLOBE study also has the same criticism as measures of Hofstede particularly at the individual level that is uni-dimensionality (Berry et al, 2010). In his articles, Hosftede et al (2010) also acknowledge the complexity through his admission that some of the correlations of the IBM study that was original were weak. However, they assert that the correlations still reflected other factors impact and were also still interesting and simultaneously working in the social world. Moreover, this is also echoed by Singh (2007) who argued that the impact of the culture consideration on strategy should acknowledge that culture is an element that needs to be considered as part of the internationalization context.

Conclusion

The essay critically evaluated the relevance of Hofstede’s contribution to understanding culture’s influence on global organizational practices. There are multiple global practices such as accounting, human resource management, logistics, and chain supply management among others. The essay narrowed down and focused on logistics and supply chain management as a global organizational practice. The essay elaborated on Hofstede’s model before discussing culture and globalization. It then narrowed down to the influence of culture on logistics outsourcing, discussed the significance of cultural distance and culture. Lastly, the essay criticized the application of cultural distance measures.

References

Aguilera, R. V., & Dencker, J. C. (December 01, 2004). The role of human resource management in cross-border mergers and acquisitions. International Journal of Human Resource Management, 15, 8, 1355-1370.

Andersen, T.J., (2011). The risk implications of the multinational enterprise, International Journal of Organizational Analysis, 19(1), pp. 49-70.

Arnett, J. J. (2002). The Psychology of Globalisation, American Psychologist, Vol. 57, No. 10, pp774-783.

Bearden, W.O., Money, R.B. & Nevins, J.L., (2006). Multidimensional versus unidimensional measures in assessing national culture values: The Hofstede VSM 94 example, Journal of Business Research, 59(2), pp. 195-203.

Berry, H., Guillén, M.F. & Zhou, N., (2010). An institutional approach to cross-national distance, Journal of International Business Studies, 41(9), pp. 1460-80.

Berson, Y., Erez, M., Adler, S. (2004). Reflections of Organisational Identity and National Culture on Managerial Roles in a Multinational Corporation, Best Paper Proceeding, Academy of Management, August.

Blocker, C.P. & Flint, D.J., (2007). Exploring the dynamics of customer value in cross-cultural business relationships, The Journal of Business and Industrial Marketing, 22(4), pp. 249-59.

Carter, J.R., Maltz, A., Maltz, E., Goh, M. & Yan, T., (2010). Impact of culture on supplier selection decision making, The International Journal of Logistics Management, 21(3), pp. 353-74.

Christopher, M., (2010). Logistics & Supply Chain Management, 4, illustrated ed. Financial Times Prentice Hall, Harlow, England; New York.

Cray, D & Mallory, G.R. (1998). Making Sense of Managing Culture. London: International Thompson Business Press.

Dorfman, P.W. & Howell, J.P. (1988). Dimensions of national culture and effective leadership patterns: Hofstede revisited. Advances in International Comparative Management, 3, 127-150.

Drogendijk, R. & Slangen, A., (2006). Hofstede, Schwartz, or managerial perceptions? The effects of different cultural distance measures on establishment mode choices by multinational enterprises, International Business Review, 15(4), pp. 361-80.

Erez, M., and Gati, E. (2004). A Dynamic, Multi-level Model of Culture: From the Micro Level of the Individual to the Macro Level of a Global Culture, in Applied Psychology: An International Review, Vol. 33 (4), pp 583-612.

Garnier, (1983). Context and decision making autonomy in the foreign affiliates of U.S. multinational corporations, The International Executive (pre-1986), 25(1), pp. 893-908

Gimenez, C., Vaart, T.V.D. & Donk, D.P.V., (2012). Supply chain integration and performance: the moderating effect of supply complexity, International Journal of Operations & Production Management, 32(5), pp. 583-610.

Goodstein, L.D. (1981). American business values and cultural imperialism. Organisational Dynamics, 10,1, 49-54.

Harzing et al. (2011). International Human Resource Management (3rd ed.). Sage Publications, India Pvt Ltd.

Hofstede, Ashkanasy, N. M., Wilderom, C., & Peterson, M. F. (2000). Handbook of organizational culture & climate. Thousand Oaks, Calif: Sage Publications.

Hofstede, G. & Bond, M.H., (1988). The Confucius connection: From cultural roots to economic growth, Organizational Dynamics, 16(4), pp. 5-21.

Hofstede, G. (1998). Identifying organizational subcultures: An empirical approach. Journal of Management Studies, 35(1), 17–28.

Hofstede, G., Hofstede, G.J. & Minkov, M., (2010). Cultures and Organizations: Software for the Mind (3rd Edition), McGraw-Hill Professional Publishing, New York, NY, USA.

Kogut, B. & Singh, H., (1988). The Effect of National Culture on the Choice of Entry Mode, Journal of International Business Studies, 19(3), pp. 411-32.

Krishnan, Stephanie, Smark, Ciorstan, & Pepper, Matthew. (2013). The influence of national culture on third-party logistics outsourcing: An Asia-Pacific focus. Research Online.

Robinson, R.V. (1983). Geert Hofstede: Cultures’ consequences: International differences in work-related values. Work and Occupations, 10, 110-115.

Singh, K., (2007) The limited relevance of culture to strategy, Asia Pacific Journal of Management, 24(4), pp. 421-8.

Sondergaard, M. (1994). Research note: Hofstede’s consequences: A study of reviews, citations, and replications. Organisational Studies, 15, 447-456.

Tong, T.W. & Reuer, J.J., (2007). Real Options in Multinational Corporations: Organizational Challenges and Risk Implications, Journal of International Business Studies, 38(2), pp. 215-230.

5/5 - (6 votes)

Need Support in Studies? 📚 – Enjoy 7% OFF on all papers! Use the code "WINTER2024"

X