Welcome to Class 15

Research:
Qualitative Domain
Part 2

Chapter 7

"Culture" is a Primary Driver of
Qualitative Performance
National Culture + Corporate Culture =
Impact on firm performance

"Culture" is characterized as the mental programming
of people.

Wherever several people are gathered together for an
extended period of time a unique culture will
emerge.

TMTs should:


1) Assess their corporate culture
2) Study the national cultures of countries in which they compete

1. Looking Inward Corporate Culture

Other terms for corporate culture include:
Organizational DNA and Organizational Soul.
However, while these terms are thought provoking, they may
be unnecessarily pessimistic.
They suggest corporate culture is fixed, rigid, and unchangeable.

DNA AND SOUL terms imply there is no potential for growth and
improvement . This is NOT TRUE of corporate culture.

Corporate Culture is a reflection of a firms
personality, character, and attitude.


Corporate Culture
Healthy Corporate Culture:
A management mandate
Corporate Culture:
1. Determines whether employees support each other or work
against each other.

2. Affects the manner in which employees interact with
customers, creditors, competitors, shareholders, and other
stakeholders.

3. Determines the extent to which the interests of multiple
stakeholders will be considered and balanced.

Nurturing and supporting a healthy
corporate culture is a challenging task!
TMTs need to ask questions such as:
Are we lacking in efforts to promote the value of diversity
of thoughts, ideas, and cultures?
Do we have dual standards of behavior, one for
executives and another for all other employees?
Do our systems inadvertently reward indecision and/or
incompetence?
Do we tolerate arrogance and condescension?
Do we discourage openness and truthfulness?
Do we really understand the interaction of corporate
and national cultures?

They influence each other.

Capable corporate TMTs recognize
to fully understand either requires
understanding both.

Corporate culture and National culture
ARE SYMBIOTIC.

2. Looking Outward National Culture
National culture is:

1. The mental programming of a group of people

2. Comprised of the values, customs, and belief systems
shared by a group of people

National cultures occasionally clash with
Corporate cultures
Clashes usually occur when employees of one nation
work in another nation.
National Culture
TMTs who have cultural myopia
Lack the ability to recognize potential conflicts
between corporate culture and national culture.

Inability to recognize the conflicts

Potential for irreparable damage to a firms
reputation.

Potential Clash!

Corporate Culture: &
=
National cultures alien to the corporation can present
formidable challenges.

They require flexibility and creative management thinking.

Challenges include understanding the value systems of:
1. New customers; and
2. New employees from the local culture.

TMTs can guard against cultural clashes by developing a better
understanding of the national culture of the new
country in which they wish to compete.

TMTs need to DO THEIR HOMEWORK and study the new
culture before they begin making decisions.

The overriding objective is to strike a harmonious and
productive balance between corporate and national
cultures.

Striking this balance begins with understanding the unique
characteristics and subtleties of national cultures.


The groundwork for corralling the characteristics and subtleties
of national cultures was provided by
Dr. Geert Hofstede.


He organized various national cultures into dimensions
which facilitate the understanding of and appreciation for the
unique cultural characteristics of individual countries.

Hofstedes
Cultural Dimensions
Five dimensions:
Power Distance
Individualism
Uncertainty Avoidance
Masculinity
Short and long-term orientation
The following slides are directly from Hofstedes data
Power Distance Index (PDI)
The degree of equality, or inequality, between people in
a countrys society

1. High Power Distance
The imbalances of power and wealth that have been
allowed to grow within the society. (Rich are powerful)
These are more likely to follow a caste system that does not
allow significant upward mobility of its citizens.

2. Low Power Distance
A society de-emphasizes the differences between
citizens power and wealth. In these societies equality and
opportunity for everyone is stressed.


Uncertainty Avoidance Index (UAI)
The level of tolerance for uncertainty and ambiguity
within the society i.e. unstructured situations.

1. High Uncertainty Avoidance
Indicates the country has a low tolerance for
uncertainty and ambiguity. A rule-oriented society that
institutes laws, rules, regulations, and controls in order to
reduce the amount of uncertainty.

2. Low Uncertainty Avoidance
Indicates the country has less concern about ambiguity
and uncertainty and has more tolerance for a variety of
opinions. A society that is less rule-oriented, more readily
accepts change, and takes more and greater risks.

Individualism (IDV)
The degree society reinforces individual or collective
achievement and interpersonal relationships.

1. High Individualism
Indicates that individuality in these societies may tend
to form a larger number of looser relationships.

2. Low Individualism
Typifies societies of a more collectivist nature with
close ties between individuals. Reinforced extended families
and collectives where everyone takes responsibility for group
members

Masculinity (MAS)
The degree the society reinforces, or does not reinforce,
the traditional masculine work role model of male
achievement, control, and power.

1. High Masculinity
Indicates the country experiences a high degree of
gender differentiation. Males dominate a significant portion
of the society and power structure, with females being
controlled by male domination.

2. Low Masculinity
Indicates the country has a low level of differentiation
and discrimination between genders. Females are treated
equally to males in all aspects of the society.
Long-term Orientation (LTO)
The degree to which a society respects cultural traditions
and the value it places on long-term commitments.

1. High Long-Term Orientation
Indicates the country prescribes to the values of long-term
commitments and respect for tradition. Supportive of a strong
work ethic where long-term rewards are expected as a result of
hard work. Business may take longer to develop in this society,
particularly for an outsider.

2. Low Long-Term Orientation
Indicates the country does not reinforce the concept of
long-term traditional orientation. Change can occur more
rapidly as long-term traditions and commitments do not become
impediments to change.
Summary



Culture, both corporate and national, play a
significant role in a firms qualitative performance.

Qualitative performance should be the everyday
concern of every manager.

The global nature of business increases the risk of
clashes between corporate cultures and national cultures.

End: Research: Qualitative Domain Part 2
Assignment: Read Chapter 8
Research: Issues & Challenges
Very Important:
Review Appendix B of your text (pages 170 172)
Hofstedes Cultural Dimensions.
You are responsible for this information and
IT WILL BE ON THE TEST!