Chapter three

Organizational Cultures
and Diversity

Instructor: MA. Nguyen Thi Phuong Linh

 Chapter Objectives

1. DEFINE what is meant by organizational culture;

discuss interaction of national and MNC culture
2. IDENTIFY four most common categories of
organizational culture and discuss characteristics of
each
3. PROVIDE overview of nature and degree of multi-
culturalism and diversity in today’s MNCs.
4. DISCUSS common guidelines and principles used in
building team and organizational multicultural
effectiveness.

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The Nature of Organizational Culture

• Organizational culture: shared values

and beliefs enabling members to

understand their roles and the norms of

the organization.

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The Nature of Organizational Culture
• There are a number of important characteristics associated
with an organization’s culture including:
(1). Observed behavioral regularities as typified by common language,
terminology, rituals
(2). Norms reflected by things such as amount of work to do and degree
of cooperation between managers and employees
(3). Dominant values that the organization advocates and expects
participants to share (e.g., low absenteeism, high efficiency)
(4). A philosophy set forth in the MNC’s beliefs regarding how
employees and customers should be treated.
(5). Rules dictating do’s and don’ts of employee behavior pertaining to
areas such as productivity, customer relations, and intergroup
cooperation.
(6). Organizational climate, or overall atmosphere of the enterprise, as
reflected by the way that participants interact with each other, treat
customers, and feel about the way how they are treated by higher
level management 6-4
Example of Google’s culture

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The Nature of Organizational Culture

Sometimes an MNC’s organizational culture in one country’s facility differs

sharply from organizational cultures in other countries
For example:
•  JCPenney is an American department store chain, when this well known retailer
penetrated into Brazilian market, it used a strategy that is not very common when
one company controls another. Rather than impose its own culture on the chain,
Penney’s management took a back seat and let the Brazilian managers continue to
run the stores while it just provided assistance in the form of backroom operations,
merchandise presentation, logistics, branding, and expansion funds. Penney
understood that there are differences of market between in America and in Brazil.
In Brazil, fashion is constantly evolving, if they impose the same culture with the
host country, they can be able to keep up with the changing in Brazil where fashion
lines change seven to eight times a year. In order to help Brazilian subsidiaries, the
company also provides rapid checkout service, credit cards to individuals who earn
as little as $150 a month, and interest-free installment plans that allow people to
pay as little as $5 a month toward their purchases. Thanks to the adaptive strategy,
in the first two years Penney opened 30 stores and sales jumped from $150 million
to over $300 million.
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 Interaction between
National and Organizational Culture
• It is widely believe that organizational culture tends to moderate
or erase the impact of national culture. The logic of such
conventional wisdom is that if an U.S. MNC set up its operations
in France, it would not be long before the French employees
began to “think like Americans”.
• In fact, evidence is accumulating that just the opposite may be
true. Hofstede’s research found that the national cultural values of
the employees have a significant impact on their organizational
performance, and that the cultural values employees bring to the
workplace with them are not easily changed by the organization.
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 Interaction between
National and Organizational Culture
• Andre Laurent’s research found that cultural differences
are actually more pronounced among foreign employees
working within the same multinational organization than
among personnel working for firms in their native land.
• When they work for a multinational corporation, it appears
that Germans become more German, Americans become
more American, and so on.
• Laurent replicated the research in two other multinational
corporations, both of them emphasize that corporate
culture should not reduce or eliminate national differences,
instead they should maintains and enhances them in order
to gain benefits from global team.
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 Interaction between
National and Organizational Culture

Discuss question:

Find some benefits and drawbacks of

global team to international

business?
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 Dimensions of Organizational Culture
(Hofstede’s Diagnosing Organizational Culture
for Strategic Application – DOCSA)

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European Perceptions of Cultural Dimensions
of U.S. Operations
(a California-based MNC and its European subsidiaries)

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European Management Characteristics

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 Organizational Culture in MNCs

• Many international expansions are a result of mergers and

acquisition, the integration of these organizational cultures is a
critical concern in international management.
• Four steps in integration of organizational cultures resulting from
international expansion via mergers/acquisitions:
1. Two groups have to establish purpose, goals, and focus of their
merger
2. To develop mechanisms to identify most important organizational
structures and management roles
3. To determine who has authority over the resources to get things
done
4. To identify expectations of all involved parties and facilitate
communication between both departments and individuals in the
structure.

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 Organizational Culture in MNCs

Three aspects of organizational functioning that

seem to be especially important in determining
organizational culture:
1. The general relationship between the employees
and their organization.
2. The hierarchical system of authority that defines
the roles of managers and subordinates
3. The general views that employees hold about
the MNC’s purpose, destiny, goals, and their
place in them.
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Four Types of Organizational Cultures

When examine organizational culture, Trompenaars suggested the

use of two approaches. One distinguish between equity and
hierarchy, the other examines orientation to the person and the task.

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Four Types of Organizational Cultures
1. Family culture
• Family culture is characterized by a strong emphasis on hierarchy and
orientation to the person. The result is a family-type environment that is
power-oriented and headed by a leader who is regarded as a caring parent and
one who knows what is best for the personnel (Turkey, Pakistan, Venezuela,
China, Hong Kong, and Singapore)
• In this culture, personnel not only respect the individuals who are in charge but
look to them for both guidance and approval as well. In turn, management
assumes a paternal relationship with personnel, looks after employees, and
tries to ensure that they are treated well and have continued employment.
• Family culture also is characterized by traditions, customs, and associations
that bind together the personnel and make it difficult for outsiders to
become members.
• When it works well, family culture can catalyze and multiply the energies of
the personnel and appeal to their deepest feelings and aspirations. When it
works poorly, members of the organization end up supporting a leader who
is ineffective and drains their energies and loyalties.
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Four Types of Organizational Cultures
• Example of Family culture:
A Dutch delegation was shocked and surprised when the
Brazilian owner of a large manufacturing company
introduced his relatively junior accountant as the key
coordinator of a $15 million joint venture. The Dutch were
puzzled as to why a recently qualified accountant had
been given such weighty responsibilities, including the
receipt of their own money. The Brazilians pointed out
that the young man was the best possible choice among
1,200 employees since he was the nephew of the owner.
Who could be more trustworthy than that?

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 Four Types of Organizational Cultures
2. Eiffel Tower culture
• Eiffel Tower culture is characterized by strong emphasis on hierarchy and orientation to the task.
Under this organizational culture, jobs are well defined, employees know what they are supposed to
do, and everything is coordinated from the top. As a result, this culture—like the Eiffel Tower itself
—is steep, narrow at the top, and broad at the base (European countries like Denmark, Germany,
and the Netherlands)
• Unlike family culture, where the leader is revered and considered to be the source of all power, the
person holding the top position in the Eiffel Tower culture could be replaced at any time.
• Each role at each level of the hierarchy is described, rated for its difficulty, complexity, and
responsibility, and has a salary attached to it. In considering applicants for the role, the personnel
department will treat everyone equally and neutrally, match the person’s skills and aptitudes with the
job requirements, and award the job to the best fit between role and person. The same procedure is
followed in evaluations and promotions.
• The organization also will employ such rational procedures as assessment centers, appraisal systems,
training and development programs, and job rotation in managing its human resources. All these
procedures help ensure that a formal hierarchic or bureaucracy-like approach works well.
• However, when changes need to be made, the Eiffel Tower culture often is ill-equipped to handle
changes. Manuals must be rewritten, procedures changed, job descriptions altered, promotions
reconsidered, and qualifications reassessed

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Four Types of Organizational Cultures

3. Guided Missile Culture

• Guided missile culture is characterized by strong emphasis on
equality in the workplace and orientation to the task. This
organizational culture is oriented to work, which typically is
undertaken by teams or project groups. Unlike the Eiffel Tower
culture, where job assignments are fixed and limited, personnel in
the guided missile culture do whatever it takes to get the job done.
This culture gets its name from high-tech organizations (NASA)
• Unlike family and Eiffel Tower cultures, change in guided missile
culture comes quickly. Goals are accomplished, and teams are
reconfigured and assigned new objectives.
• However, people move from group to group, and loyalties to one’s
profession and project often are greater than loyalties to the
organization itself
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Four Types of Organizational Cultures

4. Incubator Culture:
• Strong emphasis on equality and personal orientation
• The role of organizations is to serve as incubators for the self-
expression and self-fulfillment of their members; as a result,
this culture often has little formal structure
• These cultures often are found among start-up firms in Silicon
Valley, California, or Silicon Glen, Scotland.
• Incubator cultures often create environments where
participants thrive on an intense, emotional commitment to the
nature of the work
• Change in the incubator culture often is fast and spontaneous.
• However, the problem is redefinition, and the solution typically
is generic, aimed at a universe of applications

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Four Types of Organizational Cultures

National Patterns of
Corporate Culture

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Four Types of Organizational Cultures

Discuss question:

What type of organizational culture do

you think Vietnam’s organization
mainly follow? Why?

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