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Master in Business Administration

Assessment - 2:

Significance of culture in the context of global HRM

Author Name: Shanali Samarasekara

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Introduction

Organisations have its own cultures and it determines organisations success or failure. Culture is
values, attitudes, beliefs and assumptions that determine the appropriate behavior shared by society
or specific group (Thomas and Lazarova, 2014). Organisationl culture acts as an immune system
to the organisation, it is dynamic, incremental and response to internal and external change
(Watkins, 2013). Culture has several characteristics; it is shared, learned, and systemic and
organized (Thomas and Lazarova, 2014). After realizing the impact of the Japanese management
in the 1980’s, culture was important in U.S. literature and its implications in strategy formulation
was concerned (Mintzberg, and Lampel, 1999). It is an important strategic variable of an
organisations which is leaders should effectively manage.

As globalisation bounds world together, diverse and multicultural workforces are appearing and
becoming a significant attention for modern human resource management and managers have to
deal with complex issues arising in respect with cultural issues (Thomas and Lazarova,
2014).Human capital and embedded knowledge can be viewed as intellectual capital and national
companies have to combine it within homogeneous organisational settings while multinational
companies have to act in multinational settings (Gretzinger, 2014). Effective management of
cultural differences will help to get more competitive advantage for an organisation (Thomas and
Lazarova, 2014). Global human resource management is conducting activities in attracting,
engaging, developing and retaining employees across the countries, cultures and institutional
contexts (Thomas and Lazarova, 2014)

In the globalizing world, culture is not closed but it is continuously influenced by new cultural
materials such as artifacts, symbols, values (Hatch, 2000).There are standards established in each
oraganisation according to the culture; working time, dress code, rules and regulations governed
etc. If the two or more culture have significant differences in values, beliefs, norms and behavior,
cultural conflicts are arisen. Human resource responsibilities, such as recruiting and hiring,
performance management, compensation, employee relations, training and development,
communication etc. are significant in international business. These responsibilities are bound with
the organisation’s culture. Therefore culture plays major role in global HRM and knowledge and
competencies about culture in countries and the organization are very important in international
business.

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What is culture?

Traditions, habits, ways of organising and patterns of relationships at work make culture of an
organisation (Molander, 1986). Linstead and Grafton-Small (1992) have distinguished corporate
culture and organisational culture. Corporate culture is create by the management and transmitted
to rest of the organisation. Beliefs and values offered (Linstead and Grafton-Small 1992) to the
members and both external and internal image (Marshall 1988; Jackson and Carter 1986 cited in
Linstead and Grafton-Small 1992) governs by the corporate culture.

"Organisational culture" is a culture that grows and emerges within an organization, reflects the
creativity of organizational members as cultural makers, perhaps resisting the dominant culture or
ironically evaluating it (Linstead and Grafton-Small 1992). Organisation culture is viewed as
aggregation of sub cultures than corporate culture (Linstead and Grafton-Small 1992).

Control culture, Collaborate culture, Create culture and compete culture are the for types of
cultures was identified by Tharp, (2009). Characteristics of these four types are described in table
01.

Culture type Control Collaborate Create Compete


(hierarchy) (Clan) culture (Adhocracy) (market) culture
culture culture
Characteristics
values standardization, Integration, Flexibility, Differentiation,
control, and a Collaboration, discretion, focus on
well-defined flexibility and adaptability, relationships,
structure for discretion innovation and rules, standard
authority and creativity, operating
decision making. procedures, and
specialized job
functions
Leadership Organizer, facilitator, Innovator, demanding,
characters coordinator, mentor, team entrepreneur, hard-driving,
monitor. builder visionary and productive

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Theory of Control and Human Innovativeness, Aggressively
effectiveness efficiency with Resource vision and new competing and
capable development and resources are customer focus
processes are participation are effective are effective
effective effective
Quality Error detection, Empowerment, Surprise and Measuring client
improvement measurement, team building, delight, creating preferences,
strategy process control, employee new standards, improving
systematic involvement, anticipating productivity,
problem solving, Human needs, creating external
quality tools Resource continuous partnerships,
development, improvement, enhancing
open finding creative competiveness,
communication solutions involving
customers and
suppliers
Table 1: Types of cultures and their characteristics. (Adapted from Tharp, 2009 and OCAI online,
2018)

There is no superior culture can be identified among these four types and its appropriateness
depends on the context of the organisation (Tharp, 2009).

Schein and Scheiner, (2016) suggest that three levels of culture based on the visibility to others;

 Artifacts (visible and feelable structures and processes),


 Espoused belief and values (ideas, ideologist, rationalization),
 Basic underlying assumptions (unconscious, taken for granted beliefs and values.)

According to Pfister, and Hartmann (2011), three layers can be identified in culture; surface or
explicit culture, hidden culture and invisible or implicit culture. Explicit culture includes the things
which are easily observable to others and hidden culture represents values, religions, and
philosophies while implicit culture’s universal truth and the bases of all values and beliefs.

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Studies of national cultures in fifty three subsidiaries of IBM and has identified work related
factors of cultures ; power distance, individualism and collectivism, uncertainty avoidance,
masculinity - femininity, long-term - short term orientation, (Hofstede,2001; Hofstede and
Mincov, 2010 cited in Pfister, and Hartmann, 2011). Language is necessary to be able to do
business therefore it is one of the most obvious parts of culture.

Power distance is the degree of acceptance of power in bosses and subordinates (Hofstede,2001;
Hofstede and Mincov, 2010 cited in Pfister, and Hartmann, 2011 ).In individualistic cultures
individuals are more important and individuals act as autonomous persons (Gretzinger, 2014)
while groups are more important in collectivistic culture (Hofstede,2001; Hofstede and Mincov,
2010 cited in Pfister, and Hartmann, 2011) and individuals are depend on the membership of the
group in collectivistic culture (Gretzinger, 2014). Individualistic culture and collectivistic culture
are two distinct types identified in organisations (Gretzinger, 2014). In Individualistic cultures
individuals act as autonomous persons and in collectivistic cultures individuals are depend on the
membership of the group (Gretzinger, 2014). Organisational culture supports empowerment.
Sigler and Pearson, 2000 have done a study of front line employees in four textile plants located
in the Southeastern United States and found that organizational cultures that were perceived as
being more collective and more doing-oriented were related to significantly greater perceptions of
empowerment and higher levels of commitment.

Degree of uncertainty avoidance or tolerance for ambiguity focuses on how people adapt to
changes and cope with uncertainty (Hofstede, 2001; Hofstede and Mincov, 2010 cited in Pfister,
and Hartmann, 2011). When there is high degree of uncertainty avoidance, peoples are welcome
rules for guiding their behaviors and attitudes while people tend to resist too many rules and
policies when there is low degree of uncertainty avoidance (Hofstede, 2001; Hofstede et al, 2010
cited in Schein, and Scheiner, 2016). Masculinity society prefers achievement, heroism,
assertiveness, material rewards, differentiate gender roles and competitiveness but femininity
society prefers cooperation, modesty, caring for the week, sexual equity, environment awareness
(Hofstede, 2001; Hofstede and Mincov, 2010 cited in Pfister, and Hartmann, 2011).

When country has long term orientation culture, business results may take time to achieve and
employee valuing long term relationships but results and achievements are set and in short term
orientation dimension results and achievements reached within a specific time frame and

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employees will change employers very often (Hofstede,2001; Hofstede and Mincov, 2010 cited in
Pfister, and Hartmann, 2011). People in normative societies exhibit great respects to traditions and
relatively small propensity to save for future, focus on achieving quick results (Hofstede, 2001;
Hofstede and Mincov, 2010 cited in Pfister, and Hartmann, 2011). Societies with pragmatic
orientation, people believe that truth depend on situation, context and time, they have ability to
accept contradiction, adapt according to the situation (Hofstede, 2001; Hofstede and Mincov, 2010
cited in Pfister, and Hartmann, 2011). Indulgence society allows relatively free satisfaction human
drives related to enjoying life but restrain society suppresses satisfaction (Pfister, and Hartmann,
2011).

In Denmark and Sweden hierarchy, power and status are downplayed (Schneider, Barsoux, and
Stahl, 2014). Hierarchy and status are more ambiguous in Japanese culture while in USA and
Europe boss is more directly involve with the worker (Schneider, Barsoux, and Stahl, 2014).

Culture is external and instrumental in line with tasks, goals and objectives of the organisation
(Schein, 1985 cited in Alvesson, 1989). Barney (1986) stated that culture must be imperfectly
imitable, can be copied, normative and accessible to evaluation in terms of frequency (Alvesson,
1989).

Cultural differences

In global business context cultural differences cause great difficulty. As an example in India
clothing should cover body especially legs and leather clothing is offensive as Hindus who revere
cows (Warburton, 2018). Indian team members are not questioned about the instructions given by
the leader although it is apparent going wrong. Therefore team leader is responsible for the success
or failure of the business (Warburton, 2018).In Singapore, decisions are team ones and therefore
success or failure is also team oriented (Warburton, 2018). Indian workers like to welcome positive
feedback but consider negative feedbacks are detrimental though in western cultures negative
feedbacks are considered as positive learning experiences (Warburton, 2018).

Cross cultural issues

Organisational behavior within countries and cultures is described by cross cultural management
and it seeks to understand improve interactions of managers, co- workers, executives, clients
suppliers, alliance partners around the world (Black and Mendenhall,1990). Organizational culture

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draws criticism from some, and praise from others. Some view organizational culture as confining
and limiting, forcing people to shed individualism for a larger, generic corporate image, while
others laud organizational culture for establishing rules and behaviors for employees.

According to Black and Mendenhall (1990) 40% of the turnover of managerial post in foreign
assignments resulted by poor performance or poor adjustment to the local environment due to
failed negotiations and failed interactions caused by the cross cultural differences. Cross cultural
training is effective for enhance performance and adjustment (Black and Mendenhall,1990)

In cross boarder merges, significant differences in national culture as well as organization culture
may influence the performance in different ways (Schneider, Barsoux, and Stahl, 2014).Some
cross boarder merges did not successful due to these cross cultural differences (Schneider,
Barsoux, and Stahl, 2014).TLC;s acquisition of France’s Thomas Electronics, SAIC’s takeover of
South Koreas Sangyon Moter Company, D’Long Group’s purchase of Americas Murray Inc. are
some examples for unsuccessfully ended cross boarder merges (Schneider, Barsoux, and Stahl,
2014).

Efficient and productive cultures

Culture may be characterized by efficiency, rationalization, productivity, glory of advanced


technology, exploitation of nature, hierarchy, unequal distribution of compensation, the glory of
leadership (Alvesson,1989). Culture affect productivity of organisation. Employees which have
better understand about their culture would achieve goals, display loyalty and fulfill needs of
managers as well as customers. Companies that have succeeded in raising employee productivity
generally have an organizational culture that supports and evaluates the value of employees
(Barney, 1986). If there is strong organizational culture, with values and internal guides for more
autonomy at lower levels, reduces expense of middle-level administration (Bass and Avolio,
1993).

Global human resource management.

Aspects of an organization’s human resource management processes operating on a global scale


is global human resource management. Culture, language, management styles, and laws would all
be considerations before implementing HRM strategies in global perspective.

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Globalisation is development of a single market for goods and services but internationalization is
economic integration of worldwide markets (Armstrong, 2001). Therefore globalization can be
defined as movement of people, capital, goods and services across the borders. International
human resource management can be convergence or divergence (Armstrong, 2001). Convergence
is implementing similar policies and practices across the world while divergence is modify parent
company policies and practices to match local subsidiary requirements. Cultural issues are one of
factors affecting convergence or divergence of international firm (Armstrong, 2001).

Culture and leadership

Organizational culture develops primarily from leadership, but the culture of the organization also
affects the development of leadership (Bass, 1985 cited in Bass and Avolio, 1993). Leadership
affect; vision, strategy itself and value of organization and these three components collectively
create the culture of organisation (Jonminerich, 2008). Transactional leaders work within
organizational culture according to existing rules, procedures and norms and their decisions &
actions based on operative norms & procedures of the organization although transformational
leader change organisational culture by understanding it first and reorganizing the organization's
culture with new vision and common assumptions, values and norms (Bass and Avolio, 1993).
Organizational outcomes of different organisations, situations, levels of analysis, and cultures such
as productivity and turnover were positively associate with transformational leadership (Avolio,
Walumbwa and Weber, 2009).

Effective organizations require culture building by its leaders and vision may determine the
characteristics of the organisation’s culture (Bass and Avolio, 1993). Strategic thinking helps to
create and build the vision of an organisation’s future by that leader can create vision and move
forward it by constructing necessary culture which supports the vision (Bass and Avolio, 1993).

The way that leader responds to the problem, solves the crisis, rewards and punishes to followers
are related to the culture of the organization (Bass and Avolio, 1993).

Cultural fit

Newer models of recruitment emphasize the cultural fit of the applicants in order to maintain its
culture in healthy way. HRM areas such as recruitment, selection, and placement decisions are
affected by culture (Bass and Avolio, 1993). Some companies consider cultural fit by assessing

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applicants’ personalities and values than other job related skills and experience in order to match
with the corporate culture (Stahl, 2007). Tools have been developed by IKEA for assessing the
applicants’ values and beliefs rather than their skills, experience and academic credentials (Stahl,
2007). In companies like P&G, Unilever, Shell, and GE, practice open job posting system and
priority is given to the internal candidates. These companies have job rotation system and such
culture allows workers to move throughout the business (Stahl, 2007). Zappos gives first and
foremost priority in cultural fit when hiring their employees and company also dedicates part of
its budget on team building activities and the development of its culture. (Patel, 2015).

Culture and company image

Company culture is a part of the brand which creates the business, and makes an impact on talent
hunting. Job seekers look for lifestyles fit, flexible hours, and financial assistance with continuing
education, casual dress codes, international work opportunities or companies boasting amenities
such as on-site gyms. Twitter motivated people by its culture which consists rooftop meetings,
friendly coworkers and a team-oriented environment, free meals, yoga classes (Patel, 2015). On
the other hand culture determines organisation’s identity; how customers are treated ultimately
reflects brand image. Culture is internal symbolic context for the development and maintenance of
organization identity and it emerges from the ongoing interactions between organizational
members as well as from top management influence (Jo Hatch, and Schultz, M. 1997). Facebook
offers open office space, a focus on teamwork and open communication, a competitive
environment that fosters personal growth and learning and great benefits (Patel, 2015). .

Innovations and culture

Innovations are necessary for persistence and development of an organisation in order to achieve
goals and objectives. Innovation requires human capital and it represents competences, level of
education and qualifications, knowledge and skills of employees, as well as leadership skills of
managers (Szczepańska-Woszczyna, 2014). Culture based on strong control is helps to creativity
and innovation and cultures characterized by dynamism, flexibility, fast adaptation to changing
conditions are developing innovation (Szczepańska-Woszczyna, 2014). Adobe’s culture is give
changing projects and trusting employees to do their things best and it avoids micromanaging
results risk taking culture. Adobe doesn’t use ratings to establish employee capabilities because
they trust it negatively affect creativity and teamwork (Patel, 2015).

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Change management

Approaches of cultural change based on identify the culture which should support organisation’s
strategy, whether current culture supports organisation strategy and gaps between strategies, plan
of actions need to close the gap identified (Wilkins and Dyer 1987 cited in Alvesson,1989). The
organizational culture is important in shaping how employees are prepared for imminent
organizational changes (Jones, Jimmieson, and Griffiths, 2005) Beliefs, values, assumptions, rites,
and ceremonies embedded in the culture may be a barriers to change culture and modify it. Leaders
need to be attentive to the conservativeness reflected in can hinder efforts to change the
organization (Bass and Avolio, 1993). They need to modify key aspects of culture, when it is
possible to do so, to fit with new directions desired by the leadership and membership of the
organisation (Bass and Avolio, 1993). Burnes and James 1995 cited in Jones, Jimmieson, and
Griffiths, 2005) found that when there is a supportive and participatory culture, low change
resistance is prevailed.

Culture as sustainable / competitive advantage

The resource-based view is one of the most influential theories for explaining a firm's sustained
competitive advantage and the relation between human capital and the RBV has been explored in
the literature on strategic human resource management (Kraaijenbrink, 2011). Culture helps to
acquire competitive advantage for an organisation. Imitation increases the competition, reduces
margins, and decreases the level of financial performance. Competitive advantages that are not
subject to imitation, firms may enjoy superior financial performance (Lippman & Rumelt, 1982
cited in Barney, 1986). In order to acquire superior financial performance organisation culture
must have positive economic consequences, the culture must have attributes and characteristics
that are not common to the cultures of a large number of other firms, the culture must be
imperfectly imitable; firms without these cultures cannot engage in activities that will change their
cultures to include the required characteristics, and if competitors try to imitate these cultures, they
will be at some disadvantage. Such a firm will enjoy the positive economic consequences of its
culture (Barney, 1986).

For example, Unilever Corporation has long been committed to developing its human resources to
achieve a sustainable competitive advantage (Briscoe, Tarique, and Schuler, 2012). As early as the
1930s, the company recruited and developed local staff to replace the managers of the parent

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company, which had run most of its subsidiaries overseas (Briscoe, Tarique, and Schuler, 2012).
But after that they had to step up its cross-border operations again for high-level managers without
much attention to their countries of origin because they understood their powerful "glue" which
had bound its diverse organizational groups together and had linked its dispersed operations was
diluted due to previous decision (Briscoe, Tarique, and Schuler, 2012). Understanding nature,
dimensions and variables of culture is useful for an international manager to planning, leading and,
organizing the business in international setting (Deresky, 2016). Apple computers have acquired
competitive advantage in order to survive, compete and enter into new markets by leveraging its
culture of innovation towards products and process (Tharp, 2009).

Conclusion.

Culture is values, attitudes, beliefs and assumptions that determine the appropriate behavior shared
by society or specific group (Thomas and Lazarova, 2014).Culture plays significant role in
globalisation and internationalization. Globalisation is development of a single market for goods
and services but internationalization is economic integration of worldwide markets (Armstrong,
2001). Therefore, human resource management is the interface of culture in global context. As
globalisation bounds world together, diverse and multicultural workforces are appearing and
becoming a significant attention for modern human resource management which includes activities
in attracting, engaging, developing and retaining employees across the countries, cultures and
institutional contexts and therefore managers have to deal with complex issues arising in respect
with cultural issues. (Thomas and Lazarova, 2014).

It is concluded that when moving to international or global business it should be sensitive to the
relevant national cultures. Therefore workforce dynamics are to be properly identified. Power
distance between bosses and subordinates, whether collectivism or individualism is prominent,
degree of tolerance for ambiguity, masculinity or femininity nature of the society, long-term - short
term orientation of the culture are the main variables of national cultures identified by (Hofstede,
2001; Hofstede and Mincov, 2010 cited in Pfister, and Hartmann, 2011) and (Hofstede, 2001;
Hofstede et al, 2010 cited in Schein, and Scheiner, 2016). Sigler and Pearson, 2000 found that
organisational cultures that were perceived as being more collective were related to significantly
greater perceptions of empowerment and higher levels of commitment.

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Power, authority and interaction between members of the organizational hierarchy also vary
according to the national culture. In Denmark and Sweden hierarchy, power and status are
downplayed (Schneider, Barsoux, and Stahl, 2014). Hierarchy and status are more ambiguous in
Japanese culture while in USA and Europe boss is more directly involve with the worker
(Schneider, Barsoux, and Stahl, 2014). Language is necessary to be able to do business therefore
it is one of the most obvious parts of culture.

Understanding existing culture is significant to change management because, change involves


cultural transformation. Change management is necessary to an organisation in order to ensure the
persistence in dynamic external environment. If there is a strong culture which resist change in an
organisation, it may be difficult to transform the culture.

Culture and leadership are interconnected. Leadership affect; vision, strategy itself and value of
organization and these three components collectively create the culture of organisation
(Jonminerich, 2008). The way that leader responds to the problem, solves the crisis, rewards and
punishes to followers are related to the culture of the organization (Bass and Avolio, 1993).

Companies that have succeeded in raising employee productivity generally have an organizational
culture that supports and evaluates the value of employees (Barney, 1986). If there is strong
organizational culture, with values and internal guides for more autonomy at lower levels, reduces
expense of middle-level administration (Bass and Avolio, 1993). It is obvious that culture affect
to the productivity of organisation.

According to Bass and Avolio, (1993) recruitment, selection, and placement decisions are affected
by culture. Companies like IKEA, Zappos assess the applicants’ values and beliefs, cultural fit
when selecting employees (Stahl, 2007; Patel, 2015). Companies P&G, Unilever, Shell, and GE,
have job rotation system and such culture allows workers to move throughout the business (Stahl,
2007). Therefore culture is significant in recruitment, selection and job designing in an
organisation.

Culture is internal symbolic context for the development and maintenance of organization identity
(Jo Hatch, and Schultz, M. 1997).Global companies like Twitter, Facebook motivate people by
their unique facilities related to culture (Patel, 2015). Culture is internal symbolic context for the
development and maintenance of organization identity (Jo Hatch, and Schultz, M. 1997).

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Therefore company culture is a part of the brand which creates the business, and makes an impact
on talent hunting as well as culture determines organisation’s identity; how customers are treated
ultimately reflects brand image.

There is a relationship between organisational culture and innovations. Innovation requires human
capital and it represents competences, level of education and qualifications, knowledge and skills
of employees, as well as leadership skills of managers (Szczepańska-Woszczyna, 2014). Culture
based on strong control is helps to creativity and innovation and cultures characterized by
dynamism, flexibility, fast adaptation to changing conditions are developing innovation
(Szczepańska-Woszczyna, 2014).

In resource based view, human resource help to acquire sustainable competitive advantage. Culture
helps to acquire competitive advantage for an organisation. Competitive advantages that are not
subject to imitation, firms may enjoy superior financial performance (Lippman & Rumelt, 1982
cited in Barney, 1986). Therefore, unique inimitable culture helps to acquire competitive
advantage and superior financial performance in human capital perspective.

Finally, it is concluded that culture plays significant role in human resource management in global
context.

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