corporate culture

corporations

should

impose

their

corporate

culture

wherever

they

operate

Critically

examine

this

statement

illustrating

your

analysis

with

examples

Introduction

The corporate culture, as an informal management theory and practice, was developed

in

the

United

State

in

late

1908s.

It

has

become

a

real

challenge

for

multinationals

corporate (MNC), to

apply the corporate culture as a control mechanism. There are

many

Chief

Executive

Officers

in

MNCs,

such

as

the

Tyco

International

(the

Australian, 2003), regard organizational culture as essential key for success; however,

there are some literatures present the opposing view to the popularity of the corporate

culture.

They

believe

that

several

factors,

such

as

national

culture,

organizational

structure and level of employees? commitment, will vary the effectiveness of applying

corporate culture. In this essay,

I am

going to argue that although corporate culture

could

be

an

essential

key

for

MNCs?

success,

MNCs

should

not

always

impose

corporate culture to all of their subsidiaries around the world.

In addition, leader of

MNCs

should

take

different

variance,

which

are

national

culture,

organizational

structure

and

level

of

commitment,

into

account

when

they

decide

to

use

corporate

culture as a management tool.

Main body

Extant management scholars believe that there exists a dynamic linkage between the

concepts

of

culture

and

corporate,

in

the

other

words,

the

corporate

culture

is

embedded

in

and

maintained

by

organizational

mechanisms,

such

as

recruitment

strategies, reward strategies and communication strategies (Morgan, 1993; Hill, 2011).

As a result, there is a vast amount of literatures pinpoint that the corporate culture is a

source

of

competitive

advantage,

and

can

be

imposed

as

a

management

tool

in

a

multinational

corporation

(MNC) (Welch*

&Welch, 2005).

For

example, Sorensen

(2002) identified the corporate culture as a soft control mechanism that can create an

informal

communication

network

through

staffs

in

a

MNC.

Such

strong

corporate

culture

built

on

shared

values

and

behaviors

will

increase

the

commitment

of

employees and support the effective transfer of knowledge, information and resources.

According

to

Fey

and

Dension

(2003),

an

effective

organization

should

involves

4

cultural traits, which are

?involvement?, ?consistency?, ?adaptability? and ?Mission?;

1

in

addition,

Sadri

and

Lees

(2001)

suggest

a

MNC

maintaining

a

positive

organizational

culture

is

likely

to

enjoy

many

benefit,

for

instance

it

is

main

determination to attract and retain top employees.

Wal-

Mart,

the

world?s

largest

retailer,

demonstrate

sthat

how

a

positive

corporate

culture can be developed as a competitive advantage. The main reason for Wal-

Mart?s

success

is

not

the massive warehouse or intensive capital

but

the specific corporate

culture.

It?s

founder,

Sam

Walton,

shaped

Wal

-

Mart?s

success.

He

showed

concern

and respective for his employees from

the company?s inception

, in which he create an

environment of trust that last to this day. For example, he shared the profit with the

staffs

and

built

a

strong

partnership

with

suppliers.

And

he

promise

to

provide

“everyday low prices” to keep the minimal

cost. “Every time Wal

-Mart spends one

dollar foolishly, ” he wrote, “it comes out of our customers? pockets”

(the economist,

2011).

Until

now,

this

is

still

ingrained

in

Wal-

Mart?s

culture.

Walton

as

the

top

leader, he actually perceives culture as a mana

geable variable to drive company?s core

value and model the behaviors of his employees. Scholars, Deal and Kennedy (1982)

argue that the way to mange people, the greatest resources, is not by computer reports,

but

by

the

subtle

cues

of

culture.

The

purpose

of

culture

control

is

to

expect

appropriate

performance

from

employees

and

remove

direct

supervision

in

diverse

locations.

This

argument

provides

a

strong

support

to

why

Wal-

Mart?s

small

-town

value can create a sense of belongingness among staff and suppliers.

There are many MNCs like Wal-Mart regard corporate culture as the essential key for

success; however, more and more management scholars doubt the utility of corporate

culture

in

MNCs.

The

questions

like,

whether

it

will

increase

the

effectiveness

of

MNCs

in

different

national

culture;

and

some

scholars,

such

as

Welch* and

Welch

(1997)

critical

examine

the

corporate

culture

may

become

a

barrier

to

MNCs?

flexibility, responsiveness and innovativeness if the external business environment are

diverse and rapidly changing. The flowing paragraphs will focus on the drawbacks of

imposing corporate culture may cause, without considering the internal and external

environment of MNCs.

It may be counter- productive for a MNC to develop and apply the corporate culture as

a soft management tool when the influence of national culture is taken into account

2

(Fey & Dension, 2003; Lim, 1995; Welch* & Welch, 1997). It seems clear that there

are

some

kind

of

relationship

between

national

culture

and

organizational

culture,

scholars like DiMaggio and Powell (1983) use the term ?isomorphism? to describe the

phenomenon that the corporate culture of a firm will follow the general contours of

national culture. The most famous study conducted by Geert Hofstede in late 1980s

shown a clear linkage between the national culture and values in the workplace, he

summarized

four

different

cultures,

which

are

?power

distance?,

?uncer

tainty

avoidance?, ?individualism

versus collectivism? and

?masculinity versus femininity?.

Therefore,

different

cultural

context

will

influence

values

and

norms

of

a

MNC,

to

adopt a similar corporate culture with host countryat the foreign country will limit its

success.

For

example,

Fey

and

Denison

(2003)

conducted

a

survey

to

illustrate

how

the

effectiveness

of

subsidiaries

in

a

host

country

will

be

affected

if

MNCs

impose

similar

corporate

culture

in

home

country.

He

chose

Russia

as

the

host

country

b

ecause the foreign investment is critically important to Russia?s success, in addition

he chose the USA as home country because the theory of using corporate culture as

competitive

advantage

is

first

developed

and

applied

in

the

United

States.

He

was

intend to find out that whether the four cultural traits of effective organization in USA,

which

are

?involvement?,

?consistency?,

?adaptability?

and

?mission?,

will

provide

positive effect toward foreign subsidiaries under Russia?s context. He concludes that

although the general corporate cultural model can be applied to Russia from the UAS,

there should be some changes as the specific economic and political environment in

Russia. For instance,

the ?involvement? attained unique meaning in Russia; in USA, it

means give the decision right to lower- level manager, however in Russia even though

the decision right is delegated to middle manager, they are more likely to come back

over,

asking

top

manager

to

decide

on

the

issue.

According

to

Elenkov

(1997),

the

Russia

s

core

?87?

in

?Uncertainty

avoidance?

in

comparison

with

the

United

States

that only score ?46? in such dimension, based on the Hofstede?s four dimensions of

national

culture.

It

will

take

a

long

time

to

change

the

behaviors

of

employees

in

foreign

subsidiaries,

and

headquarter

may

not

receive

expected

performance

from

foreign subsidiaries during the period of adaption.

3

Furthermore,

the

business

environment

is

going

to

be

more

diverse

because

of

the

globalization, being flexible and adaptable is becoming an important factor of success.

Witt

(2002)

suggests

that

firms

in

diverse

national

context

might

be

better

to

emphasize

bureaucratic

or

other

?non

-

cultural?

control

mechanism.

Diversity,

changeability

and

global

competitiveness,

as

Welch*

and

Welch

(1997)

comments,

are the desire factors for MNCs. However, corporate culture as a control purpose is

very

difficult

to

be

change.

For

example,

norms

of

a

top

manager

may

have

been

profoundly modeled by the past corporate inculcation process and become a kind of

personal

adherence.

Such

individual

may

become

a

source

of

resistance

when

company face radical change, in case of replacement of new Chief Executive Officer,

the whole value system of company may change and managers have able to take new

approach and follow new strategies as quick as possible. Welch* and Welch (1997)

categories individuals in a company into different level of commitment to corporate

value

system

and

summarize

that

employees,

who

have

strong

commitment

to

espoused values, will be harmful to company health because they limit the ability of

being

flexibility,

responsiveness

and

innovativeness.

Therefore,

MNCs

should

not

always impose corporate culture to

all of the subsidiaries around the world

without

considering the

employees?

degree of commitment to corporate value.

The different culture between the home and host country, in addition with the vertical

differentiation of MNC

will influence the decision of imposing corporation

culture.

The

vertical

differentiation

determines

in

where

a

MNC?s

h

ierarchy

and

decision-

making

power

is

concentrated,

Hill

(2011)

split

it

into

centralization

and

decentralization.

Decentralization

will

increase

the

level

of

autonomy

by

allocating

the decision right to lower-level employee, and according to Nohria & Ghoshal (1994)

the innovative firm with less centralized structure is more likely to create share values

in

an

aim

to

control

their

international

subsidiaries.

Yong

and

Tavares

(2004)

conclude

that

because

the

greater

the

autonomy

of

subsidiaries,

there

is

more

uncertainty about the subsidiaries actions and goals. Therefore, the traditional control

mechanism

such

as

bureaucratic

control

mechanism

become

less

feasible,

and

headquarters become more reliable on using cultural control. For example, Brown and

Eisenhardt

(1997)

suggest

that

it

is

better

for

a

firm

to

operate

in

the

form

of

decentralization

and

applying

corporate

culture

as

subsidiaries?

management

mechanism

in

knowledge-intensive

industry.

Because

a

positive

corporate

culture

4