Employees of MNCs are expected to “fit in.” Regardless of the external environment, managers and employees must understand internal culture to be successful. Organizational Culture is the shared values and beliefs that enable members to understand their roles in and the norms of the organization.

1. MANAGING ACROSS
CULTURES

2. Organizational Culture
• Employees of MNCs are expected to “fit in.”
• Regardless of the external environment,
managers and employees must understand
internal culture to be successful.
• Organizational Culture is the shared values
and beliefs that enable members to
understand their roles in and the norms of the
organization.

3. Characteristics
• Observed behavioral regularities (language,
terminology, and ritual).
• Norms, as reflected by things (such as the
amount of work to be done).
• Dominant values that the organization
advocates and expects participants to share.
• A philosophy of how employees and
customers should be treated.
• Rules that dictate the dos and don’ts of
employee behavior

4. Interaction Between National and
Organizational Cultures
• There is a belief that organizational culture
tends to moderate or erase the impact of
national culture.
• But, Hofstede’s research found that
– National cultural of employees have a significant
impact on their organizational performance
– National cultural of employees can not be easily
changed by the organization.
– Cultural differences are actually more pronounced
among foreign employees working within the
same MNC.

5. Interaction Between National and
Organizational Cultures
• There often are substantial differences
between the organizational cultures of
different subsidiaries.
• And of course, this can cause coordination
problems.
• By examining the differences between
organizational cultures, Hofstede identified
the dimensions of organizational culture.

6. Dimensions of Corporate Culture
European Subsidiary USA Operation
Relationship
Job Oriented (To put the demands of the job
before the needs of the individual.)
Person Oriented (To put the needs of the
individual before the needs of the job.)
Communication
Closed (To monitor and control the
exchange and accessibility of information
and opinion.)
Open (To stimulate and encourage a full and
free exchange of information and opinion.)
Control
Tight (To comply with clear and definite
systems and procedures.)
Loose (To work flexibly and adaptively
according to the needs of the situation.)
Motivation
Activities (To be consistent and precise. To
strive for accuracy. Get it right.)
Output (To be pioneers. To innovate and
progress. Go for it.)

7. Organizational Cultures in MNCs
• Organizational cultures of MNCs are shaped
by a number of factors:
– The general relationship between the employees
and their organization;
– The hierarchical system of authority that defines
the roles of managers and subordinates;
– The general views that employees hold about the
MNC’s purpose, destiny and their place in them.

8. Types of MNCs Organizational
Cultures
• Trompenaars suggested the use of two continua:
– One distinguishes between equity and hierarchy;
– The other examines orientation to the person and the
task.
• Along these continua, he identifies and describes
four different types of organizational cultures:
– Family
– Eiffel Tower
– Guided missile, and
– Incubator.

9. Family Culture
• Family culture is characterized by the
following:
– A strong emphasis on hierarchy and orientation to
the person.
– A family-type environment which is headed by a
leader who is regarded as a caring parent.
– Personnel not only respect the leaders but look to
them for both guidance and approval as well.
– Management assumes a paternal relationship
with personnel, looks after employees.
– Turkey, Pakistan, Venezuela, China, Hong Kong,
and Singapore

10. Eiffel Tower Culture
• Eiffel Tower culture is characterized by the
following:
– A strong emphasis on hierarchy and orientation to
the task.
– Jobs are well defined, employees know what they
are supposed to do.
– Everything is coordinated from the top.
– Unlike the Family culture, the person holding the
top position could be replaced at any time.
– Managers seldom create off-the-job relationships
with their people.
– Denmark, Germany, and the Netherlands

11. Guided Missile Culture
• This culture gets its name from high-tech
organizations such as NASA. It is characterized
by the following:
– A strong emphasis on equality in the workplace
and orientation to the task.
– Unlike the Eiffel Tower culture, personnel in this
culture do whatever it takes to get the job done.
– Formal hierarchical considerations are given low
priority, and individual expertise is of greatest
importance.
– USA, UK, Russia

12. Incubator Culture
• It is characterized by the following:
– A strong emphasis on equality and personal
orientation.
– Self-expression and self-fulfillment of the
members.
– Organizations typically are entrepreneurial and
often founded and made up by a creative team.
– Unlike family culture, leadership in this incubator
culture is achieved, not gained by position.

13. Organizational Cultures of MNCs

14. Cultural Tendency
• Most MNCs have a cultural tendency toward
doing things in a particular way.
• Four distinct predispositions have been
identified:
– Ethnocentric,
– Polycentric,
– Regiocentric, and
– Geocentric.

15. Cultural Tendency
• Ethnocentric
– A nationalistic philosophy of management
whereby the values and interests of the parent
company guide strategic decisions.
• Polycentric
– A philosophy of management whereby strategic
decisions are tailored to suit the cultures of the
countries where the MNC operates.

16. • Regiocentric
– A philosophy of management whereby the firm
tries to blend its own interests with those of its
subsidiaries on a regional basis.
• Geocentric
– A philosophy of management whereby the
company tries to integrate a global systems
approach to decision making.
Cultural Tendency

17. Implications For Managers
• If an MNC relies on one of these profiles over
an extended time, the approach may become
institutionalized.
• A tendency toward any of these profiles can
provide problems for a firm.
• Successful MNCs use a mix of these
predisposition based on the demands of the
current environment

18. Need For Mix of Cultural Predispositions
• A number of factors are moving MNCs to use the hybrid
cultural predisposition for different cultures, these are
the following:
– The diversity of worldwide industry standards.
– A continual demand by local customers for differentiated
products.
– The importance of being an insider.
– The need to allow subsidiaries to use their own abilities.
– The difficulty of managing global organizations.
• Responding to the cultural needs of local customers,
MNCs find that regional strategies can be used
effectively.

19. Orientation of an MNC Under Different Profiles
Subject Orientation of the Firm
Ethnocentric Polycentric Regiocentric Geocentric
Mission Profitability
(viability)
Public acceptance
(legitimacy)
Both profitability and
public acceptance
Same as regiocentric
Governance Top-down Bottom-up (each
subsidiary decides
on local objectives)
Mutually negotiated
between region and
its subsidiaries
Mutually negotiated
at all levels of the
corporation
Culture Home country Host country Regional Global
Strategy Global integration National responsiveness Regional integration
and
national responsiveness
Global integration and
national responsiveness
Finance Repatriation of
profits
to home country
Retention of profits
in host country
Redistribution within
region
Redistribution globally
Personnel
practices
People of home
country
developed for key
positions
everywhere
in the world
People of local
nationality
developed for key
positions in their own
country
Regional people
developed for key
positions anywhere
in the region
Best people everywhere
in the world developed
for key positions
everywhere
in the world