Does National Culture Affect Organizational Practices?

Companies that operate in more than one country face a challenging dilemma: how much should they tailor organizational practices like leadership style, rewards, and communication to each country’s culture? To some extent, it is necessary to change the way a company does business because of differences in regulations, institutions, and labor force characteristics. For example, a U.S. company that operates in Germany will have to contend with laws requiring greater worker participation in decision making, and an Australian company operating in China will have to  match the knowledge and skills found in the Chinese workforce. Despite certain limitations imposed by law and situational factors, managers still need to make many decisions about adjusting their organizational culture to match the culture of the countries in which they operate.

There are no simple responses to this dilemma. Some researchers propose that managers need to make a concerted effort to adapt their organizational culture to match the culture of the countries in which they operate. These authors note that within any country, there is a great deal of similarity in management practices that is likely the result of culture or values. If a country’s basic outlook is highly individualistic, then organizational culture should also emphasize individual contributions and efforts. Conversely, if national culture values collectivism, then organizational culture should emphasize group contributions and cohesiveness. From this perspective, successful international management is all about tailoring management practices and values to fit with the cultural values of each country in which the company operates.

On the other hand, some propose that national culture should not, and does not, make much difference in shaping organizational culture. These researchers note that even within a single country, there can be a great deal of variation in values and norms. The development of practices to match a culture is fraught with problems of stereotyping and over-generalizing about the degree to which everyone in a given country shares the same values. These authors also note that in tailoring practices to each country, a firm loses the potential value of having a unifying organizational culture. From this perspective, companies should try as much as possible to create a strong culture that operates across borders to create a unified global workforce.

 

Source: Based on B. Gerhart, “How Much Does National Culture Constrain Organizational Culture,” <emphasis>Management and Organization Review 5,</emphasis no. 2 (2009), pp. 241–259; A. S. Tsui, S. S. Nifadkar, & A. Y. Ou, “Cross-national, Cross-cultural Organizational Behavior Research: Advances, Gaps, and Recommendations,” Journal of Management 33, no. 3 (2007), pp. 426-478; and G. Johns, “The Essential Impact of Context on Organizational Behavior,” Academy of Management Review 31, no. 2 (2006), pp. 386-408.