• Hofstede carried out research of over 100,000 employees at IBM in different countries around the world

  • Attempted to categorise cultures of different nationalities working at IBM

  • His research suggests that cultural differences matter especially in those international organisations where the culture of the country is more important in the manager’s decision making than the firm’s culture. If you understand this then international business ventures are more likely to be successful.

  • A model of cultural dimensions that distinguish one country’s culture from another

  • The model measures and compares cultural dimensions of different countries and demonstrates that there are national and regional cultural groupings that affect the behaviour of organisations.

What distinguishes different cultures?

  • Individualism vs Collectivism
    • Some cultures prioritise individuals, whilst others prioritise family and teams.
  • Power Distance
    • The gap between the boss and the employees. In some cultures, a boss is friends with employees and there is a small power distance. However in others a boss is a much more imperialistic figure with a much sharper structure and larger power distance.
  • Short-termism vs Long-termism
    • Some cultures want instant change to justify any action, whilst others are willing to appreciate long-term investments.
  • Masculinity vs Femininity
    • There is a divide between equal treatment in different countries around the world and a business needs to figure out how to handle each.
  • Uncertainty Avoidance
    • Some cultures are unwilling to take unnecessary risks while others are more willing to go for it.
  • Indulgence vs Restraint
    • Relation between gratification and control. Indulgence is freedom of speech and leisure as priorities whilst restraint sees these with lower importance. Indulgence tends to be more prevalent in the Americas and Europe.

Cultural Web Analysis

  • The Cultural Web analysis is a model where the organisational paradigm, convictions and assumptions within an organisation are clarified by means of a coherent whole of six elements.
  • A paradigm is a widely accepted example, belief or concept.

Symbols and Titles

  • These include visual representations of an organisation, including logos, how people dress and how they speak. It also includes things such as how large a manager’s office is, whether managers have PAs or if there are separate canteens/entrances for different power scales.

Power relations

  • The power structure is an interrelationship between individuals or groups who take decisions about how an organisation’s resources are allocated.

Organisational Structure

  • This is about the way management is organised both vertically, by layers of hierarchy, and horizontally by functional structures.

Control Systems

  • This is about the way that an organisation is controlled, including financial systems, quality systems and reward systems. This does include the level of autonomy awarded to individuals within the organisation.

Rituals and routines

  • These are signs of what is considered appropriate behaviour and what is expected to happen in a given situation.

Myths and stories

  • These are the things that are repeated within the organisation and by others outside the organisation about it’s history, founders and other significant figures.

Organisational assumption (paradigm)

  • The six elements of the cultural web discussed above help to make up what Johnson and Scholes call the paradigm.

Influences on Organisational Culture

  • Business History
    • Stores of how the business began
    • Who were the company’s founders?
  • Existing Leadership Team
    • They set the example of expected behaviours and values
  • Business Performance
    • If a firm is successful then this will reinforce the existing culture
  • Company Ownership
    • Is the focus upon social needs (government) or profit (private). Recent ethical focus.

Reasons for changing culture

  • New leadership at the top of the company
  • Change in the ownership of the company
  • Economic conditions become more hostile or new competition enters the market
  • Business growth through takeovers or mergers

Problems with changing culture

  • Even the most experienced managers/leaders will face varying levels of resistance when seeking to change a firm’s culture.
  • New leaders will need to convince existing employees that:
    • Change is necessary for the business to thrive/survive
    • Any change will make the business stronger in the long-term
    • The suggested changes are right for the business
    • Change is inevitable and will happen
  • Need a clear and consistent message to harness as much support for the change as possible.
  • However, ultimately some leaders will be pushed aside by their board of directors who might be fearful of the suggested changes.