Cultural differences in organizations

1
Cultural differences in organizations

• Opening academic year
• Faculty of Economics and Business
• University of Groningen
• 1st September, 2009
• Geert Hofstede

2
Cultural differences in organizations

• Mind your level of analysis!
• individuals
• (stranger in our midst)
• organizations
• (the way we do things here)
• societies
• (crazy guys, those Romans)

3
Cultural differences in organizations

• individuals
• (stranger in our midst)

4
Cultural differences in organizations and the
functioning of a (foreign) individual

• more a matter of persons (on either side) than of
  culture
• demands on settlers personality
• openness to new experience
• emotional stability
• universality of culture shock
• dealing with mutual prejudices
• expatriate training
• cultural intelligence

5
Cultural differences in organizations

• organizations
• (the way we do things here)

6
Cultural differences in organizations and the
culture of the organization

• organizational level comparing different
  organizations within same country(ies)
• also called corporate culture but this can
  include different organizational cultures
• organizational cultures consist of practices
  that adult new hires can learn on the job
• in particular symbols, heroes and rituals
• they can be monitored and changed
• but only through what top management practises,
  not through what it preaches
• corporate values are window dressing

7
Cultural differences in organizations

• societies
• (crazy guys, those Romans)

8
Cultural differences in organizations and the
cultures of societies

• societal level comparing same or similar
  organizations across different countries
• societal cultures consist of shared values
• which pass from parents to children
• which can change, but not be changed
• for managers they are given facts
• which economists have too long ignored
• international organizations function through
  shared practices, as values are rarely shared

9
Cultural differences in organizations and the
origin of societal culture differences

• we humans are born incompletely programmed
• until about age 10 we are physiologically
  equipped for completing our programming
• which is provided by our social environment
• and includes all our basic emotional values
• which to ourselves remain largely unconscious
• after age 10, these basic values stay with us
• even if we migrate to another country

10
A case of societal cultures the 2008 crisis
11
Culture and the 2008 financial crisis

• That things could turn as quickly as they could,
  I dont think anyone saw, said Sir Fred Goodwin
• Schools of economics and business didnt teach
  him one cannot have ones pudding and eat it
• Economics as a science has ideological roots in
  Anglo-American cultural values .
• which have blinded it to the role of other values
• Goodwin and his kind still did not discover that
  their own values were at the root of the crisis
• Ideology of privatization led to nationalization

12
Business goals around the world

• How does one find out about the goals-in-use of
  business leaders? Asking the leaders themselves
  is not a solution there is an obvious
  self-serving bias moreover, real goals may be
  unconscious
• In 1995, Hong Kong evening MBA students rated
  their successful business leaders on 15 goals
• From 1996 to 2002, evening MBA students in 16
  other countries replicated this exercise
• Part-time MBA students with day jobs in business
  organizations may be the best objective judges of
  their top managers goals available anywhere

13
Business leaders goals attributed rank
ordermean across 17 countries around 1998

• Growth of the business
• Continuity of the business
• This years profits TOP 5
• Personal wealth
• Power
• Honour, face, reputation
• Creating something new
  MIDDLE 5
• Profits 10 years from now
• Staying within the law
• Responsibility towards
  employees
• Respecting ethical norms
• Responsibility towards society
• BOTTOM 5 Game and gambling spirit
• Patriotism, national pride
• Family interests

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Goals of business leaders perceived by MBAs

• more less important goals compared to
  other countries
• in the U.K. in the Netherlands
  
• Staying within the law Game and gambling spirit
• This years profits Responsibility tds.
  employees
• Responsibility tds. employees Continuity of the
  business
• Responsibility tds. society Honour, face,
  reputation
• Continuity of the business Responsibility tds.
  society
• Game and gambling spirit Personal wealth
• Profits 10 years from now Profits 10 years from
  now
• Growth of the business Patriotism, national
  pride
• Power Family interests
• Creating something new Growth of the business

15
Goals of business leaders perceived by MBAs

• more less important goals compared
  to other countries
• in the USA in China
• Growth of the business Respecting ethical norms
• Respecting ethical norms Patriotism, national
  pride
• Personal wealth Power
• This years profits Honour, face, reputation
• Power Responsibility tds. society
• Profits 10 years from now Family interests
• Responsibility tds. employees Game and gambling
  spirit
• Family interests This years profits
• Creating something new Personal wealth
• Continuity of the business Staying within the
  law

16
Top goals of US business leaders in 1998 growth,
wealth and short term gains

• Growth, no continuity
• Short term, no long term
• Personal greed and power
• No responsibility towards stakeholders
• No creativity for innovation
• This was the recipe for a collision course
• The 2008 crash was predictable in 1998 but
  economists didnt see it

17
Rated importance of wealth vs. reputation

• Reputation more important
• Denmark, Netherlands, Germany
• China, Asians in Hawaii, New Zealand
• About equal
• India, Brazil, Britain
• Personal wealth more important
• USA, Australia, Hong Kong

18
Dont spill our cultural assets

• The USA has played a key role in the world
  economy of the 2nd half of the 20th century
• Civilizations rise and fall, and the American
  civilization is no exception its era is fading
• A Dutch cultural trait is to admire others
  often forgetting to look at own strengths
• Dutch universities are able to link co-European,
  American and Asian cultures

19
FEB after the crisis business as usual?

• The University of Groningen was founded on 23rd
• August, 1614, and international from the
  beginning
• It always recognized the challenges of the times

Desirables for its 5th century - Studying the
economics of responsibility - Studying business
as a creative game - Forming masters prepared to
serve society