Organizational Culture and National Culture in Multinational Companies

Abstract Multinational organizations are combinations of multicultural employees. Multicultural environments cause cultural shock among leaderships and employees. Organizational culture and national culture are significantly important in current marketing environment. Organizational culture mainly shows the value and the roles inside the organization. However, national culture is the directing of organizational culture and influence both leadership and employees deeply from their personal values.

Furthermore, the relationship between organizational culture and national culture has impacts on leaderships, employees, job satisfaction as well as the commitment of employees to the organizations. This essay will discuss the issues above, and make introduction about organizational culture, national culture and leadership, and corresponding impacts on employees and organizations as follows: Firstly, a brief summary of the influence given by organizational cultures and national cultures on multinational companies will be made.

Secondly, it will discuss the importance of organizational culture and its influences on organizations, leaderships and employees. Thirdly, it will emphasize discuses the significance of national culture and impacts on organizations, leaderships and employees. Fourthly, it will present how leadership is related to i organizational culture and national culture. At last, it will conclude how national culture is stronger than organizational culture in influencing employees in multinational companies. Globalization has a great influence in the booming of multinational companies.

Multinational companies encourage the cooperation of versatile national powers. Doing business in different countries integrates the resource utilization and decreases the costs to a large extent. Multinational companies make the cultures of organization diverse. The relationship between leaderships and employees, which is connected to both organizational culture and national culture, is also influential in the development of organizations. However, national cultures and organizational cultures have some potential conflicts in multinational companies.

Under this circumstance, it is vital to consider which culture is more valuable than the other to the development of the multinational company. With the rapid economic development over the past a few years, multinational companies has become one of the primary forms of corporation. The construction of these companies promotes not only universal economic growth but also the progress of globalization. Meanwhile, in any overseas country, the establishment of multinational companies might confront various challenges like different working habits and culture conflicts.

It is comprehensible that employees from diverse culture backgrounds would have different perspectives on organizational culture in multinational companies. In this case, organizational culture is the collection of practices, traditions, customs, beliefs and values shared by one generation of employees of the organization to the next. National cultures must be considered if accurate predictions need to be made regarding corporate behavior in different countries. Thus, due to the existence of difference between organizational culture and national culture, multinational companies could not avoid facing the challenges.

Most of the leaders and workers in a multinational enterprise are from different races and countries. It is unavoidable to confront the issues of culture conflicts when employees working in cooperation. Organizational culture affects the attitudes of employees towards treating personal and professional aims, and the performance of employees when accomplishing tasks. Organizational culture also has great influence on how people think and make decisions as well as the way they feel, act and express.

Peter and John (2004, p323) suggests that organizational culture could influence particular aspects considerably in organizations like performance and commitment. Organizational cultures also combine with various forms of cultures. For instance, Wallach (1983) viewes three perspectives of organizational culture, that is, innovative, supportive and bureaucratic. Martin (1992) identified three forms of organizational culture, including fragmentation, differentiation and integration. Goffee and Jones (1998) define four types of organizational cultures, which is communal, fragmented, mercenary and networked.

However, in a company, individuals have personal values and beliefs as well as personal desires. On that account, the attitude of employees and commitment to the companies may result in diversity of achievements. National cultures also have some effects on the values, beliefs and personal desires. A variety of countries have multifarious national cultures, giving rise to a culture shock in multinational companies. Cross-cultural research shows that significant differences exist in national culture characteristic between western and eastern cultures (Hofstede, 1980, 1991; El Kahal, 2001; Chen, 2001).

For instance, it is widely known that bureaucratic traditional deep-rooted culture and high power distance exist in Chinese companies (Pye, 1985; Chen, 2001). The management of firms in the west and east makes a world of difference. The reason for that is the distinction between the impact of national culture on individual worth and how individual worth adapts to the organizational culture. Furthermore, after organizations in Hong Kong are mostly in power by ethnic Chinese, the Chinese-style high power distance and values of Confucian may make significant change of the organizational cultures.

Confucian thinks that loyalty, respect of authority and obedience to the leadership may well be the most crucial (Peter & John 2004, p323). A typical example is that the owner or supervisor in Korean and Chinese companies often makes major decisions. According to Hofstede (1980), Australia and America are both low power distance countries. People regard participation, equalitarianism and democracy as ubiquitous. However, they do not think authority is worth considering. As for decision making in these countries, there is much more democracy and equality.

Furthermore, the more flexible the leaderships are, the further improvement of the enthusiasm, participation, productivity and satisfaction of the employees. It cannot eliminate the presence of bureaucratic structure in western firms, however the aim is to coordinate business of all levels and achieve the goal. The organizational culture of a firm, leadership and work satisfaction may be hypothesized by national cultures. Cultures consist of many distinct layers or types, national cultures and organizational cultures are parts of them.

Organizational culture illustrates the value which is superior in a specific corporation. According to the comparison of the national culture and organizational culture, Hofstede (1991) suggests that national cultures normally show the gap in ingrained values of the corresponding cultures. Understanding of national cultures is beneficial to the development of the relationship among employees and employers. This could form a balance condition between the leadership and the staff. However, national cultures always cause misunderstandings and distance in multinational companies.

Furthermore, due to unlike values, gaps among variety of national cultures are normally found in business in several multicultural companies. The organizational culture in a multinational company could build a bridge through cultural barriers, although the deep-rooted values among people in multicultural environment may always exist. Namely, perhaps employees from diverse national cultures are able to adjust to the organizational culture, still, the national cultures of their own may also be persistent in their daily life and business practice.

This makes it difficult for the company to socialize employees from different cultures when the organizational culture is against their national culture. National culture and organizational culture are correlated with the behavior of employees. The research shows that national culture has a greater impacts on employees than organizational culture (Dols & Silvius 2010, p13). This reflects the self-selection which occurs at the recruiting stage. Multinationals utilize employee selection process to recruit applicants who are appropriate for their organizational culture.

Accordingly, the knowledge of national culure is indispensable, in particular in forms of accurate forecasting of employee behavior. At this point, if an enterprise plans to securely establish an efficient culure, it should considers both of national culture and organizational culture. In the multinational companies, national culture causes barriers to the diversity of a company. It makes an influence on hiring new employees who are not so fit in a corporate environment in certain country background.

Leaders want the new employees to bring different cultures to the workplace whilst being adjustable to the organizational culture. Employees are under considerable pressure to conform strong cultures. The range of styles and values need to be restrained to some extent. With the aid of strong culture, an enterprise can reinforce cultural diversity by seeking their core culture to appeal to new employees. However, if the attraction and encouragement are effective, people who holds different values to the organization might become isolated and accept institutional bias.

National culture is a culture related to individuals, it is one’s original culture roots deeply into one’s mind since one was born. However, organizational culture is created by others and one must adapt to and even affected by, but only on condition that it fits one’s national culture. Leadership is the most important aspect to both success and failure of the companies. The form of leadership influences employee job satisfaction and commitment significantly. Peter and John (2004, p324) state that the style of leadership is often connected with low power distance and a flatter corporate construction.

However, organizations that from Asia have much concentrated power and, what’s more, central decision making and policy driven, which makes the situation that Asian companies are more based on position, authority and seniority. For instance, Chinese top boss always require guarantee as a symbol of loyalty to the organizations. Society in Chinese is defined as personalism (Peter & John 2004, p324). That is, the relationship among employees and employers may make influences on employees’ commitment and their team spirit, also, better relationship between people leads to greater job satisfaction.

Asian companies seem to be more ruled by person and relationship among person than other organizations in America that ruled by law, business rules and top bosses. Furthermore, in American organizations, leaderships are low power distance and normalized. Abilities are much more important than people’s relationships. The more consideration the leadership style is, the greater commitment and job satisfaction will be provided. To conclude, both national cultures and organizational cultures are imperative for multinational organizations in contemporary global environment.

However, national cultures are more influential and deep-rooted in multinational organizations. Even organizational regulations are imposed according to national culture. Furthermore, with regard to decision-making, relationships between employees and employers are significantly inevitable in up-to-date business market. Organizational culture is the method to make the organization more outstanding in the market competition. However, national culture is related to the origin of organizational culture.

Both of them have different value to multinational companies. Consequently, as the report has mentioned, owing to the value and power system of the organization are depended on the national culture national culture has greater influence on managers and employees in multinational companies. To identify the relationship between national culture and organizational culture could adjust the relationship between employees and leadership. What’s more, cooperation could gain more profits through internal personnel system.

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