Carla I. Koen. Comparative International Management
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Learning Objectives
By the end of this chapter you will be able to:
understand the different approaches to organizational culture
appreciate the complexity of organization culture research
reflect upon the context-versus-actor problem in organization culture analysis
appreciate the intricate role of organizational culture in domestic and
international mergers and acquisitions
evaluate the link between industry characteristics and organization culture
analyse the link between organizational culture and strategy
reflect critically upon the link between organizational culture and performance
understand the development of organization culture
assess the plausibility of a cultural dynamics process.
Chapter
3
Organizational Culture
Research
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Chapter Outline
3.1 Organizational Culture: What and Why?
3.2 Research Streams: the Etic and Emic Approaches
The emic approach
The etic approach
Conclusion to the emic–etic methodological debate
3.3 Multi-level Shaping of Culture
The micro perspective
The macro perspective
Societal culture versus organizational context
3.4 Culture Issues in Mergers and Acquisitions
Strategic fit?
Cultural fit
Symbols and boundaries
Acculturation
Management styles
Case: Culture Clash at DaimlerChrysler
3.5 Organizational and Industry Culture
3.6 Organizational Culture and Strategy
3.7 Organizational Culture and Economic Performance
Culture as a building block
Culture as a tool and constraint
Culture as a diagnostic instrument
3.8 Creation and Consolidation of Organizational Culture
Creation
Consolidation
Case: Glass Ceiling or Sticky Floor? Organizational Culture as a Source of
Stickiness at RaboBank
3.9 Organizational Culture Change
Three types of organizational culture change
Cultural change versus structural and material change
Study Questions
Further Reading
Case: Atos Origin and KPN
References
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3.1 Organizational Culture: What and Why?
The previous chapter explained how organizations are linked to culture at the societal
(national) level. A second major way in which organizations and culture are linked is that
organizations are themselves culture-producing phenomena. Organizational culture is
seen as a metaphor for understanding how organizations differ, how their members
cohere, and how organizations and members interact (Adler and Jelinek, 1986).
While most organizational culture research still tends to perceive organizational
culture as entirely distinct from the societal or national culture, it is widely recognized
that the societal level influences the organizational level. In other words, the members of
an organization are influenced by both the national and organizational culture contexts.
As a consequence, managing international business means handling both national and
organizational culture diversity.
This chapter has been conceived with this observation in mind. It discusses organiz-
ational culture issues that are especially important for operating successfully in a
multicultural context. In this respect, Section 3.3 of this chapter discusses approaches that
focus on intra-organizational culture diversity as well as approaches that specifically incorpo-
rate the societal environment in their analysis of organizational culture. It addresses the issue
of fit between the societal and organizational cultural level.The section also introduces a tax-
onomy (classification) of work-related values to analyse the societal effect on organizations.
Section 3.4 continues in this direction by introducing the concept of ‘cultural fit’ in
the context of mergers and acquisitions, both international and domestic. It is argued
that, depending on the degree of integration, the cultures of the merging corporations
need to ‘fit’ in order to arrive at successful post-merger coordination and integration. This
section also addresses the concept of acculturation, which suggests different ways
through which the culture and systems of two companies can be combined. There is a
brief discussion of the DaimlerChrysler case at the end of the section, showing how cul-
tural clashes can impede the efficient functioning of a merged company.
Aside from the impact of the societal level, organizational culture is also influenced
by the industry in which the organization operates. In fact, industry characteristics
impose another type of ‘fit’ upon organizational culture. In order for a company to
survive, both the culture and the form it develops must be appropriate to industry
demands. Section 3.5 examines the link between industry characteristics and organiz-
ational culture, and addresses some effects of this link for organizational strategy.
The central role of strategy in corporate life explains why we have dedicated a section
of this chapter – Section 3.6 – to the link between organizational culture and strategy. The
section discusses the main approaches to this issue. The concept of ‘fit’ is used in this
context by research that argues for the alignment of strategy and organizational culture
in order for companies to be successful.
In one way or another, Sections 3.3–3.6 of this chapter suggest a link between organ-
izational culture and corporate performance. Section 3.7 broadens this picture by looking
at three perspectives, which discuss the scope for management intervention within organ-
izational culture in order to enhance performance. It warns the reader against simplistic
solutions to organizational problems. A topic, which is related to this discussion, is the
question of organizational culture change in general. This is discussed in Section 3.9.
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In some cases, continuity rather than change of organizational culture is desirable.
Organizational culture creation and consolidation is discussed in Section 3.8. The issue of
undesirable continuation is demonstrated through a case study on Rabobank. At the
same time, this case introduces gender issues in relation to organizational culture.
Before tackling these issues, following a structure similar to that of the previous
chapter on national culture, Section 3.2 offers a balanced view of contemporary organiz-
ational culture research. It discusses the two main perspectives on the topic: the emic and
etic approaches – stressing complementarity instead of one-sidedness. We argue that,
rather like national culture, organizational culture is a complex research area, which
cannot be understood from a single perspective.
3.2 Research Streams: the Etic and Emic
Approaches
The body of literature that focuses on organizational culture is large and diverse, crossing
disciplinary and methodological barriers. Similar to cross-cultural research, the present
state of the art in the field of organizational culture research shows little convergence
towards a commonly accepted conceptualization and operationalization of the construct
(an operationalization is the way a given concept is measured in a particular study).
Conceptualizations of organization culture range from viewing it as a root metaphor
for understanding how organizations are (the emic view) to viewing it as an independent
variable that managers can manipulate for desired ends – that is, something an organiz-
ation has (the etic perspective) (Smircich, 1983). The difference in conceptualization of
organizational culture results in the use of different definitions, levels of analysis and,
hence, different research methods. These differences are discussed below.
The emic approach
Definition and levels of analysis
The first stream of research is rooted in anthropology and ethnography, with Edgar Schein,
Marta Calàs, Joanne Martin, Majken Schultz, Mary Jo Hatch and Linda Smircich as
important representatives. The conceptualization and definitions of organizational culture
in this strand of research all focus on the so-called ‘deep levels’ of meanings, beliefs and
values, which can only be understood and studied from the ‘inside’ (Figure 3.1). They
express the approach’s concern with ‘understanding’, tending to view corporate culture as
a way of understanding corporate life and as developed by the members of the organization.
Schein’s conceptualization and formal definition of organizational culture are
among the clearest expressions of the emic approach. For Schein, organizational culture
or the culture of a group can be defined as follows:
A pattern of shared basic assumptions that the group learned as it solved its prob-
lems of external adaptation and internal integration, that has worked well enough
to be considered valid and, therefore, to be taught to new members as the correct
way to perceive, think, and feel in relation to those problems. (Schein, 1992: 17)
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Schein’s definition expresses his view that the essence of a culture lies in the pattern of
basic underlying ‘assumptions’ that members of an organization come to share as a result
of common experiences in their working life. These assumptions, in turn, are reflected in
and give meaning to expressed ‘values’ and observable artefacts and patterns of behav-
iour. Schein thus differentiates between different levels, addressing questions of depth of
organizational culture (see Table 3.1).
In his view, the level of artefacts is at the surface and includes all the phenomena that
one sees, hears and feels when one encounters a new group. Artefacts would include the
visible products of the group such as the architecture of its physical environment, its lan-
guage, its technology and product, its style as embodied in clothing, manners of address,
observable rituals and ceremonies, and so on. Artefacts are easy to observe but very diffi-
cult to decipher. The observer can describe what she sees and feels but cannot reconstruct
from that alone what those things mean in the given group, or whether they even reflect
important underlying assumptions. Only if the observer lives in the group long enough do
the meanings of the artefacts gradually become clear.
If one wants to achieve this level of understanding more quickly, Schein argues that
one can attempt to analyse the espoused values, norms and rules that provide the day-to-
day operating principles by which the members of the group guide their behaviour.
However, Schein also argues that values are often inconsistent with observed behaviour,
and may only reflect rationalizations or aspirations for the future. Moreover, large areas of
behaviour will be left unexplained.
Schein thus argues that in order to achieve a deeper level of understanding of a
group’s culture, one must attempt to get at its shared basic assumptions and one must
understand the learning process by which such basic assumptions come to be. Schein
argues that while any group’s culture can be studied at these three levels – the level of its
artefacts, the level of its values and the level of its basic assumptions – if one does not deci-
pher the pattern of basic assumptions that may be operating, one will not know how to
interpret the artefacts correctly or how much credence to give to the articulated values
(Schein, 1992).
Many other ‘emic’ and ‘etic’ organization culture researchers prefer the concept of
basic ‘values’ for describing the deepest levels. Schein prefers basic ‘assumptions’ because
these tend to be taken for granted and are treated as non-negotiable. Values can be and
are discussed, and people can agree to disagree about them. Basic assumptions are so
taken for granted that someone who does not hold them is viewed as crazy and automat-
ically dismissed (Schein, 1992). The question of whether values or assumptions lie at the
98 COMPARATIVE INTERNATIONAL MANAGEMENT
Source: Schein (1992: 17).
Table 3.1 Schein’s levels of organizational culture
Artefacts Visible organizational structure and processes
(hard to decipher)
Espoused values Strategies, goals, philosophies (espoused
justification)
Basic underlying assumptions Unconscious, taken-for-granted beliefs,
perceptions, thoughts and feelings (ultimate
source of values and action)
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core of organizational culture is debatable, however. The fact that values are acquired in
early childhood, and afterwards show considerable resistance to change, would seem to be
an argument to place them at the deepest level of culture (Noorderhaven, 1995: 151).
Moreover, we should not forget that the layers model of organizational culture is no more
than a metaphor expressing that some elements of organizational culture are easier to
observe and to change than others. The ‘deep’ elements are not in any real sense
embedded more deeply in the organization or in the organization members’ minds.
Moreover, the exclusive focus on cognitive components such as assumptions and
beliefs has its shortcomings (Martin and Meyerson, 1988: 96). Given that organizations
are purposive, the manifestations of ideas in practices are important. Comparing
expressed ideas and actual practices as perceived by others can provide valuable infor-
mation about the worldview of organizational members and its degree of overlap with
reality as perceived or experienced by others. Observations of manifestations such as arte-
facts and behaviours can therefore be used as sources of data to ‘triangulate’ with
information obtained about cognitive components (Sackmann, 1992).
Methodology
The preferred research methodologies of emic cultural research are open interviews and
participant observations. Emic researchers have taken several positions supporting quali-
tative research and countering the use of quantitative culture measures. The rationale for
the use of qualitative methods in organizational culture research is largely predicated on
the presumed inaccessibility, depth or unconscious quality of culture. Schein (1992), for
example, argues that only a complex interactive process of inquiry between insiders and
outsiders can uncover fundamental assumptions. Such assumptions, he argues, tend to
drop out of awareness and become implicit, because unlike the situation with corporate
ideology or slogans, there is no need to remind members of assumptions that are an inte-
gral part of their worldview.
While assumptions are, indeed, difficult to assess without interactive probing, char-
acteristic patterns of behaviour (norms) regarding how members should or should not act
and members’ perceptions of organizational processes – which are seen as reflections of
organizational culture – are far more accessible. In this respect one could argue that the
method appropriate to assessing culture depends on those elements we choose to
examine. In the layered model of culture shown in Table 3.1, observations by outsiders
and responses to structured instruments become more appropriate as we move from the
bottom to the top. As the elements of culture we are interested in become more conscious
(values and perceptions) or observable (artefacts), these are accessible by both standard-
ized and non-standardized assessments.
Another argument that is used in favour of qualitative research is the possible
uniqueness of an organization’s values and beliefs such that an outsider cannot form a
priori questions or measures. Louis (1985) and Smircich (1983) have argued that culture
reflects a social construction of reality unique to members of a social unit, and that this
uniqueness makes it impossible for standardized measures to tap cultural processes.
Stereotypical or over-general categories, reducing the wide variety of possible organiz-
ational forms and cultures to an idealized few, might be construed as a weakness of an a
priori structured (or etic) approach to tapping culture. Moreover, some argue that the
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specific types assessed might reflect ethnocentrism among organizational development
practitioners or organizational behaviour researchers, something Schein (1985) labels
‘American optimism’ that anything can be changed or bettered. The very fact, however,
that many researchers question the uniqueness of organizational culture (see Section
3.3) is an indication of the ambivalence surrounding the entire methodological and defi-
nitional debate. This is especially so since similar elements of culture have been found in
different contexts. In other words, there are no sufficiently convincing arguments in
favour of an exclusive reliance on qualitative methods for the purpose of organizational
culture research.
Moreover, qualitative research has some disadvantages, which can be remedied by
using quantitative methods. First, there are the costs of doing this type of labour-inten-
sive research, and the difficulty for the researcher not to impose his or her own views. In
most cases it is impossible to involve every organization member, so sampling is needed
but is not always easily organized. The analysis of data is also more difficult than with
questionnaire-based research. Finally, comparison between organizations, which after all
is the goal of comparative international management research, is difficult to realize.
The advantages of qualitative methods to assess organizational culture are the rich-
ness of data they provide and the possibility that a close insight will be achieved through
empathic listening. The latter idea comes from the research focus on socially constructed
knowledge (how people interpret what happens to them).
The etic approach
Definition and levels of analysis
The second stream of literature – neopositivist cultural research – is rooted in organiz-
ational psychology and sociology, with Charles O’Reilly, Jennifer Chatman, David
Caldwell, Geert Hofstede, Robert Cooke and Janet Szumal its main adherents. In contrast
to the emic approach, this approach focuses on the shallow levels of practices or patterns
of behaviour, which can be understood from an outsider (etic) point of view (Figure 3.1).
It is concerned mainly with change, and predominates among management teachers
and consultants. The goal of this approach is to develop generalizable theory (Martin,
2002: 6).
We will elaborate here on Geert Hofstede’s (2001 and 1980) view of organizational
culture as he is one of the few researchers, if not the only one, who studied culture both
at national (see Chapter 2) and organizational levels. Hofstede’s organizational culture
definition resembles his national culture definition in that it uses the metaphor of the
mental programming of the mind. It differs, however, in its focal group. For Hofstede
(2001: 373): ‘Organizational culture is the differences in collective mental programming
of the mind found among people from different organizations, or parts thereof, within the
same national context.’
Rather like Schein, Hofstede recognizes that culture manifests itself at different levels.
The major difference with Schein’s perception of organizational culture is that, instead of
assumptions (or values), Hofstede finds that ‘shared perceptions of daily practices should be
considered the core of an organization’s culture’ (Hofstede, 2001: 394). Values are at a
deeper level and, as explained in Chapter 2, they are the core of national culture.
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