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The specific objectives of this chapter are:
1. EXAMINE some of the major ethical issues and
problems confronting MNCs in selected countries.
2. DISCUSS some of the pressures on and action being
taken by selected industrialized countries and
companies to be more socially responsive to world
problems.
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The Nature of Organizational Culture
 Organizational culture
 Shared values and beliefs that enable members to
understand their roles and the norms of the organization,
including
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Observed behavioral regularities, as typified by common
language, terminology, and rituals.
Norms, as reflected by things such as the amount of work to be
done and the degree of cooperation between management and
employees.
Dominant values that the organization advocates and expects
participants to share, such as high product and service quality,
low absenteeism, and high efficiency.
The Nature of Organizational Culture
 Organizational culture
 Shared values and beliefs that enable members to understand
their roles and the norms of the organization, including


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A philosophy that is set forth in the MNC’s beliefs regarding
how employees and customers should be treated.
Rules that dictate the do’s and don’ts of employee behavior
relating to areas such as productivity, customer relations, and
intergroup cooperation.
Organizational climate, or the overall atmosphere of the
enterprise as reflected by the way that participants interact with
each other, conduct themselves with customers, and feel about
the way they are treated by higher-level management
Interaction Between National and
Organizational Cultures
 National cultural values of employees may have a
significant impact on their organizational performance
 Cultural values employees bring to the workplace with
them are not easily changed by the organization
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Cultural Variations
Table 3–1
Dimensions of Corporate Culture
Activities
Motivation
Output
To be consistent and precise. To strive
To be pioneers. To pursue clear aims and
for accuracy and attention to detail. To
objectives. To innovate and progress. Go
refine and perfect. Get it right.
for it.
Relationship
Job
Person
To put the demands of the job before the To put the needs of the individual before
needs of the individual.
the needs of the job.
Corporate
Identity
Professional
To identify with and uphold the expectations of the employing organization.
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To pursue the aims and ideals of each
professional practice.
Cultural Variations
Table 3–1
Dimensions of Corporate Culture
Open
Communication
Closed
To stimulate and encourage a full and
free exchange of information and
opinion.
Tight
To comply with clear and definite
systmes and procedures.
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To monitor and control the exchange and
accessibility of information and opinion.
Control
Loose
To work flexibly and adaptively according
to the needs of the situation.
Cultural Variations
Table 3–1
Dimensions of Corporate Culture
Conventional
To put the expertise and standards of
the employing organization first. To do
what we know is right.
Conduct
Pragmatic
To put the demands and expectations of
customers first. To do what they ask.
Source: Reported in Lisa Hoecklin, Managing Cultural Differences: Strategies for Competitive Advantage
(Workingham, England: Addison-Wesley, 1995), p. 146.
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European’s Perceptions of Cultural Dimensions of U.S.
Operations/Same MNC
Activities
Outputs
Job
Person
Corporate
Professional
Open
Closed
Tight
Loose
Conventional
Pragmatic
30 31 32 33 34 35 36 37 38 39 40 41 42
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European’s Perceptions of Cultural Dimensions of
European Operations/Same MNC
Activities
Outputs
Job
Person
Corporate
Professional
Open
Closed
Tight
Loose
Conventional
Pragmatic
30 31 32 33 34 35 36 37 38 39 40 41 42
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European Management
Characteristics
Table 3–2
European Management Characteristics
Dimension
Western
(U.K.)
Corporate
Commercial
Management attributes
Behavior
Experiential
Attitude
Sensation
Institutional models
Function
Salesmanship
Structure
Transaction
Societal ideas
Economics
Free Market
Philosophy
Pragmatic
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Table 6–2: European Management Characteristics
Characteristic
Northern
Eastern
(France)
(Germany)
Administrative Industrial
Southern
(Italy)
Familial
Professional
Thought
Developmental Convivial
Intuition
Feeling
Control
Hierarchy
Production
System
Personnel
Network
Dirigiste
Rational
Social market
Holistic
Communal
Humanistic
European Management
Characteristics
Table 6–2
European Management Characteristics
Characteristic
Northern
Eastern
(France)
(Germany)
Dimension
Western
(U.K.)
Cultural images
Art
Culture
Theatre
Architecture
(Anglo-Saxon) (Gallic)
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Yetian
6–2: European Management
Characteristics
Music
(Germanic)
Southern
(Italy)
Dance
(Latin)
Organizational Cultures in MNCs
 There are four steps in the integration of organizational
cultures in international expansions that result from
mergers or acquisition
1. The two groups have to establish the purpose, goal, and
focus of their merger
2. They have to develop mechanisms to identify the most
important organizational structures and management roles
3. They have to determine who has authority over the
resources needed for getting things done
4. They have to identify the expectations of all involved parties
and facilitate communication between both departments and
individuals in the structure
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Organizational Cultures in MNCs

Three aspects of organizational functioning that are
important in determining MNC organizational culture
The general relationship between the employees and
their organization
2. The hierarchical system of authority that defines the
roles of managers and subordinates
3. The general views that employees hold about the
MNC’s purpose, destiny, goals, and their places in
them.
1.
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Organizational Cultures
in MNCs
Equity
Fullfillmentoriented culture
Project-oriented
culture
INCUBATOR
GUIDED MISSILE
Task
Emphasis
Person
Emphasis
FAMILY
EIFFEL TOWER
Power-oriented
culture
Role-oriented
culture
Hierarchy
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Organizational
Cultures
in
MNCs
 Family culture
 Strong emphasis on hierarchy and
orientation to the person
 Family-type environment that is power
oriented and headed by a leader who is
regarded as a caring parent
FAMILY
Power-oriented
culture
Management looks after employees, and tries to ensure that
they are treated well and have continued employment
 May catalyze and multiply the energies of the personnel or
end up supporting a leader who is ineffective and drains
their energies and loyalties

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Organizational Cultures in MNCs
 Eiffel Tower
 Strong emphasis on hierarchy and
EIFFEL TOWER
orientation to the task
Role-oriented
 Jobs are well defined, and everything is
culture
coordinated from the top
 This culture is narrow at the top, and broad
at the base
 Relationships are specific, and status remains with the job.
 Managers seldom create off-the-job relationships with their
people, because they believe this could affect their rational
judgment
 This culture operates very much like a formal hierarchy—
impersonal and efficient and loyalties
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Organizational Cultures in MNCs
 Guided missile
 Strong emphasis on equality in the
Project-oriented
culture
workplace and orientation to the task
 This culture is oriented to work
GUIDED MISSILE
 Work typically is undertaken by teams or
project groups
 In projects, formal hierarchical considerations are given low
priority, and individual expertise is of greatest importance
 All team members are equal (or at least potentially equal
 All teams treat each other with respect, because they may
need the other for assistance
 Egalitarian and task-driven organizational culture
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Organizational Cultures in MNCs
 Incubator
 Strong emphasis on equality and
personaI orientation
 Based on the premise that organizations
serve as incubators for the selfexpression and self-fulfillment of their
members
Fullfillmentoriented culture
INCUBATOR
Little formal structure
 Participants in an incubator culture are there primarily
to perform roles such as confirming, criticizing,
developing, finding resources for, or helping to
complete the development of an innovative product or
service

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Four Corporate Cultures
Table 3–3
Summary Characteristics of the Four Corporate Culture
Corporate Culture
Eiffel Tower
Guided Missile Incubator
Characteristic
Family
Relationships
between
employees
Diffuse relationships to organic
whole to which
one is bonded
Specific role in
mechanical
system of
required
interaction
Specific tasks in
cybernetic system
targeted on shared
objectives
Diffuse,
spontaneous
relationships
growing out of
shared creative
process
Attitude toward
authority
Status is ascribed
to parent figures
who are close and
powerful
Status is ascribed
to superior roles
that are distant yet
powerful
Status is achieved
by project group
members who
contribute to
targeted goal
Status is achieved
by Individuals
Exemplifying
creativity and
growth
Ways of thinking
and learning
Intuitive, holistic,
lateral and error
correcting
Logical, analytical, Problem centered, Process oriented,
vertical, and
professional,
creative, ad hoc,
rationally efficient practical, cross
inspirational
disciplinary
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Adapted from Table 6–3: Summary Characteristics of the Four Corporate Culture
Four Corporate Cultures
Table 3–3
Summary Characteristics of the Four Corporate Culture
Characteristic
Family
Attitudes toward
people
Family members
Corporate Culture
Eiffel Tower
Guided Missile Incubator
Human resources Specialists and
experts
Co-creators
Ways of changing “Father” changes
Course
Change rules and Shift aim as target Improvise and
procedures
moves
attune
Ways of
motivating and
rewarding
Promotion to
greater position,
larger role
Pay or credit for
performance and
problems solved
Participation in the
process of creating
new realities
Management by
job description
Management by
objectives
Management by
enthusiasm
Intrinsic
satisfaction in
being loved and
respected
Management by
subjectives
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Adapted from Table 6–3: Summary Characteristics of the Four Corporate Culture
Four Corporate Cultures
Table 3–3
Summary Characteristics of the Four Corporate Culture
Characteristic
Family
Criticism and
Turn other cheek,
conflict resolution save other’s face,
do not lose power
game
Corporate Culture
Eiffel Tower
Guided Missile Incubator
Criticism is
accusation of
irrationalism
unless there are
procedures to
arbitrate conflicts
Constructive task
related only, then
admit error and
correct fast
Improve creative
idea, not negate it
Source: Adapted from Fons Trompenaars and Charles Hampden-Turner, Riding the Waves of Culture:
Understanding Diversity in Global Business, 2nd ed. (Burr Ridge, IL: Irwin, 1998), p. 183.
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Adapted from Table 6–3: Summary Characteristics of the Four Corporate Culture
Phases of Multicultural Development
Table 3–4
The Evolution of International Corporations
Phase I
Characteristics/ (Domestic
Corporations)
Activities
Phase II
(International
Corporations)
Phase III
(Multinational
Corporations)
Phase IV
(Global
Corporations)
Primary
orientation
Product/service
Market
Price
Strategy
Competitive
strategy
Domestic
Multidomestic
Multinational
Global
Importance of
world business
Marginal
Important
Extremely
important
Dominant
Product/service
New, unique
More
standardized
Completely
standardized
(commodity)
Mass-customized
Product
engineering
emphasized
Process
engineering
emphasized
Engineering not
emphasized
Product and
process
engineering
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Adapted from Table 6–4: The Evolution of International Corporations
Phases of Multicultural Development
Table 3–4
The Evolution of International Corporations
Phase I
Characteristics/ (Domestic
Corporations)
Activities
Phase II
(International
Corporations)
Phase III
(Multinational
Corporations)
Phase IV
(Global
Corporations)
Technology
Proprietary
Shared
Widely shared
Instantly and
extensively
shared
R&D/sales
High
Decreasing
Very low
Very high
Profit margin
High
Decreasing
Very low
High, yet
immediately
decreasing
Competitors
None
Few
Many
Significant (few
or many)
Market
Small, domestic
Large,
multidomestic
Larger,
multinational
Largest, global
Production
location
Domestic
Domestic and
primary markets
Multinational,
least cost
Imports and
exports
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Adapted from Table 6–4: The Evolution of International Corporations
Phases of Multicultural Development
Table 3–4
The Evolution of International Corporations
Phase I
Characteristics/ (Domestic
Corporations)
Activities
Phase II
(International
Corporations)
Phase III
(Multinational
Corporations)
Phase IV
(Global
Corporations)
Exports
None
potential
Growing, high
Large, saturated
exports
Imports and
Structure
Functional
divisions
Functional with
international
division
Multinational lines
of business
Global alliances,
hierarchy
Centralized
Decentralized
Centralized
Coordinated,
decentralized
Primary
orientation
Product/service
Market
Price
Strategy
Strategy
Domestic
Multidomestic
Multinational
Global
Perspective
Ethnocentric
Polycentric/
regiocentric
Multinational
Global/
multicentric
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Adapted from Table 6–4: The Evolution of International Corporations
Phases of Multicultural Development
Table 3–4
The Evolution of International Corporations
Phase I
Characteristics/ (Domestic
Corporations)
Activities
Phase II
(International
Corporations)
Phase III
(Multinational
Corporations)
Phase IV
(Global
Corporations)
Cultural
Marginally
important
Very
important
Somewhat
important
Critically sensitivity
important
With whom
No one
Clients
Employees
Employees and
clients
Level
No one
Workers and
clients
Managers
Executives
Strategic
assumption
“One way”/
one best way”
“Many good
ways”
equifinality
“One least-cost
Way”
“Many good
Ways”
simultaneously
Source: Nancy J. Adler, International Dimensions of Organizational Behavior, 2nd ed. (Boston: PWS-Kent Publishing,
1991), pp. 7–8.
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Adapted from Table 6–4: The Evolution of International Corporations
International Culture Diversity Focus
Phase1
Phase2
Phase3
Phase4
Domestic
firms
International
firms
Multinational
firms
Global
firms
Source: Nancy J. Adler, International Dimensions of Organizational Behavior, 2nd ed. (Boston: PWS-Kent Publishing,
1991), p. 123.
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Types of Multiculturalism
 Domestic multiculturalism
 Multicultural and diverse workforce that operates in the
MNC’s home country
 Group multiculturalism
 Homogeneous groups
 Token groups
 Bicultural groups
 Multicultural groups
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Potential Problems Associated with
Diversity
 Attitudinal problems
 May cause a lack of cohesion that results in the unit’s
inability to take concerted action or to be productive
 Perceptual problems
 When culturally diverse groups come together, they often
bring preconceived, erroneous stereotypes with them
 Inaccurate biases.
 Inaccurate communication
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Advantages of Diversity
 Can enhance creativity, lead to better decisions, and
result in more effective and productive performance
 Can prevent “groupthink”
 Social conformity and pressures on individual members of
a group to conform and reach consensus
 Can be very effective team under right conditions
 Tasks requiring innovativeness
 Activities must be determined by the stage of team
development
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Understanding the Conditions for
Effectiveness
Highly
ineffective
Average
effectiveness
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Adapted from Figure 6–5: Group Effectiveness and Culture
Highly
effective
Guidelines for Effectively Managing
Culturally Diverse Groups
1. Select team members for their task-related abilities
2. Team members must recognize and be prepared to
3.
4.
5.
6.
deal with their differences
Team leader must help the group to identify and
define its overall goal
Members must have equal power so that everyone can
participate in the process
All members must have mutual respect for each other.
Managers must give teams positive feedback on their
process and output
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