Influence of Social Culture and Industry Culture on Organizational Culture

Influence of Social Culture and Industry Culture on Organizational Culture
Niloofar Namjoofard
Global Challenges
B7521
Argosy University
Fall I, 2012
Dr. Nkemeh

Relationship Between Social Culture, Industry Culture and Organizational Culture According to Briscoe & Schuler global organizations try to offer products and services with lowest costs, highest quality and shortest time of delivery to wherever demand is sufficient. They provide the resources from wherever the best quality for cost can be found. House, Javidan & Dorfman (2001) stated that the global locations of organizations with the growing cultural diversity of the workforce, have led to lots of challenges for organizations. "A better understanding is required to determine how employees from societal cultures with different values and cultural practices perceive the identity of the organization for which they work, as well as to learn how those perceptions can foster more effective identification with the organization. Understanding diverse cultural perspectives has become critical not only for recruitment and retention, but also for maximizing employees’ contributions to and identification with the organization" (House, Javidan, & Dorfman, 2001). Albert & Whetten ( 1985) suggested global companies must understand the influence that multiple cultural point of views may have on employees’ understanding of the organization’s identity such as those characteristics considered to be the most core, enduring, and distinctive in order to help for more effective connections between the corporation and its members. Souday A. and Kunda (2003) stated that the impact of societal culture on organizations has been examined from a different viewpoints such as leadership, management practice, and organizational culture. According to these authors "societal culture includes the culture of the country in which the global organization is located, as well as the societal cultures of the organization’s employees. While countries and societies play a major role in the construction of social reality in organizations in global organizations, within a national culture multiple social identities do exist". An example of the social culture 's influence on organizational culture and industry culture is for China. According to Pei, M. (2012) the rapid growth rate in China has increased the level of development, raising the status of China from a low-income economy to a lower middle-income economy. Chinese social structure has become more diverse and plural because of the large change from the rural sector into modern sectors and to the emergence of new industries and growth of various professions. Economic modernization has created various emerging service professions, such as accounting, law, information, financial services, and the real estate. Increasing professional specialization has led to the fast emergence of a middle-class. Rapid expansion of access to information made Chinese society more informed which has resulted to changes in cultural values. The new values, which are adapted from the west such as purchasing behavior and consumption. "An analysis that compares the contents of commercial advertising in China and the United States revealed two common values: modernity, youth (Cheng and Schweitzer, 1996)". Chinese culture has been affected by Western culture. Hence, "traditional Chinese culture, influences sensitivity towards foreign brands in a positive way, while modern, characterized by the value of youth and modernity, also promotes sensitivity to foreign brands for Chinese consumers"( LI, Ch. 2012). A different perspective has been taken by the GLOBE (Global Leadership and Organizational Behavior Effectiveness) research project that concentrates on the relationships between societal culture, organizational culture, and leadership. Hofstede’s (1980), Trompenaars and Hampden-Turner, (1997),and Kluckhorn and Strodtbeck (1961) conducted a research on GLOBE which included 9 cultural clusters representing core dimensions from 62 cultures around the world. According to Schuler & Rogovsky (1998), Lee & Barnett (1997) discussions of societal culture and its relationship to organizations are mainly focused on management practices and organizational culture in the GLOBE research. Societal culture consist of “commonly experienced language, ideological belief systems such as religion and political belief systems, ethnic heritage, and history" (House & Javidan, 2004, p. 15). The followings are the propositions from GLOBE study which explore the nine cultural dimensions of the GLOBE studies and identify corresponding propositions that apply to a global organization as well as explanations of the human connections that allow relationships to exist between societal culture and organizational culture.
Performance Orientation The perceived organizational identity in a societal culture, where performance orientation is high, will have more attributes associated with competing, scoring, winning, evaluating, achieving, comparing, distinguishing, and elevating.
Uncertainty Avoidance In a societal culture, where uncertainty avoidance is high, the perceived organizational identity will have more attributes associated with categorizing, regulating, controlling, governing, directing, planning, structuring, and communicating.

Humane Orientation In a societal culture, where humane orientation is high, the perceived organizational identity will have more attributes associated with caring, empathizing, supporting, including, protecting, fostering, nurturing, loving, and comforting.
Institutional Collectivism In a societal culture, where institutional collectivism is high, the perceived organizational identity will have more attributes associated with collaborating, team-building, uniting, institutionalizing, bonding, ritualizing, consolidating, and building tradition.
In group Collectivism In a societal culture, where in group collectivism is high, the perceived organizational identity will have more attributes associated with developing fraternalism, belonging, building family, and establishing roots.
Assertiveness
In a societal culture, where assertiveness is high, the perceived organizational identity will have more attributes associated with pressing, leading, trailblazing, exploring, challenging, dominating, and commanding.

Gender Egalitarianism In a societal culture, where gender egalitarianism is high, the perceived organizational identity will have more attributes associated with establishing maternalism, emphasizing femininity, conveying community decision-making, and demonstrating gentleness.
Future Orientation In a societal culture, where future orientation is high, the perceived organizational identity will have more attributes associated with being patient, demonstrating discipline, saving, planning for contingency, and leaving legacy.
Power Distance In a societal culture, where power distance is high, the perceived organizational identity will have more attributes associated with attaining power, gaining status, establishing superiority, possessing authority, and creating distinction (Ekmekci, Casey, Rosenbusch, Cataldo & Byington, 2012). According to Pang, Bunker, and Smith(2007) "industry culture is a way of understanding the inter-organizational information system (IOIS) adoption process. An IOIS is defined as an information system shared by two or more companies. Industry culture is more influential in an inter-organizational domain as organizations have to deal with their partners in the same industry". Utilizing a good communication between the management and employees, and employees’ involvement in business process helps them to have a better perception of information sharing, trust with other organizations and, the adoption of new business processes (Hammer 2001). "It has been argued that organizational culture is evolved from industry culture" (Gordon 2001; Christensen and Gordon 1999; Hofstede et al. 1990). According to Gordon (2001) "the industry culture evolves from: (a) the industry environment and characteristics such as customer requirements, competitive environment and societal expectations, and “right things to do” in that industry; (b) strategies, structure and business process developed by management of organizations in that industry; and (c) the outcomes of demand for performance and survival in that industry". Additionally, organizations within the same industry are expected to share similar norms and values (Fombrun 1986). The organizational culture may differ more across industries than within them (Chatman and Jehn 1994). Therefore," organizations in the same industry share similar cultural values and practices"(Christensen and Gordon 1999). Furthermore , culture between industries are different (Philips 1994; Chatman and Jehn 1994). As for industry culture, Pang, Bunker, and Smith(2007) suggested the individuals such as managers and employees are influenced by practices instead of values due to the closer relationship of the way they work and do businesses. Organizational culture could change over time. Therefore if an organization realizes the benefits of adopting an IOIS with their partners, they may consider to change their traditional practices to achieve their goals. Alternatively, industry culture could be an inhibitor in the adoption process because individuals might not want to change their practices( Pang, Bunker, & Smith, 2007). For instance in study by Pang, Bunker, and Smith(2007), FMCG-Retail , industry changed the way they used to do their businesses. Now they are trading on-line and the major retailers developed better relationships and open communication with the major manufacturers. Therefore," industry culture has changed from a closed (not sharing information) culture to an open (and sharing information) culture because people can see that the benefit of sharing information can lead to growth of the business and they are prepared to change their practices to achieve the objective" (Pang, Bunker, & Smith, 2007). Healthcare is another example from the study conducted by Pang, Bunker, and Smith (2007). Historically, the suppliers as dominant parties in the industry dictated the price and the minimum quantity the hospitals must purchase. "However, in the last couple of years, the hospitals, both in the private and public sectors, have consolidated through takeovers in the private sector or through the government’s restructuring policies. The consolidation of the hospitals has resulted in greater purchasing power for the hospitals and a shift of purchasing power from the suppliers to the hospitals" (Pang, Bunker, & Smitt,2007). The third example is about foodservice industry. Ever since distributors decided to have their own brand of products, and their products are competing with products from the manufacturers, the industry has changed. Also, many manufacturers decided to work only with the end-customers, by-passing the distributors. Additionally,, the amount of trust in the foodservice industry between the manufacturers and distributors is very poor compared to the FMCG-retail industry. Therefore, according to this study by Pang, Bunker, and Smitt (2007) it is estimated that the adoption of an IOIS may happen in ten years. Hence, as it is obvious, it would be very difficult for the foodservice industry to commit to adopting an IOIS if the industry culture does not foster this. According to Gordon (2001) "the industry culture could only be changed if individuals in the industry believed that changing their practices would give them benefit to survive in that industry ". References:
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References: Albert, S., & Whetten, D. A. (1985). Organizational identity. In L. L. Cummings & B. M. Straw (Eds.), Research in organizational behavior (pp. 263-295). Greenwich, CT: JAI Press. Ailon-Souday, G., & Kunda, G. (2003). The local selves of global workers: The social construction of national identity in the face of organizational globalization. Organization Studies, 23(7), 10731096. Briscoe, D. R., & Schuler, R. S. (2004). International human resource management (2nd ed). New York: Routledge. Christensen, EW & Gordon, GG (1999). An Exploration of Industry, Culture and Revenue Growth’, Organization Studies, vol. 20, no. 3, pp. 397-422. Chatman, JA & Jehn, KA( 1994). Assessing the relationship between industry characteristics and organizational culture: How different can you be?’ Academy of Management Journal, vol. 37, no. 3, pp. 522-53. Gordon, GG (1991). Industry Determinants of Organizational Culture’, Academy of Management Review, vol Hammer, M (2001). The superefficient company’, Harvard Business Review, vol. 79, no. 8, pp. 82-91. Hofstede, G, Neuijen, B, Ohayv, DD & Sanders, G (1990). Measuring Organizational Cultures: A Qualitative and Quantitative Study across Twenty Cases’, Administrative Science Quarterly, vol. 35, no. 2, pp. 286-316. House, R., Javidan, M., & Dorfman, P. W. (2001). Project GLOBE: An introduction. Applied Psychology: An International Review, 50(4), 489-505. House, R. J., & Javidan, M. (2004). Overview of GLOBE. In R. J. House, P.J. Hanges, M. Javidan, P. W. Dorfman, V. Gupta (Eds.), Culture, leadership and organizations. The GLOBE study of 62 societies (pp. 9-28). Thousand Oaks, CA: Sage Publications. LI, Ch. (2012). Brand culture and consumption: Chinese consumers and the foreign brands. Retrieved September 8, 2012 from: http://www.cerdi.org/uploads/sfCmsContent/html/253/LI_Chen.pdf Pei, M Phillips, ME (1994). Industry Mindsets: Exploring the Cultures of Two Macro-organizational Settings’, Organization Science, vol. 5, no. 3, pp. 384-402. Trompenaars F., & Hampden-Turner, C. (1998). Riding the waves of culture: Understanding diversity in global business (2nd ed.). New York: McGraw-Hill.