This book is mainly built upon our investigations of international enterprises operating in France, Germany, Italy, Austria, Japan, Hong Kong, USA, Finland and India. It's then enriched by case studies from China, Bahrain, Australia, Thailand, Spain and Indonesia. Multinational aspects are thus thoroughly discussed. COVID-19 has taught enterprises a lesson to be resilient, even more importantly for those running international operations.
Resilience comes from agility, and agility starts with culture. The book is here to help us practitioners and students of International Business Management succeed in building an Adaptive Corporate Culture (ACC) and align it with an agile strategy. Chapters 1 to 6 bring the ACC to the table, while Chapters 7 onwards explore the diverse flavours of corporate culture in different sectors: energy & telecom, asset management, and aviation travel & tourism. In addition to further expanding our horizon, they may trigger fresh ideas for our own industry.
While strategy has always been in the centre of managers' attention, the fundamental role of culture in the firm's success is often overlooked. Sadly because it's not well understood. Culture has been accountable for around 40% of differences between good performing and poor performing enterprises. For multinationals, it is estimated that 60% of Merger and Acquisitions fail to meet their intended objectives, or fail altogether, because of unresolved cultural issues. If aligned well with strategy, the combination will create an unbeatable power. If not, culture will eat strategy as a breakfast.
Culture is complex. It's "broad, deep and stable," wrote Edgar Schein, an MIT professor emeritus in leadership. Yet stable doesn't mean static: Cultures are dynamic. It's even more complex in multinational companies, where cultures meet cultures: Interactions between cultures are inevitable. Take benefits from the book, to make culture and strategy have lunch together. Share your experiences and reach us at fopa.pro@outlook.com. Competitors can copy our strategy, but nobody can copy our culture.
Contents
Chapter 1. The Soul of an Enterprise
1.1 Culture Can Drive Our Strategy, or Eat It
1.2 What a Culture Does to an Organisation
1.3 Harmful Corporate Culture: Brought to You by United Airlines
1.4 The Five Myths of Corporate Culture
1.5 Multinational Companies
1.6 What this Book is About
Chapter 2. The Anatomy of a Corporate Culture
2.1 What is Really a Corporate Culture?
2.2 Two Eyes: Cultural Anthropologists and Management Scholars
2.3 The Roots and Philosophy of Culture in Management Research
2.4 Culture Shapes Company's Long Term Viability
2.5 Typologies of Corporate Cultures
2.6 Agile Corporate Cultures
Chapter 3. Developing and Transforming a Corporate Culture
3.1 Development Stages of a Multinational Corporate Culture
3.2 Analysing the Current Culture
3.3 Transforming
3.4 Resilience and Agile Transformation
3.5 Growing and Nurturing
3.6 Transferring to Subsidiaries
Chapter 4. Transferring Corporate Culture to Subsidiaries
4.1 The Challenge: Staying Effective Internationally
4.2 Adapting a Corporate Culture to Subsidiary's Local Culture
4.3 Adopting Corporate Culture into Subsidiary: In What Conditions?
4.4 Coordination and Delegation in International Businesses
4.5 Between to Adapt and to Adopt
Chapter 5. Corporate vs Host Cultures: To Adapt or to Adopt?
5.1 Summary of the Empirical Study
5.2 Adopting the Corporate Culture in a Daughter Company
5.3 Level of Delegation and Coordination
5.4 Leadership Styles in Subsidiaries
5.5 Communication Tools
5.6 Misunderstandings with Headquarters
5.7 Change in the Organisational Structure of Subsidiary
5.8 National Cultures in Headquarters and Subsidiaries
5.9 In Conclusion: the Adaptive Corporate Culture (ACC)
Chapter 6. Formulating Adaptive Corporate Culture in International Business
6.1 Globally Interconnected World and the Role of MNC's
6.2 Four Foundations of the Adaptive Corporate Culture (ACC)
6.3 Merging the Corporate Culture and Host's National Culture
6.4 Creating a Universal Culture
6.5 Managing the Expatriation of Zone Managers
6.6 Managing Conflicts due to Communication Problems
6.7 Insights from Industries
Chapter 7. Industry Insights: International Energy & Telecommunications
7.1 Communication with Respect and Listening Skills
7.2 Multinational Oil & Gas: How the Local Culture Fits in?
7.3 Satellites, Communications and Cultures
7.4 Perfect Internal, International Movements
Chapter 8. Industry Insights: Corporate Culture in Asset Management
8.1 The ISO-55000 Series in a Nutshell
8.2 The Elements of Asset Management System
8.3 Stakeholders Engagement
8.4 Organisation and People
8.5 A Culture Seeking to Align and Engage
8.6 A Culture Seeking to Optimise
8.7 Building a Culture of Reliability
8.8 Is Planning Enemy of Agility?
Chapter 9. Industry Insights: Aviation Travel and Tourism Hospitality
9.1 Travel Industry: The Post-Pandemic
9.2 Aviation Travel: Southwest Airlines
9.3 Effects of National Cultures on Airline's Service Quality
9.4 Cultural Intelligence and Intercultural Communication Competence
9.5 Hospitality: High versus Low Performing Hotels
9.6 Case Study: Homes Inn in China
9.7 Advanced Topics: CSR and Outsourcing
9.8 Authentic Perceptions: "Consuming" Cultures
9.9 Cultural Diversity is an Asset
Chapter 10. The Culture Ahead
10.1 Trends that Shape Future Businesses
10.2 Balancing Responses
10.3 Agile Culture in Human Capital: Internal Mobility
10.4 The Bottomline: Nobody Can Copy Our Culture
Bibliography
Abbreviations
List of Figures
List of Tables
Acknowledgments
Book's Features
This book is mainly built upon our investigations of international enterprises operating in France, Germany, Italy, Austria, Japan, Hong Kong, USA, Finland and India. It's then enriched by case studies from China, Bahrain, Australia, Thailand, Spain and Indonesia. Multinational aspects are thus thoroughly discussed. COVID-19 has taught enterprises a lesson to be resilient, even more importantly for those running international operations. Resilience comes from agility, and agility starts with culture. The book is here to help us practitioners and students of International Business Management succeed in building an Adaptive Corporate Culture (ACC) and align it with an agile strategy. Chapters 1 to 6 bring the ACC to the table, while Chapters 7 onwards explore the diverse flavours of corporate culture in different sectors: energy & telecom, asset management, and aviation travel & tourism. In addition to further expanding our horizon, they may trigger fresh ideas for our own industry.
While strategy has always been in the centre of managers' attention, the fundamental role of culture in the firm's success is often overlooked. Sadly because it's not well understood. Culture has been accountable for around 40% of differences between good performing and poor performing enterprises. For multinationals, it is estimated that 60% of Merger and Acquisitions fail to meet their intended objectives, or fail altogether, because of unresolved cultural issues. If aligned well with strategy, the combination will create an unbeatable power. If not, culture will eat strategy as a breakfast.
Culture is complex. It's "broad, deep and stable," wrote Edgar Schein, an MIT professor emeritus in leadership. Yet stable doesn't mean static: Cultures are dynamic. It's even more complex in multinational companies, where cultures meet cultures: Interactions between cultures are inevitable. Take benefits from the book, to make culture and strategy have lunch together. Share your experiences and reach us at fopa.pro@outlook.com. Competitors can copy our strategy, but nobody can copy our culture.
About the Authors
Andy Marjoko, MSc, MBA, PhD, is a business practitioner and management consultant living in Bali, Indonesia. Andy previously spent 20+ years of his career at multinational energy companies, primarily ConocoPhillips and Chevron; with assignments in Indonesia, Australia and Singapore. In 2002 he was granted the British Chevening Award scholarship to pursue an MSc in Risk Management at Cranfield University, UK. Once receiving his MBA in Marketing Management early 2014, Andy elected to relocate to Bali and Strasbourg performing research and practicing management consulting. Dr. Marjoko is a certified member of the Institute of Asset Management (IAM), Bristol, UK, and holds a Doctor in Management Science from Université de Haute-Alsace (UHA), France.
Aurélia Royer-Duffait, MBA, is a management practitioner in Verona, Italy, focusing on the aviation and travel industry. She obtained her MBA from ESCE International Business School Paris, specialising in export management. Aurélia's research interest has primarily been in the adaptation of a corporate culture with the host culture, particularly in the air travel.
Caroline Saradjian, MBA, practices business development in Berlin, Germany, specialising in the media industry. She holds an MBA from ESCE International Business School Paris, majored in export management. Caroline's research interest has mostly been in the relationships between headquarters and subsidiaries within multinational companies, including new technologies for communications between the two.
Chapter 1. The Soul of an Enterprise
"I believe every truly exceptional organisation understands that culture needs to be at the centre of its success," writes Roz Brewer, the CEO of Walgreens Boots Alliance, in The Economist. The one of only two Black women CEOs of Fortune 500 companies then adds, "In 2023 and beyond, connections to companies’ culture and values will be key drivers of motivation for workers as we rephrase the corporate environment."
1.1 Culture Can Drive Our Strategy, or Eat It
Every organisation has two main purposes: (1) Achieve its objective(s) and (2) Create a set of workable relationships between members of the organisation, so they can perform to achieve the organisation's objective(s) 87. Many companies focus on creating strategies to achieve the first and implement management practices to create the second. But there is one underlying foundation that's often overlooked: Culture. And sadly because it's often misunderstood.
If aligned well with a strategy, a culture can drive the strategy, creating a powerful and unbeatable resonance. Otherwise, the culture can kill it. A good organisational strategic plan always includes culture because corporate culture is an incredibly powerful factor in a company’s long-term success 80. Like the popular saying "Culture eats strategy for breakfast," no matter how good the strategy is, it can quickly be undermined by a poor culture. It's well illustrated by Torben Rick as a flow chart on Figure 1.1.
Figure not included in this reading sample
Figure 1.1. Alignment of Strategy and Culture
Corporate culture has gained increasingly more attention lately: For instance, Fortune’s annual 100 best companies to work for, are based on employee anonymous surveys about the workplace' culture 84. The Insight recently reported an online survey to 1,000 employees in the U.S. who work full-time for companies employing 500 people or more. Questions addressed their perceptions of cultural risks, and the result says: “Only 28% of employees strongly agree that there is an alignment between their company’s actions and its stated values - a finding that should give us all pause.” 84 We know the employee engagement directly affects customer satisfaction and, eventually, our business performance 68.
The discrepancy highlights a gap between the organisational culture in the eyes of the employees and the increasing attention given to cultures. Leaders have now recognised that organisational culture is the first challenge they have to overcome in order to fulfil their objectives.
A chart by the Harvard Business Review illustrates this almost-linear correlation from the groceries industry: Within the white band, Trader Joe's sits on the top, both for customer satisfaction and employee motivation, followed by Whole Foods, while Albertsons lies in the bottom for both criteria:
Figure not included in this reading sample
Figure 1.2. Customer Satisfaction & Employee Motivation
A research by LSA Global on over 400 companies across eight different industries found cultural factors account for 40% of the difference between high and low performing companies in terms of revenue growth, profitability, customer satisfaction, leadership effectiveness and employee engagement 46. Therefore, creating a great strategy is half of the story, building a great culture aligning with it is the other half. Culture and strategy need to eat lunch together, competition should be on their menu. Competitors can copy our strategy, but nobody can copy our culture 80.
1.2 What a Culture Does to an Organisation
A culture contains (1) Observed behaviour, the rituals and rites that the group chooses to adopt, (2) The espoused values the group chooses to promulgate, the learning and adaptive structures and processes the group evolves, (3) The deep and taken-for-granted assumptions that give meaning to the daily behaviour. A culture even contains what the group defines as leadership 87.
The fundamental role of a culture is very visible in military organisations, in which culture is clearly a crucial determinant to their effectiveness. Of all the factors that are involved in military effectiveness, culture is perhaps the most important. It is so difficult for military organisations to change their fundamental, underlying culture. Thus, even a catastrophic military defeat may have relatively little impact on an organisation’s underlying culture 62. Mansoor and Murray further describe two major impacts of a culture to an organisation: First, it creates organisational identity, that is, the distinctive attributes that make the organisation different from others. Second, culture establishes expectations of how group members will act in a given situation 62.
In brief, Gallagher describes it precisely: "A culture is a soul of an organisation." 27 or in Groysberg's term "an Operating System of an organisation." 33
1.3 Harmful Corporate Culture: Brought to You by United Airlines
The way culture establishes expectations of how group members will act in a given situation, can be illustrated from well-known incidents happening at United Airlines. These ranged from passengers dragged off planes to dogs dying. An analysis by LSA Global points out three issues related to the corporate culture of United Airlines, briefly described in the following paragraphs.
Figure not included in this reading sample
Figure 1.3. Newark Airport, New Jersey
First, is too many fine prints. It seems United Airlines relied too much on policy guidelines, and the company expected to follow the policy no matter what. It explains the United's case of teenagers being denied their flight because of “inappropriate” attire – (they were wearing leggings). And just two weeks later, a passenger was dragged off the plane (and injured in the process) as a result of the airline’s policy of overbooking seats. In these two cases, employees made poor decisions due to strict policy 46.
Second, too little employee discretion. A positive and healthy corporate culture should help employees make decisions in both low and high stress situations. A company's cultural goal should be to empower employees to serve their customers without having to read the fine print of company policy or without being afraid of doing "the right thing." If common sense had been at work, as well as the flexibility for employees to make humane and reasonable decisions, neither of these situations would have occurred 46.
And the third, is misaligned KPI's. Being in a highly competitive business where both cost and customers are equally important, United Airlines focused on being operationally excellent. The goal was to provide customers with timely, reliable and convenient flights at competitive prices with minimal inconvenience. Unfortunately, based upon United’s customer experience, it seems that United cares mostly about keeping costs as low as possible and achieve on time departures. Customer experience seems to have lower priority, creating misalignment in the KPI's. United should have balanced in measuring operational excellence and customer intimacy, aiming to deliver both competitive pricing and compelling experience 46. In contrast, Southwest Airlines is among aviation companies recognised to demonstrate the ability to balance the two.
LSA Global estimates the harmful corporate culture may have cost United's investors over US$ 800 million, based on the 3.8 percent drop in the company's stock overnight. Therefore, in order to thrive, our enterprise should be vigilant towards warning signs of a harmful corporate culture 46. This is one of the areas where this book would like to help us.
1.4 The Five Myths of Corporate Culture
In "Disrupting Corporate Culture," White, Jr. reminds us not to oversimplify cultures in business contexts: Culture was not invented by management scholars, but by cultural anthropologists. He brings forward five myths about corporate culture, which we need to be cautious of 106:
Myth 1: Culture Starts at the Top
White, Jr. admits that culture and leadership are strongly related. Leadership is an input to culture (and an important one), but leaders often overestimate their own influence. Leader's beliefs or ideologies need to be already present in the social system, for those ideas to take hold. This reminds us to thoroughly involve and listen to the employees starting from a very early stage, if our organisation plans to do any cultural transformation 106.
Figure not included in this reading sample
Figure 1.4. Initiatives from Anywhere vs from the Top
Schein endorse it with a diagram in Figure 1.4, describing that change initiatives coming unexpectedly and perpetually from anywhere in the organisation will matter more than linear change programs coming from the top. The best outlook is to expect the change to happen in the organisation, not to the organization 87.
Myth 2: Culture is a physical thing
Although even cultural anthropologists recognise "material culture" as a part of any culture (to be discussed in Chapter 2, the anatomy of a corporate culture), it's just the outer layer. The whole culture is a deep structure. It goes even deeper than behaviours or leadership style. The core is a tacit, underlying assumptions, which sometimes are not even realised. More of this topic in Chapter 2.
Myth 3: One company, one culture
This myth came from old assumptions that a company is like a "simple society." It is not. Within companies, cultural boundaries overlap. In our case of multinational business, it's also affected by regions, nations and languages 106. Chapter 2 and onwards will bring us to an interesting journey of how all of those are interrelated.
Myth 4: Culture is what we say we care about
Companies often proudly call their "core values" as "our culture." Core values are part of the culture, but they don't tell the whole story 106. I (i.e., Andy, one of the authors) spent 15 years of my career in a multinational company having core values abbreviated as "SPIRIT." And now I should be embarrassed that I even have a problem recalling what it stood for in complete. In Schein's metaphor with water lilies in Chapter 3, these values are referred to as espoused values. Whether they really connect to the underlying assumptions, it depends on many factors.
Myth 5: Culture is Employee Well-Being
How employees feel may reflect some aspect of a culture, or, as with values, might be compensations for something missing or not socially acceptable to express (such as lack of respect). To see this, one need only reflect on one’s own feelings as a member of any company, group, or institution. White Jr. wrote: "When we mistake attitudes, opinions, or employee well-being for culture, we chase the wrong variable. Culture is not how people feel." 106
1.5 Multinational Companies
Things can get more interestingly complex in multinational companies. The famous quote "Think globally, act locally," from René Dubos in 1977 had been adopted by Coca Cola for its slogan to highlight its corporate strategy. It's with $21.73 billions of their 2020's revenue come from operations outside the United States (66%), as opposed to $11.28 from the US (34%). This growth of international business has led enterprises to multiply the number of their subsidiaries worldwide and to implement an elaborative strategy about local management. It's because organisational viability relies on the ability of a company to adapt the organisation to its environment 84. Integrating this adaptation skill in the firm's DNA allows maintaining its existence even in the case of a change in the organisation.
As the world is getting more and more interconnected by the globalisation, making us adapt to technology innovations, we notice a cultural paradox: Although the cultural diversity exists, there is a phenomenon of standardisation in our way of life and our consumption. Arose from it is the notion of "globalised culture." The globalisation entails a "distressing historical change" as mentioned by Ricoeur 8184. Therefore, a culture can create a cohesion between different populations who share it. These complex interactions around cultures are indeed both interesting and important.
Each one of these enterprises, has to learn to integrate new cultures and consider their differences, while maintaining a global synergy between mother and daughter companies along their line of sight. They have to learn to collaborate while taking into account their own differences through face-to-face or virtual meetings 84. This is even more interesting because Schein observed that in most cases, national and occupational cultures matter more than organisational cultures, as illustrated in Figure 1.5.
Figure not included in this reading sample
Figure 1.5. Occupational & National vs Organisational Cultures
In fact, the success of international influence is determined by a good communication between different players. Some enterprises choose to adapt their firms' cultures to the local habits and customs in order to facilitate the trades; others prefer to apply a universal firm’s culture for the sake of cohesion, consistency and fluidity of internal processes. Either scenario has its own consequences.
1.6 What this Book is About
This book is dedicated to us, practitioners and students of International Business Management. Having a strong interest in the underlined influence of cultures on trade, the authors started with analysing existing studies about the subject. We then conducted an empirical research and investigations on the culture's adaptation process. The research was conducted on multinational enterprises operating in France, Germany, Italy, Austria, Finland, Japan, Hong Kong, USA and India; it's then enriched by case studies from China, Indonesia, Thailand, Spain and Australia.
Therefore, the multinational aspects of culture are thoroughly discussed in this book. However, fundamental concepts about corporate cultures are also covered, especially in the early parts of the book. It then gradually brings us to the multinational aspects of corporate culture, followed by insights from different industries: Energy and telecoms, asset management, and aviation travel & tourism. Regardless from which sector we are, those insights will trigger fresh, valuable ideas, for the benefits of our own industry. Let's start with the anatomy of a corporate culture.
[...]
- Quote paper
- Andy Marjoko (Author), Aurélia Royer-Duffait (Author), Caroline Saradjian (Author), 2023, Adaptive Corporate Culture in International Business Management, Munich, GRIN Verlag, https://www.grin.com/document/1323193
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