Impact of National Culture on Organisational Culture - Literature review Example

?Impact of National Culture on Organisational Culture Table of Content Introduction 3 Literature Review 3 Conclusion 7 Reference 7 Bibliography 10 Introduction The topic in question here is “Effects of difference between organisational cultures of global companies and the cultures of countries in which they operate”? According to Hofstede (1983), effective organisations operating in multiple countries have adapted management ideas of their own to local cultures. Hofstede (1993) has also highlighted that the different management theories have cultural constraints meaning that these theories have no value once they enter the border of different country with different culture. While Johns (2006) stated that national culture restricts the disparity in the culture of the organisations (Martocchio, & Liao, 2009, p. 4). It is important that organisations around the world should know certain parameters on which cultural difference is based. Cultural differences can be a matter of concern as well as can be advantageous for the organisations. Its effect can have a greater impact on the productivity and functioning of the organisations in global market. The effects of differences between national culture and organisational can may be functional and dysfunctional depending on the situation. As far as dysfunctional effect of culture is considered, innovation and change is affected and group thinking is encouraged (Aswathappa, 2010, p. 176). Literature Review Organisational Culture is the cooperative encoding of the brain that differentiates people from a particular organisation from people belonging to some other organisation. National Culture on the other hand can be defined as the cooperative encoding of the brain that differentiates people of a particular group from the people belonging to other group (Hofstede, n. d). It is believed that culture is a concept but still the forces created in the situations related to organisation culture are said to be powerful. The difference between national and organisational culture may affect an organisation but on the hand it is also noted that there is a strong linkage between national and organisational culture. Moreover, organisational culture derives from national cultures. This signifies the advantage lying in organisational culture being derived from national culture as it would create a better understanding of the working culture in the host country. But, disadvantage associated with it also cannot be denied as the true culture of organisation is subjugated in presence of national culture. Newman & Nollen (1996) have put forth the theory saying managing business with one best possible method is a wrong assumption. Cultural differences in different countries emphasises on different management practices by organisations. Diversity in the culture of organisation and the host country is a sensitive issue. Organisations around the world face challenges in diversified environment with different cultures. Different people have different religious beliefs, come from different ethnic groups, and belong to different countries and most importantly cultural difference. The complexity and the differences that arise between organisational and national culture gives rise to entities which are beyond expectation. It is believed that national culture’s impact on employees is higher than the impact of organisational culture. Every organisation develops a culture of its own in the process of evolution as a global player. Organisational culture development becomes all the more important to overcome the problems related to adaption in external environment. Globalisation on the other hand has made organisations improved entities and their cultures have made significant influence on the employees and their work culture. It is believed that multinational organisations have strong culture to overpower the impact of national culture, thereby helping multicultural people to assimilate in a team (Saiyadain, 2003, p. 262). National cultures cannot be neglected as they have considerable effect on the functioning of an organisation in different countries. There are several differences that occur between national and organisational culture. The organisational culture is assumed to be less comprehensive in comparison to national culture. The values inculcated through national culture in the members of an organisational will have greater impact (Francesco, & Gold, 2008, p. 260). The factors associated with cultural difference have a deeper and broader meaning which can be used in context to the society where people with different cultural backgrounds signify an association. This association comprising of different cultures around the globe, difference in ethnicity, rituals and beliefs possess a great challenge for the organisations and also a great deal of opportunity (Steinberg, 2009, p. 5-6). Further, it has also been stated by Schuler & Rogovsky (1998) that MNC’s effectiveness in different national cultures lies in the compensation practices which needs to be in accordance to the host country. This will ensure MNC’s with the competitive edge over other players. Organizations operating in different countries find that national culture and organisational can affect the performance of the organisation as the two cultures differ in many ways. The differences between country and organisational culture also include regulatory and institutional apart from cultural differences. Henceforth, to effectively shape and manage organisational cultures in multiple countries, global companies are required to understand the difference and secondly, determine the impact of such difference. Thirdly companies must decide whether they need to localise their strategy to suit the countries culture in which they are operating. It is noted that the global companies with divergent cultures addresses and motivates its employees and are eventually accredited for bringing stability within the organisation (Rosado, 2006, p. 1-4). Global companies thinking that localisation of their strategy depending on the situation will be an effective measure can be seen as a contrasting character. It is believed that country differences, especially the difference in national culture have such a great impact that organisation will be left with the option of opting for localised strategy. The advent of globalisation has diminished the concept of border between the countries. The world has turned into one single habitat in context to the business world. This has given rise to borderless entities and also diversified culture. Cultural difference is no more a contemplation, but has become an important aspect in today’s business scenario. Organisations must scrap the old notion that national culture does affect the organisation, but should slowly embrace the diversity in the organisation to achieve better results (Shrm, 2009, p. 5). Cultural differences and diversity in workplace is the result of changing working environments for organisations and is moreover a natural consequence occurring because of globalisation (Jackson, 1992, p. 7). Diversity in cultures may lead to conflict but at the same it also encourages innovation in an organisation (DiTomaso, & Post, 2004, p. 5). Conclusion The effects of cultural difference between organisation and nation are not new to the world of business, but, what is important is the appropriate management and handling of these issues. Different researchers have put forward various theories focusing on the advantages and disadvantages related to differences in national and organisational culture. Organisational culture which forms a part of an organisation’s work culture is part of the national culture. Some theories make national culture to be more powerful while some believe that organisational culture may needs to be modified but still it holds the key for its success in multiple countries with different cultures. For any organisation its strategy or plan provides a holistic view of the company’s goal which is crafted on the line of developing an inclusive working ambience or environment keeping in mind the differences between national and organisational culture. This can help a company motivate and encourage its employees from diversified cultural background to yield maximum productivity and attain full confidence and potential. Reference Aswathappa, K. (2010). International Business, (Ed. 4). New Delhi: Tata McGraw-Hill Education. DiTomaso, N., & Post, C. (2004). Diversity in Workforce. Research in the Sociology of Work. 14. Amsterdam: Emerald Group Publishing. Francesco, A. M., & Gold, B. A. (2008). International Organisational Behavior, (Ed. 2). New Delhi: Pearson Education India. Hofstede, G. (No Date). National Cultural Dimensions. [Online]. Available at: http://geert-hofstede.com/national-culture.html. [Accessed on 9 May 2012]. Jackson, S. E. (1992). Diversity in the Workplace: Human Resources Initiatives. New York: Guilford Press. Martocchio, J. J., & Liao, H. (2009). Research in Personnel and Human Resources Management. (28). Bingley: Emerald Group Publishing. Rosado, C. (Jan. 2006). What Do You Mean By “Managing Diversity”?. [Pdf]. Available at: http://www.edchange.org/multicultural/papers/rosado_managing_diversity.pdf. [Accessed on 9 May 2012]. Saiyadain, M. S. (2003). Organisational Behaviour. New Delhi: Tata McGraw-Hill Education. Shrm. (2009). Global Diversity and Inclusion: Perception, Practices and Attitudes. [Pdf]. Available at: http://www.shrm.org/Research/SurveyFindings/Articles/Documents/Diversity_and_Inclusion_Report.pdf. [Accessed on 9 May 2012]. Steinberg, S. R. (2009). Diversity and Multiculturalism: A Reader. New York: Peter Lang. Bibliography Collis, J. & Hussey, R. (2009). Business Research: A Practical Guide for Undergraduate and Postgraduate Students. (Ed. 3). Basingstoke: Palgrave Macmillan. Dartey-Baah, K. (2012). The Impact of National Cultures on Corporate Cultures in Organisations. Academic Leadership. 10(1). [Online]. Available at: http://www.academicleadership.org/1245/the-impact-of-national-cultures-on-corporate-cultures-in-organisations/. [Accessed on 9 May 2012]. George, J. 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