Comparison of Cultural Factors at Outback Global in Both Australia and India - Case Study Example

Individual Major Project Comparative Study: A Comparison of Cultural Factors at Outback Global in both Australia and India. Name Grade Course Tutor’s Name Date: Abstract This report explores the national cultures of both Australia and India using Hofstede’s cultural dimensions. The report is based on the assumption that an Australian company (Outback Global) is considering setting up a subsidiary in India. The report indicates the cultural differences between the two countries and critically discusses the likely implication that such differences will have on the expectations, values and practices of employees and managers of the subsidiary company. The report indicates that while the host culture is relevant for any multinational business, the management needs to embrace values that support the company goals and objectives. Such values should ideally be an essential component of the subsidiary company’s organisational culture. The report, however, notes that expectations among employees are a product of the psychological contract they get into with the employer. The psychological contract is shaped by both the country’s culture and the leadership offered by the company. The report argues that communication between the Australian company and its Indian subsidiary must consider the cultural differences between the two countries, and specifically notes that India is a higher power distance country, while Australia is not. The report recommends that the subsidiary company strive to understand the different cultural aspects represented in India and develop ideal strategies on how well to position itself in the host country. The report concludes by reiterating the importance for the subsidiary company to base its strategic, operational decisions on a sound understanding of the host country’s culture. Introduction Australia and India are not only worlds apart geographically, but culturally. If culture is indeed the way that people do things in a particular place, significant differences exist between how Australians and Indians conduct businesses. Such differences are informed by the values, beliefs, and time concepts among other cultural aspects that people from the two countries hold. According to Hebbani (2008, p.4), for example, India is a high-context culture, while Australia is a low-context culture. If an Australian company wants to operate successfully in India, therefore, it would be imperative for the company’s management to be sensitive to the Indian cultures and traditions. This hypothetical report is an exploration of the Australian and Indian cultures, where it is assumed that an Australian multinational company is setting up a subsidiary company in India. The report relies on information obtained from credible literature sources addressing cultural concepts in the two countries. The information obtained from literature, therefore, forms the bulk of the critical and reflective section below and also informs the conclusions and recommendations that this report makes. Overall, the report reiterates the importance of the multinational company respecting India’s culture as a way of ensuring its business operations in the Asian country are successful. Critical and reflective discussion Dimensions of culture in Australia and India Culture is defined differently by different authors. For purposes of specificity, this report will adopt a working definition of the term. This report, will, therefore, perceive culture to be the “Learned beliefs, attitudes, values, customs and traditions that are common to a group of people” (Jindal, Bagade & Sharma 2013, p.2). Notably, Indians and Australians have different values, attitudes and beliefs, which are reflected in their different traditions and customs. This report will rely on Hofstede’s cultural dimensions theory as described by Jandt (2006, p. 160) to compare the two subject cultures. The first dimension, in theory, refers to individualism versus collectivism. In cultures where individualist tendencies prevail, the interests of single entity (be it a person or a business) are given more weight compared to the interest of the larger collective society. Collectivist cultures, on the other hand, uphold the interest of the larger group unit. According to Hofstede (2001, p. 215) Australia is a highly individualistic culture ranking second only to the US. The author indicates that unlike collectivist cultures, which are tightly integrated, individualistic cultures, are more personal. On its part, India is considered a collectivist culture (Hosfstede 2001, p. 216). The foregoing differences arguably have implications for the setting up of Outback Global’s subsidiary in India, because it means that the management of the subsidiary needs to be aware of the collective needs of the Indian workers. As Hofstede (2001, p. 47) specifically notes, personal relations in India prevail over task relationships. In other words, the management will need to appreciate that group or team accomplishments are more important to Indians as opposed to individual accomplishments. As Kulkarni et al. (2010, p. 95) notes, the collectivist culture is the exact opposite of individualistic cultures where goals are pursued by individuals and autonomy, achievement and self-reliance are perceived as the norms of pursuing competitiveness in business. Other studies, however, contest India’s blanket ranking as a collectivist culture arguing that both the collectivist and individualistic orientations exist in the country (Sinha et al., 2001, p. 134). Such an argument would, therefore, indicate the need for the multinational to carefully study the Indian culture before setting up the subsidiary to identify which of the two differing opinions about collectivism and individualism is indeed true. The second cultural dimension in Hofstede’s theory is ‘Masculinity versus femininity’ abbreviated as M/F (Jandt 2006, p.171). Masculine cultures are defined as those that seek to attain maximum distinction between what men and women do while feminine cultures give more weight to interpersonal relations, and the quality of life (Jandt 2006, p. 171). Notably, however, men and women are competitive and ambitious in masculine cultures, while both genders are modest where feminist cultures are the norm. According to Hebbani (2008, p. 6), masculinity was high in Australia as evident from the high expectations placed on people who were in leadership. Specifically, Australian leaders are expected to be more assertive, strong and competitive. In a study in India, it was also found that the country had a masculine culture as reflected in the expectations placed on leadership, risk-taking, and defending own beliefs (Singh & Agrawal 2007, p. 135). The main difference between the masculine versions in Australia and India is that expectation among women in the latter is not as harsh as it is for men in the former. In India, sympathy - a feminine trait- is part of the culture. Arguably, the sympathetic characteristic as practised in the Indian culture could have its genesis in the collectivist culture, where greater importance is attached to group achievements as opposed to individual achievements. The implication of the foregoing revelation for the subsidiary company is that while the management of the foreign subsidiary in India may emphasise competitiveness, risk-taking and other masculine traits among employees, they should not ignore the need to use the sympathetic characteristic in their Indian operations. The most likely expectation that Indian employees would have on the leadership of the new subsidiary company would be assertiveness and decisiveness without being brutal since such would accommodate the sympathetic cultural aspect. The third cultural dimension as proposed by Hofstede is power distance. Power distance is “The extent to which less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally” (Hofstede 1997, p. 28). In the business environment, high power distance cultures show more reverence to the people in leadership and managerial positions. The opposite is true for cultures that have low power distance. Jandt (2006, p. 172) specifically notes that employees in low power distance cultures expect their leaders to be democratic and involve them in decision-making. According to Hebbani (2008, p. 6), Australia has a low power distance, while India has a high power distance. This means that while Australians managers consult with their subordinates concerning decision-making, Indian employees do not expect such consultations to take place. As a high power distance culture, Indian employees would most likely expect their leaders and managers to play a paternalistic role, where they give orders that are to be followed. According to Singh (2001, p. 7), the subordination of some people is accepted as inevitable and the norm in most high distance cultures. The implication for the subsidiary being set up in India is that managers and leaders have to take up the authority of running the company, and realise the importance of setting rules as well as offering directives. About communication, the effect of the high power distance culture in India means that the management should be ready to set up workplace hierarchies and should also expect to be addressed using language that shows respect. The management will also need to be careful about the remarks they make to the employees because as Singh (2001, p.8) indicates, deference should be embraced in high-power distance cultures. Hofstede (2001, p. 150) identifies the fourth cultural dimension as uncertainty avoidance. According to Jandt (2006, p. 174), uncertainty avoidance is the extent of threats that people in a specific culture experience when they encounter uncertain situations. In his work, Hofstede (2001, p. 150) had explained that cultures with high uncertainty avoidance were more comfortable working with predictable situations, were intolerant and security seeking. Cultures with less uncertainty avoidance were, on the other hand, big at risk taking; more accommodative of differences; more relaxed; and relatively more tolerant (Jandt 2006, p. 175). Notably, both Australia and India have medium-high uncertainty avoidance preference (Australia at 60 and India at 40 scored out of 100 possible points) (Hebbani 2008, p.6). The foregoing scores mean that both countries accept imperfection; have high levels of tolerance, and accept changes as part of business development and growth. It is, however, worth noting that there are differences between what is acceptable in the two countries. Australians who are used to routines in the work environment may find the Indian environment too liberal because as Hebbani (2008, p.8) indicates, Indians have little regard for rules, which they flout easily, and are also poor at time keeping. Hebbani (2008, p. 9) further notes that Indians use the word ‘adjust’ in reference to the collective mindset that nothing is impossible in the country. Seemingly, the possibilities in India are endless as long as the people charged with specific responsibilities understand how well to navigate the Indian environment through ‘adjusting’. The implication for uncertainty avoidance for doing business in India is that the management of the subsidiary need to understand fully what risks Indian employees are willing to take, and how best they can be made to ‘adjust’ to achieve the highest possible productivity for the company. The final cultural dimension as proposed by Michael Bond (cited by Jandt 2006, p. 177) is “long-term versus short-term orientation”. The author defines the long-term orientation concept as the manner in which a specific society maintains links with its past while dealing with present events and anticipating future possibilities. Cultures that score highly on long-term orientation derive lessons from the past, and their present and future are closely linked to the past. According to Hofstede (2001, p. 355), Australia has a score of 21 while India has scored 51 out of a possible 100 points. The foregoing statistics mean that Australia is short-term orientation country, where a normative culture is rife. In such a culture, traditions are respected; people focus on achieving quick results in the present, and people have little propensity to predict or save for the future. Instead, they spend as much as they can in an attempt to adjust to external pressure from the society (Jandt 2006, p. 176). In other words, Australians live in the present and are more concerned with utilising the present resources for the times they are living in. India, on the other hand, is more long-term oriented compared to Australia. Consequently, the Indian culture can be defined as pragmatic based on concepts such as ‘Karma’, time management and religious tolerance. Karma is a philosophy, which has dominated the Indian culture for ages. Time management, on the other hand, is based on the historical concept that indicated that time is not linear. Consequently, Indians do not attach much importance to time as Australians would. Religious tolerance, on the other hand, is a reality whose genesis is linked to the historical co-existence of people from difference religions. The impact of the relatively high long-term orientation culture in India means that the management of the subsidiary need to appreciate that lack of punctuality in India is something that the locals consider forgivable. Moreover, the management needs to appreciate that the prevailing reality for different situations is reason enough for Indians to change the game-plan. If it is raining, for example, people may be late to work because, after all, the weather was bad, and in some places like New Delhi, traffic congestion worsens whenever it rains. Finally, the management of the subsidiary company may need to adjust the communication to emphasise the importance of exact plans. However, the management should avoid forcing the ‘urgency’ of living for the present as is the norm in Australia in the Indian context. As would be expected, exact plans are almost always foiled given the lack of punctuality and last minute changes that Indians consider normal. The management may, therefore, need to consider accommodating changes in time or plans when making specific business plans. The effect of a country’s culture on business It is clear that there are differences between a country’s culture and the organisational culture of businesses that operate in that same country. As Ferrell, Fraedrich and Ferrell (2013, p. 111) observe, the culture of a global organisation may be different from the national culture in the host country. The differences in national and organisational culture arguably emerge because businesses develop their set of beliefs, values, norms and traditions, which do not necessarily reflect the host country’s culture. Ferrell et al. (2013, p. 112) are among authors who emphasise that organisational values (which contribute to the larger organisational culture) are often specific to the mission, vision and goals that the organisation has. While relating to employees and other stakeholders, therefore, it is expected that the organisation would be guided by its mission, vision and goals. The implication of the foregoing argument by the two authors on the subsidiary is that the company does not have to accept everything that is contrary to its business values based on the culture justification. Rather, when setting up business in India, the subsidiary should consider embracing organisational values, which will be communicated to employees in the Indian subsidiary, for purposes of helping them understand what the company expects of them. Ferrell et al. (2013, p. 116) make an interesting argument by indicating that the national culture is more relevant to the marketing aspect of a firm than it is to local human resource engagement. The authors argue that understanding the national culture makes it easier for a global business to comprehend consumer behaviour in specific markets. Organisations that have well-articulated values, policies and procedures can communicate desirable behavioural expectations to their employees in different global environments where they operate, and as a result, employees who are willing to abide by the rules and procedures are absorbed as part of the workforce. Interestingly, however, a global organisational cannot ignore the country’s culture because as Ferrell et al. (2013, p. 117) observe, a host country’s culture predicts organisational culture. In other words, while deciding on which values to uphold in a specific country, a multinational organisation should consider cultural aspects of the host country. It is also worth observing that organisations are independent entities and as such, the prevailing national culture should not be perceived as a true reflection of what organisational culture should be. Gulev (2009, p. 261) for example observes that specific organisational advantages can be realised when businesses defy some acceptable norms in the host culture. In India particularly, the accepted norms about punctuality (or the lack thereof), have been challenged by several companies in the communication sector as indicated by Singh and Parashar (2005, p. 11). The foregoing argument means that organisations have the liberty to set the values, beliefs, policies and procedures that will constitute their organisational culture and they are also free to oppose some cultural values that would jeopardise the effective operations of a company. Such measures, however, should be taken without contravening some of the core values upheld by the dominant host culture. It is worth noting that several institutional theorists (Meyer 1995, p. 33; Scott 1995, p. 45) have suggested that national cultures determine the practices that organisations adopt. Other authors like Ijose and Iossifova (2012, p. 2) indicate that cultural isomorphism makes it difficult for a foreign company to adopt the practices of the parent company entirely. In other words, the subsidiary that will be set up in India cannot fully adopt the practices of Outback Global in Australia. Ijose and Iossifova (2012, p. 2) argue that employees (recruited from the skilled pool available in the host country) inevitably bring elements of the country culture into the workplace hence hindering the blanket adoption of the mother company’s practices. To operate successfully in the foreign markets; therefore, it is suggested that companies should resist the temptation of enforcing the parent company’s practices and procedures, and instead try to infuse the positive cultural aspects of the host country into the organisational culture. The implication of the decisions that the subsidiary makes concerning the Indian culture will undoubtedly affect the values, communication and expectations of employees most of whom will most likely be recruited from the host country. Considering the high power distance of the Indian culture, for example, employees may find it harder to communicate within a flat organisational structure. It would, however, be easier for them to communicate in a hierarchical organisational structure because their culture has seemingly socialised them to respect authority. The values of the employees will most likely be impacted by the values endorsed in the organisational culture. In other words, when a conflict between personal values as shaped by the host country’s culture and organisational values emerge, employees are most likely to observe the latter. The foregoing argument is informed by Schein (2010, p. 3) who notes that the effective leadership shapes the values and behaviours of employees within an organisation, thus aligning them with the goals, mission and vision that an organisation has. Interpreted, the observation made by Schein (2010, p. 3) means that the subsidiary company will need to have a leader who understands the aims, goals and objectives of the company in the Indian market, and one who is willing and capable of conveying the relevant values to the employees. Ideally, value congruence is desirable since, as Lamm, Gordon and Purser (2010, p. 51) note, the fit between the values that employees have and the values that the organisation espouses makes it easier for the workers to fit easily into the work context. However, value congruence is not always attainable, hence requiring the organisation to come up with a set of values, which supports the company’s agenda. In a narration based on having met a dying pilgrim in the Himalayas, McCoy (1983, p. 107) implies that without shared and mutually accepted values, an organisation may be unable to handle the challenges that come up when handling diverse people. Such diversity can be based on gender, religion, race or other cultural aspects. Considering the diversity of gender and religious beliefs in India, it would, therefore, be imperative for the subsidiary company to have some mutually accepted values, which employees should uphold when in the work environment. Schein (2010, p. 4) indicates that the organisational values set the expectations that employees develop towards an organisation. If the employees expectations are met, Schein (2010, p. 4) argues that they (employees) are likely to commit to their jobs and perform their duties well. In other words, commitment among employees would be higher where their expectations are met. Abdullah, Boyle and Joham (2012, p. 15) on the other hand indicates that the expectations that employees have are based on the psychological contract that they have with their employer firm. By definition, a psychological contract is an informal and unwritten relationship that exists between the employer and the employee (Abdullah et al. 2012, p. 19). The psychological contract is shaped by the communication, perceptions and interpretations that occur when the two parties interact. However, the national culture also affects employees’ expectations regarding negotiations (for example regarding acceptable work practices); fulfilment of promises; and identification with groups (Abdullah et al. 2012, p. 20). The implication of the foregoing arguments to the subsidiary is that before setting the company in India, the management needs to understand how the Indian culture affects employees’ psychological contract, and how the subsidiary can influence such expectations using appropriate organisational values. Conclusion and recommendations From the foregoing section, it is rather obvious that Australia and India have multiple cultural differences. As evident from the analysis based on Hofstede’s cultural dimensions, Australia is an individualistic and masculine culture that registers relatively low points on uncertainty avoidance and long-term orientation. While similar to Australia’s masculine culture, India’s culture is more collectivist oriented, with high scores on uncertainty avoidance and equally high points on long-term orientation. While it is clear from the analysis section above that the national culture and the organisational culture, this report cannot assume that the former does not have any effects on the latter. As such, this report recommends that before setting up a subsidiary in India, Outback Global should seek to understand the Indian culture, and identify the best values to infuse in the subsidiary company’s organisational culture to enhance the attainment of organisational goals in the company. Based on the goals and objectives of the subsidiary company, the management will have to decide whether to accept or reject aspects of the national culture as part of the organisational culture through what Nelson and Gopalan (2003, p. 1115) term as “isomorphic and rejective (sic) responses”. As indicated in the discussion section above, multinational companies operating in India do not always have to conform to prevailing cultural practices; instead, such companies can choose to embrace the cultural aspects that support their organisational values. However, rejection of some aspects of the national culture has to be done sensitively to avoid creating perceptions of disrespect to the host culture. This report has established that the organisation can influence the values held by employees, through leadership and the adoption of desirable values as part of the organisational culture. This means that if the subsidiary company does not like some values espoused by employees in the workplace based on their culture, it can create the necessary change through indicating the ideal values to be upheld in the workplace. Communication between the Australian company and its subsidiary in India has to consider the cultural differences between the two countries, mainly based on the cultural dimensions context. Since India is a high-power distance country, communication may not be as straightforward as the case would be in Australia. In Australia, it is easy for employees to air their opinions regarding concerns, problems or other issues that arise in the workplace. Due to the relatively flat organisation structures in Outback Global, the information can easily get to the management or leaders. In India, however, all information would probably have to go through several hierarchies before it can eventually get to the leaders. The preceding observation means that the timing of communication is quite critical in India especially if the information is meant for people in different organisational hierarchies. Moreover, the communication context in India is at an increased risk of suffering from distortions as it gets from one organisational level to another. The risk of distortions hence calls for enhanced clarity and brevity in the information as a way of minimising the associated risks. Finally, the report has addressed employee expectations indicating that they are shaped by the psychological contract that employees have with their employer. As Abdullah et al. (2012, p. 17) indicate, the national culture of the employees influence their expectations to a great extent, hence indicating the need for the subsidiary company to understand the different cultural aspects in the host country. Overall, and despite the fact that this report has established that a company operating in India can choose to reject or conform to some aspects of the host culture, understating that same culture is arguably the basis on which the company will make all its strategic, operational decisions. Rejecting the host country’s culture in its entirety would, however, be a bad idea for any multinational company. References Abdullah, ABM, Boyle, S & Joham, C 2012, ‘Managing employee expectations in South Asia; the case of multi-national companies in Bangladesh’, Review of Business Research, vol. 12, no.5, pp. 13-29. Ferrell, OC, Fraedrich, J & Ferrell, L 2013, Business ethics: ethical decision making and cases, 9th edn, South-Western Cengage, Mason, OH. Gulev, RE 2009, ‘Are national and organizational cultures isomorphic? Evidence from a four country comparative study’, Managing Global Transitions, vol. 7, no. 3, pp. 259-279. Hebbani, A 2008, ‘Managing cross-cultural encounters: presenting a rationale for studying Australian-Indian business communication’, ANSCA08 Power and Place, Wellington, July, pp. 1-16. Hofstede, G 1997, Cultures and organisations: software of the mind, 1st edn, McGraw-Hill, New York. Hofstede, G 2001, Culture’s consequences: comparing values, behaviours, institutions and organisations across nations, 2nd edn, Sage Publications, Thousand Oaks, CA. Ijose, O & Iossifova, A 2012, ‘National culture and the adoption of organizational practices: evidence from a global company’s call centers in two market economies’, Journal of International Business and Cultural Studies, Vol. 4, pp. 1-11. Jandt, FE 2006, An introduction to intercultural communication: identities in the global community, 5th edn, Sage Publications, Thousand Oaks, CA. Jindal, S, Bagadem SD & Sharma, P 2008, ‘Impact of work force diversity on work culture of Indian organisations’, Journal of Business Management & Social Sciences Research, vol. 2, no.7, pp. 1-5. Kulkarni, SP, Hudson, T, Ramamoorthy, N, Marchev, A, Kondakova, PG & Gorskov, V 2010, ‘Dimensions of individualism-collectivism: a comparative study of five cultures’, Current Issues of Business and Law, vol. 5, no.1, pp.93-109. Lamm, E, Gordon, J & Purser, RE 2010, ‘The role of value congruence in organizational change’, Organisation Development Journal, vol. 28, no.2, pp. 49-64. McCoy, BH 2008, ‘The parable of sadhu’, Harvard Business Review, vol. 61, pp. 103-108. Meyer, H 1995, ‘Organisational environments and organizational discourse: bureaucracy between two worlds’, Organisational Science, vol. 6, no.1, pp. 32-43. Nelson, RE & Gopalan, S 2003, ‘Do organizational cultures replicate national cultures? Isomorphism, rejection and reciprocal opposition in the corporate values of three countries’, Organisation Studies, vol. 24, no.7, pp. 1115-1151. Schein, EH 2010, organizational culture and leadership, 4th edn, Jossey-Bass, San Francisco. Scott, WR 1995, Institutions and organisations, Sage, Thousand Oaks, CA. Singh, K & Agrawal, P 2007, ‘Masculinity and femininity among working women in Indian urban culture’, Journal of Human Ecology, vol. 21, no.2, pp. 135-138. Singh, K 2001, ‘Work values and work culture in Indian organisations: evidence from automobile industry’, Delhi Business Review, vol. 2, no.2, pp. 1-9. Singh, SK & Parashar, M 2005, ‘Cross-cultural conceptualizations revisited’, Paper Presented at the Eleventh Cross-Cultural Research Conference, New Orleans. Sinha, JBP, Sinha, TN, Verma, J, & Sinha, RBN 2001, ‘Collectivism coexisting with individualism: an Indian scenario’, Asian Journal of Social Psychology, vol. 4, pp. 133-145. Read More