Managing in Multinational Companies

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Table of Contents

The introduction
The body
The conclusion
References

The introduction

Some fundamentals on organizational culture

Taking into account the fact that organizational culture impacts on organizational performance, one can conclude that organizational culture in multinational companies can be regarded as an important factor competitive advantages and the challenges of employee cultural diversity depend upon.

For this reason, it seems to be evident that the process of intensifying organizational learning is also determined by the variable. Although detailed studies concerning organizational culture allow us to analyze general knowledge on a wide range of strategies multinational companies tend to achieve, one is to keep in mind that the separate elements the phenomenon of organizational culture involves are poorly understood.

The thesis statement

Organizational culture is recognized to be an important element in multinational companies, because it affects effectiveness in companies. Both – organizational performance and organizational learning depend upon the phenomenon.

The body

Globalization and demographic background and their relation to organizational culture

The realities, which must be considered, in order to understand the way organizational culture affects multinational companies include globalization and demographic background. Thus, while considering the first variable, one can probably notice that globalization gives employees an opportunity to work in person or virtually, with employees from different parts of the world.

Of course, the fact that employees of different ethnic groups can cooperate without any difficulties or efforts cannot be neglected too. It should be noted that the most effective and successful organizational techniques of the past do not work today.

Thus, multinational companies look for new fresh ideas. “Ironically, increasingly diverse workforces offer an often-overlooked potential for competitive advantage – if the organizational culture facilitates management of diversity’s challenges and harnesses its potential benefits” (Trefry 2006, p. 563-564). The phenomenon of organizational culture has been studied by many scientists. Thus, it was proven that if organizational culture emphasizes integration and learning, the challenges it faces are considered to be positive.

The concepts of organizational culture

Generally, the definitions organizational culture involves are of wide range. For instance, the phenomenon can be defined as the combination of certain expectations, attitudes and values. On the other hand, it can be regarded as a set of rules for behavior. The most appropriate definition, however, is based on the idea of shared perceptions in relation to everyday issues.

The idea that identity negotiation process is affected by the variable should be also taken into consideration, as “teams are more likely to benefit from diversity when team members’ identities are verified by reflected appraisals of other team members” (Polzer et al. 2002). As far as multinational companies are recognized to be global companies, one can state that the key challenge MNCs face is acting global.

One of the primary purposes multinational companies tend to achieve is to maximize the benefits of a diverse workforce. Therefore, one can state that the organizational culture of various MNCs can be changed.

In other words, some beliefs on norms, various policies and procedures undergo numerous transformations, in order to satisfy modernized requirements of the contemporary business world. For instance, such successful multinational companies as News International and Time Warner can be regarded as the most vivid examples of globalization process driving force (Gulyás 2005).

The effectiveness of multinational companies seems to depend upon mental models employees create to analyze certain situations. For this reason, one can suppose that employ staff, which involves a variety of national cultures, is able to produce a variety of decisions. A high degree of commonality, therefore, is considered to be a determinative factor managers rely on while evaluating certain perspectives within the company.

National culture as an integral part of organizational culture

It is extremely important to distinguish between the notions of real culture and constructed culture (Vaara 1999). Thus, while speaking about constructed culture, one is to keep in mind certain stereotypical interpretations concerning organizational reality. Newcomers to multinational companies may experience certain difficulties on desired behaviors; although they learn the rules for communication to cooperate with employees who think in a different way.

The interdependence between organizational culture and national one is considered to be one of the most important aspects, which is to be analyzed. “Many multinational companies assume that organizational culture will overcome the influence of national identity and that culture is the glue that holds geographically dispersed units together” (Schneider & Barsoux 2003). Some researchers are of the opinion that organizational culture cannot exist without national culture.

The assumption seems to be correct, as nobody will deny the fact that employees of different ethnic groups bring some unique elements of their own culture (i.e., national culture) into organizational one. Certain distinctions in values are mostly associated with the national level; while certain distinctions in performance are mainly related to the organizational level (Hofstede 1997).

Managing national values within multinational companies can be regarded as one of the principal challenges MNCs face. Still, even a strong organizational culture cannot exist without the national cultural background employees carry about. The relationship between the cultures determines divergent values and judgments in multinational companies.

The issue of diversity and organizational performance

There are many contradictions on the issue of diversity in multinational companies. The phenomenon of cultural diversity is strongly associated with certain advantages; although one is to keep in mind that the challenges the issue brings about do not always cause positive effects in relation to organizational performance. In other words, if such challenges are poorly managed, organizational performance can be seriously injured.

According to the answers of employees of eight multinational companies in Luxembourg, organizational advantages cultural diversity brings about include more creativity, different ways to solve numerous contradictions, business projects diversity (an opportunity to use knowledge of a wide range of cultures), and an opportunity to cooperate with different customers.

When speaking about personal advantages, employees highlighted knowledge expansion, an opportunity to manage the unexpected, the psychological support, and greater flexibility. Despite the fact that diversity is mostly regarded as a positive phenomenon, it should be noted that greater diversity means more complex relations.

For this reason, in most cases organizational effectiveness seems to drop. The employees of multinational companies in Luxembourg pointed out the following challenges:

team development is slower;
communication among diverse people is more difficult and time-consuming;
creating common understanding requires considerably more effort; and
different expectations held by diverse people often lead to misunderstanding” (Trefry 2001).

Generally, the advantages and challenges of the phenomenon depend upon both – divergent and convergent processes. Thus, convergent processes in multinational companies lead to certain negative outcomes. Interactions and integration cause contradictions among employees. On the other hand, diversity in divergent processes affects organizational performance in a positive way. So, one can conclude that convergence in strategies of multinational companies is one of the main challenges MNCs face (Adler 2002).

The variables multinational companies’ effectiveness depends upon

The strategic utilization of the issue of diversity provides multinational companies with an ability to cope with the challenges. Thus, one can conclude that competitive advantages are created due to the nature of organizational culture. It intensifies potential advantages and seems to facilitate the process of cooperation.

On the other hand, uniformity in intellectual models is associated with danger, as monotonous thinking prevents creativity. Personal and organizational flexibility determines the way various practices, procedures and processes are managed and accepted by employees. In our days, that effectiveness of multinational companies depends not only upon employees’ abilities to think in different ways, but also upon their abilities to accept and adapt to different circumstances.

Gentile (1996, p. 1) is of the opinion that “it is precisely through our interactions and confrontations with a difference – of perspective, of prior experience, of style, of identity— that we come to recognize the limits of our own perspectives, experiences, and styles”. A wide range of available options multinational companies provide employees with seems to expand employees’ experience. The process of adaptation to specific contexts is determined by a variety of values, expectations and beliefs.

The conclusion

Multinational companies’ effectiveness depends upon the strategic utilization of employees’ divergent thinking. Thus, employees with different cultural backgrounds rely on their own mental models, in order to resolve certain contradictions.

The key challenges, which multinational companies face, include acting global, managing national values, and managing convergent processes. “Individuals and organizations actually learn from expanding the frames of reference through which they view and interpret what they see and experience – thus increasing their awareness of alternative ways to act” (Trefry & Vaillant 2002).

References

Adler, N 2002, International Dimensions of Organizational Behavior, Cincinnati: South-Western Publishing.

Gentile, M 1996, Managerial Excellence through Diversity, Chicago: Irwin.

Gulyás, A 2005, ‘Multinational Media Companies in a European Context’, University of Lincoln, pp. 1-20. Web.

Hofstede, G 1997, Cultures and Organizations: Software of the Mind. New York: McGraw-Hill.

Polzer, J, Polzer, L, & Swann, W Jr. 2002. ‘Capitalizing on Diversity: Interpersonal Congruence in Small Work Groups’, Administrative Science Quarterly, vol. 47, pp. 296-324.

Schneider, S & Barsoux, J 2003, Managing Across Cultures, London: FT Prentice-Hall.

Trefry, M 2006, ‘A Double-Edged Sword: Organizational Culture in Multicultural Organizations’, International Journal of Management, vol. 23, no 3, pp. 563-575. Web.

Trefry, M 2001, ‘Multicultural teams: Insight from Experiences in Luxembourg’, Proceedings of the European International Business Association Annual Conference, Paris, France.

Trefry, M & Vaillant G 2002, ‘Harnessing Cultural Diversity to Stimulate Organizational Learning’, Current Topics in Management, vol. 7, pp. 47-60. London: Transaction Publishers.

Vaara, E 1999, ‘Cultural Difference and Post-Merger Problems: Misconceptions and Cognitive Simplifications’, Nordiske Organisasjonsstudier, vol. 1, no 2, pp. 59-88.

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