Multinational managers must deal with organizations from different societies

1
INTRODUCTION

• Multinational managers must deal with
  organizations from different societies
• Each society provides a unique national context
  for the design of organizations

2
KEY ISSUES IN COMPARATIVE ORGANIZATIONAL DESIGN

• What makes organizations from different societies
• Alike?
• Different?

3
CONVERGENCE

• The increasing similarity of management practices

WHY CONVERGENCE?

• Growing similarity of customer needs
• Growing levels of industrialization and
  economic development
• Global competition and global trade

4
THE CULTURE FREE HYPOTHESIS

• Regardless of national culture, organizational
  design depends to on the organizational context
  (size, technology)

5
SOCIAL INSTITUTIONS

• Encourage managers to develop structures and
  processes that match institutional requirements
• Example U.S. laws regarding monopolies prevent
  U.S. organizations developing large conglomerate
  structures

6
NATIONAL AND BUSINESS CULTURE

• Pervasive and taken-for-granted aspects of
  culture influence preferences for certain
  designs
• Most managers also design organizations
  purposefully to fit local cultural expectations

7
ORGANIZATIONS ALIKE AND DIFFERENT SUMMARY
OBSERVATIONS

• Global trade/investment with its increasing
  contact among managers of all nationalities leads
  to convergence
• Similar technology/size leads to similar
  structures, regardless of nationality
• In spite of the trend toward convergence,
  extensive differences still exist among
  organizations from different countries.

8
CONTROL MECHANISMS

• Link the organization vertically
• Five broad types of control
• personal
• output
• bureaucratic
• decision making
• cultural

9
NATIONAL CULTURE AND ORGANIZATIONS

• Hofstede power distance and uncertainty
  avoidance the most important
• Influence basic problems of organizational
  design--differentiation and integration

10
ADHOCRACY

• Low power distance low uncertainty avoidance
  adhocracy
• Fits cultures where people can tolerate ambiguity
  and have less need for formalized rules and
  regulations

11
THE ADHOCRACY DESIGN

• Vertical and horizontal differentiation fewer
  levels and wider span of control
• Control mechanisms mutual adjustment
• Decision making Participative or consultative

12
PROFESSIONAL BUREAUCRACY

• Small power distance high uncertainty avoidance
  norms professional bureaucracy

13
THE PROFESSIONAL BUREAUCRACY DESIGN

• Vertical and horizontal differentiation moderate
  levels
• Control mechanisms standardization of skills.
• Decision making centralized decision making

14
FULL BUREAUCRACY

• High power distance high uncertainty avoidance
  full bureaucracy
• Full bureaucracy is the most formalized of the
  Hofstede organization types

15
FULL BUREAUCRACY DESIGN

• Vertical and horizontal differentiation Tall
  pyramids and narrow spans of control
• Control mechanisms Standardization and a high
  degree of formalized rules
• Decision making Highly centralized

16
FAMILY BUREAUCRACY

• Occurs in countries with large power distance
  norms and low uncertainty avoidance norms.
• It most parallels an extended family with a
  dominant patriarch or father figure.

17
FAMILY BUREAUCRACY DESIGN

• Vertical and horizontal differentiation small
  and low specialization
• Control and coordination mechanisms direct
  contact
• Decision making highly centralized

18
THE JAPANESE KEIRETSU

• Web of trading partners
• Financial networks revolve around major banks-
  e.g. Mitsubishi.
• Production networks revolve around user and
  supplier relationships

19
INSTITUTIONAL FORCES SUPPORTING KEIRETSU

• Historic- zaibatsu
• Close links between government and Japanese
  industry create coercive pressures

20
THE KOREAN CHAEBOL

• Family-dominated and multi-industry conglomerates
• Dominate much of Korean business
• Close relationships with banks for financing

21
DISTINCT ORGANIZATIONAL FEATURES OF CHAEBOL

• Extensive family control
• Paternalistic leadership
• Centralized planning - reports directly to the
  chairman
• Close connections with the government

22
INSTITUTIONAL PRESSURES SUPPORTING CHAEBOL

• Coercive isomorphism - government support
  dominated the founding and growth of the Korean
  chaebol
• Recent government policies

23
THE MODERN PUTTING-OUT ORGANIZATION IN ITALY'S
MODENA REGION

• Manufacturer "puts-out" raw material to
  independent companies
• Companies assemble the goods, usually in homes
• Manufacturer then retrieves the assembled goods

24
INSTITUTIONAL SUPPORT

• Economists consider the system archaic but it
  thrives - why?
• Supported by legal and political institutions
• State-subsidized loans to 100,000
• Freedom from some labor and social security laws

25
INSTITUTIONS AND DESIGN SUMMARY OBSERVATIONS

• The Italian example institutional support
  networks of small family-owned companies
• The Japanese keiretsu/Korean chaebol state
  provides a coercive environment