Culture and control: A critical analysis

What is the role of organizational culture?

Culture and control: A critical analysis

What is the role of organizational culture?

Martijn Hazelhorst

Executive summary

Currently the role of culture within the field of organizational and management control is unclear. This paper discusses the current issues and tries to integrate the concept of organizational culture within the cultural domain and it also is being linked to management control systems (MCS’s). The outcomes state that there is a two-way relationship between organizational culture and MCS’s. Organizational culture shapes MCS’s and MCS’s can shape organizational culture. Organizational culture functions as a bridging mechanism between the broader cultural background of individuals and the collective environment employees have to cope with within the organization. Organizational culture provides a more in-depth perspective than national culture and is therefore necessary to involve when analyzing culture. This is because organizational culture is better in showing nuances and also allows for explaining discrepancies from national culture. National cultural models (Hofstede’s model) fail in providing answers to a lot of the current cultural problems, but the alternatives are also far from perfect. Organizational culture can complement in solving these problems. Therefore, organizational cultural factors and dimensions should be taken into account during cultural analysis.

Keywords

Preface

This paper is written as a master thesis for the University of Groningen for the specialization Business Administration and Organizational and Management Control.

Introduction

When talking about management control systems (MCS) we mean the systems that are used to influence the behavior of people to achieve certain goals or actions (Merchant&Van der Stede, 2007). Culture also has to do with behavior, which is one of its outcomes (Schein, 1992). It seems that these systems are often specific to certain groups, such as cultures (Harrison&McKinnon, 1999). We therefore could conclude that different cultures prefer different configurations of their MCS’s since different groups prefer different behavior. However, most literature currently available in the field of organization and management control (O&MC) is based on national culture. Other fields, such as that of international management, already seem to have done more research with regard to organizational culture. This research states that the role of organizational culture should not be underestimated (Cui et al., 2006). Currently, organizations are often analyzed with a vague conception of culture (Harisson&McKinnon, 1999). This conception does not provide a lot of detail and is also very general. This is because national culture is often used, even though the dimensions from this level of culture are rather general and also the concept is very broad since it plays on a national level. If an organization has to be analyzed in greater depth this would therefore require another level of culture since national culture is likely to be too broad to answer specific cultural questions for organizations. It could thus be that a country and its cultural level (i.e. national culture) is an incorrect proxy to analyze culture when talking about organizations (Tsui et al., 2007). A cultural level that plays a role on the organizational level is organizational culture. Using this concept may provide more information about why an organization is functioning and designed they way it is.

A real-life example is the merger of the German Daimler-Benz and US Chrysler in 19981. From a strategic and economical point of view this merger seemed to make sense. At first, revenues increased, but in 2000 third quarter losses of half a billion dollar were reported. Future estimations were even more pessimistic. In 2007, Daimler sold the Chrysler division. The negative results seemed to be based on cultural differences between the organizations. For example, Daimer-Benz preferred a traditional hierarchy and centralized decision-making, whereas Chrysler preferred equal empowerment and methodical decision-making. These problems were significant enough to lead to negative results for the merged company, which was expected to increase revenues from an economical point of view.

relevant because of the fact that the research with regard to culture in the field of O&MC is very limited. Current literature already gives some directions for further research because the use of culture is incomplete at this moment (e.g. Harisson&McKinnon, 1999; Baskerville-Morley, 2005). The manner in which culture is used is too simple, it fails to consider the totality of the cultural domain, the differential intensity of norms and values is not implemented, external pressures are not taken into account and there is a restricted conception of culture (Harisson&McKinnon, 1999). If the field of O&MC wants to improve its knowledge with regard to the role of culture, these issues will have to be researched into further depth. The goal of this paper is to integrate organizational culture into the field of O&MC, since this might be an important level of culture when looking at and trying to analyze organizations. One of the implications of not investigating these issues is that any cross-cultural or international research cannot use a good definition of culture, since this is non-existent. This is because the current definitions that are used are often criticized or disconfirmed (e.g. Chow et al., 2002). Furthermore, suggestions are done to update the current definition, such as including the role of organizational culture (Harisson&McKinnon, 1999). We can therefore assume that the current definition of culture is incomplete and that therefore a good definition of culture does not exist. Because of the increasing globalization and cross-border activities of companies it is essential that there is a good concept of culture that is used (Soeters&Schreuder, 1988).

The goal of this paper is to find out what the role of organizational culture is in the cultural field of O&MC. Furthermore, because culture is about behavior and because MCS’s are about influencing behavior, this aspect of O&MC is taken into account. MCS’s are a more tacit element of O&MC. Therefore the relationship between organizational culture and MCS’s will also be investigated.

The contribution to the academic literature will be that this paper aims to provide a link between organizational culture and O&MC which is currently incomplete or lacking. For practitioners the outcomes can be helpful in how they will view cultural elements of organizations. If organizational culture is confirmed to play a role in the cultural spectrum, this means that managers can take this into account more deliberately when analyzing their own or other organization’s organizational cultures.

This paper will start with describing O&MC. Subsequently an overview of national culture will be given. After this the paper will elaborate more thoroughly about organizational culture since this is the main issue. Hereafter the influence of national culture on O&MC will be investigated and finally the relationship between organizational culture and O&MC will be explained.

1. Methodology

literature and not on numbers, which is part of a quantitative analysis. This study will use previously written literature to come to new insights. Literature previously written about the subjects of organizational culture, national culture and MCS’s will be gathered and will be elaborated upon in the literature review. Based on the literature, problems within the cultural field for O&MC will be stated. These issues will be discussed after the literature review in the analysis part. The analysis will go into further depth with regard to the problems and will provide insights and answer to the problems. First, an overview of organizational and management control, national culture and organizational culture will be given in the literature review. Subsequently, the relationships between these concepts will be described. After this, the problems based on the literature review will be mentioned and elaborated upon in the analysis. The problems will be discussed separately and knowledge from the literature review will be used to shed new light on these problems. The role of organization culture and MCS’s will be integrated in the analysis. Finally, a framework will be provided showing the role of organizational culture and MCS’s for organizations.

Literature review

2. Organizational and management control 2.1 What is organizational and management control?

At first a short overview will be given about the literature currently available about O&MC (see Table 1). After this overview a description will be given about what O&MC is about.

Author Concept

Ouchi (1979) Organizational control and control mechanisms

Etzioni (1965) Organizations and power relations

Eisenhardt (1989) Agency theory

Tannenbaum (1968) Control as the sum of interpersonal influence

relations

Birnberg et al. (1983) Organizational control based on measurability and programmability

Table 1: Overview of O&MC literature

companies start working together by forming a joint venture together. Different companies may have different preferences for a management control system configuration so that they can more easily transfer outcomes and information back to their parent company without having to reinterpret the data. However, to collaborate both companies still have to come to a certain consensus with regard to the management control system. The smaller the upfront differences the less likely it is that major changes have to take place. This would assume that companies with more or less similar MCS´s should have less difficulty cooperating. That goes for all situations in which employees from a certain organization have to adapt to a new management control system.

2.2 Management control and power relations

Furthermore, some researchers describe control as based on power relations and interpersonal influence relations between people in the organization (Tannenbaum, 1968; Etzioni, 1965). This means that the control systems are used to express power and influence. This shapes a control system in a certain way, where some people might have more power, whereas others have less. The control systems therefore formalize the relationships between the different people in the organization. It manages who gets which information and how an employee’s performance is measured. These power relations can be culturally determined, because some cultures have high power distances, whereas other cultures have low power distances (Hofstede, 1980). If MCS’s are used to express power relationships, this should lead to different MCS’s because preferred power relations differ between countries and also between organizations.

2.3 Elements of management control

budget, whereas other organizations let the supervisor set the budget. This shows that there are numerous possibilities for configurations of an MCS. Especially if the entire MCS design is viewed there can be a great variance. These elements will later be used to demonstrate the role and outcomes regarding national and organizational culture.

In this paper the focus is on control as being able to influence the behavior of employees to efficiently and effectively reaching organizational objectives. The aspect of O&MC focused on will therefore be the MCS of an organization. MCS’s are used because these are the mechanisms all employees come into contact with, in contrast to guidelines that top management uses to create new policies or control mechanisms. This is also what is most relevant with regard to the cultural dimensions introduced later.

3. National culture 3.1. What is national culture?

This chapter will elaborate about national culture. It will first provide a general overview of the literature with regard to this area (see Table 2). Afterwards an explanation about the concept of national culture will be given.

Author Concept

Hofstede (1980)(1983) Cultural dimensions (national cultural

differences)

Hofstede & Bond (1988) Fifth cultural dimension

Javidan (2005) Cultural dimensions (project GLOBE)

Orr & Hauser (2008) Critique on Hofstede’s cultural dimensions

O’Grady and Lane (1995) Psychic distance paradox

Table 2: Overview of national culture literature

Culture consists out of the shared beliefs and ideas a certain group has. These can be traditions, artifacts, norms etc. For example, Hofstede (1984) gives the following definition:

"Culture is the collective programming of the mind which distinguishes the members of one category of people from another." (p.51)

The most dominant model in this field is that of Hofstede (1980) and its four cultural dimensions; power distance, uncertainty avoidance, masculinity/femininity and individualism/collectivism. Later, a fifth dimension was added, called confusion dynamism, which has to do with long- or short-term orientation (Hofstede&Bond, 1988). This paper will refer to Hofstede (1980) mostly, but the fifth dimension by Hofstede and Bond (1988) should also be taken into account. In this model power distance is about how a cultural expects differences in power. A high score assumes large power distances, a low distance assumes equality. Uncertainty avoidance refers to whether a culture accepts uncertainty and risk. A high score means that a culture dislikes uncertainty; a low score means the opposite. Masculinity/femininity is about whether a culture prefer male- of female-related values. Male values are, for example, competitiveness and ambition. Female values are empathy and participation. Individualism/collectivism can be defined as how people view their culture; as a group of individuals or as one large group. Finally, Confucian dynamism refers to the time orientation of a culture, whether it is long-term or short-term oriented. These dimensions are supposed to influence the preference for certain business practices, such as control systems. For example, people who score low on the uncertainty avoidance dimension are likely to prefer more risk. They therefore can have a preference for variable payment systems (Jansen et al., 2009).

There is some criticism about this model because the empirical evidence is limited and therefore it is difficult to generalize (Orr&Hauser, 2008; Chow et al., 1996; McSweeney, 2002). Nonetheless, the cultural dimensions developed by Hofstede remain dominant. Hofstede’s model will be more thoroughly discussed in chapter 7.5. Javidan et al. (2005) also developed a framework, called GLOBE, with multiple cultural dimensions. This framework is based on more empirical evidence. Nonetheless, there seem to be cultural differences between countries. This is important since this influences people and also the businesses they run.

(organizational) cultural differences. This issue is called the psychic distance paradox (O’Grady&Lane, 1995). Therefore, culture is always a precarious subject and has to be managed well to be able to reap the benefits and avoid the traps. Hereafter there will be elaborated upon organizational culture.

4. Organizational culture 4.1 What is organizational culture?

This part will elaborate about organizational culture. It starts with an overview of the literature written about organizational culture (see Table 3) and thereafter a further elaboration about organizational culture will follow.

Author Concept

Albert & Whetten (1985) Organizational identity

Hill & Jones (2001) Definition of organizational culture

Kotter & Heskett (1992) Adaptive and unadaptive organizational cultures

Denison (1990) Organizational culture and

performance/dimensions

Schein (1992) Organizational culture and leadership

Schein (1985) Organizational artifacts, values and tacit

assumptions

Flynn & Chatman (2001) Organizational cultural content

O’Reilly et al., (1991) Organizational culture and fit with the individual

Hofstede (1980) National culture could influence business

behavior

Johnson (1988) Factors and elements influencing organizational

culture

Quinn & Rohrbaugh (1983) Competing Values Model

Table 3: Overview of organizational culture literature

There are numerous definitions of organizational culture. This makes it difficult to pick one. The definition that is used in this paper is that of Edgar Schein who defines organizational culture as follows:

This definition is used because it clearly states that organizational culture is about groups and that it has to do with relationships regarding internal and external factors. This fits well to the definition that is used for MCS’s. Both definitions are about internal and external relationships. Organizational culture is how people would like these relationships to be. The MCS is about how these relationships and flows are controlled. An MCS can control these relationships according to the cultural preferences, but it can also be different. This could be explained by the fact that the MCS is not designed well (it incorrectly controls aspects of the relationships) or it can be because the cultural preferences are not wished for by the organization (use the MCS to generate change) (Merchant&Van der Stede, 2007).

Groups of people use shared beliefs to solve problems of external adaptation and internal integration (Schein, 1992). Of course, it depends on the culture how this is done. It can also depend on the content of the culture and not on whether the culture is strong or weak (Flynn&Chatman, 2001). It might be different which element of culture is more dominant. A strong culture is a culture where employees’ beliefs and actions are aligned with organizational values. In the case of a weak culture it is the opposite. A strong culture might also make it more likely that employees try to achieve the organizational goals effectively, reducing the need for tight control mechanisms. A downside of a strong culture might be that it is more resistant to change, whereas a weak culture is more receptive to it since it is less embedded in the people of the organization.

4.2 Organizational culture apart from national culture

Thus, besides national culture there is also organizational culture. Whereas national culture plays a role on the national level, organizational culture does so at the organizational level. Just like national culture, organizational culture also has certain practices, norms, symbols and traditions that are typical for a certain group, which in this case is a company, instead of a country (Albert&Whetten, 1985; Dutton et al., 1994). Hofstede (1980) also states that there are national and regional cultural factors affecting a business, which could explain why organizational cultures differ throughout a single nation. This could be one of the reasons why it is important to include organizational culture in cultural analyses since this takes into account more factors which can help in explaining why an organization is operating the way it is. This could solve some issues in the cultural domain which will be discussed in greater detail in chapter 7.

4.3 Organizational cultural dimensions

entails empowerment, team orientation and capability development. And finally, consistency is about core values, agreement and coordination/integration.

Schein (1992) states that organizational culture is the most difficult thing to change within an organization and will outlive all other physical objects of the organization, such as products and founders. This shows how important it is to have a good organizational culture that supports the organizational goals and objectives. According to Schein (1985) there are three levels of organizational cultures. At first there are the artifacts, these are the visible aspects of the organization. It is about how people dress, how they interact, how the interior design of the firm is, the language that is used etc. All of these are physical components that carry cultural meaning. The second level consists of the values of an organization. This is what preferences people hold with regard to certain organizational issues, such as customer friendliness. These values are often strongly embedded in the organizational culture. From these values organizational norms, guidelines, or expectations that prescribe appropriate kinds of behavior by employees in particular situations are developed and which also control the behavior of organizational members towards one another (Hill&Jones, 2001). At the third level there are the tacit assumptions, which are very difficult to notice (Schein, 1985). These are also difficult to spot in everyday interactions. People from within the organization might not even be explicitly aware of these assumptions. These three levels already show why organizational culture is so difficult to change, since it is very intangible and because it is also deeply rooted into people´s behavior. It might even be so deeply rooted in their behavior that they are even unaware of it. This also means that when certain things have to change based on external pressure (e.g a take-over or sending people abroad to support operations there) this can cause large problems since organizational norms and values are embedded in people’s behavior. If organizational culture is indeed this important than there should be more emphasis on this concept with regard to fields of research that have to do with organizational culture. Because the field of O&MC has to deal with issues such as internationalization it is also likely to run into other business with different national and organizational cultures.

4.4 Adaptive versus unadaptive organizational cultures

case of O&MC because this might greatly reduce the impact of cultural discrepancies and differences with regard to MCS´s.

4.5 Competing Values Model

Quinn and Rohrbaugh (1983) came up with the Competing Values Model. This model entails two sets of contrasting values along two axes. The first set is control/flexibility and the second is people/organization. The first is about how control (tight) and flexibility (loose) should be balanced to let the organization be effective as possible. The second is about differences in organizational focus. From these axes emerge four types of cultures: rational, hierarchical, developmental and group culture (Quinn&Kimberley, 1984). Rational cultures focus on productivity and performance (Denison&Spreitzer, 1991). These cultures aim at goal achievement, functionality and efficiency. Control and external focus are important here. Hierarchical cultures focus on the internal organization, stability and efficiency. There are lots of rules and regulations. The focus is on control and the internal organization. Developmental cultures have a flexible and external focus. Important aspects are growth and creativity. The last, group culture, has a focus on flexibility and the internal organization. Values such as trust and participation are important.

An organization will not fit perfectly in a single one of these categories, but will usually represent a certain combination of these four types. The first set on the axis refers to control and flexibility. The MCS is one of the elements that support this concept. Namely, it should control and influence how people behave, but at the same time it should also offer some flexibility so that employees are able to reach the desired objectives (Merchant&Van der Stede, 2007). This flexibility is required because not every individual is the same and because factors out of the employee’s control can interfere with the process of goal achievement. The overlap between organizational culture and the function of an MCS is therefore interesting because dilemmas from the field of O&MC (e.g. control versus flexibility) can be found back in organizational culture. For example, one of the elements of control can be payment systems which could also be reflected in the organizational culture, since there is a link between value systems and pay system preferences (Cable&Judge, 1994; Westerman et al., 2009). The payment system itself can be used to change organizational culture5. For example, if sales employees are paid a fixed salary and an organization’s customer satisfactions ratings are low it could try to improve these ratings by substituting a part of the fixed salary by a variable component based on the ratings an employee receives from the customers he or she handled. This is likely to motivate employees to increase their service towards customers. The behavior of employees is directed towards this goal because of the MCS, which influences employee behavior to increase their customer satisfaction

5

ratings. Otherwise they will get paid less because of the variable component which is unlikely to be preferred by the employees. In time, this can lead the employees to hold customer satisfaction in higher regard in the future if they make these new values their own (internalize them) and will see this as a normal approach towards customer satisfaction instead of being forced to. This would mean that the organizational culture has changed since these changes can be specifically attributed to the organization’s employees and values. This change could take time because organizational culture is difficult to change (Schein, 1992).

4.6 Organizational culture and organizational performance

Empirical research supports that organizational culture is critical for organizational performance (Denison, 1990; Denison&Mishra, 1995; Kotter&Heskett, 1992; Wilkins&Ouchi, 1983). We can therefore assume that culture has a certain influence on the organization and that it is relevant for this paper. Furthermore, it is also suggested by other researchers (e.g. Harisson&McKinnon, 1999) to include organizational culture in O&MC research. Next, the relationships between the three described concepts (management control systems, national culture and organizational culture) will be elaborated upon.

5. National culture and O&MC

5.1 The relationship between national culture and O&MC

Firstly, research about culture and O&MC has gained more prominence because it is important for the business community, especially since the occurring globalization which creates and enlarges the need to establish international operations (Harrison&McKinnon, 1999). It then becomes important for companies whether they have to redesign their MCS´s or whether they can implement the MCS from the parent company. As one might notice, the practical implications can be very important. The role of culture can be very important in this case. It seems that MCS are often based on influencing behavior because of how the different categories are filled in (Speckbacher&Offenberger, 2010).National culture is also based on behavior. National culture is about which collective ideas a group takes for granted in a certain country and how they should behave in certain situations.

The second issue is primarily important to the academic community. This concerns the fact that the concept of culture is incomplete as discussed before. Since frameworks are developed and research is done based on this concept there should be an emphasis on improving this concept.

power distance could lead to more deliberately expressed power relations within the MCS. However, this research has always been done in single nations, whereas a cross-cultural impact is not investigated, even though this is also very relevant. This paper will not investigate a cross-cultural impact, but rather will contribute to providing a better understanding of culture which should lead to a better utilization of this concept in future research. An improved concept is required to get a more whole and detailed understanding of culture and cultural effects which, in turn, should lead to better research outcomes and better frameworks that are based on this cultural concept. The current concept of culture lacks this and therefore will contribute to improving this concept.

5.2 Confirmations and disconfirmations of the relationship between national culture and O&MC

5.3 Organizational culture continues where national culture stops

O’Connor (1995), in turn, confirms the statement in the previous paragraph. The results from his paper suggest that organizational culture allows employees to cope with differences when there are discrepancies between organizational practices and national culture (individual background of employees). There is also a counter-argument because Chow et al. (1999) confirmed that United States and Japanese organizations operating in Taiwan did alter their practices to better fit the local environment. Since evidence points both ways organizations are able to make a choice whether they want to invest in transferring their own practices or adapt their practices to the foreign standards (Harrison&McKinnon, 1999). Of course, this might also depend on the organizational culture itself and not only on differences regarding national culture. It might be that the cultural values are aimed at adaptation or not. This fits with what Kotter and Heskett (1992) state. They mentioned that there are adaptive and unadaptive cultures. So even though the evidence may points in different ways, this can be explained by the fact that it depends on organizational culture whether values are transferred similarly or that they are adapted to a foreign location.

Harisson and McKinnon (1999) stated that the outcomes of research with regard to the culture-O&MC link are diverse. They explain this by the fact that a lot of research does not take culture into account in a correct manner. They therefore mention that with regard to the field of O&MC also the national culture-component is still in its infancy. It is now a fact that culture has become an explicit factor in O&MC research, but this mostly relies on Hofstede’s (1980; 1988) work (Harisson&McKinnon, 1999). However, other research does show that there are differences (with regard to preferences) for different cultures when looking at management control system (Jansen et al., 2009; Elger&Smith, 1994; Budhwar&Sparrow, 2002; Granovetter, 1985; Newman&Nollen, 1996). Literature that seems to have its doubts or is unable to prove any cultural influence on MCS´s is older than the papers stating that culture does have an influence on O&MC (e.g. Ouchi, 1979). But more current papers express support for the fact that there can be a link between culture and O&MC (e.g. Johnson, 1988). For example, control systems are said to be able to influence organizational culture and organizational culture should be able to influence control systems to be able to correctly influence behavior (Johnson, 1988).

6. Organizational culture and O&MC

6.1 The relationship between organizational culture and O&MC

It is mentioned in the previous chapter that national culture cannot be held fully accountable for how an organization is designed. Organizational culture seemed to be one of the explanations why employees were able to cope with practices that differed from their national preferences (O’Connor, 1995). Furthermore, Johnson (1988) states that MCS’s can help in changing organizational culture which indicates that there is a relationship between the two concepts. This also makes it sounds logical why organizational culture contains elements of management control as discussed in chapter 2.

6.2 Organizational cultural values and MCS’s

6.3 Specific organizational culture and O&MC elements

the employee take on more risk if he still gets paid the same amount of money? Certain tasks which differ with regard to risk should be rewarded differently to deal with the risk discrepancy. Thus, in order to cope with these differences regarding empowerment and risk, the MCS should also be configured accordingly to effectively reward employees and maintain a feeling of fairness among employees. Because these tasks are specific to the restaurant it would be the smartest to tailor the MCS to organizational values about how employees should be rewarded and also about values with regard to risk preferences. Some organizations might prefer equality among employees, whereas others pay much more to employees that excel. A restaurant that aims at being premium may pay its chef cook a lot. But in return they do expect a lot from the chef. The organizational values might thus entail that a lot is demanded from its employees, but that they are also paid well. The MCS should therefore take this into account. Because the chef must cook premium dishes he also requires premium ingredients. He can thus not be forced to purchase products at the lowest possible costs, because this does not allow him to cook premium dishes which require more expensive ingredients. If he cannot buy premium ingredients, the restaurant cannot sustain its premium image. The same goes for a lot of other factors and tasks within organizations. But this example shows that the specific organizational design requires different approaches of the MCS to be able to let the organization operate successfully. In this case, premium dishes require more flexibility in ingredient purchasing costs. This shows that organizational values, such as maintaining a premium image, have an effect on how payment systems and measurement systems of MCS’s should be designed. This is because the goal of the organization can be to become a top-class restaurant en therefore arranges the elements (including the organizational culture) within the organization in such a way to be able to effectively reach that goal.

Analysis

7. Issues in the field of O&MC

There are several problems with regard to culture in the field of O&MC. This chapter will elaborate about these problems and will discuss the role organizational culture could play to solve these problems. These problems are distilled from the literature review. The analysis will try to provide an answer to these problems by describing the contributing role organizational culture can play in the field of O&MC. This is because national cultural analysis falls short in explaining some of the outcomes from previous research. Organizational culture could be used as a complementary perspective to help explaining these outcomes. The main issues derived from the literature are:

The second is the differential intensity of national cultural norms and values (Harisson&McKinnon, 1999). There can be core and peripheral values. Not all cultural norms and values are equally important. But this distinction is not used often. This will be described in paragraph 7.2.

The third is the simplistic treatment and the restricted conception of culture (Harisson&McKinnon, 1999; Baskerville-Morley, 2005; Bhimani, 1999). Culture is more complex than how it is regularly used. There is much more depth, richness and complexity to be found in culture. This is also one of the major issues in the field. The restricted conception of culture also is about a simplistic treatment of culture. Often, cultural concepts are taken for granted and processes that lead to these concepts are ignored and also the interactions within and between cultures are ignored. For example, culture entails values, but the processes that shape or change these values are neglected. This will be described in paragraph 7.3.

The fourth is that external organizational factors are not taken into account (Bhimani, 1999; Hill&Jones, 2001). An organization is often under pressure from external factors, such as economical and institutional factors. This will be described in paragraph 7.4.

Fifth, there is a strong reliance on Hofstede’s (1980) cultural dimensions which may be inappropriate, since this framework falls short in several ways. This will be described in paragraph 7.5.

7.1 Failure to consider the totality of the cultural domain

In current research some national cultural dimensions are left out of the framework when investigating a subject (Harisson&McKinnon, 1999). But there is no apparent reason why this has been done. It is likely that a combination of cultural dimensions can lead to a certain outcome which can be different from what is likely to follow from a single dimension. The cultural dimensions are likely to be interrelated and therefore all cultural dimensions should be taken into account during an analysis.

7.1.1 Culture should be viewed in totality

which has led to a preference different from the national culture. In the paper of O’Connor (1995) it is investigated whether organizational culture is related to budget participation. It is found that organizational cultures with higher flexibility (see the Competing Values Model from chapter 4) lead to the increased usefulness of budget participation. This case is consistent with the national cultural dimension of power distance, where a higher power distance should lead to lower usefulness of budget participation. Note that this conclusion is drawn based on organizational culture. Furthermore, the research that has led to the pinpointing of nations on the cultural map was also subject to cultural issues, for example, regarding answering methods or experimental situations (Tsui et al., 2007). The preceding text shows that organizational culture can explain outcomes of MCS’s, even without using national cultural dimensions and also when national culture cannot explain the outcomes.

Geert Hofstede himself also stated that his model is not applicable for organizational culture, but rather for national culture (Hofstede et al., 2010). This supports the statement that national culture cannot explain everything that occurs on an organizational level and therefore there is a possibility for organizational culture to come into play.

One of the dimensions of national culture, uncertainty avoidance, exists out of many underlying factors and elements which overall might lead to the same conclusion, but which might be very different when viewed separately. National culture is not effective in showing heterogeneity within cultures. This could be because the national cultural dimensions only provide a framework to describe culture, but it does not give outcomes of the different configurations that are possible. This is consistent to what is stated in the literature review, where it is mentioned that national culture cannot be held responsible for all outcomes which are related to cultural issues. This is because it only shows the aggregated outcome of certain sub-dimensions which are not described. It is therefore difficult to find out how one exactly got to the final outcome. This makes national culture difficult to apply to situations where specific circumstances have to be taken into account because its general cultural dimensions lack the detail to describe these specifics.

an organization is more often created from rather local and similar elements. For example, employees may live nearby and could have been to the same school, making it more likely that they think similarly about certain values, such as payment systems. Furthermore, organizational culture may be better able to describe homogeneous groups because it targets a more specific entity, which is the organization, whereas national culture targets a much larger entity, which is a country. A country is more likely to be rather heterogeneous because it contains subcultures (McSweeney, 2002). It would therefore not make sense to use the same outcomes of the national cultural dimensions to describe the subcultures within a country. These can be different and should be analyzed accordingly. Such a subgroup can be an organization, which thus also requires another cultural level of analysis.

Current research may thus provide biased results because outliers currently could be seen as false data even though they might represent a very important issue in the cultural domain. The research issues and outcomes from this paragraph support this point. Researchers may thus overlook issues simply because they are trying to prove another point and because of that they miss something very important. This might not be their focus but it is nonetheless relevant if research regarding culture wants to improve. Because of this bias there is more room for the role of organizational culture, especially if national culture seems not to be responsible for a certain outcome. This could mean that national culture is not fully responsible for these outcomes or might not play a dominant role. It could well be that other factors play a role in shaping these outcomes.

7.1.2 Cultural dimensions are interrelated

7.2 Differential intensity of the cultural norms and values

Not all cultural norms and values are equally important (Lachman et al., 1994). It depends on how central a norm or value lies in the cultural spectrum. There can be made a distinction between core and peripheral values. Core values are more resistant to change and are also more likely to have a stronger influence on organizational practices. Peripheral values are less resistant to change and are more likely to have a weaker influence on organizational practices. This shows that not all elements of national culture are likely to be prevalent within an organization and these may be replaced with other elements. This allows for organizational culture to add elements as well since these may be more applicable to the situation. How these peripheral elements are arranged is likely to be company-specific. Organizational cultural dimensions seem to be better at describing these specificities since they allow for more detail and provide some information about preferences from within the organization, which could be based on their local environment (Schein, 1985). This can explain why certain norms and values are used on an organizational level. It is thus important to acknowledge the differential intensity of norms and values because this allows organizational culture to be used to explain more in-depth issues of organizations (Lachman et al., 1994). This is because when national cultural values are not used they have to be replaced by other values. Since we look from an organizational perspective these values could be explained by organizational culture since these take into account specific organizational circumstances.

7.3 Simplistic treatment and restricted conception of culture

Culture is often seen as a simple concept (Harisson&McKinnon, 1999; Baskerville-Morley, 2005). The five national cultural dimensions as provided by Hofstede (1980) should provide a clear picture of the organization. It is unlikely that only five dimensions can explain everything that happens within organizations. There is more complexity, depth and richness in culture. Furthermore, the restricted conception of culture currently does not show the processes that shape and influence culture (such as the external pressures as mentioned in the previous chapter. Culture is not a static, but a dynamic concept.

7.3.1 Simplistic treatment of culture

Figure 1: The role of different cultural levels for organizations

7.3.1.1 Analyzing culture requires depth

organizational cultural dimension of adaptability, which exists out of creating change, customer focus and organizational learning. Adaptability can be high when creating change and customer focus are high, but organizational learning is low. But it can also be explained by creating change and organizational learning being high, and customer focus being low. These sub-dimensions clearly contribute towards explaining why adaptability is attributed a certain score and could therefore be useful when analyzing culture because they provide more detail.

7.3.2 Culture is complex

The fact that culture is complex should not be overlooked since it is not as straightforward as it seems at first sight (Harisson&McKinnon, 1999; Baskerville-Morley, 2005). Culture has got multiple dimensions, and should therefore not only be watched from the perspective of national culture. Cultural classifications can help people form mental pictures of countries or groups of people. However, these dimensions are very general and are therefore hard to apply specifically. One should therefore take into account that national culture alone does not tell the entire story. Other cultural concepts, such as organizational culture, also contribute by providing several cultural dimensions that can be applied which allow us to extend our image of a group of people. It could be well possible that there are interactions between national and organizational culture (Soeters&Schreuder, 1988). Just the fact that there is cultural diversity within a country supports this point, because this leads to the fact that national cultural dimensions are only partially applicable (Baskerville-Morley, 2005). In the case of hybrid organizations, microclimates are created which reflect a mixture of the practices from two or more companies (Harrison&McKinnon, 1999; Kamminga, Van der Meer-Kooistra, 2007). These can be similar to none of the national cultures involved and are therefore unique. We cannot call these microclimates national cultures, since they are not created in a different nation. The generality of the dimensions of national culture falls short in explaining these types of organizations (Alexander&Smith, 1993). Therefore, there must be another level of culture which can explain these types of cultures in greater detail. Since these hybrids exist on an organizational level, this makes it sound logical to introduce the concept of organizational culture to be able to define these cultures. This is because there is no higher level of culture which can specifically describe these organizations. Especially since they have no unilateral national background it would be inappropriate to use dimensions prescribed by Hofstede (1980) or other researchers that researched national culture.

7.3.3 Culture is dynamic

General cultural dimensions such as those described by Hofstede (1980) are not likely to be suited to deal with details (Harisson&McKinnon, 1999; Baskerville-Morley, 2005; Bhimani, 1999). To be able to incorporate these details, and thus cultural dynamics, more specific cultural dimensions are required. Hofstede (1980) only provides five dimensions (if Confucian dynamism is included) which is designed for use at the national level and therefore requires to be very general, whereas organizational culture provides four dimensions, but each with three sub-dimensions (Denison, 1990). This allows for a more specific definition of the general cultural dimensions. A framework such as that by Hofstede (1980) lacks these subdimensions. Furthermore, Schein (1985) also mentions that there are three depth levels in organizational culture (artifacts, values and tacit assumptions) which makes a distinction between the visibility of cultural levels. And finally, these factors are specifically designed for organizations, whereas Hofstede’s dimensions are not. Even though the dimensions designed by Denison (1990) cannot show exact dynamics, they do allow for a more nuanced image of the organization which is likely to lead to a better understanding of the organization. The model also allows describing whether an organization’s focus is internal or external, which fits well to the fact that an organization has to cope with internal and external pressures. Therefore, organizational culture should be able to reduce the restricted conception of culture, although not entirely.

Thus far, this paper assumed similarities between national and organizational culture because overall values may still be similar, but that the operationalization can be very diverse. However, values are not the only aspects of culture (Triandis, 1993; Zammuto&Krakower, 1991). This permits organizational culture to be different from national culture based on other dimensions, apart from values. And even though values can be similar, this can still lead to different outcomes based on values alone since the operationalization can differ which may lead to different artifacts and underlying assumptions.

This relates to what Kotter and Heskett (1992) state about organizational cultures, which can be either adaptive or unadapative. So there might be better ways to cope with situational factors than employees knew. Even though their old way of running the business was satisfactory, it can be improved because they have access to greater knowledge with regard to this field. Their cultural assumptions could thus be overridden.

7.3.3.1 MCS’s are one of the factors influencing organizational culture

Johson (1988) elaborates about factors that can influence organizational culture. These factors are: the paradigm, control systems, organizational structures, power structures, symbols, rituals and routines and stories and myths. The most interesting element in this list is that of the control systems. It states that control systems have an influence on organizational culture. This would mean that there is a connection between the field of O&MC and organizational culture. The control mechanisms from O&MC can thus influence or shape the organizational culture. Furthermore, it also stated that the organizational culture is created by how all of the aforementioned elements are arranged. This means that an organizational culture can be build up from the bottom. This means that managers can shape the organizational culture by implementing these elements in a certain way. However, this should be done at the start, because the organizational culture will get embedded later and then it will become difficult to change. And another interesting assumption is that when the organizational culture is used to change, the employees might also have fewer difficulties when MCS´s change. This could significantly decrease the number of encountered problems during a cross-cultural process. As stated in the O&MC chapter, MCS’s are in place to be able to support the organization and its objectives (Merchant&Van der Stede, 2009). It therefore sounds likely that they are able to assist in coping with changes because they can inform employees about what is required of them after the changes. Keeping employees informed is important to reduce resistance to change (Cummings&Worley, 2005). MCS’s should thus also be able to assist when organizational culture has to change.

7.3.4 Culture is not always expressed

The cultural part that is specific to the organization can be seen as synthetic and as a replacement for inexpressible elements of national culture. It should be noted though that this also touches another subject of interest with regard to culture. The preceding story can also be explained by the fact that not all cultural elements are equally important (Lachamn et al., 1994). This could explain why some elements from the national culture are abandoned quickly, whereas other elements are harder to change. Nonetheless this means that national culture is not a static concept, but that there is a certain core that is most important to people. However, it may be well possible that this core is not very applicable to how organizations are being run, or only in a partial manner. This opens up the possibility that besides national culture there is also a part to be played by organizational culture. If we would say that people from a certain country prefer certain O&MC characteristics, such as variable pay, this does not have to be true. The specific arrangements around this variable pay may differ greatly; some might prefer variable pay with a large variable component whereas others might prefer a smaller variable component. National culture only sets a certain direction but does not mention anything about how the outcomes are specifically filled in. This can be done by the organizational culture, which stands in closer proximity to the local environment and may contain values that allow the organization to deal with specific local factors and might give a clearer answer to why a specific payment system is chosen. There may thus be general similarities between organizational and national culture, but when one looks into further depth great differences may appear.

The fact that culture can change shows that this is not a static concept. And therefore cultural dimensions should not be used to pinpoint an organization somewhere on a cultural map. MCS’s can help in changing culture (Johnson, 1988). This may lead to the fact that the organizational culture deviates from the national culture. National culture would be useless to define this company, simply because the organization is not similar to what it is supposed to be according to the national cultural dimensions. Another cultural scale has to be used to define it. Thus, MCS’s are not only influenced by culture, they can also shape it. Organizational culture can therefore play a role in providing an answer to the simplistic treatment and restricted conception regarding culture. Organizational culture provides a more in-depth perspective and it also is linked to a concept, namely MCS’s, that exert pressure on culture which can force it to change. MCS’s can thus be seen as one of the processes that shape culture.

7.4 External pressures are not taken into account

culture, external forces should be taken into account because these made provide extra information about the specific arrangements of the organization. External pressures are therefore likely in shaping organizational culture and the MCS.

7.4.1 Interaction with the external environment

1999). These organizational goals, interdependencies and external relationships are likely to be different for every organization because they reside in different environments. Therefore, the MCS’s are also likely to be different since they should reflect differences in required behavior (Johnson, 1988). It requires different configurations of an MCS to reach different goals when different resources and different environmental factors are taken into account. This is because it requires different behavior to cope with these differing environments.

7.4.2 External influences found back in organizational culture and the MCS

Since behavior and MCS’s are linked, this also means that different MCS’s require different cultures (Zammuto&Krakower, 1991). This is because of the fact that (organizational) specific cultural elements can also be found back in the design of the MCS since this has to influence behavior. The fact that an organization is situated in the United States does not mean that it also has to use variable pay systems, even though that is typical for that country. The specific circumstances (e.g. institutions, nature of the business) can lead the top management of the organization to decide that other measures are more suitable to run the organization and to achieve its goals (Efferin&Hopper, 2007; Bhimani, 1999; Schein, 1992). The general circumstances in a country are not the same as the specific environment in which an organization resides. Therefore organizational culture would be more appropriate and specific to describe organizational design since this more thoroughly describes factors that the organization has to cope with, which may be dissimilar from factors that play a role on a national level.

At the same time, the organization is forced to adopt certain characteristics to fit within its environment and survive. The design of the organization therefore does not have to come forth from values that are preferably dominant within the organization since external factors can make them irrelevant. If these external pressures translate into shared values and beliefs on how to behave this can be considered organizational culture. At first it is not organizational culture but rather a contingency approach even though this may still contain subjective assumptions about what the best solutions are (Burns&Stalker, 1961; Chenhall, 2003). With a contingency approach is meant that every situation requires a different (optimal) approach and that no best practices have to exist. The chosen solutions might be not what organizational culture would consider the dominant preference belonging to a certain culture, but still a preference because the dominant preference is not viable in a specific situation.

7.4.3 Polycontextualization

but also other contexts, which are possibly more specific in describing the organization’s outcomes. This can be discussed under the external forces part because these different contexts can all be seen as different external factors influencing the organization. As discussed hereafter, the DESTEP analysis can contribute in providing such a polycontextualized perspective.

7.4.4 DESTEP analysis

A widely used tool to analyze specific environments is the DESTEP analysis (Cornelissen, 2004). This stands for demographical, economical, social-cultural, technological, ecological and political factors that could influence the environment. This could provide a good picture of how the specific environment is shaped and therefore also shapes how these factors should be dealt with. These factors might help explaining why and how an MCS and organizational has been created the way it is. For example, a lack of available high-tech production facilities might force an organization to invest more labor hours into production, instead of fully automated production. This means that the employees generating these labor hours have to be rewarded. The MCS will therefore have to be tailor-made to the fact that labor hours have to be measured and rewarded, which would not have been the case if an automated high-tech facility was used. This type of analysis shows the peculiarities of the environment and thus the different aspects of the context the organization resides in.

7.5 Strong reliance on Hofstede’s cultural dimensions

As can be noted in the previous chapters, there is a strong reliance on Hofstede’s (1980) cultural dimensions. But these dimensions have been criticized as well. It is said that the national cultural dimensions have been based on Western values and not on Asian values (Chow et al., 1996). The fact that the fifth dimension, Confucian dynamism, has been added later shows this weakness of the model.

Secondly, some researchers also state that a single national usually does not have one culture, but that there can be subcultures (McSweeney, 2002; Myers&Tan, 2002; Baskerville-Morley, 2003). National culture is therefore not able to describe these subcultures. Or one has to take into account that the national cultural dimensions can be used on a very basic level and are not useful for more thorough descriptions.

Even Geert Hofstede himself criticized his model regarding national and organizational culture: “[…] organizational and national culture are very different phenomena and cannot even be measured with the same questions.”(Hofstede, 2010, p. 43)

practices are about tailoring to the local environment and taking into account external pressures like discussed in the previous chapters.

Third, Hofstede’s cultural dimensions are based on research among IBM employees only (Chow et al., 1996). There is little empirical research with regard to these dimensions (Orr&Hauser, 2008). Because national culture still seems to play an important role with regard to core values it is important that national culture is also defined properly (Alexander&Smith, 1993). As mentioned before, Hofstede’s dimensions are rather general and should also be used as such. The dimensions lack the ability to show nuances within those dimensions. Therefore it is important that one does not pinpoint on the outcomes of an analysis based on this framework. Other frameworks have to be used to gather more detailed information to gain a more whole analysis of an organization. For a superficial analysis Hofstede can be used, but if a company plans on intensive collaboration (e.g. joint ventures) this general analysis will not be enough because problems that lie within the nuances of these dimensions can cause a lot of resistance (e.g. Elgar&Smith, 1994).

Even though Hofstede’s framework does not seem to be perfect, it can be a starting point to analyze culture. It should not be used to analyze it into great depth, but rather at a superficial level. Because alternative models also seem to be flawed Hofstede’s cultural dimensions should not be thrown away (Williamson, 2002; Drogendijk&Slangen, 2006). Even though there have often been disconfirmations, there also have been confirmations (e.g. Jansen et al., 2009; Efferin&Hopper, 2007). Nonetheless, there should not be a blind reliance on Hofstede, because alternative frameworks have become available, such as GLOBE, which also have greater empirical evidence supporting their models (Javidan, 2005). This model also contains more dimensions, allowing for a more detailed and nuanced description of culture. The prior dominance of Hofstede’s model seems to be based on the fact that it was the only framework available.

Nonetheless, all the criticism on this model show that is not likely to perfectly describe cultural issues. As mentioned in the previous chapter organizational culture is also able to describe culture; often into greater depth and sometimes even with greater accuracy. It could thus fill in the details where Hofstede’s model falls short.

8. A framework regarding culture and O&MC 8.1 Model including the role of organizational culture

difference between the MCS and organizational culture. However, because they mutually influence one another they should move to one another, becoming more similar again. Because there are multiple options for the organization to survive and the MCS and organizational culture can be changed this allows for a range in which the MCS and organizational culture can be arranged so that either the culture or MCS can be changed more in line with organizational goals or the other way around. Without this range it would mean that organizational culture or MCS’s cannot influence one another, since there simply is no way to move. This range allows the MCS and organizational culture to be set otherwise, leading to change and this range also allows for the MCS and organizational culture to be different. However, this discrepancy is likely only to exist for a short time, because they eventually level out again. But the range should illustrate that the MCS and organizational culture can drag each other along across several options that the organization can follow regarding goals or focus to be able to survive within its context.

9. Conclusion and discussion

9.1 Organizational culture provides more depth

As follows from the literature review and the analysis, national culture is used too often without properly explaining it in the O&MC field. Most issues with regard to culture are put under the umbrella of national culture. However, national culture is very general. The dimensions used to explain national culture often seem to be difficult to apply to specific situations. Therefore it is wise to provide support by using other cultural concepts and dimensions to view more in-depth cultural phenomena (for example, see Figure 1). On an organizational level organizational culture could be used. The organizational culture can differ from the national culture prevalent in a country because the organization is forced to because of its environment or because its wants to be different by itself. The shared assumptions and values employees carry with them do not have to play a role because of environmental factors which can force an organization to be different. And also the differential intensity of values is not always equal, leading to some (peripheral) values to be replaced more easily than others. National culture is not likely to be able to explain these issues because its dimensions lack to depth to be able to do so. Organizational culture contains more depth because of its categories that are tailored to organizations and also because of the fact that it contains more dimensions, which can provide more detail. The suggestions that researchers give which adhere more prominence to organizational culture might also be somewhat biased. This is because organizational culture is also not a one-dimensional or static concept even though the existing frameworks view it as such. But it is always difficult to capture dynamic concepts into rather static frameworks. Organizational culture seems worthwhile to use in the field of O&MC since it provides an extra framework to analyze an organization’s culture. However, it should not be seen as a replacement for national culture. The point is that culture plays a role on many levels and that none of these levels should be ignored since they influence other levels as well. The more specific the level, such as an organization, is to be analyzed, the more specific the cultural level should become to be able to create a more detailed understanding. So overall we could define organizations based on national cultural dimensions, but when one goes into further depth, this requires another cultural level since this is more able to describe and explain characteristics of the organization. And also possible discrepancies could be explained.

frameworks. The person using the framework can use these factors to more thoroughly analyze a culture, without making premature conclusions such as those that are likely to follow from Hofstede’s cultural dimensions.

9.2 External factors also influence an organization

However, not everything seems to be explainable by culture per se. Sometimes actions and characteristics are based on the environment the organization resides in. We could therefore say that an organization sometimes follows a contingency approach to cope with environmental factors. However, the solutions used to deal with these environmental issues may be rooted in cultural backgrounds again. Operationalization of structure and MCS’s might thus depend on local factors. This does generate the urge to analyze such organizations from a level of culture lower than the national level, since this is too general to successfully describe an organization. Organizational culture acts at the level of organizations. The dimensions used to describe this cultural type are therefore based on values those organizations can have. Therefore these dimensions can be used more generally on an organizational level. The exact artifacts however, are unique for an organization and therefore could require another explanation. It follows from which values an organization has, but it is still different for every organization. Organizational culture may also fail in explaining this because it uses dimensions on the organizational level, which are too general again for sublevels within the organization.

9.3 Organizational culture and MCS’s

MCS’s can prove very useful since this provides a more complete picture of the MCS and its design. This can also provide a good explanation for why the MCS is configured as it is because the organizational cultural dimensions allow for a more detailed view on why MCS characteristics are designed the way they are. National culture often does not seem to allow for nuances, but organizational culture can, because these values can provide extra information about how an organization arrives at a more general national cultural dimension. Organizational culture is better in showing the important elements of the environment which the organization should take into account. These elements will eventually translate into a certain MCS and culture. Organizational culture should be able to provide a clearer and more detailed picture of how an MCS is designed. It is therefore interesting to see why organizational culture often is not being taken into account when attempting to explain cultural phenomena, but that there is a heavy reliance on Hofstede’s national cultural model which is severely criticized.

9.4 Organizational culture as a bridging mechanism