Isomorphism- An Underestimated Phenomenon?

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Master Thesis

Isomorphism-

An Underestimated Phenomenon?

The influence of isomorphism on expatriates‘ cross-cultural

adaption processes.

By Rebecca Nußbaumer

Master of Science International Business & Management University of Groningen

Faculty of Economics & Business

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Master Thesis

Isomorphism-

An Underestimated Phenomenon?

The influence of isomorphism on expatriates‘ cross-cultural

adaption processes.

Student Rebecca Nußbaumer S2732769 Bedumerstraat 14 9716 BL Groningen The Netherlands R.J.C.Nussbaumer@student.rug.nl Supervisor: I. de Besser

Referent: Prof. Dr. S. Beugelsdijk Submission: 12th June, 2015

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Abstract

This research takes an institutional perspective on the influences affecting expatriates. Expatriate assignments are often not as easy as expected. Cultural and institutional differences have a large influence on the cross-cultural adaption process and subsequently on the overall success of the assignment (Hyslop, 2010). These differences are however not static. This is where a phenomenon called ‘isomorphism’ has to be acknowledged. To explain the idea behind isomorphism DiMaggio and Powell (1983) investigate this phenomenon in detail and find that firms going abroad tend to imitate behaviors, shapes and forms of local firms for several reasons. Other researchers find that imitation is not only taking place on an organizational level, but also on national level. They say that not only firms but also countries can show imitating characteristics as they resemble the system of other countries. From this we can take that in general isomorphism, no matter if taking place on a country or organizational level, influences a country’s culture and has to be taken into account when preparing expatriates to go abroad.

This study suggests that expatriates sent to a country that shows isomorphic behaviors towards their country of departure, will have an easier time adapting to the new culture than expatriates sent to a country, not characterized as being isomorphic. For the purpose of this study Germany was chosen as a country of origin. After a profound country analysis, Romania is expected to have more isomorphic features towards Germany than Turkey.

By interviewing German expatriates about their experience in the respective countries, this study takes an in-depth qualitative analysis to find out to what degree countries are perceived to show isomorphic characteristics, and how this affects the adaption process of expatriates.

The findings support that Romania is resembling general EU (or German) systems in various aspects, whereas in Turkey these aspects cannot be found. Furthermore, by profoundly analyzing the interviews, there is support for the proposition that institutional and organizational similarities positively influence expatriates’ cross-cultural adaption processes.

Key Words: Isomorphism; cross-cultural adaption process; expatriates; institutions;

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Acknowledgements

I am honored to present the final achievement of my studies in the program “Master of Science in International Business and Management” at the University of Groningen in the Netherlands. This document introduces a Master thesis about the influence of isomorphism on the cross-cultural adaption processes of expatriates.

The results have been retrieved from primary data wherein expatriates were willing to share their profound experiences of their international assignments. Their openness, cooperation and flexibility were the basis for this study. Therefore I would like to offer my greatest appreciation to those 14 people playing the leading role in the analysis.

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1. Introduction

“The beauty of the world lies in the diversity of its people” ~ Unknown Author Growing corporate internationalization throughout the past years led to an increased importance of expatriates. International corporations that participated in a study by the Economics Intelligence Unit expressed that the number of expatriate assignees abroad is expected to increase (Hyslop, 2010). By preferring expatriates over locals, companies aim to ensure a standard of quality, whereas expatriates often see the assignment as a chance for personal progress as well as opportunities for promotion (Stahl, Miller, Tung, 2002). These assignments are often not as easy as expected. Cultural and institutional differences have an influence on the cross-cultural adaption process and subsequently on the overall success of the assignment (Hyslop, 2010). To prevent these multinational corporations (MNCs) and small and medium-sized enterprises (SME) from high repatriation costs, they increasingly invest in pre-departure training methods, to reduce the risk of expatriate failure (Puck, Kittler, Wright, 2008).

The grounds on which expatriates are prepared are questionable. The problems expatriates encounter are likely to happen due to a different national or corporate culture. Therefore it is of importance for them to adjust to the new general environment, as well as new work standards (Lee and Badri Munir, 2010). Management has to decide on techniques and best practices that might vary depending on the region the expatriate is sent to (Mendenhall and Oddou, 1988). One might assume that expatriates from a certain country will be faced with more problems in countries that are characterized by a relatively different culture. In that case cultures have to be defined as being similar or rather different from another one. For that purpose Geert Hofstede’s dimensions (1980) are a widely used indicator. He believes that people living in one country share certain values (Orr and Hauser, 1980). In his first study he concluded that these national cultures can be defined on the basis of four dimensions, namely power distance, individualism-collectivism, uncertainty avoidance, masculinity-femininity. He later added long term orientation and indulgence (National Culture, n.d.). Hofstede’s

dimensions might indeed give a first overview of values and believes abroad. Even though his model has often been criticized, it is still widely used to explain why people from one nation experience cultural differences when going abroad (Orr and Hauser, 2008).

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8 behaviors, shapes and forms of locals. The most decisive reason for this is the aim to create legitimacy abroad by behaving like local companies do. Firms further aim to learn more about the new market. As foreign corporations resemble standards of local ones, there is overall more homogenization within this certain market.

Yet, this phenomenon of isomorphism might take place on another level. Boli and Thomas (1997) go further and find support for resemblance taking place not only on the organizational level, but also on the national level. They say that not only firms but also countries can show adjusting characteristics as they resemble the systems and institutional characteristics of other countries. Institutional theory suggests that such institutions influences organizational forms and structures (Meyer, 2007). (Kostova (1997) claims that institutional characteristics (i.e. rules and regulations) are directly linked to cultural norms and social knowledge. Considering these assumptions, isomorphism, no matter if taking place on a country or organizational level is assumed to influence a country’s culture.

For the purpose of differentiating these two types of isomorphism, in this study they will be referred to as follows: ‘Organizational Isomorphism’ will be characterized as organizations going abroad and adopting processes similar to those of local organizations. It will be labeled Type A. With ‘Institutional Isomorphism’ this study refers to a country adapting institutional characteristics of another country. It will be labeled Type B.

Problem indication

The aim of this research is to study isomorphism in the context of expatriates’ cross-cultural adaption processes. If institutions become more alike, they should also determine the organizational cultures in a country as they capture cultural norms, rules and regulations. Put simple, if a country adapts institutional characteristics of another country, also the way in which work is done should become equal to the country they are adjusting to. As organizational behavior becomes similar there is not much need for type A isomorphism. These institutional and organizational similarities will lead to an overall smaller cultural distance between two countries. Therefore expatriates are expected to have less cross-cultural adaption problems in a country that is characterized as showing institutional isomorphic features towards the expatriate’s home country.

In order to achieve this aim, organizational and institutional factors that expatriates perceived to be similar, different or resembling abroad compared to their home country, will be collected. In a next step these factors’ influences on expatriate’s adaption process will be tested. Analyzing these influencing factors will allow understanding of how and why these factors might change.

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9 fills this gap by researching how expatriates experience the phenomenon of isomorphism. This study further contributes to literature by exemplifying what a country characterized as isomorphic, can look like.

Both of these aspects are particularly interesting because they will enable people to better understand how to properly manage expatriates. It will give insights into the most decisive factors affecting them and what makes their stay more difficult or possibly easier. Learning about these factors will contribute to expatriate management. It will more precisely show where the adaption problems for expatriates have their roots and allow management to find up-to-date mechanisms to reduce these issues. By constantly improving training methods, management can further reduce the risk of expatriate failure and the costs associated.

This study expects expatriates from a well-established nation in the European Union (EU) sent to another EU member state to have an easier cross-cultural adaption process than those sent to a country outside the EU. The reason for that is that within the EU, members have to adjust to certain forms, shapes or structures which will lead to more homogeneity (Boli and Thomas, 1997). Two respective countries will be compared. One of which is a member of the EU and one that is not. In particular one objective of this research is to find out what effects isomorphism has on expatriates. To find results to this question, expatriates’ perceptions about institutional similarities or differences between home and host country and how they affected their stay abroad are analyzed.

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10 Figure 1: Dimensional comparison of countries of analysis (The Hofstede Center, 2015)

This graph includes figures retrieved from The Hofstede Center (2015). It shows that according to Hofstede the two cultures are not significantly different. The largest gap exists within the indulgence dimension. However, as the cultures score similarly on the other dimensions, one would expect that individuals from one country going abroad to either one of the two will make similar cultural experiences.

The research question guiding this study is what effects the phenomenon of isomorphism has on the cross-cultural adaption process of an expatriate in a host country.

In a first step the review of the literature explains in more detail the phenomenon of isomorphism, how countries might be characterized as isomorphic or not, and the importance of expatriates. It further contains an analysis of the two countries chosen. It is followed by the methodology section, describing the research approach, how data were achieved and in what way they were analyzed to allow reliable conclusions. As a next step the results will be presented in the findings and analysis chapter, followed by a discussion and the study’s limitations and implications for further research. After addressing the theoretical contributions of this study and making practical recommendations for international management, concluding remarks will be made.

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2. Literature Review and Conceptual

Model

This section will provide the theoretical background that leads to the basic assumption of this research. It will first give a profound discussion of isomorphism. A description of the two countries serving as the basis for this research will follow. Next, there will be an overview of the importance, tasks and problems expatriates have to face. Even though expatriate selection and the choice of pre-departure training methods are beyond the scope of this research, background information on expatriate management is crucial for understanding the complexity of the adaption process and how it might be influenced. These two theories will be combined and will be followed by the conceptual model.

2.1 Isomorphism

This section explains the phenomenon of isomorphism. As this study looks at two types of isomorphism, the section starts by identifying organizational isomorphism. Continuing with the explanation of institutional isomorphism, a comparison between the two is made possible.

2.1.1 Organizational Isomorphism

When going abroad organizations are at disadvantage in comparison to their local competitors due to a “liability of foreignness” (Hymer 1976 cited in Zaheer, 1995, p.341). For one part the disadvantages are of informational nature and a higher level of uncertainty in the new market. Further, foreign firms lack networks or ties in the new environment. This liability leads to additional costs- costs that the local companies in the new arena do not have to face. According to Zaheer (1995) firms tend to orient towards local organizations, imitating their practices to overcome this unfamiliarity - a pattern known as ‘isomorphism’. This phenomenon will be described in the following paragraphs.

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12 Di Maggio and Powell (1983) identify three processes that cause isomorphism. These processes are brought about by the institutional environment that organizations find themselves in. Coercive pressures reflect those that force organizations to resemble other organizations in the closer environment either because they are dependent on them or because society expects a certain behavior. Mimetic pressures stand for organizations facing a high degree of uncertainty, which leads them to mimic established local firms. Normative pressures, which arise out of professions, refer to norms learned in an education. These norms automatically also enter the organization. Whereas mimetic isomorphism is rather based on a voluntary basis, coercive and normative pressures force organizations to adjust to common and established routines within an environment (DiMaggio et al., 1983). Clearly, isomorphism seems likely to help organizations through the initial period in a new institutional environment. However, the benefits of it are said to diminish with an increase in firm experience in the new market (Henisz and Delios, 2001).

With the initial purpose of overcoming the liability of foreignness, this type A isomorphism can lead a firm to additional advantages. By behaving in an isomorphic manner firms or their management in charge can better evaluate the appropriateness of their actions and behaviors, and how they will be perceived by locals. This is because by behaving in a different way than used to, they see their original behavior through the eyes of others. Moreover, isomorphism allows facilitation of understanding the others and the intentions they have, by being able to better process their actions (Wilson, 2001).

This study will evaluate how expatriates perceive this type of isomorphism and how it affects them. However, isomorphic characteristics cannot only be found on an organizational level, but also on an institutional level.

2.1.2 Institutional Isomorphism

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13 Scholars (Kerr, Dunlop, Harbison, 1960, as cited in Turner & Windmuller 1998) have been witnessing the convergences of organizations and institutions, which is what Hawley would define as “isomorphism” (1960, as cited in Di Maggio et al., 1983, p.149). World polity theory suggests that there are increasingly similarities found among states. One example is the institutionalization of the European Union (EU), which requires member states to adapt certain rules and regulations. This reduced diversity leads to the proposition that states entering the EU are brought together as single units adapt to the wider population (Boli and Thomas, 1997) - a sign of isomorphism. Taking this into consideration, the EU is a population, within which entering units- namely states- develop over time to resemble the other ones. They adapt rules and regulations and are likely to resemble some cultural aspects over the long run. According to Kostova (1997) institutional characteristics (i.e. rules and regulations) are directly linked to cultural norms and social knowledge.

Thus, this study analyzes if countries that are perceived as being isomorphic in their institutions (type B), will have become more homogeneous in their culture over the long run.

2.2 Entry requirements as isomorphic features

In this section a closer look will be taken at the rules and regulations that newly entering countries have to adopt as an EU entry requirement. Whether a country will be admitted to the union or not will be decided by the EU organizations, member states and the country’s own citizens. The ‘Copenhagen Criteria’ include various requirements that have to be met by all means, when wanting to be considered a potential EU member state. According to the European Commission (2014a.) the requirements are:

- “Stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities”

- “The existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the Union”

- “The ability to take on the obligations of membership including adherence to the aims of political, economic & monetary union.”

(European Commission, 2014a)

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14 citizens. The country would in turn receive votes on the European Council and would be represented in other councils and committees (Lammers, 2006).

In applying EU legislation and committing to requirements, the country wishing to become a member resembles the union in various aspects, including for example public health and social protection (Józon, 2005). Kostova (1997) claims that institutions capture rules and regulations. This means that requiring new entrants to adjust legislation to EU standards represents institutional homogenization. A similar behavior can be expected in fields such as education (European Commission, 2014b), health (European Commission, 2014c), and human rights (European Commission, 2014d), to only name a few (Lammers, 2006). In consideration of these requirements, the following proposition is suggested.

Proposition 1a: Countries entering the EU will resemble the organizational and institutional

environment of EU standards.

2.3 Choice of countries

Taking the definitions of isomorphism from above into consideration, we would expect a higher degree of type B isomorphism between countries that have similar institutions. To find validity for this proposition it would be necessary to define a country as facing isomorphism, and a country that still remains its very own institutions compared to others. Looking at the EU as an area of similar institutions, various countries could be of interest. The countries chosen for this study are the following:

 As Country A EU founding member Germany has been chosen, being representative for the union’s institutional environment (The World Factbook, 2015a).

 Country B is a new entrant of the EU as they are expected to be experiencing isomorphism. As an example for this research Romania is chosen as it accessed the EU in 2007 and is therefore expected to resemble the environment of the union (The World Factbook, 2015b).

 As Country C Turkey has been chosen. It is located close to Romania but is not an EU member and not expected to be isomorphic (Turkey Country Profile, 2015).

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2.3.1 Romania’s requirements for entering the EU

Being considered a potential entrant of the EU is associated with several measures that have to be adapted. When Romania became an EU member in 2007, the country began to be part of various EU organizations, wherein Romanian citizens, employees and other interest groups are being represented. Romania holds 32 seats of the 750 in the European Parliament, which is one of the main law-making institutions in the EU. European laws are being debated and passed, democratic work approaches of institutions are being ensured, and the EU’s annual budget is being supervised. Another institution of interest, especially from a business and human resource perspective, it the European Economic and Social Committee, on which Romania places 15 representatives. This committee gives interest groups, for example employers and employees a say in the proposal of EU legislative (European Union, 2015a). Even though by entering the EU Romania became integrated into the institutional environment of the region, this process also brought along some flaws. Becoming an EU member, Romania has been faced with strict monitoring measure by the EU with the union’s emphasis on fighting corruption. The entrance to the EU came at the cost of being exposed to constant surveillance (“Romania and Bulgaria join the EU”, 2007).

Analyzing the requirements for entering the EU, the integration of Romania becomes obvious. Legislation, working conditions and other laws that the EU prescribes have to be adapted and enforced. This allows assuming that the overall institutional Romanian environment resembles those of the other states within the EU. Compared to the overall state before 2007, life, work and culture in Romania is expected to experience a change towards the rest of the union, showing isomorphic features. This phenomenon comes closest to the coercive form of isomorphism, as society or, to be more precise, EU regulators, require the adaption of behaviors and actions (Di Maggio and Powell 1983).

2.3.2 Turkey- independent and free of isomorphism

In this research’s definition of isomorphism of states a counter example to Romania has to be considered. Located close to Romania, Turkey has been a growing economy over the years and was able to stand out with their modernity and dynamism. Negotiations with the EU about the possible membership of Turkey started in 2005. Even though Turkey is seen as a less productive economy compared to the other EU members, Turkey has long been considered a potential entrant to the union (Spillius, 2012).

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16 In order to improve the country’s standpoint on the list of potential EU entrants, in terms of politics Turkey has to ensure stable institutions that in turn ensure democracy, human rights and the rule of law. Economically Turkey has to guarantee a functioning market (Oktay, 2009). As Turkey is not an EU member and lacking full integration, it is expected to be less isomorphic on a country level (type B) than Romania. Taking the above considerations into account, the institutional differences between Turkey and Germany might lead corporations abroad to adapt Turkish work styles. Therefore work in Turkey is expected to be perceived largely different from Germany. Drawing on these insights, the following proposition is put forward.

Proposition 1b: Romania will be perceived to be more similar to Germany in terms of

organizational and institutional approaches than Turkey.

2.4 The importance of expatriates

As the world has been facing globalization over the past years, turning it into a global market, this single market increased the number of people working abroad. According to Freeman and Olson-Buchanan (2013) expatriates are employees sent to a foreign country for a definite time or for good. Merriam-Webster dictionaries (Expatriate n.d.) allow a broader view on the definition of expatriates and include all individuals that “leave their native country to live elsewhere”. Using this definition, expatriates do not necessarily have to be sent by a company. Yet, companies increasingly emphasize such international assignments and see them as a chance to make use of global opportunities. Therefore much responsibility lies within the hands of the expatriate (Mercer, 2009, as cited in Firth, Chen, Kirkman, Kim 2011). Being a strategic asset, human resources have a considerable influence on the degree of an organization’s competitive advantage. With that in mind corporations have to make a choice when expanding internationally.

There are two possibilities to fill the newly created management positions abroad. These two options are sending an expatriate on an international assignment or hiring host country nationals (Daniels, 2004, cited in Tan and Mahoney, 2006). Gupta and Govindarajan (1991) argue that in general corporations should choose to send expatriates abroad when the need for control and coordination is high. Being an internal, expatriates are more likely to ensure the control and coordination that headquarters request.

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17 subsidiaries. Finally, Tan and Mahoney (2006) argue that from a transaction cost perspective, by assigning an expatriate, less recruitment and control costs are incurred compared to hiring new employees. Even though these three approaches give an overview of the advantages of expatriates as opposed to host country nationals, it can be doubted if these benefits outweigh the risks.

In deciding who is going to be assigned to the overseas affiliate, a company is expected to determine motivational qualifications a candidate should have in order to increase his probability of success abroad (Phillips and Stanley, 2012). In many cases firms ensure that the person they choose has the best technical knowledge and expertise to accomplish the assignment. However, this is often seen as insufficient (Lee, 2007). No matter how profound an expatriate’s technical knowledge, other personality characteristics have to be possessed to make the assignment’s success possible. The person should be tolerant with regard to other cultures, has to have the ability to easily adapt to new situations, and match the host country’s mentality (Mütze & Popp, 2007). Others argue that potential expatriates should be evaluated by means of adaptability to different cultures, ability to observe cultural differences, excitement for the overseas posting and respecting employees of the overseas’ affiliate. The probability of succeeding abroad increases with the aspirants’ higher scores on these personality dimensions (Katz and Seifer, 1996).

Even though organizations tend to place a lot of emphasis on the selection process and the individual suitability, the risk of failure remains. According to Hill and Hernandez (2011) American expatriates sent to developed countries fain in between 16% and 40% of the cases. Even 70% of American expatriates fail in developing nations. European expatriates in developed countries are with between 17% and 30% less likely to fail. Hill and Hernandez (2011) also suppose that on average companies face costs amounting to a sum three times higher than the expatriate’s annual salary at their domestic company. Additionally relocation costs occur.

Failures often have their roots in culture shocks and an expatriate’s misfortunate performance abroad, both of which might result in returning to their home country prematurely (Mendenhall & Oddou, 1997). Furthermore the most common reason for failure has been found to be the expatriate’s spouse’s inability to adjust (Cartus Corporation, 2012). However, whether expatriate or spouse, culture shocks are the result of poor cross-cultural adaption to which Black (1988, cited in Peltokorpi, 2008, p.1589) refers to as the “degree to which expatriates are psychologically comfortable and familiar with different aspects of a foreign culture”. Expatriates do not only have to adapt to the new national culture, but also to the work environment, that is often different to what they are used to (Cartus Corporation, 2012). This includes feeling comfortable in doing their job, work attitudes and the corporate culture abroad. Not adapting to the new work environment might as well lead to expatriate failure (Firth et al., 2011).

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ISOMORPHISM

companies have to invest in pre-departure training to properly prepare expatriates for their international assignment. These trainings often include tutorials that aim to teach the foreign language of the host country and country-specific information. This is done to make trainees become as familiar as possible with the differences in behavior abroad and was found to reduce adaption problems (Puck, Kittler, Wright, 2008).

Having reviewed the basics of expatriate management shows how complex of a task it is. Due to the high risk of failure and potential additional costs, all processes within this field of management should be executed carefully. The expatriate’s personality, including their cultural interest and excitement, and preparation influences the attitude towards the assignment. This is covered within the following proposition.

Proposition 2: The perception of isomorphic characteristics is influenced by the individual

attitudes towards the international assignment.

2.5 Combining the concepts

In the above paragraphs two different concepts have been evaluated. Recapping briefly what has been found in existing literature, two approaches have been determined as a consequence of a globalized business world. (1) As more organizations expand internationally, a phenomenon called isomorphism can be observed. This phenomenon does not only explain the adjustment of a company’s practices to those of local companies (type A). It also describes the convergence of institutions and cultures (type B). (2) As expatriates gain importance and require profound pre-departure training to overcome cultural differences, firms realize the need for this training and increasingly invest in various training methods. In all expatriation processes management has to consider the overseas environment and culture- factors that are subject to a changing world. The relationship between type A isomorphism and the adaption process is expected to be the following:

In case of strong type A isomorphism, expatriates will be expected to experience more adaption problems, because the home company does not implement its usual practices when going abroad, but rather adjusts its practices abroad to those of local corporations. This relationship is illustrated in Figure 2.

Figure 2: Effects of Type A isomorphism

Expatriate’s company practices

from country of origin

Company practices

from country B Adaption problems on

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ISOMORPHISM

This concept of isomorphism leads to the assumption that expatriates sent abroad by their companies, face different work standards in the new country. Relating this to the theory of expatriate adaption indicates that adaption becomes more difficult with more type A isomorphism. Therefore the proposition evaluating this relationship will be the following:

Proposition 3: Perceived organizational isomorphism negatively influences expatriate’s

adaption process.

Contrarily, the higher the degree of type B isomorphism, the easier it is for an expatriate to adjust abroad, both organizationally and institutionally, because regulations and normative behaviors become alike. Relating the concept of institutional isomorphism to the theory of expatriation, it can be assumed that cultural homogeneity reduces the risk of adaption problems. This relationship is shown in figure 3.

Figure 3: Effects of Type B isomorphism

In countries in which expatriates perceive institutions to be similar to the home country, easier adaption processes are expected. These insights allow making the following proposition:

Proposition 4: Perceived institutional isomorphism positively influences the adaption process.

Taking a closer look at the definitions above, the following can be suggested. In the presence of a strong type B isomorphism, type A isomorphism should be less necessary (Figure 4) because the rules and regulations, by which companies have to abide, become more alike. This leads to a convergence of work practices, making it unnecessary for companies to change their processes abroad.

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20 Figure 4: The relationship between Type A and Type B isomorphism

This also means that the more a host country converges the institutional environment of the expatriate’s home country the less an expatriates faces adaption problems regarding both, work and general environment.

Combining these concepts of isomorphism and expatriate failure seems contradictory. As organizations and their environments are becoming more alike, expatriates are expected to be less affected by cultural differences. Assuming the theory of convergence holds true, an expatriate’s recognition of institutional and cultural differences should be decreasing. This would propose that expatriates will less likely experience adaption problems in foreign cultures than in a culture without isomorphic indications. The following figure (Figure 5) illustrates this research context.

2.6 Summary of research context

Independent variable Dependent variable

Figure 5: Summary of research context

Type B isomorphism (to country A) Country B Easier Cross-cultural adaption process Type A Type B Expatriates from country A

Country C Harder

Cross-cultural adaption process Little Type A isomorphism

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21 This research expects expatriates from a country A. Some of them are being sent to country B, some to country C. The two countries are independent variables. Country B will be under the influence of type B isomorphism, country C will not. This means that country B is more likely to approach the institutional and cultural environment of country A. The dependent variables are the outcome of the expatriates’ adaption processes in either B or C. They can be either, as expected in this study, relatively easy in the country influenced by type B isomorphism, or rather difficult, expected in the country without signs of isomorphism towards country A. This would leave room for type A isomorphism. This relationship is illustrated in Figure 6.

Adaption problems Adaption ease

Figure 6: Effects of the type of isomorphism on adaption

Having reviewed the literature the following conceptual model (Figure 7) shall offer an overview of the concepts used in this study and the relationships between them. The individual personality of the expatriate might have an influence on how they perceive internationally differing settings. Furthermore the perception of isomorphism is determined by differences or similarities in corporate culture as well as institutions. The degree of perceived isomorphism determines the cross-cultural adaption process.

P2

P1a & P1b

P3 P4

Figure 7: Conceptual model

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3. Methodology

This chapter illustrates the methodology of the research. First a description of the research approach and design will be provided. Secondly the data collection will be explained including its strategy and an overview of participants. Finally an overview of the analysis process and an evaluation of quality criteria will be given.

3.1. Research Approach

This research aims to answer the overall research question “What effects does the

phenomenon of isomorphism have on the cross-cultural adaption process of an expatriate in a host country?” In the data collection and the analysis of the results a qualitative research approach was used. Qalitative research leaves room for a variety of answers and a profound interpretation of different perceptions. Furthermore, this will give more well-grounded information as participants might have very context-specific individual experience. As opposed to a quantitative approach, whereby data are analyzed numerically, in qualitative research information is gained by expressing meaning through words (Saunders, Lewis, Thornhill, 2009). As perceptions might largely vary, for the purpose of this study qualitative data was expected to generate more meaningful findings by allowing participants to express their opinions and experience. From the perceptions of this study’s participants comparisons can be made based on how they assess institutional differences.

This study deductively approached propositions that have been outlined. After a review of theory, propositions were made. Observations take place to apply this theory and find arguments to test the propositions. In doing so, the research observations will contribute to theory (Wilson, 2013).

The design of a research describes the way in which data are collected and analyzed. This research uses a case study including two embedded units to explore the different communities. According to Marshall (1998, cited in Thomas, 2004, p.127) a case study is “a research design that takes as its subject a single case or a few selected examples of a social entity”. Case studies are a common method for qualitative research which allows studying a certain phenomenon in depths. These newly obtained insights are then used to test the theoretical propositions by looking at patterns that are established (Thomas, 2004). Yin (1981, p. 59) said that case studies are a useful tool of investigation “when the boundaries between phenomenon and context are not clearly evident”. In this research this is the case as the relationship between isomorphism and adaption is not immediately obvious but has to be made evident.

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23 These two units are embedded in a case, namely perceived isomorphism (Yin, 2014). This case is further embedded in the context of cross-cultural adaption. Since the two units of analysis are evaluated with regard to one case, namely how isomorphism is perceived, it is one case study that is used. Multiple case studies would require multiple cases and contexts.

As this research looks at cultural attributes, ethnography would be an alternative approach for data collection. However, the purpose of the study is not to study a culture, but to study influences on the adaption process (Zaharlick, 1992). Nevertheless, an ethnographic study might also lead to the achievement of data. More time would have been required though, as “a year is ordinary considered a minimum because a year usually allows people to go through their regular routine, patterns of work and play and special activities” (Zaharlick, 1992, p. 119).

3.2 Sample

To achieve the data required to answer the research question, telephone interviews were chosen as the method for data collection. The Interviewees were found in an online community for expatriates- InterNations. This online community gives expatriates the opportunity to meet other expats in their current city of residence. Founded in 2007 it is the largest expatriate network worldwide, making it a platform for establishing personal networks. Once signed up, membership has to be approved by the owners. It currently has approximately 1.8 million members.

Using the “member search” filter, German expatriates were found in the two countries. The process of choosing who to contact was not completely non-selective. Even though people stated they were German, having seemingly Romanian or Turkish names might indicate that they were raised in families with migrant backgrounds. These expatriates were not contacted, because growing up learning the virtues of the respective countries, illustrates that they might have been surrounded by that culture throughout their lives. Moving there is expected to not be associated with complete new surroundings.

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24 consisted of three people sent by their German company, and four people that were given an opportunity abroad in another way.

After they agreed to participate, they received a follow-up mail, informing them about the procedure of the interview, and the way their data would be treated (Appendix 2).The interviews took place between 17th of April 2015 and 10th of May 2015. Depending on the depth the interviewee was willing to go into detail when talking about their experiences, the interviews lasted between 20 minutes and 50 minutes. The long durations compensated to some extent for the small sample size. The interviewees were German nationals that have left their home country to live abroad.

3.3 Interviews

This section illustrates the method of collecting data, namely interviews. First an overview will be given of the characteristics of the interviews. In the next step the interview structure will be elaborated on. As this research aims to find out what an expatriate’s perceived effects of isomorphism are on the cross-cultural adaption process, the logical step to achieve these data is interview expatriates to find out in detail about their experience. Due to the geographical distance the conversations were held through (online-) telephone interviews. This method allows expatriates to speak rather anonymously about feelings and experience.

3.3.1. Interview characteristics

In interview conversations a set of questions is asked by the interviewer, who in turn collects significant information from the respondent. These data will be analyzed subsequently. This study used semi-structured telephone interviews, whereby the researcher prepared a list of the same key questions (Appendix 3) which could be followed by individually differing and context dependent additional questions. This structure enables the researcher to ask follow-up questions for more detail and gives a broader range of information as the follow-up questions can vary. Furthermore the order of the questions might vary. As this type of interview uses pre-determined questions that were aimed to be answered, unstructured interviews were not an option. For the purpose of this study completely structured interviews would not have left enough room for individual stories and examples (Saunders et al., 2009).

3.3.2. Interview structure

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25 isomorphism as well as the adaption process. The next 11 questions covered the organizational aspects and aimed to find out perceived differences or similarities in work with regard to home and host country subsidiaries. Finally, 13 questions were asked on institutional factors. This was done to find out how daily lives might be affected by perceived institutional differences.

This interview guide served as a reminder of which most important questions have to be answered (Patton, 1987). In some cases the order of the questions changed as interviewees anticipated the answer when talking about experiences. The questions by the interviewer were truly open-ended. This allowed the participants to tell a story and invited them to take the question into their own direction (Patton, 1987). They were first asked to give some background information on the assignment, how they ended up being an expatriate and what the purpose of their assignment was. Later the questions were directed towards more detailed and difficult answer. Interviewees were asked to give examples when they expressed their opinion on certain behaviors they observed. All in all the interviews gave a clear overview of how different situation are seen from the individual’s point of view.

Confidentiality and anonymity have been guaranteed before the interviews and are the basis for this research. Participants have also been informed about the conversations being recorded. The interviews were held in German and have been transcribed afterwards.

3.4. Data analysis

In analyzing the information received several standards have to be ensured. This research aims to find out the influences of isomorphism on individuals. The literature review examined what the institutional differences in these countries are. In analyzing the empirical data, it has to be found out whether those differences are the cause for a more difficult adaption process. Therefore the aim of the analysis is to find explanations for the propositions and expected relationships between the concepts. These findings will be elaborated on in the following chapter. In this section the systematic way of how the analysis was conducted will be described.

The analysis of the data started taking place during the interviews by looking for connections between the interview groups and their perceptions. After having transcribed the audio files, the answers were analyzed in more detail. This was done by coding, which is the basis for memos.

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26 Once a framework for coding had been established, what has been said by interviewees was analyzed and categorized accordingly. New codes appeared as expatriates had different feelings about certain matters. After citations of participants have been categorized, they were analyzed by the use of memos. Memos serve as a thinking tool the researcher uses to develop ideas. They bring value to the study if they seriously reflect what has been found. Furthermore, they allow the researcher to go back to the initial thinking at any time (Maxwell, 2004).

As more interviews came in, the original codes were overworked, codes were added, and interview transcriptions were read again. This iterative work allowed finding new patterns or signals that were missed in by analyzing transcripts for the first time.

Going through the memos, patterns became obvious. Certain factors have been commonly mentioned by participant and could therefore give clear answers to the questions. Other aspects were mentioned in only single interviews. These perceptions completed the whole picture of how countries are perceived, how individuals approached assignments and what affected their adaption. In linking answers to certain concepts, explanations for problems in the adaption process were developed (Yin, 2014).

In order to find out if the propositions hold true, patterns that were empirically found were compared with the predicted pattern. This pattern matching process is an appropriate analytical technique for case study research. If the predicted outcome can be found in the analysis, the patterns match, strengthening internal validity (Yin, 2014).

Limitations to the research are the non-recognition of sources other than institutions or (corporate) culture that can lead to an expatriate’s adaption problems. These might occur regardless of the environment (e.g. missing friends). Therefore, it is crucial to pose the questions in a way to make them answer explicitly what effect institutions have on personal comfort. Looking for common patterns will give more meaning to the research.

3.5. Quality Criteria

Reliability: Denzin and Lincoln (1994, p.100) argue that reliability is “the extent to which

findings can be replicated, or reproduced by another inquirer”. It might be questioned if the impacts of isomorphism will be the same in other countries. However, the data achieved gain in reliability as interviewees were asked, to give examples of situations for the perceptions they named. As these examples are not likely to be made up, they become more reliable. Moreover it has to be kept in mind that interviewees were asked for their perceptions. There is no reason to assume that the answers are wrong. Reliability can be said to be ensured.

Validity: This research used a non-probability sampling, reducing internal validity. To

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27 reduced validity was compensated for in going around falsification by asking for examples for perceptions experienced (Thomas, 2004).

Generalizability: The question behind generalizability is what the sample says about the

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4. Analysis and Findings

In this study the effects of isomorphic characteristics of a country on an expatriate’s cross-cultural adaption process is being investigated. This chapter starts with a look at the economies investigated. As a next step the participants’ answers are analyzed to find indications for the perceived degree isomorphism. Following this the effects of the individual personality on adapting will be evaluated. Finally the reasons that led to adaption problems will be analyzed in order to test whether isomorphism has an effect on the adaption process of expatriates.

4.1 Recap of countries of analysis

To analyze the findings properly a look has to be taken at the economies under investigation. This will be the basis to find answers to what might be different.

4.1.1 Germany as an EU founding member

Located in Central Europe, Germany is the EU’s largest economy. Following two devastating world wars, Germany was one of the founding members of the EU. With its approximately 81 million inhabitants Germany is now the most populated country of the EU. Through its economic strength and strive for EU success, Germany values human rights, and promotes fair conditions at work and in society (The World Factbook, 2015a). As German individuals enjoy fortunate conditions, cross-cultural adaption problems can be expected, when these conditions are non-existent in another country.

4.1.2 Romania as an isomorphic country

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4.1.3 Turkey as an individual country

Turkey is situated partially in Southeast Europe, and in part in Western Asia. With over 80 million inhabitants, Turkey occasionally still faces political unrest and is said to be ruthlessly dealing with civil objection (Turkey Country Profile, 2015). Even though Turkey is not an EU member, the country remains close relations with the union, e.g. in trading (The World Bank, 2015). As Turkey is not obligatorily asked to abide by certain EU laws, it is expected to be less isomorphic to other EU countries especially with regard to labor conditions and social security.

4.2. Organizational isomorphism

Proposition 1a suggested that countries entering the EU will resemble the organizational and institutional environment of EU standards. Proposition 1b expects Romania to be perceived more similar to Germany in terms of organizational and institutional approaches than Turkey. The findings with regard to these propositions will be analyzed in this section by finding support in the organizational factors first and the institutional factors afterwards.

4.2.1 Organizational Factors Romania

Three of the interviewees said that the way people work in public services is improperly organized. They found that bureaucratic processes are not clearly explained, public services do not work efficiently, and the work they do seems to be chaotic. One participant said that “some processes are indeed more complicated” but he also acknowledges that “at the same time many processes are also easier in Romania”. Two participants did not remember experiencing differences bureaucratic work approaches. Another participant said that there used to be obstacles which he witnessed to be “declining since Romania became an EU member”. Even though there is a tendency towards a more inefficient work in public services, this bureaucratic disorder cannot be characterized as a common pattern found in all the answers of participants. One expatriate even confirmed that the EU membership brought enhancement to work in Romanian public services.

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30 than Germany. Nevertheless, there were people who said there are no work approaches that are visibly worse.

Two expatriates acknowledged that vacancies are often filled by a person who has the best interpersonal connections, but does not have the skills to actually execute the job. One participant explained the difference as follows: “In Germany you have job requirements. Here people get jobs not because they have certain skills, but because they are related to the right people.” Another participant said that this is the reason for certain management positions being less efficient. People in charge “do not have the necessary skills”. One expatriate acknowledged that the old president “who stood for corruption and nepotism” has been defeated by the democratically voted president. Therefore he believes that this “nepotism” will be in decline. The fight against corruption and nepotism is “representative for the majority thinking of Romanians.”

Three expatriates further noticed emotions involved in work. “Work is more emotional compared to the rational German approach”. Team work is valued the same way it is in Germany, but the interpersonal relations play a more important role.

The findings show that there are still differences recognizable between Germany and Romania, including bureaucratic organization, general work approach and staffing. This is in contrast to what was expected. However, none of the factors have been commonly observed across interviews. Perceptions vary greatly.

Summing up the findings of organizational behavior in Romania, it has to be acknowledged that there are still small differences, though declining. This supports Proposition 1a, which suggested that countries entering the EU will have more similar organizational and institutional environments.

4.2.2 Organizational Factors Turkey

Also in Turkey four participants observed unsatisfying work behaviors regarding bureaucratic matters. One expatriate explained this the following way: “In Germany things are better structured. Bureaucracy and administrative matters are often handled too relaxed in Turkey”. Another participant goes further by saying that she felt like she was “sent around like some package by the authorities”. A third one said that “processes are so difficult that every now and then you have to attempt bribery”. These statements indicate a more unorganized administrative work than in Germany. However, in contrast to these expatriates, one participant claimed that all bureaucratic processes in Turkey are handled in a better way compared to Germany. Therefore it can be said that even though there is a tendency in the data towards a deviation from the German system, perceptions of people are different.

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31 words “relaxed”, “emotional” and “casual” repeatedly occurred across interviews. One factor that might lead to less productivity is that there is no mistake admission. One participant said that the problem with the Turkish work approach is that “you do not talk about mistakes. If a mistake is made it is kept under wraps until the bomb explodes”. This argument would explain another participant’s statement that “the Turks are not known for perfection”. Furthermore, expatriates complained about working conditions. One even characterized them as “inhuman”. Another one said that “labor laws are not implemented.”

Two participants perceived differences in the value of team work. For them the way people worked with each other was rather “fake” and “superficial”. One of them said that “jealousy is a big problem” indicating that people are not collectively striving to reach a goal but want to achieve individual success. Another one said that “everything is selfish, there is no team spirit” and that “people are deceitful and refined”. For them this was a big contrast to the German work behavior.

Summing up the findings, opinions about how organizational behaviors regarding bureaucratic matters differ. However, among the expatriates there is consensus about general work and organizational behavior in Turkey. Contrarily to Romania, Turkey seems to be more distant from the EU in terms of work organization.

4.2.3 Summary Organizational factors

Even though Romania has certain requirements to fulfill as a member of the EU, participants still perceived slight differences in the work organization compared to Germany. However, it has been witnessed that Romania is progressing in certain aspects of organizational behavior, leading to a more “formal and structured work approach”.

In Turkey more differences were recognized. Especially the relaxed way people approach work with and working conditions were commonly mentioned. If Turkey would become an EU member, these conditions would be expected to improve.

From an organizational perspective support can be found for the proposition (1a) that countries entering the EU will become more similar to EU standards, and (1b) that Romania is organizationally more similar to Germany, than in Turkey. This supports the assumption that companies in Turkey are more likely to adopt local behaviors.

4.3 Institutional isomorphism

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4.3.1 Environmental Factors Romania

Two participants said that the Romanian quality of education was unsatisfactory. Even though this does not directly affect expatriates it does have influence on the work organization. Lacking educational quality can lead to inferior work quality, which has previously been mentioned as constituting problems. One participant said that “Education is not well enough to educate managers to have the skills to perform the managing role. A lot of management skills that are common for us, are lacking”. This is in contrast to what another participant said: “Education is good. Universities have a positive reputation”. Also in terms of education the perceptions vary among interviewees. Nevertheless, taking into consideration what has been perceived at the organizational level, there are indications inferring that the differences in organizational work have its roots in the educational quality.

With regard to peoples’ mentalities, participants did not commonly agree on differences between Romanians and Germans. There is a slight tendency to observing a less direct attitude, shaped by a more apparent temperament in Romania. Other participants claimed that “there might be differences but they are either decreasing or not recognizable” for them.

One issue that remains is the Romanian health system. Doctors are perceived as doing bad work. Many of the expatriates have private insurances though, arranged by their home company that allows them to make use of the well equipped private doctors and hospitals. Nevertheless, expatriates mentioned the overall improper medical treatments for the average Romanian individual. Even though this factor did not necessarily affect expatriates, it is speaking against the expectations that Romania should have a quality in health systems somewhat similar to other EU members (European Commission, 2014c).

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33 Three participants further noticed that Romania was increasingly becoming more international and open towards other cultures. One of them added that this process is still going on, partially due to the recently elected, ethnic German president, Klaus Iohannis. “The Romanian president values German and European virtues and this is representative for the majority thinking of Romanians.” Another expatriate even claimed to be continuously surprising her friends and family back home in Germany, by showing them that Romania is actually quite western. “Yes, Romania is definitely more western than all of us imagine it to be.” Additionally, another participant said that Germans coming to Romania are facing less adaption problems and added: “Nowadays, when we have interns coming over from Germany, they are positively surprised”.

Since more people are said to go abroad their educational quality improves. This might explain why one participant sees the working behavior improving with the EU entrance. More international integration, offers the young generations better education and experiences abroad. “Younger people are oriented towards Europe and have often lived in the UK, Germany, Italy and so on”. He goes on by saying that those that have lived abroad “return to Romania and apply what they have learned successfully”. Becoming an EU member led to the adaption of other EU countries’ work styles. Support for this can be found in the words of another participant who said that “The use of formal working behaviors is more spread across the country”.

An environmental factor that was repeatedly mentioned as differing from Germany was the traffic and the infrastructure. This was one of the first things they noticed as being unpleasantly different. Even though such factors should not be underestimated in their possible contribution to culture shock, it is difficult to take into consideration for this study. Safety and traffic rules differ across borders within the EU. As every country has its own rules there is no way for Romania to resemble an EU way (European Union, 2015b).

4.3.2. Environmental Factors Turkey

Most of the participants see the lower Turkish quality of education as a factor contributing to the chaos they are surrounded by. There was agreement in the answers that except for very few elite universities, other educational institutions are “well behind European standards”. Except for one expatriate they did not have direct connections to universities. This one exception stated that “at non-elite universities things are more chaotic. Teachers sometimes just do not come to lectures”. This lower quality in education can explain the chaotic and faulty work that has been witnessed. Another problem that participants attributed to the low-quality education was the fact that hardly anyone spoke proper English. According to them “the fact that English skills are lacking probably has to do with the general quality at educational institutions.”

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34 was commonly recognized that people in Turkey were more “friendly”, “hospitable”, “helpful”, and “family oriented”. However, two of the participants found these allegedly positive features to be only apparent on the surface and even characterized this behavior as “fake”. One participant saw the differences also in “less separation between privacy and work”.

Also in Turkey the health system is perceived to be unequally provided. People that can afford private insurance are granted access to good private hospitals that offer high standard medical treatment. According to some participants “not many people can afford private insurance.” One said that “you cannot depend on the state health system if you want good medical treatment.” This unequal distribution is not in line with the EU’s appeal to make proper health systems accessible for every citizen. This does, however, not directly affect expatriates, as they are often provided private insurance. Nevertheless, it speaks for this study’s suggestion that Turkey is in various societal areas not at the same level as the EU. It has to be kept in mind, though, that Romania is not convincing either regarding health systems.

A crucial factor that became obvious in the evaluation of the interviews was that expatriates repeatedly said that “freedom of speech was missing”. By that they referred to “the way authorities in Turkey handled civil protests against the government of Tayyip Erdogan”. One participant added: “The fact that they closed down certain homepages to avoid people getting in contact to organize protests, does not have anything to do with freedom of speech”. Furthermore, this argument was mentioned as a reason why “Turkey is not ready to become an EU member”.

4.3.3. Summary Environmental factors

In both cases interviewees criticized educational quality, while one expatriate thought that it was rather good. In Turkey the inferior quality can explain the different work approaches, which led to adaption problems. This is not the case in Romania, as work approaches are perceived as relatively equal to German approaches.

Differences in mentality are more apparent in Turkey than in Romania (Appendix 5). According to this study’s findings people in Romania are more comparable to Germans. One expatriate in Turkey said that “men do not accept women smarter than them”. This behavior is very distant from the EU gender equality principle that promotes equal treatment between men and women (European Commission, 2014). Therefore it can be assumed that changes in institutions might make people change in their thinking.

Isomorphism- An Underestimated Phenomenon?

Master Thesis

Isomorphism-

An Underestimated Phenomenon?

The influence of isomorphism on expatriates‘ cross-cultural

adaption processes.

Master Thesis

Isomorphism-

An Underestimated Phenomenon?

The influence of isomorphism on expatriates‘ cross-cultural

adaption processes.

Abstract

Acknowledgements

Table of Contents

1. Introduction

2. Literature Review and Conceptual

Model

3. Methodology

4. Analysis and Findings