In Focus:  Organizational vs. National Culture

A question many people have asked me is how national and organizational cultures relate and which of them is stronger.  My answer?  “It depends”.

There is no doubt that the two kinds of culture both exert powerful influences that may sometimes conflict.  A company’s culture may be informal while a country’s culture could be rather formal. A company may be encouraging and rewarding risk-taking in a country where people are generally risk-averse. Or, vice versa. All of these call for some kind of resolution.

National Cultures

The influences of national cultures shape strong value systems among their members.  The resulting shared values, preferences, and behaviors of population groups differ widely between coun- tries. That is frequently also the case between different subgroups within a country, so keep in mind that the term “national culture” can be misleading.  It may only be referring to part of the people in a given country.

Organizational Cultures

Organizational culture helps establish common values and align behaviors among employees.  Many multinational companies use employee handbooks, corporate ethics guidelines, written value definitions, and other tools for their employees world-wide in order to drive this kind of alignment.  They may be partly founded in national cultures, but it appears also seem to be shaped by many other influences.

Especially in the United States with its strong preference for individualism, a wide and diverse range of company cultures exists.  They may reflect personality and preferences of a founder, or be influenced by other charismatic leaders, often growing over a long time to become mature and consistent.

Which is Stronger?

In her book International Dimensions of Organizational Behavior, McGill professor Nancy Adler asks whether organizational culture does “erase or at least diminish national culture”.  Her surprising conclusion is that there actually is more evidence to the contrary. Adler cites researcher André Laurent’s finding that cultural differences were “significantly greater among managers working within the same multinational corporation than they were among managers working for companies in their own native country. When working for multinational companies, Germans seemingly became more German, Americans more American, Swedes more Swedish, and so on.”  The reasons are not well-understood, but it appears that employees may be resisting a company’s corporate culture if it is counter to the beliefs of their own national one.

One factor may offset this: at some multinationals, a combination of targeted hiring processes and employee self-selection in- creasingly establishes foreign workforces that are more in harmo- ny with the respective corporate culture.  Those who fit well stay with the company, those who do not either do not get hired in the first place or leave within a few years. This seems to have intensi- fied over the last decade. Companies strongly nurturing the trend may be able to maintain a fairly homogenous culture across their foreign locations.  However, such companies may be giving up several of the benefits of cross-cultural diversity and risk becoming estranged from national cultures with possible consequences to local relationships.

All of this drives important conclusions for multinational com- panies:

  • One cannot safely assume that even a very powerful corporate culture will render national influences insignifi- cant.  Employees facing conflicts are likely to respond in ways typical of their national culture, not their organiza- tional one.  Seeking to employ only those in a country who are “sufficiently compatible” comes with its own set of drawbacks.
  • It is in a company’s best interest to carefully assess its organizational culture against the local cultures in all countries and regions it is engaged in.
  • When recognizing potential conflicts between organi- zational and foreign national cultures, a company should strive to take preventative action in order to keep local employees motivated and committed.  This may require changing or toning down aspects of the organization’s culture.
  • Similarly, the company must develop ways to resolve actual conflicts in ways that keep its foreign employees at ease.  Again, this may require some compromising bet- ween the cultures.

(The above is an excerpt from an in-depth article available on our web page)
  Read the full article

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When in Rome
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Lothar Katz is the founder of Leadership Crossroads.  He has a wealth of experience in achieving productive coopera-tion across cultures and driving business success on a global scale.
A seasoned former executive of a For­tune 500 company, he regularly interacted with employees, cus­tomers, out-sourcing partners, and third parties in more than 25 countries around the world.


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Global Business Practices:
Ten Tips For Doing Business in Sweden

  • Honesty and truthfulness are strong business values in Sweden.
  • This is a low-context culture. Don't try to "read between the lines"; focus instead on what is being said.
  • Swedes are fairly egalitarian. While authority is respected, "bossiness" will be frowned upon.
  • Most Swedes dislike bargaining. It is wise to bid close to your target price and focus the negotiation on other aspects.
  • Decision making often has to involve many, sometimes the whole workteam. Allow enough time for this process.
  • Don't expect much small talk before meetings begin.
    People often get right down to the issues at hand.
  • The pace of business is generally slower than in the U.S.  Don't try to rush the Swedes, and give them time to think
    things through before replying to you.
  • There is little to no room for private topics in business life.
  • Except for young people, it is best always to address others by their last name.
  • Avoid any physical contact except for handshakes.


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