Abstract

Multinational enterprises are the engine of the worlds economy. Reason enough to focus exactly on
this kind of organizations within these paper.Analyzing multinational enterprises it has to be recognized
that such an organization is in fact not one homogenous company but most often a conglomerate of
companies spread out around the world. Most of these multinational enterprises try to establish a
common organizational culture within their companies (e.g. workshops to communicate the values).
Although the efforts are high to create such a culture there are still national or regional cultural
influences which can not be avoided. Assuming that the organizational culture or at least the efforts to
establish such a culture are the same within one international enterprise, differences in certain behavior
may come from these national differences.
This is exactly what researches like Hofstede (2001) together with Hofstede and Minkov
(2010)discovered, analyzed and summarized in 6 dimensions of cultural differences.
Introduction
The term Multinational Enterprise implicates already that the according organization not only makes
business or is located in one single country but in many (multi) different countries (nations). This
situation brings a lot of advantages (less dependence on the economy or political situation of one single
country; differentiated marked position; economy of scale through the size of the business; use of
synergies; etc.) but also comprises the challenge to combine many different nationalities and with this
also diverse cultures under one roof. To be able to use the advantages mentioned above, it is important
that not too much energy within the organization is lost through cultural barriers. Therefore, many
multinational enterprises try to establish an own organizational culture to find a common language or
way to collaborate all around the world. However, it is not possible to fully neglect the influence of the
national / regional culture. Therefore, although these enterprises often run expensive programs to
establish a common organizational culture, the behaviour and thinking may differ from one unit within
the multinational enterprise to another. The following literature research will show a summary of both
aspects, national and organizational culture, and how a multinational enterprise may handle this
challenge.
Cultural differences National level The name Hofstede and his IBM study (company internal employee
attitude survey program, executed between 1997 and 1973, with more than 119.000 responses from 72
countries and 20 languages) are undeniably the most prominent ones when it comes to cultural
research.
Researches all around the world have used the results of Hofstede for their studies. Meanwhile not only
Geert Hofstede (128) but also Gert Jan Hofstede (15) his son focus their research efforts on cultural
differences. Almost 50 years of studying national cultural differences in more than70 countries bring a
broad and deep knowledge of the topic (Hofstede, Hofstede & Minkov 2010).
The originally four dimensions of cultural difference (Power Distance, Uncertainty Avoidance,
Individualism and Masculinity) have over the years been complemented by two additional ones (Long
Term orientation, which was included 1991 in collaboration with Michael Bond and Indulgence vs.
Restraint, which was only lately added as a result of a collaboration with Michael Minkov).
(Hofstede 2011a)But there are also other names, which should be mentioned with regard to research on
cultural differences.
one of the earliest researches on cultural differences was Edward T. Hall and his wife Mildred Reed Hall
(Hall / Hall), who developed a cultural model that emphasized the importance of nonverbal signals
and modes of awareness over explicit messages. These insights proved invaluable in studying how
members of different cultures interact and how they often fail to understand one other. (Hall 2011)
Hall / Hall summarize the cultures mainly in high and low context cultures, whereas high context
means that there are many unwritten rules and low context indicates that more explanations
are needed but the chance of misunderstanding is lower. Furthermore, they also take Time
(monochromic time vs. polychromic time) and Space (high territoriality vs. low territoriality)
into consideration when talking about cultural differences (Missana 2011).



National Culture vs. Corporate Culture

Takeaway
Many companies try to establish a universal corporate culture, but there are often local
adaptations at different branches
It is important not to ignore the effects a corporate culture may have on the national norms that
we suppose to exist
Recently I was asked to be a judge at an MBA case competition. It was a fairly formal event and other
judges from various companies were also invited to participate. Given the formality and professional
environment of the event, everyone dressed in business formal attire. That is to say, everyone except
the judges from Apple Computer. While everyone else was dressed in a suit and tie, the judges from
Apple computer were all dressed casually. What was interesting to see was the reaction from everyone
else that attended the case competition. Oh, thats just the way Apple people are. There was almost a
cool factor associated with their casualness.
With this example in mind, today I want to address the issue of national versus corporate culture.
When we speak of international business, we often categorize our experience based on nationality. For
example, Americans have a reputation for being well prepared for meetings, while Japanese business
professionals are known for being detail-oriented. However, given the image, mission, philosophy, and
branding that a company builds for itself, it might also have its own corporate culture that doesnt
completely align with the larger national culture.
So which type of culture carries more weight in shaping a companys identity? Do some people gravitate
to IBM over HP because they fit the IBM profile better than they do the HP profile? Does the
corporate culture of Nestl differ from that of Hersheys? And if so, is there something inherently Swiss
about Nestl and inherently American about Hersheys?
Similarly, we can ask ourselves whether there is something about the American cultural background of a
Sam Walton or a Bill Gates that caused their corporate identity to become what it is today.
The example of Apple above can be counterbalanced with another story from an opposite perspective. A
number of years ago I was arranging international internship experiences for our UT MBA students with
FranklinCovey, the education and training services company that was modeled after Stephen R. Coveys
book The Seven Habits of Highly Effective People.
Part of this model includes the four quadrants of the time management matrix. I recall asking the
FranklinCovey home office representatives about whether any of the principles from the matrix had to
be modified in other parts of the world due to conflicting cultural values. Their response, as expected,
was that their principles were universal and applied equally to all people in all situations. Later,
however, when I was dealing directly with the local branch offices in Latin America, I asked the same
question. Their answer, in effect, was something like, Yes, the truth is that we do have to modify some
of the principles to fit our situation here locally. There was even a small confession that they didnt
always tell the home office about some of these local changes because they didnt want to be told to
stick to the established model! In this case, there may have been a corporate culture, but there were
clearly local adaptations as well.
We have a number of interesting comments on this topic from the international executives that we have
interviewed about cultural issues. Christina Hafka, a German executive from Hamburg, notes:
What I can say is that company culture is heavily impacted by the national origin of the company. If it is
an American company, an American culture will dominate its subsidiaries worldwide. Thats why I believe
that one cannot separate those two things, because negotiation strategies specific to the company are
always typical of the national culture that the company originates from.
Rainer Anskinewitsch, who is from Dsseldorf, expressed a similar point of view:
Those of us who have traveled know Americans from different occasions, on a personal level. I think
there are some typical American negotiation styles that we Germans appreciate. They are openness,
honesty, and transparency during negotiations. These characteristics are always obvious, no matter
whether in our organization or in other organizations.
Both of these comments illustrate that many times there is a philosophical blending of national and
corporate cultures.
In another interview, Udo Kiesslich, who is from Berlin, observes that corporate style can also be
influenced by industry sector (e.g., a service provider vs. a manufacturer) and company type (e.g., a
conglomerate vs. a family-owned business). All of these go beyond a national culture.
In quoting these three German executives, it reminds me that if we want to review the effects of
national and corporate cultures, we need go no further than recall the failed merger of DaimlerChrysler.
Houn-Gee Chen, from Xinju, Taiwan, agrees that American companies have their own corporate style,
but underlying this, they are also connected to the larger national style. His advice is to identify the
underlying national style, and then fine tune your understanding with the specific corporate style.
On the other hand, Chao Zhen from Hunan, China, believes that we can get lost in all of these artificial
attempts to continually modify things for cultural differences. For him, since all are focused on reaching
trade agreements and all work from a set of common trade standards, it is best to not focus too heavily
on the particulars of certain countries, cultures, or traditions.
To conclude, I share the comments from Javier Cantera, a lawyer from Castilla y Len, who believes that
corporate cultural tendencies often trump national cultural tendencies. The bottom line is that we
should not ignore the effects that a corporate culture may have on the national norms that we suppose
to exist. (See a video of Canteras comments in their original Spanish here.)
The idea that there exists a difference between an American culture and a European culture, in the way
they understand a company, is sometimes more of a stereotype than a reality. We are always finding
more people that are unique to their own company, their own personal culture, their own cultural
features that are a result of their history, their evolution, of their socialization processes. For an example
of this we can look to the drink sector here in Spain and you will notice a big difference between those
that are from Coca Cola and those that are from Pepsi Cola and those that are from Schweppes. They are
people that have different styles of conduct. Many times when you are conducting an interview with a
person from a company you know right away which company it is, and it is independent from the fact
that the person is American, Belgian, French, or Spaniard, right? So, at any given moment you know right
away that the person is from Coca Cola. Why? Because, for example, he is more focused on results, and if
the person is from Pepsi Cola, he is more focused on the client. It is their own personal culture that
creates their own way of thinking. These are cross-cultural characteristics. We believe we have been able
to observe that these are very important in negotiations, many times more important than the national
culture from where they are from.

At the UT Center for International Business Education and Research (CIBER) we have developed a series
of online materials related to international business, culture, and language. All of the materials are
provided open access and without password restriction. Feel free to visit Prof. Kelms Homepage and
the CIBER website for more materials and information.
- See more at: http://www.texasenterprise.utexas.edu/article/national-culture-vs-corporate-
culture#sthash.JfpKjGoR.dpuf
Organizational Culture and National Culture:
Whats the Difference and Why does it Matter?

Based on the research of Dr. Geert Hofstede, there are differences between national and
organizational cultures. For global companies, it is important to understand both in order to impact
organizational performance.
In a recent ITAP webinar, Dr. Geert Hofstede discussed Integrating Corporate Practices and
National Cultural Values. The topic is highly relevant to organizations operating in a volatile global
economic environment. While economic turmoil creates challenges and failures, it also creates
opportunities as evidenced in a large number of mergers and takeovers: Doosan and Bobcat, Lloyds
and HBOS, Barclays and Lehman Brothers, Citigroup and Wachovia. The list is long. Many of these
names have strong national brand identity. They are goliaths with offices in many economic centers
around the world. How should they integrate to become one organization?
At least part of the key to success in this area lies in the lessons shared by
Dr. Hofstede.
Our national culture relates to our deeply held values regarding, for
example, good vs. evil, normal vs. abnormal, safe vs. dangerous, and
rational vs. irrational. National cultural values are learned early, held deeply
and change slowly over the course of generations.
Organizational culture, on the other hand, is comprised of broad guidelines
which are rooted in organizational practices learned on the job. Experts, including Dr. Hofstede,
agree that changing organizational culture is difficult and takes time. What is often overlooked or at
least underestimated when two or more companies merge/integrate is how the underlying personal
values of employees impact how they perceive the corporate culture change efforts. A person can
learn to adapt to processes and priorities, and a person can be persuaded to follow the exemplar
behaviors of leaders in an organization. But if these priorities and leadership traits go against the
deeply held national cultural values of employees, corporate values (processes and practices) will be
undermined. What is appropriate in one national setting is wholly offensive in another. What is
rational in one national setting is wholly irrational in another. And, corporate culture never trumps
national culture.
The answer, then, lies not in abandoning efforts to unify organizations after a merger or cancelling
efforts to build high performance culture, but in overlaying and harmonizing local interpretations of
corporate practices to cultural norms.
ITAP International works at the intersection of business and national cultural value differences. ITAP
provides the following services for organizations across borders:
M&A consulting to align leadership, processes, operational structure, and stakeholder
perception
Culturally adapted competencies for recruiting, selecting and measuring employee
performance
Localization of change initiatives such as training and coaching
Global team development
Global leadership development