How Corporate Culture Influence Multi-National Enterprises’ Global Operations?

Topics: Cross-cultural communication, Management, Culture Pages: 8 (2364 words) Published: October 4, 2011
How Corporate Culture influence Multi-national enterprises’ global operations?

It is undeniable that competition in the business area is very fierce. People in the business world must find the best way in order to survive. Business, nowadays, expand their business to other countries as globalization on the rise. They need to remain competitive in a global marketplace with well coordinated and tightly controlled worldwide operations. For multinational enterprises (“MNEs”), the corporate culture is one of the core elements bringing success to its businesses. Yet, cross-cultural conflicts also could hinder the MNEs from optimizing its worldwide operations. In this paper, we will discuss how corporate culture influences the MNE’s global operations.

Control mechanism
Globalization brings challenges which are often under-estimated. Maintaining growth in the MNE’s international business activities requires structural responses, but the evolutionary process will differ across MNEs. The size of organization, rate of expansion, country of origin, footprint of internationalization, management policies and etc determine the required changes in its corporate culture. Many MNEs have difficulty in getting the local management to adhere to the value of the group. Thus it is necessary for MNEs to implement effective control mechanism. With reference to William Ouchi (W. Ouchi, 1981), he suggested that the control strategies could be classified as (1) bureaucratic control and (2) clan control (D. Ulrich, 1997). Despite the control strategies focus on different aspects, both are vulnerable to faulted promotion of the MNE’s corporate culture.

1. Bureaucratic control
Traditionally MNEs emphasize more formal, structural forms of control. Structure results in hierarchies, functional authority and increasingly prescribed job descriptions, selection criteria, training standards and compensable factors. Human resources activities act to implement existing structural system of control. (Peter J, 2008). Companies gradually develop their own bureaucratic control in response to their unique challenges, business strategies and employee relations. The control mechanisms help to reinforce the corporate culture and have large influence in shaping relationships among colleagues and among business departments. Many MNEs naturally extend their bureaucratic control mechanism from headquarter to the overseas subsidiaries. However, these MNEs might find their state-of-art bureaucratic controls are ineffective outside their home country.

Using my personal experience as an example: I had worked in the Hong Kong office of a MNE, which is based in the U.S. The Hong Kong office was run by a local management team who were accustomed to local Chinese style that was akin to top-down management. Due to rapid expansion of its overseas operations, the U.S. headquarter decided to synchronize the corporate structures of offices across the globe. The headquarter detached a human resources team from the U.S. to Hong Kong for designing and holding a training programme that introduce new bureaucratic control mechanism. It was an intensive training programme that last for three working days. Its contents included the introduction of the new policies, procedures and corporate culture of the U.S. headquarter, team building exercises and group discussion with alcohol drinks at the end. The goal of the programme was to reduce power distance, develop a friendly environment within the group and encourage staffs sharing their ideas and opinions in the workplace. Unfortunately, the programme was definitely a failure. Most of the staffs felt the training was not useful, time consuming, and affected their productivity. In Hong Kong culture, people are often discouraged to challenge the seniors. Also, some people who are traditionalist may not be willing to adopt the new culture like drinking alcohol during office hours. In addition,...

References: 1. D. Ulrich (1997), Human Resource Champions: The Next Agenda for Adding Value and Delivering results, Boston, MA: Harvard Business School Press
3. Peter J. Dowling, Marion Festing & Allen D. Engle, Sr (2008) , International Human Resources Management, 5th Edition, p. 41-43
9. Wenli Yuan (2010). Conflict Management among American and Chinese employees in Multination Organizations in China. An International Journal Vol. 17 No. 3, pp 303
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