With respect to external assessment I will focus on two determinants of organizational culture.  One distinct element is the “host culture” in which a company operates; in other words, the culture of the society at large. 

If a company from another country is operating in that region then there may be challenges.  For example, cultures have different understandings of the law.  In Western cultures the primacy of law is a foundational to the culture, with its root in England.  In the US, law has achieved greater primacy as an arbiter among a very individualistic culture.  In some cultures, a legal agreement may be a basis for starting a relationship; whereas in other cultures it defines the minutae of the relationship.

Culture can be an outgrowth of different country environments.  A company’s host culture will have prevailing norms in terms of methods of communication and understanding of business concepts.

At some level it is difficult to generalize, but there is truth to the fact that, for example, in Chinese culture there is a notion of “saving face” and “giving face.”  Showing respect and maintaining respect is an important part of culture. 

Another example is the simple act of using business cards.  In most Asian cultures the exchange of business cards is a respectful ritual in which the card is often grasped with both hands and momentarily studied.  In North American culture the business card is treated as a scrap of paper with contact information and often flung across a table.

“Guanxi” is an important concept, that relationships and connections are important to functioning in life.  In other cultures, there is less of a network society and thus more emphasis on one-off transactions (Gordon Redding).

In Asian cultures, people do business with friends; in North America, they become friends if they do business long enough.  In Asia, there is a necessary process of establishing relationships and thus there is a considerable amount of socializing that goes with the business territory.

A second aspect of culture can be the nature of the industry.  I previously consulted to the North American operations of a large Korean computer equipment manufacturer (monitors and related computer hardware).  The head office in Korea as interested in penetrating the North American market and distributing its excess inventory. 

The North American office operated in an extremely competitive environment.  Their gross profit was 10-12% and their net profit was 1-2%.  The industry was characterized by razor-thin margins and high turnover.  There was a premium on longstanding relationships or with large, established companies; at the same time any bad debts could cripple a company. 

The nature of an industry can impact the culture of the company.  This particular company needed to balance building relationships while realizing that it was a very, very price sensitive market.  It could extend some flexibility, but too much could easily be fatal.  Retailers in the business could go out of business, despite a long track record, as happened on a regular basis.

---

The contents of this series are adapted from Dr. Rick Goossen’s paper on “Strengthening Competitive Advantage through Enhanced Cultural Engagement Capabilities”. For more information or for a complimentary copy of this paper, please contact Rick.Goossen@Avantage.com.

The "Strengthening Competitive Advantage through Enhanced Cultural Engagement Capabilities" by Dr. Rick Goossen series:

1. Cultural Capabilities
2. Building Cultural Engagement Capabilities - An Internal Assessment
3. Building Cultural Engagement Capabilities - An External Assessment
4. Building Cultural Engagement Capabilities - Balanced Scorecard
5. Strengthening Competitive Advantage through Enhanced Cultural Engagement Capabilities