What it takes to design the multicultural organization

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When a management system that works in one country is transferred to another country and fails, this indicates that there is something between management system and employee behavior that moderates the effect – presumably culture. In global networks and value-added chains, multinational corporations are challenged to design an organization under cultural influences – among others. They need to create organizational structures and cultures that manage multicultural diversity to balance out organizational flexibility and integration.

Main questions are:

  • To what extent can management systems be transferred to other cultures? How effective in influencing behaviors are they in other cultures?
  • What demands for organization design result from the features of multinational corporations? Which demands would possible organizational solutions impose on the employees?
  • To what extent can and should multicultural diversity be managed? Can cultural diversity be preserved and at the same time the integration of the organization be enforced?

The answers on these questions have to be collected from different fields of science:

How diversity in form of cultural identity grows and how culture is brought into companies and affects them is explained by (social) psychological theories. Influenced by culture people develop different self-concepts (identities) that later form their psychological processes. By interpreting the management system and the working situation, the employees’ self-concepts moderate the effect of the management system on the employees’ behavior.

Cultural differences are examined by the intercultural management science. Studies like GLOBE compare country cultures by dimensions. Furthermore, there are numerous studies on specific cultural aspects in working situations. These findings usually only allow recommendations on an individual or group level, recommendations for designing management systems on an organization level can hardly be concluded from that.

More helpful for designing the overall organization in the multinational corporation is the international management science, that examines the multinational corporation. Here, the objective is to optimize all investments in the home country and abroad, to formulate and implement transnational strategies. Organization models such as the transnational organization were developed directly from the context the multinational corporation operates in. Specific recommendations for designing the organization, human resources and controlling in the same have been developed.

Based on the features of modular, networking, virtual organizations it has been worked out what demands the transnational organization imposed on employees. Here, the findings from the cultural science can be brought in and questioned to what extent employees with a culturally determined different expression/attitude regarding for example power distance, insecurity avoidance or achievement orientation could comply with these organization models or could be triggered by it. The image of man that the employees have to meet to make these organization models work is sophisticated. Trust becomes a coordination mechanism.

The most useful approaches to handle multicultural diversity are part of the new corporate culture science. These difference oriented approaches do not assume one uniting corporate culture anymore, instead they suppose the existence of many subcultures in the company. In every company both integrating and diversifying dynamics are active at the same time. The objective is to preserve these diversity and dynamics and try to manage them. Notice, this is about subcultures and diversity in general which makes these concepts useful to integrate the management of multicultural diversity into the management of corporate culture. Socialization becomes a major instrument of management and coordination and a major instrument to handle multicultural diversity.

Many questions remain unanswered, particularly when it comes to considering other influential factors:

  • To what extent shall the organization be designed by business or cultural considerations? Can configuration effectiveness exist without motivation effectiveness?
  • How can organization standards be designed if employees react differently on them? Is it acceptable, on the other hand, to have employees who come from different organization units working in one team under different regulations and conditions?
  • It becomes obvious how much the working conditions in the multinational and the postmodern organization match. But not all organization members in the multinational corporation form part of the knowledge economy and should/can deal with the ambiguities of postmodern work. How can organization design integrate classic, modern and postmodern forms of work under one overall multinational organization?

Here is my thesis of 2008 from my specialization on organizational behavior and leadership:

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