How do motivation and leadership affect the corporate culture of multinational firms?

If newly hired individuals enter a company, especially a multinational one, they bring their own national culture with their own values and beliefs, and in return they must adopt and respect the organisational culture of the company they work for. Of course, companies want their employees to fit in. At Pepsi for example workforce is expected to be cheerful and positive whereas at Ford, it is expected to show self-confidence and assertiveness. (Hodgett and Luthans, 1997)

“Multinational firms are companies which own and control enterprises in more than one country. The parent company is based in the home-country source for the FDI (Foreign Direct Investment) and has one or more foreign branches or subsidiaries. These firms are also referred to as:

multinational corporations (MNCs) and multinational enterprises (MNEs).”

accessed on 06.11.2005)

A good example for a multinational firm is the company Procter & Gamble. The so called “P & G community” consists of nearly 98,000 employees working in almost 80 countries all over the world. (http://www.pg.com/jobs/corpinfo/corpstructure.jhtml accessed on 06.11.2005) The motto of the company: “We act on the conviction that the men and women of Procter & Gamble will always be our most important asset.” Regarding leadership, all members of the company are leaders in their area of responsibility, with a deep commitment to deliver leadership results. They have a clear vision of where they want to go and focus their resources to achieve leadership objectives and strategies. Therefore, all members develop the capability to deliver their strategies and eliminate

jsessionid=MPFYFTDGSYA4LQFIAJ2C0HWAVABHOLKG accessed on 06.11.2005) Furthermore, keywords like “Integrity, Trust, Ownership and Passion for winning” make Procter & Gamble to an organisation which wants to ensure that their employees fit in and that they can identify themselves with the corporate culture of the company.

The major problem is, that in some multinational firms the corporate or organisational culture in one country profoundly differs from those in other countries, for example the American subsidiary has its own corporate culture as well as the Chinese one, or

managers who work for the same company do well in England but may be ineffective in Germany. Therefore also motivation and leadership have different influences on it and the major challenge of international marketing is to find a multicultural balance between the different locations of the MNC. (Hodgett and Luthans, 1997) Of course, this problem is caused by the national culture.

National culture is defined as “the set of values, assumptions and beliefs that are dominant in the population of a particular country.” (Arnold et al, 2005, p. 624)

In order to understand the diversity of the different national cultures, Geert Hofstede, a Dutch psychologist, initiates a large research project across subsidiaries of a multinational corporation in 64 countries, analysing data from over 100,000 IBM employees and managers. These studies created five dimensions which demonstrate that there are national and regional cultural differences that affect the behaviour of organisations. (Hofstede, 1991)

Power distance

Individualism versus collectivism Masculinity versus femininity Uncertainty avoidance Long-term versus short-term orientation

The first dimension is defined as "the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally". (Hofstede, 1991, p. 28) In many companies there is a hierarchy in which all members of the organisation have a particular position. People at the top position, for example have a higher influence on the employees at lower levels. They have the possibility to control, punish or reward them. That means there is a high power distance and employees agree to the decisions of their bosses in a respectful way. If there is a low power distance there is often no hierarchy and all employees have nearly the same rights which also means that people are more prepared to trust one another. (http://users.tkk.fi/~vesanto/ihfudge/culture-part2.html accessed on 10.11.2005) Malaysia for example is a country with a very high power distance. Employees express their respect to their bosses by bowing. Sweden or Ireland are countries with

a low power distance. Employees have more freedom in making desicions and they work together in a nearly private way such as talking to each other using their first

These examples already show that societies are unequal and that multinational firms have to adopt their corporate culture to the different behaviours in different countries.

The second dimension is defined as follows: Individualism is part of societies in which the ties between individuals are loose that means everyone is expected to look after him- or herself, whereas in collectivist societies people are integrated into strong, cohesive groups. (Hofstede, 1991) When speaking about an individualistic culture it is said that employees act according to their own interests and that work should be organised in a way that self-interest and the employer’s interest coincide. The USA for example is a country with a high level of individualism. Employees are not afraid of being direct because speaking one’s mind indicates honesty.

In a collectivist culture, group work and group thinking is important. In companies in Guatemala for example, employees try to avoid conflicts and confrontations. They just act to the interest of the whole group and decisions are made together.

The third dimension called masculinity versus femininity indicates the relationship between gender and work roles. Masculinity belongs to societies where social gender roles are clearly distinct whereas femininity belongs to societies in which social gender roles overlap. “Men are supposed to be assertive, tough, and focused on material success (“live to work”); women are supposed to be more modest, tender, and concerned with the quality of life (“work to live”)”. (Hofstede, 1991, p. 292) It is said that Japan is the world’s most masculine society. Nowadays men still have the leading part, especially in business. Sweden is the most feminine society that means women are equally treated like men.

Uncertainty avoidance, Hofstede´s fourth dimension, can be defined as the degree to which the members of a culture feel concerned about uncertain or unknown situations and how people tolerate ambiguous situations.