The role of Organizational culture in Innovation Management: A case of Foxconn Technology Group-China

Bachelor Thesis, 2012
43 Pages, Grade: A


Table of Contents

Aim and Objectives
Research questions
Dissertation Structure

The Role of Organizational Culture
Innovation Management
Foxconn Culture and Innovations

Research Perspective
Research Design
Qualitative Research
Reasons for Choosing Foxconn
Data Collection
Primary Data Collection Methods
Interview Questions Development
Secondary data
Ethical Issues Observed in the Study

Organizational culture in Foxconn
Foxconn 3Cs Culture
Innovations in Foxconn

Organizational culture
Foxconn’s training culture
Effects of Innovations on Foxconn’s Organizational Culture
The Human Resource Policy In Foxconn




An organization’s culture is the established system of doing things, it is a reference point that guides the relationships in an organization and the decision making processes. This is either consciously or unconsciously. Culture affects all aspects of the organization; it is like a web that joins new ideas or relationships with the old ones that represent the accepted thought paradigm. This paradigm is a sieve that only lets through the culturally acceptable strategies in an organization. Modern organizations struggle to create an organizational culture that supports the set goals and objectives of an organization. It is from the organizational culture base that an organization can pursue projects that increase its competitiveness in the market.

Culture is dynamic. Organizations are involved in a program that ensures there is a suitable culture to cope with the changes in the industry of operation, human resource policy and the technological changes that always affect organization. Top on the major organizational practices that require a suitable organizational culture is Innovation. This is among the major competitive advantages that an organization can have especially in this rapidly changing era. The market is not only interested by the quality or price of a company’s product but also on the improvements aimed at adding utility while satisfying the consumer wants. The survival of every organization is greatly influenced by its innovation capacity. The dynamism in modern business environments requires organizations to set up structures that ensure continuous flow of new ideas in production marketing and human resources mobilization. In innovation management, an organizations culture plays a major role.

In the recent past China has emerged as a major economic power with multinationals that market their products in almost all parts of the world. The Chinese multinationals have become competitive in the world due to their innovative tendencies. There is always a new product that the market gets from this multinationals especially Hon Hai Precision industry which trades as Foxconn. This study focuses on this company. Foxconn was established in 1974 as a manufacturer of various electrical products. The company has specialized in computer related products like motherboards and micro chips that drive the information technology sector in the world today (Foxconn Technology Group, 2011).

Foxconn is the leading electronics company in the world. Their popular brands include the iphone, iPod and circuit boards. Foxconn manufactures products for the leading companies in information technology. Microsoft, Acer, Samsung, Motorola, Sony, Dell, Toshiba, Apple inc. and Cisco are among its major customers. Foxconn has factories in Asia, Europe and Latin America where it manufactures its products for the local customers. The company has over 200,000 employees distributed in all its factories. There is a prevailing Foxconn culture in all its factories although there are variations depending on host countries legal structure, the dominant culture in the region and the particular aspects of the workforce. Like the level of expertise.

This Chinese company has managed to maintain an organizational culture that supports innovation .The process of research and development (R&D) has become an organizational norm. This has produced numerous innovations that are explored by this study.

Aim and Objectives

This dissertation aims to explore the relationships that exist between an organizations culture and innovation management. In this study focus is on the human resource in an organization and the culture that encourages change in operational process or maintains the old tested operational methods with certain results. The human resource is responsible for an organizational culture. It is therefore a major determinant of the organizational process. This study focuses on Foxconn, the world’s largest electronics manufacturer. The specific objectives of the study include

To establish the nature of Foxconn’s organizational culture and culture change processes

To identify the processes of innovation in Foxconn

To demonstrate the role of human resource policy to an organizational culture

To indentify the sustainability of Foxconn innovativeness in regard to changing organizational culture

Research questions

Organizational culture guides the overall process in an organization. To what extent does an organizations culture curtail or encourage innovations in organizations. In answering this question the researcher will get insights on the aspects of culture that are worth consideration in managing innovations and to what extents. This question will also reveal the process of innovation, the supporting factors and the curtailing scenarios that can be attributed to Foxconn’s culture. The role of research and development and its relationship with the organizational culture will also be revealed in seeking solutions to this research query.

Innovation introduces new systems of operation in a business organization. Can innovation change the culture in an organization? Solution to this question will reveal how culture is developed and sustained amidst organizational changes. The cyclic relationship that exists between innovation and organizational culture will be well analyzed in answering this question. The effects of innovation to the human resources in an organization, how they cope with it and the subsequent alterations in the organizational culture will be analyzed as the researcher answers this questions.

Organizational culture and Innovation are greatly influenced by the human resource policy in organizations. Which are the necessary changes that Foxconn should institute to ensure continuous innovations in the company? In answering this question the research will explore all the human resource aspects in Foxconn, an analysis of the possible effects of the current human resource policy on the continuity of innovations will be undertaken in answering this question. The relationships between human resource management and their influence on innovation either through culture or technology will be revealed.


In order to achieve the objectives of this study, the researcher will need to establish a working definition of what to term as organizational culture and innovation. There is need to draw the line between innovation and technological changes due to the advances in information systems. The difference between organizational culture and the established legal code of conduct in Foxconn need to be established. This study achieves a standard definition of innovation by studying the academic view of the concept, the perception of the concept in the business sector and what Foxconn the company under study classifies as innovation. The standard view of organizational culture is also established through considering the sociological view of the concept and an analysis of what Foxconn seeks to achieve as organizational culture.

This study uses both primary and secondary data collection methods. There is a case study of Foxconn, a Chinese company that is credited for innovations. The researcher interviews various stakeholders who are involved in Foxconn through Skype. This interview provides first hand information on organizational culture and innovation in the company. Questionnaires are also administered to workers in various levels in Foxconn; input from past employees in Foxconn has also been gathered through the questionnaires. This study relies heavily on secondary data sources. Past annual reports and records of innovation milestones in Foxconn are considered to offer solutions to the research questions. This study brings to board various credible third party reports on Foxconn organizational culture and innovation.

Dissertation Structure

This dissertation is structured into 6 chapters. The chapters contribute in answering the research questions and achieving the set objectives of this study

In the chapter that follows there is a comprehensive literature review on the subject of organizational culture and innovation. The focus of this literature review is on private organizations that have a record of innovation and the different scholarly perspectives to the subject. In this review past records concerning Foxconn China growth are revisited. Chapter 3 explains all the methods used in data collection, assessing their possible limitations while explaining the strengths that qualify each method for this study. The credibility of the data collection methods is held paramount to ensure accurate findings; this is due to the existence of varied subjective information concerning Foxconn and its organizational culture. . In Chapter 4 have all the research findings from the different methods that will be used in the study. The chapter offers raw data for the researcher to deduce the solutions to the research questions. This has been achieved in chapter 5 that offers a discussion which relates the research findings. The relevance of the findings in analyzing the role of organizational culture in innovation is established. This chapter offers insights into the human resource aspects that relate to Foxconn China and their influence on innovation through the created culture.

The discussion lays ground for Chapter 6 which concludes the study by offering a comprehensive view of the organizational culture effects on the innovation in Foxconn. There are suggestions on the various managerial changes that should be effected especially in the human resource sector. This will ensure continued innovations in Foxconn China thus enabling the company to maintain its competitiveness.

At the end of this study the researcher has provided references that were depended on during literature review, research data discussion and in making conclusions. This includes cases that reveal the practicality of the research recommendations.



The dynamic business environment requires organization that adopts new business practices while inventing new systems of operation that ensures their competitiveness in their section of interest. Innovation may be a onetime event but it requires a process that culminates into the invention of an improved system. This process is supported research, human resource expertise, technological advancement and sound managerial skills. All this pre-requisites to an invention event are tied together by the existing organization culture. It is the thread that joins all this pre-requisites into a whole that supports innovation. Over the years, innovation has been viewed as a product of the research and development department. Organizations have concentrated on strengthening this department. This mode failed to improve company’s innovation capacity since inventions are usually emanated from the people who are involved in carrying out an activity.

The Role of Organizational Culture

Burns and Stalker, (1991) argues that companies should focus their efforts from research to creating an organizational culture that will be open to research that eventually gives way to innovation. The organizational culture may appear like the rigid established manner of operation but it is a great platform for change through innovations. Hippel, (2006) observes that departure from Research and development system requires the involvement of all the employees since no department is a mere cog in the organizational machine. Even when the workers in an organization have high academic credentials, an organization should establish a culture of work related training. Such a culture will drive the invention processes as employees seek more efficient and cost friendly ways of attaining the objectives of the organization.

The general culture of an organization is a major determinant of innovative tendencies as mentioned earlier; Organization culture is the denominator for all the progress or stagnation that a company can be indentified with. Drazin and Bird noted that the leading innovative companies have a common culture, Foxconn was among this world most innovative companies that relies heavily on their organizational culture. Drazin and Bird took issue with the common description of companies in a certain region as innovative. They noted that it is not the Chinese or American companies that are innovative but the specific companies that have established a culture with supportive structures for innovation.

In explaining the difference between organizational culture and organizational climate, Denison (1996) notes that culture change in most organizations will shift dependence from R&D processes to open innovation setups that characterize the e-business world. The management should cultivate an innovative mindset among the staff in all departments. This proposition seemed to have been adopted by Foxconn in developing the iPhone and iPods’ that have become market readers. Although Foxconn invested into research activities, the company’s 2004 report notes that the employees had owned up the idea and therefore worked towards this goal as an achievement for all departments. This was due to the prevalent culture of departmental integration in Foxconn where there are no departmental achievements but Company achievements.

Psychological backgrounds to innovation and organizational culture express the view that human beings have capacities for creativity but a stimulant is always necessary to arouse these abilities. Evangelista, Smith (1998) noted that, an organization’s culture provides this stimulant. With due caution, an organization can create an environment that harnesses a risk taking culture. This risk taking culture has had some serious flops but the gains from successful trials outweigh the losses from product failure. Innovation is about change, change will always involve risks, and therefore organizations craving for innovation must establish a risk taking organizational culture

Innovation Management

In studying organizational culture and innovation, Hofstede (1991) documented that the human resource is the driver of innovation. The idea system that is nurtured to be a new way of doing things can never be mechanical although technology stimulates and facilitates the ideas. Organizations that can be innovation gardens if they invest in quality human resource, the investment can be either internal or external. The cardinal rule of participation in human resource management applies greatly in harnessing innovation. For an idea to be embraced, it is important to make the involved own the idea and see ‘what is in for them’ in the idea. The days when managers were just sending memos to departments with explanations of what will be implemented are long gone. Employees from all departments should embrace an innovative culture that is geared to improving the operations in an organization. The employees training culture will equip them with skills that will form a base for innovations.

In any organization there are adaptors (Freeman, 1995) this are employees who are involved in problem solving. The goal of such employees is to improve the system of operation while getting new ways of doing things more efficiently. Innovators are involved in searching for new problems; they have a passion for changing the system and invent new formats of doing things. There are bridges in an organizations workforce, the bridges act as tie-breakers in solution searching teams; they allow application of divergent views (Freeman, 1995). Organizations should invest in training to impact necessary knowledge that will widen the workers view of their working environment.

Recent centralization of organizations operations by use of Information technology have brought changes in the way organization’s training sessions should be planned. Innovation is no longer the business of the production departments alone, the marketing department may have valuable ideas on how different the organization can operate and increase its competitiveness. Grossman, Helpman (1991) the human resource can also offer suggestions on how the organization can change/improve its operations to benefit them workers and increase profitability.

Foxconn Culture and Innovations

There have been ethical issues on the organizational culture in Foxconn. The General working conditions in Foxconn has been put under sharp criticism following reports of poor working conditions and workers harassment. Foxconn is yet to rise above this claims irrespective of the gains made on the product sphere. Foxconn 2004 report indicates that the company has established a working schedule that focuses on the small details that make Foxconn products the market leaders. This has created an organizational culture where everyone seeks to improve the small details in their products in efforts to improve the product and make it a market leader. According to the report, this tendency has been responsible for the numerous inventions that have improved the microchips manufactured by this company. This is a major competitive advantage in Foxconn (Foxconn Technology Group, 2010b).

Hofsted (1991) observe that organizations that are open to variety of ideas are the most innovative. There ought to be a culture that enables the growth of alternative ideas that eventually grow into innovations. Ideas that originate from internal R&D processes should be explored to realize their maximum potential. An innovative organization has a culture that make it ready and willing to embrace new ideas in its fields of operation as it exploits the internal inventions. In the study of human resource involvement in innovation, Johnson, Christensen and Kagermann (2008) points out that Foxconn has established a training culture in its human resource management practices. The employees in Foxconn frequently trained on the emerging trends in electronics manufacturing and the challenges that face each manufacturing process .Due to the awareness of the operational weaknesses in a system and a culture of frequent training, Foxconn is employees usually invent a way through the challenge. The storage space was a nightmare to the electronics industry especially the ever expanding handset market. The company’s open culture where employees are aware of the system challenges encouraged expert’s involvement in exploring ways of increasing the storage spaces in handsets without compromising on the small physical size that had already been achieved. The awareness of this challenge and the workers involvement are responsible for the advanced microchips that are widely used in many Foxconn products. This has remained strength in the company.

Oldham and Cummings (1996) observed that the organizational culture involves how the human resources perceive an organization. In explaining employee loyalty, the two researchers argue that an organization with a favourable culture to the employees achieves high levels of employee loyalty. In such a scenario, the human resource is more involved in innovations since the new changes will be to the best of their interests. The organization advancements are dependent on how prevalent the culture of commitment is among the human resources. The 2009 Foxconn’s corporate social and environment report, the role of a socially responsible culture across the company is strengthened. The report notes that a socially responsible culture will enable acceptable innovations that contribute to the company’s growth. Foxconn claims that the society will embrace its innovations if it remains socially responsible. Barboza and David takes issue with this claim, in their New York Times article, the two points out that the Foxconn’s culture of mistreating the employee tarnished its innovations. The market may respond negatively to their products irrespective of how innovative they are (Stephanie, John and Tim, 2010). Baroza and David warn that the prevailing culture in Foxconn can be the end of this innovation giant.

The table below is an indication of the extent to which Foxconn culture will affect many companies leading of loss of revenue to the Electronics giant;

illustration not visible in this excerpt

Organizations should struggle to establish a culture where are always under evaluation to decide on the most suitable way of reducing costs while increasing production or provision of services. Organizations should not experience a ‘rest period’ in exploiting new ideas, as an idea approaches maximum utilization, companies should come up with ways of improving the knowledge base enabled by an innovation or simply discarding the innovation in favour of a technologically advanced system that will offer better results. This culture of evaluating ideas makes transforms organization into innovation drivers in their field of operation (Foxconn Technology Group, 2010a).


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The role of Organizational culture in Innovation Management: A case of Foxconn Technology Group-China
University of Portsmouth
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organizational, innovation, management, foxconn, technology, group-china
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Joseph Katie (Author), 2012, The role of Organizational culture in Innovation Management: A case of Foxconn Technology Group-China, Munich, GRIN Verlag,


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