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

Essay 2005 12 Pages

Business economics - Business Management, Corporate Governance


International Business Management

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

by Stefanie Hoffmann

Nowadays nearly all companies have to develop their own ideas and personalities. As we are living in a fast moving society the company’s corporate identity plays a huge role. This term comprises corporate culture, corporate branding, corporate communication and corporate design. It is essential to make use of all these elements in order to be able to define a company to itself as well as to the outside world, to find out how customers and employees should be treated and how to respond to interactions with the external environment and culture. The external environment is defined as factors which are not under the direct control or influence of the organisation, such as demographic, economic, political or technological factors. (http://www.fiu.edu/~pie/environmentform.htm accessed on 05.11.2005) The corporate identity of a company can be expressed in company’s communications, architectural style, by how people address each other and of course by what people wear, for example cabin attendants representing their airline outwardly through the same uniforms.

In order to answer the question “How do motivation and leadership affect the corporate culture of multinational firms?” it is essential to clarify the different terms.

Corporate culture, also called organisational culture, deals with the beliefs, attitudes, values, expectations and rules of an organisation. These values are used by all company members and are given from one generation of employees to another. (http://www.quintcareers.com/jobseeker_glossary.html accessed on 05.11.2005) To summarise, these characteristics should help to define and illustrate the nature of the corporate or organisational culture.

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).” (http://highered.mcgrawhill.com/sites/0072487488/student_view0/glossary.html 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 organisational barriers. (http://www.pg.com/company/who_we_are/ppv.jhtml;-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)

1. Power distance
2. Individualism versus collectivism
3. Masculinity versus femininity
4. Uncertainty avoidance
5. 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 name.

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.



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