Chapter 6
Intuitively, people have always assumed that bureaucratic structures and patterns
of action differ in the countries of the Western world and even more markedly between East and West. Practitioners
know it and never fail to take it into account.
-- Michael CrozierSociologist, France
2
(p. 155)
Generalizing about organizations is a
tricky and not entirely respectable
business.-- Patricia Morison
Journalist, Financial Times, UK
3
(p. 155)
Opening question:
How can organizational structures and processes differ across nations and regions, and what are the implications for global managers?
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Consider: East Hope Group
1. How did the Chinese family structure facilitate the creation and business development of East Hope?
2. How did the family structure influence the company’s organization design and management practices?
3. What is the role played by the Chinese government in East Hope’s success?
5
(p. 155)
Topic for today: Organizing Frameworks: A comparative assessment
• Culture and organization design: A model
• U.S. corporations
• Japanese kaisha and keiretsu
• Chinese gong-si
• German konzern
• Mexican grupo
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Culture 1: Normative beliefs about
appropriate forms of social organization
(e.g., belief in centralized power; importance of
individual responsibility; emphasis on rules as the basis for social control)
Culture 1: Normative beliefs about
appropriate forms of social organization
(e.g., belief in centralized power; importance of
individual responsibility; emphasis on rules as the basis for social control)
Culture and organization design
Culturally compatible managerial views on organization design
(e.g., preference for tight managerial controls;
emphasis on rule compliance and
individual responsibility)
Culturally compatible managerial views on organization design
(e.g., preference for tight managerial controls;
emphasis on rule compliance and
individual responsibility)
Other influences on organization design(e.g., economic, political, and market forces; ownership
patterns; common industry practices; legal or contractual requirements; staffing requirements or limitations; realities on
the ground)
Other influences on organization design(e.g., economic, political, and market forces; ownership
patterns; common industry practices; legal or contractual requirements; staffing requirements or limitations; realities on
the ground)
Culture 2: Normative beliefs about
appropriate forms of social organization
(e.g., belief in distributed power; importance of
collective responsibility; emphasis on
relationships as the basis for social control)
Culture 2: Normative beliefs about
appropriate forms of social organization
(e.g., belief in distributed power; importance of
collective responsibility; emphasis on
relationships as the basis for social control)
Culturally compatible managerial views on organization design(e.g., preference for democratic forms of
organization; emphasis on teams and cross-
departmental cooperation)
Culturally compatible managerial views on organization design(e.g., preference for democratic forms of
organization; emphasis on teams and cross-
departmental cooperation)
Culture 2: Organization
design principles(e.g., flat
organizations with extensive employee
empowerment; cooperative HRM
environment; extensive employee
networking)
Culture 2: Organization
design principles(e.g., flat
organizations with extensive employee
empowerment; cooperative HRM
environment; extensive employee
networking)
Culture 1: Organization
design principles(e.g., tall
organizations with centralized decision-making; competitive HRM environment; extensive employee
policies and guidelines)
Culture 1: Organization
design principles(e.g., tall
organizations with centralized decision-making; competitive HRM environment; extensive employee
policies and guidelines)
7
(p. 158)
Culture and organization design: Country examples
8
(p. 159)
Independent suppliers Independent
distributors
Strong independentunions & professional
associations
Contracted employment/HRM services
Independent capital markets & financial institutions
Contracted company advocates & government lobbyists
Contingent workers
Employees
First-line supervisors
Management
CHIEF EXECUTIVE OFFICER
Board of directors
Stockholders
Typical U.S. corporation
Contracted market research & product
development
Contracted legal & financial
services
9
(p. 163)
Consider: U.S. corporations
1. Wide variations can obviously be found in the organization designs of U.S. companies. What are some of the principal causes of such differences?
2. Despite the rhetoric about employees being their most important asset, the most common organizational form of a U.S. is a fairly rigid top-down hierarchy. Why is this?
3. In your view, is the distance between “members” and “contingent” employees in U.S. corporations becoming larger or smaller? Why?
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Consider: Organizations in “Anglo” cultures
1. If Australia, Canada, U.S., and U.K. are all described as primarily “Anglo” cultures, would we expect the organizing principles of their companies to be much the same? Why or why not?
2. If “Anglo” companies are indeed much alike, would we expect management styles to be very similar across these countries?
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Typical Japanese horizontal keiretsu
Horizontal keiretsu (e.g., Mitsubishi)
--------------Board of directorsGroup president Legal services
Financial servicesMarket research
Research & product development
PRESIDENT’S COUNCIL (Kinyo-kai)
KaishaKaisha president
ManagementFirst-line supervisors
Permanent employeesEnterprise union
Keiretsu-owned
or controlled suppliers
Keiretsu-owned or controlled banks &
financial institutions
Keiretsu-sponsored government liaisons &
group advocates
Weak nationalUnions, professional
associations
Contingent Workers
Support to and from sister kaisha
Keiretsu-owned or controlled
distributors
12
(p. 169)
Consider: Horizontal keiretsu
1. Compared to a typical “Western” corporation, the keiretsu model is far more inclusive of members from various affiliated units (e.g., suppliers, distributors). What are the organizational advantages and disadvantages of this from the standpoint of global competitiveness?
2. How is the role of Japanese trading companies (sogo shosha) different from similar units found in other countries?
3. If the keiretsu model has proven to be so effective in Japanese industry, why is it not widely imitated in the West?
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Typical Japanese vertical keiretsu
Keiretsu-owned or controlled parts supplier
Keiretsu-owned or controlled Asian
distributors
Affiliated horizontal
keiretsu (e.g., R&D, trading)
Keiretsu-owned or controlled parts supplier
Keiretsu-owned or controlled parts supplier
Keiretsu-owned or controlled European
distributors
Keiretsu-owned or controlled North
American distributors
VERTICAL KEIRETSU(e.g., Toyota)
Affiliated banks
(e.g., financing, capital)
14
(p. 171)
Consider: HRM systems in Japan
1. How do Japanese HRM policies and strategies support the keiretsu organizing model?
2. Are these HRM models sustainable into the future in view of the changing competitive realities of the global marketplace?
3. Are the basic keiretsu models themselves sustainable?
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Kongfuzi’s five cardinal virtues
16
(p. 177)
Typical family-owned gong-si
Family owners
FAMILY MANAGEMENT(including executive and general
management, marketing, R&D, HRM, logistics, accounting and control;
frequently seniority-based)
Production or service workers(largely contingent)
First-line supervisors(frequently contingent)
Extended family members and
“overseas” Chinese
Extended family or guanxi network
suppliers
Extended family or guanxi network
distributors
Non-family guanxi network
17
(p. 179)
Consider: Chinese gong-si
1. Chinese gong-si tend to have a very small core of “members,” while everyone else is “contingent.” What are the competitive advantages and drawback of this model?
2. How well would the family-based gong-si model work as Chinese organizations increase in size and diversity?
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Typical German konzern
SUPERVISORY BOARDElected to five-year terms by
members of the works council, management, & stockholders.
Board includes worker representatives
MANAGEMENT BOARDTop management team,
appointed by Supervisory Board
EmployeesFrequently hired and developed
through state-sponsored apprenticeship training programs
Works council Nominated by employees and unions;
elected by employees; focus on working conditions
ManagementFrequently promoted from the
rank-and-file employees
First-line supervisors Meisters, selected based on job skills and knowledge of Technik
Contingent workers
Codetermination(Mitbestimmung)
Codetermination rightsWorking hours
Payment methodsHiring and transfers
Social amenitiesTraining programs
Policies governing vacationsSafety regulations
Performance appraisal
Participation rightsHuman resource planning
Employee dismissalsWork procedures
Operational changesJob description changes
Work design changes
Government policies and regulations
Industrial unionsNational unions; focus
on wages & job security
19
(p. 183)
Germany’s dual system of vocational training
20
(p. 186)
Consider: German organizations
1. Why is the concept of industrial democracy so popular in Western Europe compared to other regions of the world?
2. How do the roles of Germany’s supervisory and management boards differ from similar entities in other Western countries?
3. How does a Meister in a German firm compare to a first-line supervisor in the UK, US, Australia, or Canada?
4. The apprenticeship system in Germany has come under increasing attack recently for being slow, exclusive, and expensive. If this system were to fail, where would German firms get their highly skilled workers ?
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Typical Mexican grupo
Family-controlled board of directors
Appointed by family-owners to serve at their convenience
OWNER-CEOStrong entrepreneurial executive; family control and participation in
top management team
EmployeesFrequently hired through
connections with management; loyalty to boss important
Close business-government ties
First-line supervisors Selected based on loyalty and
ability; paternalistic and autocratic supervisory style
Contingent workers
Close ties with other major firms through cross-board membership, often allowing oligopolistic control over industrial and service sectors
Management Professionally trained; loyal to
family-owners; paternalistic and autocratic management
style
Many firms maintain virtually monopolistic
control over major economic sectors
Strong national industrial unions; tied
to political parties; focus largely on wages and job
security
22
(p. 191)
Consider: Carlos Slim and Grupo Carsa
1. Mexico is filled with highly successful entrepreneurs like Carlos Slim, yet the country is poor and is not known for nurturing individual or group success. Why is this?
2. How would you describe the organizational structure and management practices of Grupo Carsa?
3. To what extent do these organization and management principles follow from Mexican cultural trends?
23
(p. 192)
Consider: Contingent workers
1. How might the role of contingent workers differ across these five countries?
2. In what country or countries do you think contingent workers might be better off? Why?
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MANAGER’S NOTEBOOK:Culture and organization design
1. Organization designs are often highly correlated with the cultural traits of their home countries.
2. Organizations and their managers reflect learning systems that build on past experiences and future expectations, both of which are tied to culture.
3. Organization designs are continually evolving in varying degrees in response to local and global changes.
4. The organization designs discussed here represent central tendencies, and wide variations can often be found within individual nations and regions.
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MANAGER’S NOTEBOOK:Key success factors in working with organizations from other cultures
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Application:Kirin Holdings Company
• Kirin is a global leader in the highly competitive beer
and soft drink market.• Kirin is part of the Mitsubishi keiretsu.• Question: What are the implications of Kirin’s keiretsu
membership for its global market success?
27
(p. 171)
Application:Kirin Holdings Company
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Application:Kirin Holdings Company
1. What are the advantages and drawbacks for Kirin of being a member of the Mitsubishi keiretsu?
2. Does the keiretsu organizing framework provide Kirin with an unfair advantage in the marketplace by shutting out potential competitors?
3. How would you work to compete against Kirin in the beer and soft drink markets in both Japan and globally?
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Think about it:Working for a “foreign” company
1. For you personally, what are the pluses and minuses of working for a “foreign” company—that is, a company headquartered outside of your home country?
2. What would be your biggest hurdles or challenges of accepting such a job?
3. What might you do to overcome these hurdles?
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