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Organizational Culture and
Acculturation
Balzs Heidrich, Ph.D
ESSCA Budapest
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The Concept and Definition ofCorporate Culture
Bringing fuzzy ideas closer to
reality
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What is OrganizationalCulture?
The way we do things around here (Bower, 1982)
Martin, 1984)
The collective programming of the mind (Hofstede,
1991)
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What is Organizational Culture?
A pattern of basic assumptions that the group has learned as
it solved its problems of external adaptation and
integration, that has worked well enough to be consideredvalid and therefore, to be taught to new members as the
correct way to perceive, think, and feel in relation to those
problems (Schein, 1985)
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Can Culture Be Known?
Is it a can of worms?
Is it dangerous to have an insight to
your own culture?
Who should hold the organizationalmirror?
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Elements of Corporate Culture
Business environment
Values
Heroes
Rites and Rituals
Cultural Network
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Cultural Forms ofCorporations
Symbols (objects, settings,leaders,heroes, roles)
, ,songs, humour, jokes, gossip,proverbs)
Narratives (stories, legends, myths)
Practices (rituals and taboos, ritesand ceremonials)
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Characteristics ofCorporate Culture
Individuals make up a
culture
Culture make sense and
have coherent points of
Culture can e rewar ersof excellence
Culture is a set of
affirmations
Cultural affirmations tend
to fulfill themselves
Culture provide their
members with continuity
and identity
A culture is in a state of
balance between
reciprocal values
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Characteristics ofCorporate Culture (contd.)
Corporate culture is a cybernetic
system
Cultures are patterns (hologram)
Cultures are more or less synergistic
Only cultures can learn-and
organizations must learn
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Definition of subcultures
Organizational subcultures consist
ideologies, cultural forms, and
other practices that identifiable
groups of people in an
organization exhibit.
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Characteristics of subcultures
Differential interaction
Similar personal characteristics
Cohesion
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Types of subcultures
Enhancing subcultures (views of the top
management are reproduced in an
exaggerated form)
Countercultures (the islands ofresistance to the overall culture)
Orthogonal cultures (neither in favour
nor against the views of the topmanagement)
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The McKinsey 7S Model
Strategy
Structure Style
StaffSystem
Skills
Shared
Values
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The Concept And Process of Acculturation
Can Cultures Really Merge?
Balzs Heidrich, Ph.DESSCA Budapest
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The Definition of Acculturation
Acculturation: is the term used to describe the process by
which two groups that have come in direct contact resolve
the conflicts and problems that inevitably arise as a result
of their contact. (Nahavandi and Malekzadeh)
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Stages of Acculturation
Contact
Conflict
Adaptation
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Stages of Acculturation 1.
Contact: The outcome of the relationship will depend on a
number of factors ranging from the type of merger to the
. ,
the initial contact is likely to engender some level ofconflict
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Stages of Acculturation 2.
Conflict: (based on the intensity of the contact)
Little:no daily interaction, not much conflict. Financialum re a.
Large:similar markets, similar technology, therefore moreconflicts. Fight for power, resources etc. Both cultures are
strong.
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Stages of Acculturation 3.
Adaptation:
Positive adaptation: groups come to an agreement overow synergy s ac eve . c opera ona an cu ura
elements will be preserved and which will be changed?
Negative adaptation: One or both groups feel cheated andcontinue resistance.
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Modes of Acculturation
Assimilation
Integration
Separation
Deculturation
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Modes of Acculturation-Assimilation
The acquired firm gives up its practices, procedures,philosophy and assimilates into the acquiring firm.
e ow o cu ure s one way.
Willingness to change stems from a weak, unsuccessfulculture.
One of the most common mode of acculturation.
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Modes of Acculturation-Integration
The acquired firm maintains its cultural identity. Success isneeded.
e acqu re rm ecomes ega y an nanc a y e par
of the acquiring company but cultural elements can be
retained.
Both firms change some cultural elements.
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Modes of Acculturation-Separation
Attempt of the acquired firm to retain all cultural elementsand practice.
e organ za on re uses o ass m a e a any eve .
Strong culture of a small company, which is to bemaintained under the financial umbrella of the larger firm.
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Modes of Acculturation-Deculturation
Least desirable mode
Loss of all cultural elements
The culture of the acquire firm is weak, ut not willing to
adapt to that of the parent company
Conflict and confusion at all level
Acculturative stress
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The Age of Mergers and Acquisitions
More than half of the M&A are financial failures No better success rate within the same industries
Reasons for failure:
Inappropriate selection of the partner
(org.culture)
Mismanagement of the acculturation process
The organization wide resistance of the
employees to changes
The same rate of (un)success in case of strategic alliances
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Mergers and/or acquisitions?M&A
Makes a big difference, legal- and power wise!
Merger: a combination of organizations of fairly similar
s ze, w c creates an organ zat on w ere ne t er party
can clearly be seen as the acquirer. (Vaara, 2001)
Acquisition: when one company buys enough shares to
gain control of another.
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Double Acculturation
Organizational and national level counts as well?
Scandinavian companies prefer to enter business
par ners ps w o er can nav an an or mer can
firms (Avoid alliances with Japanese and Latin companies)
Cross-border M&A are more successfull!
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A Possible Solution
Cultural Synergy
u ura erences as a source o va ue
Creating a third culture (comparison and differences are
not emphasized!)