Chapter 6. Intuitively, people have always assumed that bureaucratic structures and patterns of...

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?

4

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

6

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)



(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)



(e.g., belief in distributed power; importance of

collective responsibility; emphasis on

relationships as the basis for social control)



(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)


design principles(e.g., flat

organizations with extensive employee

empowerment; cooperative HRM

environment; extensive employee

networking)


design principles(e.g., tall

organizations with centralized decision-making; competitive HRM environment; extensive employee

policies and guidelines)


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?

10

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?

13

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 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?

15

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?

18

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 ?

21

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?

24

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.

25

MANAGER’S NOTEBOOK:Key success factors in working with organizations from other cultures

26

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)


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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?

29

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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