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Organizational Culture and Commitment

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Organizational Culture and Commitment

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Organizational Culture and Commitment Transmission in Multinationals

Victoria W. Miroshnik

Palgravemacmillan

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© Victoria W. Miroshnik 2013

All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission.

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First published 2013 by PALGRAVE MACMILLAN

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Softcover reprint of the hardcover 1st edition 201 978-1-137-3 -3 6162 2

ISBN 978-1-349-47232-1 ISBN 978-1-137-36163-9 (eBook)9781137361639DOI 10.1057/

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To my Angel and my Angelique

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vii

Contents

List of Tables xii

List of Figures xviii

Acknowledgments xix

Glossary of Abbreviations and Terminology xx

1 Introduction 1 Importance of this research 1 Global culture 3 Global citizenship 3 National citizenship versus company citizenship 5 Company citizenship 5 Company citizenship as a competitive advantage 6 Key gaps in the related literature 7 Objectives of this research 8 Conclusion 9

2 Organizational Culture and Commitment 10 Organizational culture 10 Theoretical models of organizational culture 11 Values as core components of culture 16 Organizational culture as resource under the RBV theory 20 What is a resource under the RBV theory? 24 Organizational culture as a resource under the RBV theory 25 Organizational culture and corporate performance 26 Organizational commitment as the index of

corporate performance 28 Organizational commitment 29 Relationship between culture and commitment 33 Conclusion 36

3 Relationship between the Headquarters and Subsidiaries in Multinational Companies 37 Types of multinational companies 40 Strategy–structure literature 42 HQ–subsidiary-relationship literature 43

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viii Contents

Globalization/localization issues 46 Role of subsidiaries 46 Centralization versus autonomy issues 47 Alternative models of HQ–subsidiary relationship 48 Hierarchical versus heterarchical approaches 48 Role of culture 50 Characteristics of the management system of Japanese

multinational companies 54 HQ–subsidiary management in Japanese

multinational companies 55 Keiretsu and its impact on Japanese multinational companies 57 Organizational culture and its impact on commitment 58 Characteristics of the organizational culture of

Japanese multinational companies 60 Characteristics of the organizational commitment of Japanese

multinational companies 61 Thailand: general characteristics of organizational culture 62 India: general characteristics of organizational culture 63 Impacts of culture on commitment in Indian and

Thai organizations 65 Transmission of culture from the HQ to the

subsidiaries in multinational companies 65 Conclusion 69

4 Methodology 70 Design of data collection and survey 70 Brief characteristic of Shogun, the selected Japanese

multinational company 72

5 Model and Measurement Instrument 76 Models of organizational culture 76 Models of organizational commitment 80 Models on the relationship between organizational culture

and organizational commitment 83 Measurement of organizational culture 84 Measurement of organizational commitment 87 Research model 93 Measurement instrument 94 Characteristics of the sample scale 94 Measurement instrument: Organizational Culture

Assessment Scale (OCAS) 95

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Contents ix

Measurement instrument: Organizational Commitment Scale (OCOMAS) 99

6 Organizational Culture and Organizational Commitment in the Parent Unit in Japan 104

Analysis of the factors comprising organizational culture and organizational commitment 105

Characteristics of the sample of the parent unit, Japan 105 Descriptive statistics: organizational culture 106 Reliability analysis: OC in HQ, Japan 108 Composition of the OC as unobserved variable 109 Covariance and correlation analyzes: OC in HQ, Japan 110 Analysis of variance: OC in HQ, Japan 111 Factor analysis: OC in HQ, Japan 112 Entrepreneurship and supportiveness: important

characteristics of organizational culture in Japan 114 Statistical analysis of organizational commitment (OCOM) in

HQ, Japan 118 Descriptive statistics: OCOM in HQ, Japan 119 Composition of the OCOM as unobserved variable 121 Covariance and correlation analyzes: OCOM in HQ, Japan 122 Analysis of variance: OCOM in HQ, Japan 123 Factor analysis: OCOM in HQ, Japan 124 Interrelationship between organizational culture and

organizational commitment in Japan 129 Results of multiple regression analysis: HQ, Japan 129 Results of Structural Equation Modeling (SEM): Japan 134 Results of testing model for convergent and divergent validity

in HQ, Japan 138 Conclusion 138

7 Study B: Analysis of the Organizational Culture and Organizational Commitment in the Thai Subsidiary 140

Factors comprising the organizational culture of the Thai subsidiary of the Japanese MNC 141

Reliability analysis: OCOM in Thai subsidiary 151 Analysis of variance 154 Interrelationship between organizational culture and

organizational commitment in Thai subsidiary 158 Structural equation modeling (SEM): Thai subsidiary 164 Conclusion 167

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x Contents

8 Study C: Organizational Culture and Organizational Commitment in the Indian Subsidiary 169

Organizational culture of the Indian subsidiary 171 Analysis of variance: OCOM in the Indian subsidiary 184 Interrelationship between organizational culture and

organizational commitment 189 Results of Structural Equation Modeling (SEM):

Indian subsidiary 193 Conclusion 197

9 Transmission of Culture-commitment from HQs to Subsidiaries: A Multilevel Model 199

Purpose of multilevel modeling 199 Structural equation modeling: organizational culture in

HQ, Japan, and Thai subsidiary 203 Organizational culture: comparison between HQ, Japan, and

Indian subsidiary 206 Organizational commitment (OCOM): comparison

between HQ, Japan, and Thai subsidiary 210 Organizational commitment (OCOM): Comparison

between HQ, Japan, and Indian subsidiary 213 Test of Equality of covariance matrices: OCOM: HQ,

Japan, and Indian subsidiary 214 Comparison of organizational culture:

Thai and Indian subsidiaries 216 Article I. Test of equality of covariance matrices for six value

components of organizational commitment: Thai and Indian subsidiaries 218

Conclusion 220

10 Discussion 222 Philosophical position of the research: positivism 223 Organizational culture in the parent unit in Japan 226 Transmission of culture-commitment from HQ to

subsidiary operations 237 Comparison of organizational cultures: parent unit in

Japan versus Indian subsidiary 239 Organizational commitment: comparison between

HQ in Japan and the Indian subsidiary 245 Culture–commitment relationship in the Thai subsidiary 248 Conclusion 254

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Contents xi

11 Conclusion 255 Research achievements 255 Contributions of this research 256 Empirical contributions of the research 260 Contributions to practice 260

Appendices 267

References 296

Index 329

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xii

List of Tables

1.1 Key gaps in the related literature 8 1.2 Research questions 9 2.1 Theoretical models of organizational culture 14 2.2 Conceptual studies on organizational commitment 30 2.3 Conceptual studies on relationship between

culture and commitment 34 3.1 Multinational literature in chronological pattern 44 3.2 Conceptual studies on transmission of organizational culture

and commitment in HQ–subsidiary relationship literature 67 4.1 Advantages and disadvantages of stratified random sampling 72 5.1 Empirical studies with value-components of culture of OCP 88 5.2 Empirical studies with value-components of

commitment of OCQ 91 6.1 Study A: set of hypotheses examined 105 6.2 Characteristics of the sample of the parent unit, Japan 106 6.3 Descriptive statistics: OC, Japan 107 6.4 Composition of organizational culture, structural

regression: HQ, Japan 109 6.5 Covariance matrix: OC in HQ, Japan 110 6.6 Correlation matrix: OC in HQ, Japan 111 6.7 Analysis of variance: OC in HQ, Japan 112 6.8 Communalities matrix: OC in HQ, Japan 113 6.9 Total variance explained: OC in HQ, Japan 114 6.10 Component matrix: OC in HQ, Japan 115 6.11 Rotated component matrix: OC in HQ, Japan 116 6.12 Factor analysis: OC in HQ, Japan 116 6.13 Essentials of factor analysis: OC in HQ, Japan 118 6.14 KMO and Bartlett’s test: OC in HQ, Japan 118 6.15 Descriptive Statistics: OCOM in HQ, Japan 120 6.16 Composition of organizational commitment:

structural regression, SEM: HQ, Japan 122 6.17 Covariance matrix: OCOM in HQ, Japan 123 6.18 Correlation matrix: OCOM in HQ, Japan 123 6.19 Analysis of variance: OCOM in HQ, Japan 124 6.20 Communalities: OCOM in HQ, Japan 124

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List of Tables xiii

6.21 Total variance explained: OCOM in HQ, Japan 125 6.22 Factor analysis: OCOM in HQ, Japan 125 6.23 Essentials of factor analysis: OCOM in HQ, Japan 125 6.24 Component matrix: OCOM, Japan 126 6.25 Rotated component matrix: OCOM, Japan 127 6.26 KMO and Bartlett’s test: OCOM in HQ, Japan 128 6.27 Model summary, regression: OCOMJV2 in HQ, Japan 130 6.28 ANOVA, regression: OCOMJV2 in HQ, Japan 130 6.29 Coefficients, regression: OCOMJV2 in HQ, Japan 131 6.30 Model summary, regression: OCOMJV3 in HQ, Japan 131 6.31 ANOVA, regression: OCOMJV3 in HQ, Japan 131 6.32 Coefficients, regression: OCOMJV3 in HQ, Japan 132 6.33 Model summary, regression: OCOMJV4 in HQ, Japan 132 6.34 ANOVA, regression: OCOMJV4 in HQ, Japan 132 6.35 Coefficients, regression: OCOMJV4 in HQ, Japan 133 6.36 Model summary, regression: OCONJV5 in HQ, Japan 1346.37 ANOVA, regression: OCOMJV5 in HQ, Japan 134 6.38 Coefficients, regression: OCOMJV5 in HQ, Japan 134 6.39 Results of multiple regression analysis: OCOM in HQ, Japan 135 6.40 Factor scores regressions: standardized solution of SEM:

OC and OCOM in HQ, Japan 135 6.41 Correlation matrix of SEM: OC and OCOM in HQ, Japan 136 7.1 Study B: set of hypotheses examined 140 7.2 Characteristics of the sample of the Thai subsidiary 142 7.3 Descriptive statistics: OC, Thai subsidiary 143 7.4 Covariance matrix: OC, Thai subsidiary 145 7.5 Correlation matrix: OC, Thai subsidiary 145 7.6 Analysis of variance: OC, Thai subsidiary 146 7.7 Communalities: OC, Thai subsidiary 146 7.8 Total variance explained: OC, Thai subsidiary 147 7.9 Component matrix: OC, Thai subsidiary 148 7.10 Rotated component matrix: OC, Thai subsidiary 148 7.11 Factor analysis: OC, Thai subsidiary 149 7.12 Essentials of factor analysis: OC, Thai subsidiary 149 7.13 KMO and Bartlett’s test: OC, Thai subsidiary 150 7.14 Descriptive statistics: OCOM, Thai subsidiary 151 7.15 Covariance matrix: OCOM, Thai subsidiary 153 7.16 Correlation matrix: OCOM, Thai subsidiary 153 7.17 Analysis of variance 153 7.18 Communalities: OCOM, Thai subsidiary 154 7.19 Total variance explained: OCOM, Thai subsidiary 155

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xiv List of Tables

7.20 Component matrix: OCOM, Thai subsidiary 156 7.21 Rotated component matrix: OCOM, Thai subsidiary 156 7.22 KMO and Bartlett’s Test: OCOM, Thai subsidiary 157 7.23 Factor analysis: OCOM, Thai subsidiary 157 7.24 Essentials of factor analysis: OCOM, Thai subsidiary 158 7.25 Model summary, regression: OCOMTHV1, Thai subsidiary 160 7.26 ANOVA, regression: OCOMTHV1, Thai subsidiary 160 7.27 Coefficients, regression: OCOMTHV1, Thai subsidiary 160 7.28 Model summary, regression: OCOMTHV2, Thai subsidiary 161 7.29 ANOVA, regression: OCOMTHV2, Thai subsidiary 161 7.30 Coefficient, regression: OCOMTHV2, Thai subsidiary 161 7.31 Model summary, regression: OCOMTHV4, Thai subsidiary 162 7.32 ANOVA, regression: OCOMTHV4, Thai subsidiary 162 7.33 Coefficients, regression: OCOMTHV4, Thai subsidiary 162 7.34 Multiple regression analysis: Thai subsidiary 163 7.35 Factor scores regressions: standardized solution of SEM:

OC and OCOM, Thai subsidiary 165 7.36 Correlation matrix of SEM: OC and OCOM, Thai subsidiary 166 8.1 Study C: set of hypotheses examined 170 8.2 Characteristics of the sample of the Indian subsidiary 172 8.3 Descriptive statistics: OC, Indian subsidiary 173 8.4 Covariance matrix: OC, Indian subsidiary 174 8.5 Correlation matrix: OC, Indian subsidiary 175 8.6 Analysis of variance: OC, Indian subsidiary 176 8.7 Relative importance of factors: OC, Indian subsidiary 177 8.8 Eigen values and total variance: OC, Indian subsidiary 178 8.9 Component matrix: OC, Indian subsidiary 179 8.10 Rotated component matrix: OC, Indian subsidiary 179 8.11 KMO and Bartlett’s test: OC, Indian subsidiary 180 8.12 Factor analysis: OC, Indian subsidiary 180 8.13 Essentials of factor analysis: OC, Indian subsidiary 181 8.14 Descriptive statistics: OCOM, Indian subsidiary 181 8.15 Covariance matrix: OCOM, Indian subsidiary 184 8.16 Correlation matrix: OCOM, Indian subsidiary 184 8.17 Analysis of variance: OCOM, Indian subsidiary 185 8.18 Relative Importance of factors: OCOM, Indian subsidiary 185 8.19 Eigen values and total variance: OCOM, Indian subsidiary 186 8.20 Component matrix: OCOM, Indian subsidiary 187 8.21 Rotated component matrix: OCOM, Indian subsidiary 188 8.22 Factor analysis: OCOM, Indian subsidiary 188 8.23 KMO and Bartlett’s test: OCOM, Indian subsidiary 188

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List of Tables xv

8.24 Essentials of factor analysis: OCOM, Indian subsidiary 189 8.25 Model summary, regression: OCOMINV1, Indian subsidiary 191 8.26 ANOVA, regression: OCOMINV1, Indian subsidiary 191 8.27 Coefficients, regression: OCOMINV1, Indian subsidiary 191 8.28 Model summary, regression: OCOMINV4, Indian subsidiary 192 8.29 ANOVA, regression: OCOMINV4, Indian subsidiary 192 8.30 Coefficients, regression: OCOMINV4, Indian subsidiary 192 8.31 Multiple regression analysis: successful results,

Indian subsidiary 193 8.32 Factor scores regressions: standardized solution of SEM:

OC and OCOM, Indian subsidiary 195 8.33 Correlation matrix of SEM: OC and OCOM,

Indian subsidiary 196 9.1 Tests of equality of group means: OC in HQ, Japan and

Thai subsidiary 202 9.2 Log determinants: OC in HQ, Japan and Thai subsidiary 202 9.3 Test results: OC in HQ, Japan and Thai subsidiary 203 9.4 Eigen values: OC in HQ, Japan and Thai subsidiary 203 9.5 Wilk’s Lambda: OC in HQ, Japan and Thai subsidiary 203 9.6 Factor scores regression, SEM: OC in HQ,

Japan and Thai subsidiary 204 9.7 Tests of equality of group means: OC in HQ,

Japan and Indian subsidiary 206 9.8 Log determinants: OC in HQ, Japan and Indian subsidiary 207 9.9 Box’s M-test results: OC in HQ, Japan and Indian subsidiary 207 9.10 Summary of canonical discriminant functions:

OC in HQ, Japan and Indian subsidiary 207 9.11 Wilks’ Lambda: OC in HQ, Japan and Indian subsidiary 208 9.12 Factor scores regression, SEM: OC in HQ,

Japan and Indian subsidiary 210 9.13 Tests of equality of group means: OCOM in HQ,

Japan and Thai subsidiary 211 9.14 Log determinants: OCOM in HQ, Japan and Thai subsidiary 211 9.15 Test results: OCOM in HQ, Japan and Thai subsidiary 212 9.16 Eigen values: OCOM in HQ, Japan and Thai subsidiary 212 9.17 Wilk’s Lambda: OCOM in HQ, Japan and Thai subsidiary 213 9.18 Tests of equality of group means: OCOM in HQ,

Japan and Thai subsidiary 214 9.19 Log determinants: OCOM in HQ, Japan and Thai Subsidiary 215 9.20 Box’s M-test results: OCOM in HQ, Japan and

Thai subsidiary 215

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xvi List of Tables

9.21 Eigen values: OCOM in HQ, Japan and Thai subsidiary 215 9.22 Wilk’s Lambda: OCOM in HQ, Japan and Thai subsidiary 216 9.23 Tests of equality of group means: OC in Indian subsidary

and Thai subsidiary 216 9.24 Log Determinants: OC in Indian subsidiary and

Thai subsidiary 217 9.25 Box’s M-test results: OC in Indian subsidiary and

Thai subsidiary 217 9.26 Eigen values: OC in Indian subsidiary and Thai subsidiary 218 9.27 Wilk’s Lambda: OC in Indian subsidiary and Thai subsidiary 218 9.28 Tests of equality of group means: OCOM in

Indian subsidiary and Thai subsidiary 219 9.29 Log determinants: OCOM in Indian subsidiary and

Thai subsidiary 219 9.30 Box’s M-test results: OCOM in Indian subsidiary and

Thai subsidiary 219 9.31 Eigen values: OCOM in Indian subsidiary and

Thai subsidiary 220 9.32 Wilk’s Lambda: OCOM in Indian subsidiary and

Thai subsidiary 220 11.1 Theoretical contributions of research 258 11.2 Methodological contributions of research 259 11.3 Empirical contributions of research 261

List of Tables in Appendices

4A.1 Features of qualitative and quantitative research methods 267 4A.2 Characteristics of the basic research techniques used in

quantitative studies 268 4A.3 Characteristics of different types of surveys 269 5A.1 Organizational culture, some major measurement

instruments reported in literature 270 Questionnaire in English language 272 Questionnaire in Japanese language 275 Questionnaire in Thai language 278 6A.1 Details of reliability tests using Cronbach Alpha: HQ, Japan 281 6A.2 Analysis of variance (organizational culture): HQ, Japan 281 6A.3 Analysis of variance (organizational commitment):

HQ, Japan 282 6A.4 Goodness of fit statistics for structural equation modeling:

HQ, Japan 282

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List of Tables xvii

6A.5 Means and standard deviations: each factor comprising organizational culture in HQ, Japan 283

6A.6 Means and standard deviations: each factor comprising organizational commitment (OCOM) in HQ, Japan 285

7A.1 Details of reliability tests using Cronbach Alpha 287 7A.2 Analysis of variance (organizational culture) 288 7A.3 Analysis of variance (organizational commitment) 288 7A.4 Goodness of fit statistics for structural equation model 289 8A.1 Details of reliability tests using Cronbach Alpha 289 8A.2 Analysis of variance (organizational culture) 290 8A.3 Analysis of variance (organizational commitment) 290 8A.4 Goodness of fit statistics for structural equation model 291 9A.1 Goodness of fit statistics: structural equation model

Japan–Thailand: organizational culture 292 9A.2 Goodness of fit statistics: structural equation model

Japan–India: organizational culture 293 9A.3 Goodness of fit statistics: structural equation model

Japan–Thailand: organizational commitment 294 9A.4 Goodness of fit statistics: structural equation model

Japan–India: organizational commitment 295

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xviii

List of Figures

2.1 Factors comprising performance 28 4.1 Research design 71 5.1 Conceptual research model 93 5.2 Multilevel research model 94 6.1 Mean responses on eight factors comprising OC in

HQ, Japan 108 6.2 Mean responses on six factors comprising OCOM in

HQ, Japan 121 6.3 Relationship between OC and OCOM in HQ, Japan 137 7.1 Mean responses on eight factors comprising OC in

the Thai subsidiary 144 7.2 Mean responses on six factors comprising OCOM in the

Thai subsidiary 152 7.3 Relationship between OC and OCOM in the

Thai subsidiary 164 8.1 Mean responses on eight factors comprising OC in

the Indian subsidiary 174 8.2 Mean responses on six factors comprising OCOM in

the Indian subsidiary 183 8.3 Relationship between OC and OCOM in the

Indian subsidiary 194 9.1 Relationship between OC in HQ, Japan and OC in the

Thai subsidiary 205 9.2 Relationship between OC in HQ, Japan and OC in the

Indian subsidiary 209 10.1 OC in all three locations: HQ, Japan, Thai subsidiary and

Indian subsidiary 237 10.2 Organizational commitment as index of performance in all

three locations: HQ, Japan, Thai subsidiary and Indian subsidiary 240

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Acknowledgments

The idea of this book took shape while I was researching multina-tional companies as a part of my MBA study. As my background is in psychology, I felt a lot of things might be missing if I restricted myself to the economic and operations research aspects of the management systems. The human factor is the most essential part of management. This is particularly true of Japanese companies, which place emphasis on employee satisfaction and participate in rituals to bridge the gap between management and ordinary employees – a policy that may not exist in Western multinationals. I suspect that most experts still do not appreciate the Japanese system of management and its distinct human relationship system. The purpose of this book is to inform the readers of the core of that system.

I was supported in this research by a large number of senior execu-tives, presidents and vice-presidents, board members, plant managers, general managers, and finance managers from Mitsubishi, Toyota, Nissan, Suzuki, and Honda in Japan, Thailand, India, Australia, and Britain. I was supported in this research by Nagasaki University, partic-ularly Professor Dipak Basu. It would have been impossible to design the research or gather the data without this assistance. I was pleasantly surprised by their openness to discuss every issue in detail. My family members, Walter Bjichkian, Tanya Miroshnik, and little Anghelika have provided every incentive for my research for this book.

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Glossary of Abbreviations and Terminology

CP Corporate Performance HQ Headquarters JIT Just in Time MNC Multinational Company MRA Multiple Regression Analysis OC Organizational Culture OCAI Organizational Culture Assessment Instrument, the research

measurement instrument to assess organizational culture that proposed by O’Reilly et al. (1991)

OCAS Organizational Culture Assessment Scale, the research measurement instrument proposed by the author

OCB Organizational Citizenship Behavior OCOM Organizational Commitment OCOMAS Organizational Commitment Assessment Scale of the research

measurement instrument proposed by the author OCP Organizational Culture Profile , the research measurement

instrument to assess organizational culture proposed by O’Reilly et al. (1991)

OCQ Organizational Commitment Questionnaire , the research measurement instrument to assess organizational culture proposed by Mowday et al. (1979, 1982)

ODQ Organizational Description Questionnaire, the research measurement instrument to assess culture proposed by Bass and Avolio (1990, 1997)

RBV Resource-Based View , the theory proposed by Barney (1991, 2001, 2005)

RVS Rockeach Value Survey, the research measurement instrument to assess culture proposed by Rockeach. (1973)

SEM Structural Equation Modeling SS Sample Scale of the research measurement instrument

proposed by the author

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Glossary xxi

SVS Schwartz Value Survey, the research measurement instrument to assess culture proposed by Schwartz (1994, 1996)

TQM Total Quality Management OCINVi = OCInvi for all i = 1,… 8 OCINVi Organizational Culture India Value (i = 1,… 8) OCJPVi Organizational Culture Japan Value (i = 1,… 8) OCJVi = OCJVi for i = 1,… 8 OCOMJVi = OComJVi for i = 1,… 8 OCOMINVi Organizational Commitment India Value (i = 1,… 6) OCOMINVi = OComInvi for all i = 1,… 8 OCOMJPVi Organizational Commitment Japan Value (i = 1,… 6) OCOMTHVi Organizational Commitment Thailand Value (i = 1,… 6) OCOMTHVi = OComThvi for all i = 1,… 8 OCTHVi Organizational Culture Thailand Value (i = 1,… 8) OCTHVi = OCThvi for all i = 1,… 8

Definitions of Values as Factors composing the variable ‘Organizational Culture’:

OCJV1 = Innovation; OCJV2 = Entrepreneurship; OCJV3 = Decisiveness; OCJV4 = Stability & Security; OCJV5 = Supportiveness; OCJV6 = Emphasis on Performance; OCJV7 = Team Spirit; OCJV8 = Preciseness

Definition of values as factors composing the variable ‘Organizational Commitment’:

OCOMJV1 = Emotional Attachment; OCOMJ2 = Value Attachment; OCOMJV3 = Environment Attachment; OCOMJ4 = Sense of Sacrifice; OCOMJV5 = Rational Attachment; OCOMJV6 = Ego Orientations