By Dr. Malika Richards, Associate Professor of Business and Management
As firms expand their operations globally, one of their main challenges is maintaining shared corporate values–the principles used to make judgments about what is important in the way they conduct business–with their subsidiaries.
While geographic and cultural distances create barriers for the transmission of shared corporate values, the importance of engendering these values, and of making them explicit, grows as distance and diversity increase. Shared corporate values are a measure of a multinational’s effectiveness in terms of control of its subsidiaries.
Researchers at Penn State Berks have found a positive relationship between this “headquarters control” and subsidiary performance in a Malaysian and Singaporean sample.
While it may be ideal, from the perspective of headquarters, to develop a shared corporate culture and standardized human resources policies throughout a company’s overseas subsidiaries, this has not always been realistic in the past.
HOW DOES A COMPANY KNOW WHEN IT MIGHT BE APPROPRIATE TO SHIFT FROM COUNTRY-SPECIFIC HUMAN RESOURCES POLICIES TO THOSE THAT ARE MORE IN LINE WITH CORPORATE POLICIES?
One goal of the research conducted at Penn State Berks is to investigate the work values of both present and future managers in diverse societies in order to assist corporate managers when making predictions and plans regarding how to best direct their future organizations.
Penn State Berks researchers have focused on three different types of values: universalism, individualism, and collectivism. The universalism value includes concepts such as unity with nature, equality, and social justice. In individualist cultures, priority is given to the task at hand and individualist cultures tend to think of the business relationship in calculative terms rather than in terms of loyalty, trust, and obligations. In collectivist cultures, priority is given to relationships.
Are future managers different from current managers across cultures? If so, along which values dimensions are they different and what external macro-level influences might explain the differences?
The cultural differences theory has received the most attention in the cross-cultural management literature as the explanation for differences in the global business environment. This theory hypothesizes that culture explains differences in values across members of the society, regardless of personal demographics, such as life stage or age.
The life stage theory proposes that there is a universal developmental sequence throughout the human life cycle. The two age groups most relevant in the workforce are early adulthood and middle adulthood. In early adulthood, one is concerned with success in personal and business relationships; this life stage is one of experimenting and making important decisions about career, lifestyle, and personal relationships. In middle adulthood, one is concerned with being a stable, responsible, compassionate, and productive member of society; this life stage is one of personal mastery and assuming leadership in family, work, and community social systems.
As younger adulthood is associated with learning to be self-sufficient and striving to scale the corporate ladder faster than one’s co-workers, we expect that younger individuals will attribute higher importance to individualism values than will older, middle- adulthood managers. With middle adulthood epitomized as being concerned with being a stable, responsible, compassionate, and productive member of society, older managers should attribute higher importance to collectivism and universalism values than would younger individuals.
Business management literature, while clearly acknowledging the importance of life stages, has empirically tested life stage theory on a limited one-country or two-country basis, but not on a multi-country level, with two generations in each country.
Penn State Berks researchers have teamed up with colleagues across the world to investigate the impact of life stage, generations, and culture on current and future managers’ values. Our findings indicate that both the cultural differences theory and life stage theory contribute significantly to our understanding of work values and behaviors. While the long-established cultural differences theory significantly contributes to our understanding of work values, it is clearly not sufficient to explain work values differences in the global context.
Do rapidly changing external macro influences have differing effects on younger and older age groups? Is there an internet technology effect?
The proliferation of the Internet around the world has been a globally pervading technological influence. Penn State Berks researchers focus on this phenomenon to assess its impact on values. Previous research has found that individualism and universalism values are more highly regarded in countries that have higher economic and technological development levels, as well as political system democratization.
Conversely, collectivism values are more important in lesser developed countries with more autocratic political systems. The transformation from a lesser developed to a developed society likely involves a transformation of individual values.
Penn State Berks researchers investigate whether the values held by younger individuals are more similar than those held by older individuals across cultures. The crossvergence perspective suggests that culture and industrialization will interact to produce a new value system that is a combination of both forces. Evidence of this crossvergence effect is starting to build.
For instance, in one study researchers have found that, while there were no significant differences between the younger and older U.S. managers in their views of organizationally beneficial behavior, younger Thai managers were more similar to the U.S. group than to the older Thai managers.
WHAT DEFINES A GENERATION COHORT?
In addition to the cultural differences and life stage theories, Penn State Berks researchers investigate the generation cohort theory by asking the question of what defines a generation cohort. Our primary finding is that the importance of political conditions during a generation cohort’s formative years is critical in ascertaining the personal value orientations of current and future managers. Economic conditions during a generation cohort’s formative years are somewhat less important in determining personal value orientations.
The study of cross-cultural values has never been more important than it is now, and will continue to be in the future. Economically emerging and politically transforming countries–such as China, Brazil, India, and Russia–have led to a significant acceleration in globalization. As the home markets of developed economies become mature and saturated, corporations seek opportunities for sales growth and lower-cost production elsewhere in the world, creating multinational firms that need to develop a global mindset to understand an increasingly diverse workforce and customer base.
Developing a global mindset in Penn State Berks students is one of my goals in my International Management class. To that end, I will spend the spring semester teaching in Taiwan, the Republic of China, as a Fulbright Scholar. I specifically applied for this environment because of China’s role in the global economy. This experience will allow me to share with my students at Penn State Berks a greater understanding of Chinese culture, which may prove to be very useful to them in their future in the global marketplace.