The Impact of National Culture on Organizational Culture

National culture plays a big role in shaping how organizations work. People from different countries have different values, behaviors, and ways of working. This means that companies operating in multiple countries must understand and respect cultural differences to succeed (Hofstede, 1980).

This blog will explore how national culture affects organizational culture, using Hofstede’s Cultural Dimensions Theory (1980) to explain key differences. We will also look at real-world examples of companies like IKEA and Toyota to see how they adapt their organizational cultures in different countries.

What is National Culture?

National culture refers to the values, beliefs, and behaviors that are shared by people from the same country (Trompenaars & Hampden-Turner, 1997). These values shape how people communicate, make decisions, and interact at work (Schneider & Barsoux, 2003).

Organizations often reflect the culture of their home country, but when they expand internationally, they must adjust to different cultural expectations (Hofstede, 2001).

Hofstede’s Cultural Dimensions: Understanding Differences

Geert Hofstede (1980) studied national cultures and identified six key dimensions that explain how cultures differ. These dimensions help businesses understand workplace behaviors in different countries.

1. Power Distance (PDI) – How much inequality is accepted

• High Power Distance: People accept that leaders have more power (e.g., China, Russia). Employees expect clear hierarchy and strong leadership (Hofstede, 2010).

• Low Power Distance: People prefer equal power and open communication (e.g., Sweden, Denmark). Employees feel comfortable questioning managers (Minkov & Hofstede, 2012).

Example: Toyota (Japan) has a structured hierarchy where managers make key decisions. However, IKEA (Sweden) encourages open discussions between employees and managers.

2. Individualism vs. Collectivism (IDV) – Personal goals vs. group goals

• Individualist Cultures: Employees focus on personal success and independence (e.g., USA, UK) (Hofstede, 1980).

• Collectivist Cultures: People value teamwork, harmony, and loyalty (e.g., Japan, China) (Triandis, 1995).

Example: Google (USA) promotes individual creativity, allowing employees to work on independent projects. In contrast, Huawei (China) encourages team-based decision-making.

3. Uncertainty Avoidance (UAI) – How comfortable people are with risk

• High Uncertainty Avoidance: Employees prefer clear rules and job security (e.g., Germany, Japan) (Hofstede, 2001).

• Low Uncertainty Avoidance: Employees are comfortable with change and flexible work environments (e.g., Singapore, UK) (Schneider & Barsoux, 2003).

Example: German companies like BMW have structured processes and clear policies. In contrast, startups in Silicon Valley (USA) encourage risk-taking and innovation.

4. Masculinity vs. Femininity (MAS) – Competitive vs. cooperative culture

• Masculine Cultures: Value competition, achievement, and success (e.g., USA, Japan) (Hofstede, 1980).

• Feminine Cultures: Value collaboration, work-life balance, and employee well-being (e.g., Sweden, Netherlands) (Gelfand et al., 2007).

Example: Goldman Sachs (USA) rewards employees based on individual performance. In contrast, IKEA (Sweden) focuses on teamwork and employee satisfaction.

5. Long-Term vs. Short-Term Orientation (LTO) – Future focus vs. present focus

• Long-Term Orientation: Employees focus on future rewards and long-term success (e.g., China, Japan) (Hofstede, 2010).

• Short-Term Orientation: Employees prioritize quick results and traditions (e.g., USA, France) (Minkov & Hofstede, 2012).

Example: Samsung (South Korea) makes long-term investments in research and development, while fast-food chains in the USA focus on quick profits and immediate success.

6. Indulgence vs. Restraint (IVR) – Fun vs. discipline at work

• Indulgent Cultures: People value fun, freedom, and personal happiness (e.g., Brazil, USA) (Hofstede, 2010).

• Restrained Cultures: People focus on discipline and self-control (e.g., China, Russia) (Minkov, 2013).

Example: Google (USA) offers fun workspaces, free food, and relaxation areas. In contrast, companies in China emphasize serious work environments and strict discipline.

How Multinational Companies Adapt to Different Cultures

Global companies must adjust their organizational culture to fit local values. Here’s how some companies do it:

IKEA: A Swedish Company Adapting to Different Cultures

• In Sweden, IKEA promotes flat hierarchies and teamwork (Jonsson & Foss, 2011).

• In China, IKEA changed its marketing and store design to fit local customer preferences (Wu & Gereffi, 2018).

• In the USA, IKEA adjusted store layouts and customer service to match American expectations (Burt et al., 2016).

McDonald's: A Global Brand with Local Adaptations

• In India, McDonald’s removed beef from its menu to respect local religious beliefs (Ritzer, 2019).

• In Japan, it offers smaller portion sizes to match Japanese eating habits (Watson, 2006).

• In France, it created stylish restaurant designs to fit French dining culture (Watson, 2006).

Why Understanding National Culture Matters

When companies ignore national culture, they face serious problems:

• Cultural misunderstandings can cause conflicts between employees (Thomas, 2008).
• Poor leadership decisions may lead to employee dissatisfaction (Gelfand et al., 2007).
• Marketing failures happen when companies do not respect local customs (Ritzer, 2019).

Example: In 1999, Walmart failed in Germany because its strict American-style management did not fit Germany’s preference for independent work styles (Christopherson, 2007).

Conclusion

National culture shapes how people work, communicate, and interact in organizations. Companies must understand and respect these cultural differences to succeed globally. Using Hofstede’s Cultural Dimensions, businesses can create better workplaces, stronger teams, and higher employee satisfaction.

By learning from global companies like IKEA, McDonald's, and Toyota, organizations can develop flexible cultures that fit different markets while staying true to their core values.

References

• Burt, S., Johansson, U. and Thelander, Å. (2016) 'Standardized marketing strategies in retailing? IKEA’s marketing strategies in Sweden, the UK and China', Journal of Retailing and Consumer Services, 28, pp. 152-163.
• Christopherson, S. (2007) 'Barriers to 'US style' lean retailing: the case of Wal-Mart's failure in Germany', Journal of Economic Geography, 7(4), pp. 451-469.
• Gelfand, M.J., Erez, M. and Aycan, Z. (2007) 'Cross-cultural organizational behavior', Annual Review of Psychology, 58, pp. 479-514.
• Hofstede, G. (1980) Culture’s consequences: International differences in work-related values. Beverly Hills, CA: Sage.
• Hofstede, G. (2001) Culture’s consequences: Comparing values, behaviors, institutions, and organizations across nations. 2nd edition. Thousand Oaks, CA: Sage.
• Hofstede, G. (2010) Cultures and organizations: Software of the mind: Intercultural cooperation and its importance for survival. 3rd edition. New York: McGraw-Hill.
• Jonsson, A. and Foss, N.J. (2011) 'International expansion through flexible replication: Learning from the internationalization experience of IKEA', Journal of International Business Studies, 42(9), pp. 1079-1102.
• Minkov, M. (2013) Cross-cultural analysis: The science and art of comparing the world’s modern societies and their cultures. Thousand Oaks, CA: Sage.
• Minkov, M. and Hofstede, G. (2012) 'Hofstede’s sixth dimension: A new pole of the model?', Journal of Cross-Cultural Psychology, 43(1), pp. 3-14.
• Ritzer, G. (2019) The McDonaldization of society. 9th edition. Los Angeles, CA: Sage.
• Schneider, S.C. and Barsoux, J.L. (2003) Managing across cultures. 2nd edition. Harlow: Pearson Education.
• Thomas, D.C. (2008) Cross-cultural management: Essential concepts. 2nd edition. Thousand Oaks, CA: Sage.
• Trompenaars, F. and Hampden-Turner, C. (1997) Riding the waves of culture: Understanding diversity in global business. 2nd edn. London: Nicholas Brealey Publishing.
• Triandis, H.C. (1995) Individualism and collectivism. Boulder, CO: Westview Press.
• Watson, J.L. (2006) Golden arches east: McDonald’s in East Asia. 2nd edition. Stanford, CA: Stanford University Press.
• Wu, X. and Gereffi, G. (2018) 'IKEA and its suppliers: Case study on corporate social responsibility', Journal of Business Ethics, 153(4), pp. 1071-1085.