In an increasingly interconnected and globalized world, an ever-growing phenomenon is the international dimension of companies, dealing with foreign markets and with a perspective which is more and more defined as “multi-domestic.”
An increasingly complex international environment is forcing organizations to respond with constant changes, starting with the business organization itself, which often must change its culture in its whole in order to adapt to markets.
But what is the organizational culture?
- It is a combination of organizational climate, leadership style and values
- It is the way people act and think within an organization
- It is the way employees and contractors interact with each other and the environment in which they work
- It is a set of shared values, norms and customs that are transmitted from one working generation to the next within the organization
“Culture eats strategy for breakfast” (Peter Drucker).
Corporate culture is more important than strategy because it concerns the “quality” of the relationship between people and the company. A company can have the best strategy, but if it does not have a consistent and consequential culture to execute it, it is doomed to fail.
Some examples of corporate cultural models from which to choose:
- formal / informal
- hierarchical / streamlined
- procedure-oriented / flexibility-oriented
- marketing-oriented / production-oriented
- creativity-oriented / control-oriented
- cooperation-oriented / internal competition-oriented
Culture depends on the values in which the leadership believes. These values permeate the entire organization, and if the leadership changes, these values may change. In addition, corporate culture reflects the values of the country and civilization in which the company is located.
It is not possible to say that one corporate culture is better than another over time. There are several, and there has not been, throughout history, one type of culture that has permanently enabled it to perform better than the others.
Corporate culture must inevitably adapt and evolve over time. A company’s success depends on this evolution, especially in an increasingly complex world where the word “uncertainty” is now replaced by the word “volatility.”
Today a company needs balance between different cultural traits and different trends, such as “cooperation” and “competition” or “method” and “creativity.” Today “diversity” and “inclusion” are the new mantras.
Changing, or even adapting, corporate culture takes time and effort, as it is difficult for people to change, or adapt, how they approach work. It is about the sedimentation of organizational behaviors. Change management is one of the main (new) disciplines.
Employer branding is the ability of a company to attract and retain people. And the success of any strategy depends on people.
Top leadership must identify and support the development of the culture that enables the company to succeed. Top leadership must then guard that culture so that it maintains its core traits and ensure that it evolves over time so that success continues.
Richard Branson, founder of Virgin, said, “If you take care of your employees, they’ll take care of your customers.”
The level of trust is a crucial element in the development of a company’s culture. With trust comes delegation; with delegation comes responsibility.
A good culture must be able and ready to adapt to changes in the business environment and anticipate them. Times of crisis bring changes in strategy. It is appropriate to think about introducing new people to “save” the company, and this often involves cultural change. Change should not be understood as an extraordinary event, but rather as a constant in corporate life.
Leaders should spread a flexible mindset that overcomes the fear of finding oneself in a different situation from the current one:
- Identification of the dominant features of the existing culture, to identify strengths and weaknesses, to be compared with the desired ones.
- Analysis of critical issues, elements of resistance to change, with respect to the objectives set.
- Definition of an organizational and behavioral model in line with the cultural reorientation to be implemented, and a new leadership model to understand the needs for change and to make it concrete.
Through the study of cultural differences related to managerial activities, Dutch psychologist Hofstede’s model analyzes national culture and how it influences the work of organizations.
This is cross-cultural management, which expands the scope of domestic management to embrace the international and multicultural sphere.
Hofstede outlines culture through five dimensions, represented by the following cultural influences:
In recent times a sixth dimension, indulgence, has been added.
One of the most important changes is induced by the choice to undertake a process of internationalization. Globalization has confronted companies with the need to face radical changes in their strategy. The decision to undertake a process of internationalization involves a high degree of flexibility to cope with the constant changes in a global market.
Management must be good and sensitive to sense the best combination of cultural influences to adequately support an internationalization strategy.
Internationalization is certainly one way in which a company can create value and increase its competitive advantage over its competitors. However, it is necessary to be aware that, especially when an SME wants to be present in foreign markets in forms beyond export, it must go through a necessary and profound process of transformation, which must start from within, that is, from the company’s own culture.
In conclusion, corporate culture is a crucial element in the long-term success and sustainability of a business. To create and maintain a strong and positive culture, it is important that companies identify and promote their values and develop a work environment that supports them.