Cultural Challenges Facing Organizations Operating in China - Literature review Example

Cultural challenges facing organizations operating in China (Name) (Institution) (Module) (Course) (Instructor’s Name) (Date of submission) Table of contents Introduction ……………………………………………. What is culture? …………………………………………… Communication and power distance …………………… Networking/guanxi ………………………………………. Knowledge management and sharing ………………… HP case ………………………………………………… Conclusion ………………………………………………. References Introduction In this age of globalization, more and more organizations are exploring foreign markets and relocating their operations to foreign countries for proximity to the market and for economic reasons among others. As they move, they carry along with tem their national culture which has elements of national culture which in most cases is different from the host country. These cultural differences need to be managed well for the benefit of the organization. Adidam, Gajre and Kejriwal (2009) say that, “The causes of business failure internationally are rarely financial, economic or technical. Failure arises from serious errors and misjudgment concerning the social, cultural, and political environment of the international countries” (p.667). Many western organizations have been setting up labor intensive production operations in China to take advantage of cheap labor and conducive government policy. This exposes these organizations to the Chinese culture which differs immensely with the western culture. For them to perform well, these organizations must engage cultural considerations of the host country in running the organizations thereby posing a new set of challenges. It is on this backdrop that this paper discusses cultural challenges that organizations operating in China are likely to face and discusses a case study of Hewlett Packard China. What is culture? The universally accepted definition of culture is tat it’s a peoples unique way of doing thins (Mor-Barak 2005; Firoz, Magrrabi, & Kim 2002). The contemporary perception by many managers is that cultural diversity has to do with language difference which is very narrow to be effective in managing cultural differences. Mor-Barak (2005) says that culture transcends language in many ways. He starts off by quoting Krober and Kluckohn (1952) who define culture by saying that Culture consists of patterns, explicit or implicit, of and for behavior acquired and transmitted symbols, constituting the distinctive achievements of human groups, including their embodiments in artifacts; the essential core of culture consists of traditional (historically derived and selected) ideas and especially their attached values; culture systems may, on one hand, be considered as products of actions, on the other as conditioning elements of further action (p. 169). Hofstede (1997) as cited by Mor-Barak (2005) says that culture is the software of the mind in that separates one group of people from the other without necessarily showing the physical differences. This ‘software’ does not however exclusively determine the behavior of people but rather delineate anticipations and expectations and behavior within a specified social context. Culture determines how managers and employees in general perceive a problem and develop solutions to the problem. In support of this are social anthropologists view that societies face the same problems only that solutions and answers to these problems differ. Therefore, organizations cannot run away from culture but can only manage it for their own benefits (Stary 2008; Firoz, Magrrabi, & Kim 2002). Communication and power distance Phatak Bhagat and Kashlak (2005) claim that managerial communication is organizations is greatly influenced by cultural background and hence the need to be aware of the needs of efficient communication. In this age of globalization, labor mobility and diversity in the workplace, managers and organizations in general need to be more conscious of the diverse communication needs that are brought in by different cultural backgrounds and diversity in the workplace. Cross-cultural communication is faced with potential barriers that are related to verbal and non-verbal methods of relaying meanings that may or may not be shared by all the participants. Managers in China should also be aware non-verbal communication that is not translatable. Again translation is challenged in that some meaning is lost in the process of communication. As such, managers should at least learn the Chinese language in an attempt to manage locally (Firoz, Magrrabi & Kim (2002). Employees perceive management’s communication efforts differently guided by their culture which is a manifestation of the power distance. The Chinese national culture is faced with a huge power distance in that subordinates feel existentially different from their seniors. As such, they tend to obey and take seriously authority. On the other hand, Chinese people who are awarded senior positions tend to be dictatorial as they feel existentially superior to their subordinates. As such, they adopt a very harsh and often rude manner of addressing their subordinates and do not accept knowledge sharing from their juniors (Fontaine 2007). Networking/guanxi This is a major problem facing managers running organization in China. Vanhanocker (2002) writes that in China business deals grow out of relationships unlike in the western world where relationships develop after dealing with someone. The Chinese people define an individual according to relations and the people that one knows unlike in the west where relationships help one in doing business. Vanhanocker (2002) gives an example of a US financial consulting firm operating in China that hired a relative to the country’s finance minister in the hope that the man would be an asset to the firm. However, bank feared awarding the contract to the consulting firm as it was somehow related with the finance minister and would have created some political difficulties for the minister and possible perception of favoritism. In this case, the relative to the finance minister was a liability to the firm as opposed to the earlier perception that he would be an asset. Vanhanocker (2002) says this is the dark side of Guanxi in China. Another consequence of guanxi is that it contradicts business ethics as it is mired by payback and reciprocity. A deal done to a relation is expected to be paid back through another deal where possible. This encourages favoritism and some actions may contradict organizational policy. As such, individuals are caught up in a web of relationships in a bid to be positioned well to obtain favors and deals from friends. Vanhocker (2002) says that the best way to manage this is to trade of efficiency and autonomy for personal dependence. He says many western managers misinterpreted the friendship and relations in the Chinese context where favors are expected but might also be a liability. Nonetheless, companies cannot afford to dismiss guanxi as a potential liability. He proposes that managers should develop strategies on how to deal with indebtedness such as neutrality and complementarity. Furthermore, in the same way that western organizations promote networking, organizations in China should also promote guanxi and manage it strategically. Knowledge management and sharing Generally, Chinese decision making culture, both at the organizational and government level is somewhat implicit, leaning towards analogical and correlative thinking as opposed to rational and analytic thinking (Chang et al 2008). This narrow view in management leads to limited positions for firms in the manufacturing industry which fail to gather relevant information that is necessary for transformation. Consequently, organizations tend to rely more on building upon existing decisions and projects rather than making far reaching changes in the whole process. This implies that organizations in the manufacturing industry are slow at responding to various requirements and trends in the market (Chang et al 2008; Tong, J. & Mitra, A. 2009). Again, Lu, Tsang and Peng (2008) explicitly state that tacit knowledge sharing is a prerequisite for innovation in organizations which places organization based in China at a disadvantage due to the Chinese people individualistic nature that prohibit knowledge sharing. Dalkir (2005) asserts that there are discrepancies in the perception of work by the management and the individuals involved in the work which create problems in the sharing of knowledge by individuals. He says that individuals are likely to share knowledge that is only described in their job description and nothing outside that. Oftentimes, job descriptions do not give a clear picture of what the actual work in reality entails and the potential scope of tacit knowledge possessed by employees in certain positions (Barnes 2002). Professional interests assist in further elaboration of job descriptions to include a wider job scope than that assumed by the organization going by the job description. There exists inherent tension between the value of tacit knowledge and its elusiveness on the other hand. Dalkir (2005) says that knowledge in itself is elusive based on the fact researches and surveys have to be conducted to gather information or to try and understand a certain phenomenon and gain knowledge. But defining knowledge being a problem, Stary (2008) and Fontaine (2007) introduce another aspect saying that one’s explicit knowledge which is what we know and can tell is different from tacit knowledge which often is what one knows but cannot tell. Therefore, the core problem lies in some knowledge being implicit. Dalkir (2005) says that such knowledge is only made explicit through metaphors and analogies during social interaction other than the in the workplace. This implies that, for organizations to make use of tacit knowledge, it has to be externalized first. Individuals however, have to make tacit knowledge explicit for use by organizations. First, individuals are not even aware that they possess tacit knowledge. Secondly, many individuals do not have the personal motivation to share tacit knowledge and thirdly because individuals are not ready to lose their competitive advantage gained out of possessing the knowledge (Fontaine 2007) HP case Early in 2001, HP China rolled out an expansive KM system to assist the innovation machinery of the firm and for efficient management. The introduction of the KM system followed the common top-down approach of introducing KM version in use at headquarters to foreign firms, in this case, HP China. However, the Chief Knowledge Officer at HP China (CRO), Gao Jianhua, had foreseen the problem posed by this method in other firms. He thus opted for a harmonized approach in appreciation of the Chinese culture. However, this new customized approach did no last long as it collapsed after just more than two years (Lu & Leung 2006). The new system was based on knowledge documentation; information relevant to management and development of the firm was organized in files which all employees could access. This information was standardized in the belief that it would increase efficiency and facilitate easy knowledge transmission. A code of work behavior was developed for all levels and all employees. All employees were trained on the new code of behavior at the workplace. Anew set of rules and regulations that corresponded with the new code of behavior was also set up (Lu & Leung 2006). The idea of sharing tacit knowledge under social environments was exploited by the management through the introduction of a book reading association consisting of over seventy groups. Members of each group were supposed to read books relevant to the occupational knowledge and recommend some to their group members. The purpose of this was help to develop a common base of knowledge among group members that would also encourage sharing of organizational knowledge and information (Lu & Leung 2006). The Chinese people believe in the protection and hoarding of information as a national culture (Firoz, Magrrabi & Kim, (2002). There is a common belief that one’s expertise at certain things should not be shared which is the reason why the management at HP sought to induce sharing of professional knowledge among workers by first introducing them to sharing of information pertaining to books in an informal setting. Burrow, Drummon and Martison (2005) say “Consistent with their cultural traditions, the Chinese favor informal and implicit forms of communication, preferring to transfer knowledge through interpersonal contact rather than through formal and/or written means” (p 75). As such, all manufacturing firms operating in China will be faced with the challenge of employees not wiling to share information. The functioning of any KM system is highly dependent on the cultural environment. Organizations have the option of investing heavily in IT to support KM or create a culture of information sharing. Given that China has computer literacy and a culture that glorifies information and knowledge hoarding, organizations are forced to adopt two pronged approach based on creating a KM friendly environment by encouraging knowledge sharing and also emphasizing on IT skills. Burrows, Drummon and Martison (2005) observe that major highly performing companies in China such as Lenovo have developed unique knowledge sharing cultures within their organizations in order to facilitate knowledge sharing. Unfortunately, implementing such as culture is not an easy task. A number of authors argue that organizational culture is derived from national culture (Burrows et al 2005; Tong & Amitra 2009) implying that introducing a knowledge sharing organizational culture will receive resistance from many quarters. Conclusion and recommendations Organizations that chose to ignore cultural issues in new markets choose failure. In the case of China, it is apparent that the country differs very much from the western culture both at the business level and the social level. Organizations need to implement ways to manage knowledge that are adaptive to the national culture of China. However, it is apparent that managers cannot embark on changing the Chinese culture in the workplace but have the option of directing and utilizing the culture in a beneficial way. The hoarding to knowledge is however, the greatest problem which presents the biggest problem to organizations operating in China. There is need to more research on ways to encourage information tacit knowledge sharing at a professional level in order to fuel innovation. References Adidam, P. T., Gajre, S. & Kejriwal, S. (2009). Cross-cultural competitive intelligence strategies. Marketing Intelligence & Planning Vol. 27 No. 5, 2009 pp. 666-680 Barnes, S. (2002). Knowledge management systems: theory and practice. Sydney: Cengage Learning Burrows, B. Drummon, D. and Martison, M. (2005). Knowledge management in China. Communications of the ACM. Vol. 48, No. 4 73-76 Chang, H. et al (2008). Factors affecting the transfer of inter-organizational systems to china: a case study of high-tech enterprises. Association for Information Systems Dalkir, (2005). Knowledge management in theory and practice. London: Butterworth- Heinemann, Firoz, N. M., Magrrabi, A. S. & Kim, K. H. (2002). Think globally manage culturally International journal of consumer marketing.12 (3/4) 32-50 Fontaine, R. (2007). ‘Cross-cultural management: six perspectives.’ Cross cultural management; an international journal. 14(2) 125-135 Lu, Y., Tsang, W.K. & Peng, M. W. (2008). Knowledge management and innovation Strategy in the Asia Pacific: Toward an institution-based view. Asia Pacific journal of management. 25 (1) 361–374 Lu, L. & Leung, K. (2006). Challenges to KM at Hewlett Packard China. http://findarticles.com/p/articles/mi_qa5362/is_200603/ai_n21390989/?tag=content;col1 Mor-Barak, F. (2005). Managing diversity: toward a globally inclusive workplace. New York: Sage Phatak Bhagat and Kashlak (2005). International management: managing in a diverse and dynamic global environment. New York/: McGraw Hill Stary, C. (2008). Knowledge management: innovation, technology and cultures: proceedings of the 2007 International Conference on Knowledge Management, Vienna, Austria, 27-28 August 2007. New York: World Scientific Tong, J. & Mitra, A. (2009). Chinese cultural influences on knowledge management practice. Journal of knowledge management. vol. 13 no. 2 2009, pp. 49-62, Vanhocker, W. R. (2004) Guanxi networks in China: How to be the spider, not the fly. The China Business Review. 31(3) 48-53 Read More