Culture and its Effects on Organizations

Societal Culture

As generally understood, the culture of a society comprises the shared values, understandings,
assumptions, and goals that are learned from earlier generations, imposed by present members of
a society, and passed on to succeeding generations. This shared outlook results, in large part, in
common attitudes, codes of conduct, and expectations that subconsciously guide and control
certain norms of behavior. One is born into, not with, a given culture, and gradually internalizes
its subtle effects through the socialization process. Culture results in a basis for living grounded
in shared communication, standards, codes of conduct, and expectations. Over time, cultures
evolve as societies adapt—by choice or otherwise—to transitions in their external and internal
environments and relationships. In 2011, for example, people in Egypt brought about political
and cultural changes as a result of economic conditions and oppression and being increasingly
exposed through social media to what they perceived to be a better way to live within systems in
democratic societies. Globalization, in all its forms of personal and business contacts and
information crossing borders, brings about changes that result in cultural diffusion.

Organizational Culture

Compared to societal culture, which is often widely held within a region or nation,
organizational culture varies a great deal from one organization, company, institution, or group
to another. Organizational culture represents those expectations, norms, and goals held in
common by members of that group. For a business example, consider the oft-quoted comparison
between IBM, considered traditionally to be very formal, hierarchical, and rules-bound, with its
employees usually in suits, and Apple Computer, whose organizational culture is very organic, or
“loose” and informal, with its employees typically wearing casual clothes and interacting
informally. Research shows that societal culture tends to be stronger than organizational culture,
so that employees working with or for a “foreign” company may not easily fall into the new
organizational culture. Clearly there is a relationship between organizational culture and societal
(national) culture, both of which can cause disputes in the workplace at all levels, including the
management of cross-border alliances.

Such was the case with the DaimlerChrysler AG alliance—largely contributing to the downfall
of the alliance in 2007. As observed by Syed Anwar: In the auto industry, Daimler-Benz was
viewed as a conservative and rigid company regarding its corporate bureaucracy, product
development, and quality standards—a corporate culture reflective of Germany’s national
culture. On the other hand, Chrysler’s corporate culture was typical American—informal,
outward oriented, and somewhat less rigid in its operations and more risk-taking. Daimler-Benz
lacked exposure to the American way of management and business practices. The cultural
mismatch eventually created problems in the areas of future planning, supervisory board,
research and development, expatriate management, executive salaries, and labor relations.
Religion and workplace

Since the basis of a religion is the shared beliefs, values, and institutions, then it is closely
aligned with the accepted underpinnings of societal culture; thus religion and culture are
inextricably linked. As such, religion underlies both moral and economic norms and influences
everyday business transactions and on-the-job behaviors. Here we note specifically that
managers in the home country or abroad must recognize both the legal religious rights in the
workplace and also the value of such diversity in the workplace. Days off for religious holidays,
accommodation for prayers, dietary requirements, etc., are the more obvious considerations. In
addition, foreign managers abroad must be particularly sensitive to the local religious context
and the expectations and workplace norms of employees and others, because those managers will
be immersed within that context in dealing with employees, clients, suppliers, and others. Failure
to do so will minimize or negate the goals of the firm in that location. Most readers of this book
are familiar with the major religions of the world, and an in-depth discussion of religions is
beyond the focus here. (The four religions with the largest number of followers are:

Christianity, with 33.1% of world population; Islam, with 20.4%; Hinduism, with 13.5%; and
Buddhism, with 6%. These figures are approximate, since of course they are changing every
day.)25 What we do focus on as we progress through the chapters are the ways in which religion
intersects with culture and affects business interactions, expectations, operations, motivations,
and leadership, including attitudes toward work, time, ethics, and decision-making.

Hinduism is over 5,000 years old and typically involves worship of many gods. Prayer is
usually a private matter in one’s own home. The traditional caste system, now illegal, still tends
to impact the labor markets. As another example of the effects of religion in the workplace, a
Western manager operating in some areas or enterprises in India might note the employees’ lack
of sensitivity to time. As noted by Agam Nag, that attitude is attributed to the religious belief and
the philosophical background. “It has been variously traced to the concept of immortality of soul
and reincarnation in Hinduism that gives a sense of infiniteness to life and hence time.” Nag
explains that the lack of sensitivity to time cuts across all religions in India, including the endless
variations of Hinduism as well as many other religions such as Islam, Christianity and Sikhism.
Clearly, religious belief is only one dimension of Indian culture to explain the way they view
time. However, we can also observe the influence and competitiveness of foreign companies
operating in the cities in India, such as the many companies in the information technology
industry that are operating there. Their young, educated workforce has adapted to the
competitiveness and expectations in those companies, resulting in a meld of their traditional
value system and the practical approach typical of western companies. Foreign firms in India and
elsewhere are reaping the benefits of this rapidly growing and highly effective workforce.
 Christianity originated in the Middle East and is now over 2,000 years old. Christians believe
in one God. Christianity is based on the life and death of Jesus Christ, the son of God, and
preaches love, the value of human life, self-discipline, and ethics. There are four principal
denominations: Orthodox, Pentecostal, Protestant, and Roman Catholic. Roman Catholicism
predominates in the Americas and Western Europe. Orthodox Christians mostly live in Eastern
Europe. Foreign corporations in Christian locales can assume that most employees and other
contacts behave largely according to the Ten Commandments. In Europe, employees typically
have a number of days off for religious holidays. In the United States, religious holidays are
typically limited to Christmas and Easter; however, there should be respect for people not
wanting to work on Sundays. One wonders, also, if the Protestant Ethic of hard work, saving,
and efficiency, common in the West and the basis of capitalism, is spreading as a result of global
competition and the influence of foreign companies.

Islam Muslims believe that there is only one god, Allah, and that the prophet Muhammad was
his final messenger. Their lives are based on the Qur’an and Muslim law (Sharia). Businesses
can be affected by the Sharia law against receiving or paying interest. As a further example of
how religious beliefs impact the workplace, respect for Islam requires that companies operating
in Muslim countries make provisions—in time and space allocation—for employees to pray five
times a day. This is true, also, in countries and cities such as in the United Kingdom where there
is a large Muslim population. In addition, out of respect for the Ramadan, a month during which
Muslims must fast from dawn till dusk, managers must expect and plan for productivity to go
down in the event that contractual obligations are scheduled. Businesspeople not familiar with
Islam might get frustrated by the lack of precision regarding scheduling and contracts
attributable to the perspective that things will happen in good time as Allah wills. However, the
Islamic work ethic is a commitment toward fulfillment and the individual’s obligation to society,
and so there is considerable respect for workers and business motives. In addition, managers
operating in Muslim countries must take care to avoid conflict with the prescribed gender roles
in their hiring and placement practices, as described in the opening profile. Generally, job
opportunities for women are limited in strict Islamic countries such as Saudi Arabia.

Buddhism, founded in India 2,500 years ago, remains the dominant religion of the Far East and
is increasingly popular in the West. Buddhism emphasizes compassion and love and the ways in
which suffering in the world can be relieved by righteous living and the cycle of rebirth. There is
a high regard for others as if they are all part of the family, and an ethical consideration of one’s
actions upon the well-being of others. Buddhism promotes a strong work ethic, persistence, and
hard work, and frowns on laziness. There are likely to be positive outcomes in the work
environment by emphasizing teamwork and responsibility. Foreign managers should
acknowledge and respect, for example, that employees expect to have a shrine on the wall or
floor with a statue of Buddha and cups holding food and drink as offerings.
Adjusting Business to Saudi Arabian Culture

For most outsiders, Saudi Arabia is a land of contrasts and paradoxes. It has supermodern cities,
but its strict Islamic religious convictions and ancient social customs, on which its laws and
customs depend, often clash with modern economic and technical realities. Saudi Arabians
sometimes employ latitude in legal formation and enforcement to ease these clashes and
sometimes accommodate different behaviors from foreigners. Nevertheless, many foreigners
misunderstand Saudi laws and customs or find them contrary to their own value systems. Foreign
companies have had mixed success in Saudi Arabia, due in large part to how well they
understood and adapted imaginatively to Saudi customs. Companies from countries with strict
separation between state and religion or where few people actively engage in religion find Saudi
Arabia’s pervasiveness of religion daunting. Religious decrees have sometimes made companies
rescind activities. For example, an importer halted sales of the children’s game Pokémon because
the game might encourage the un-Islamic practice of gambling, and a franchisor was forced to
remove the face under the crown in Starbucks’ logo because Saudi authorities felt the public
display of a woman’s face was religiously immoral. However, most companies know the
requirements in advance. For instance, Coty Beauty omits models’ faces on point-of-purchase
displays that it depicts in other countries. Companies know that they must remove the heads and
hands from mannequins and must not display them scantily clad. Companies, such as
McDonald’s, dim their lights, close their doors, and stop attending to customers during the five
times per day that men are called to pray. Companies also adjust voluntarily to gain the good will
of customers—for example, by converting revenue-generating space to prayer areas. (Saudi
Arabian Airlines does this in the rear of its planes, and the U.K.’s Harvey Nichols does this in its
department store.) During the holy period of Ramadan, people are less active during the day
because they fast, so many stores shift some operating hours to the evenings when people prefer
to shop. In 2000, Saudi Arabia ratified an international agreement designed to eliminate the
discrimination of women; however, its prescribed behaviors for women appear paradoxical to
outsiders. On the one hand, women now outnumber men in Saudi Arabian universities and own
about 20 percent of all Saudi businesses. (There are separate male and female universities, and
female-owned businesses can sell only to women.) Women also comprise a large portion of
Saudi teachers and doctors. On the other hand, women account for only about 7 percent of the
workforce. They cannot have private law or architectural firms, nor can they be engineers. They
are not permitted to drive, because this may lead to evil behavior. They must wear abayas (robes)
and cover their hair completely when in public. They cannot work alongside men except in the
medical profession, and they cannot sell directly to male customers. If they are employed where
men work, they must have separate work entrances and be separated from males by partitions.
They must be accompanied by an adult male relative when dealing with male clerks. The female
prescriptions have implications for business operations. For example, the Saudi American Bank
established branches for and staffed only by women. Pizza Hut installed two dining rooms—one
for single men and one for families. (Women do not eat there without their families.) Both
Harvey Nichols and Saks Fifth Avenue have created women-only floors in their department
stores. On lower levels, there is mixed shopping, all male salespeople (even for products like
cosmetics and bras), and no changing rooms or places to try cosmetics. On upper floors, women
can check their abayas and shop in jeans, spandex, or whatever. The stores have also created
drivers’ lounges for their chauffeurs. A downside is that male store managers can visit upper
floors only when the stores are closed, which limits their observations of situations that might
improve service and performance. Similarly, market research companies cannot rely on
discussions with family-focused groups to determine marketing needs. Because men do much
more of the household purchasing, companies target them more in their marketing than in other
countries. Why do high-end department stores and famous designers operate in Saudi Arabia,
where women cover themselves in abayas and men typically wear thobes (long robes)? Simply,
the many very rich people in Saudi Arabia are said to keep Paris couture alive. Even though
Saudi Arabia prohibits fashion magazines and movies, this clientele knows what is in fashion.
(The government also prohibits satellite dishes, but some estimates say that two-thirds of Saudi
homes have them.) Women buy items from designers’ collections, which they wear abroad or in
Saudi Arabia only in front of their husbands and other women. Underneath their abayas, they
often wear very expensive jewelry, makeup, and clothing. Wealthy men also want the latest
high-end fashions when traveling abroad. Another paradox is that about 60 percent of the Saudi
private workforce is foreign, even though the unemployment rate is about 30 percent. Changing
economic conditions are at least partially responsible for this situation. In the early 1980s, Saudi
oil revenues caused per capita income to jump to about $28,000, but this plummeted to below
$7,000 by the early 2000s. When incomes were high, Saudis brought in foreigners to do most of
the work. At the same time, the government liberally supported university training, including
study abroad. Saudis developed a mentality of expecting foreigners to do all the work—or at
least some of the work—for them. The New Zealand head of National Biscuits & Confectionery
said that Saudis now want only to be supervisors and complain if they have to work at the same
level as people from Nepal, Bangladesh, and India. Although the government has taken steps to
replace foreign workers with Saudis, prevailing work attitudes impede this transition. For
example, the acceptance by a Saudi of a bellboy job at the Hyatt Regency hotel in Jidda was so
unusual that Saudi newspapers put his picture on their front pages. Saudi Arabian legal sanctions
seem harsh to many outsiders. Religious patrols may hit women if they show any hair in public.
The government carries out beheadings and hand-severances in public and expects passers-by to
observe the punishments, some of which are for crimes that would not be offenses in other
countries. For example, the government publicly beheaded three men in early 2002 for being
homosexuals. However, there are inconsistencies. For example, religious patrols are more
relaxed about women’s dress codes in some Red Sea resorts, and they are more lenient toward
the visiting female executives of MNEs than toward Saudi women. Whereas they don’t allow
Saudi women to be flight attendants on Saudi Arabian Airlines because they would have to work
alongside men, they permit women from other Arab countries to do so. Further, in foreign
investment compounds where almost everyone is a foreigner, these religious patrols make
exceptions to most of the strict religious prescriptions. There are interesting situations
concerning the charging of interest and the purchase of accident insurance, both of which are
disallowed under strict Islamic interpretations of the Koran. In the case of interest, the Saudi
government gives interest-free loans for mortgages. This worked well when Saudi Arabia was
awash with oil money, but borrowers must now wait about 10 years for a loan. In the case of
accident insurance (by strict Islamic doctrine, there are no accidents, only preordained acts of
God), the government eliminated prohibitions because businesses needed the insurance. Personal
interactions between cultures are tricky, and those between Saudis and non-Saudis are no
exception. For example, Parris-Rogers International (PRI), a British publishing house, sent two
salesmen to Saudi Arabia and paid them on a commission basis. They expected that by moving
aggressively, the two men could make the same number of calls as they could in the United
Kingdom. They were used to working eight-hour days, to having the undivided attention of
potential clients, and to restricting conversation to the business transaction. To them, time was
money. However, they found that appointments seldom began at the scheduled time and most
often took place at cafés where the Saudis would engage in what the salesmen considered idle
chitchat. Whether in a café or in the office, drinking coffee or tea and talking to acquaintances
seemed to take precedence over business matters. The salesmen began showing so much
irritation at “irrelevant” conversations, delays, and interruptions from friends that they caused
irrevocable damage to the company’s objectives. The Saudi counterparts considered them rude
and impatient. Whereas businesspersons from many countries invite counterparts to social
gatherings at their homes to honor them and use personal relationships to cement business
arrangements, Saudis view the home as private and even consider questions about their families
as rude and an invasion of privacy. In contrast, Saudi businessmen seldom regard business
discussions as private; they thus welcome friends to sit in. The opposite is true in many
countries. In spite of contrasts and paradoxes, foreign companies find ways to be highly
successful in Saudi Arabia. In some cases, legal barriers to some products, such as alcoholic
beverages and pork products have created boons for other products, such as soft drinks and
turkey ham. In addition, some companies have developed specific practices in response to Saudi
conditions and have later benefited from them in their home countries. For example, companies
such as Fuji and Kodak created technology for while-youwait photo development for Saudi
Arabia because customers wanted to retrieve photos without anyone else seeing them. They
transferred this technology to the United States several years later.

Business culture

In Saudi Arabian business culture, strong relationships, hierarchy, and respect for tradition are
paramount, requiring patience, building trust, and understanding local customs for successful
interactions.

Here's a more detailed breakdown:

1. Relationship Building:
  Personal Connections:

Building strong personal relationships is crucial for successful business dealings.

 Patience and Time:

Saudis value time and effort invested in building relationships, so don't rush into business
discussions.

 Hospitality:

Accepting invitations to coffee, meals, or even home visits is a sign of respect and strengthens
relationships.

 Networking:

Attend networking events and business dinners to build connections.

2. Hierarchy and Respect:

 Formal Structure: Saudi Arabian business culture is often hierarchical, with decisions
made by senior leadership.

 Respect for Elders and Authority: Show respect to elders and those in positions of
authority, and use appropriate titles.

 Chain of Command: Follow the chain of command and understand who makes
decisions.

3. Cultural Etiquette and Practices:

 Conservative Dress: Dress conservatively and professionally in business settings.

 Handshakes: Use your right hand for shaking hands and passing business cards.

 Punctuality: While punctuality is important, meetings may start later than scheduled.

 Time Sensitivity: Be aware that Saudis may take a more fluid approach to timekeeping.

 Avoiding Alcohol: Alcohol is taboo in Saudi Arabia and should not be offered or
discussed.

 Sharing Meals: Sharing meals together is a good way to build relationships.

 Avoid Touching Women: Avoid touching women unless they initiate a handshake.

 Respect for Islam: Be aware of religious customs and protocols, especially during
Ramadan and Hajj.
  Indirect Communication: Communication can be indirect, and phrases like "inshallah"
(God willing) may not always indicate a firm commitment.

 Focus on Long-Term Partnerships: Negotiations often focus on building trust and

4. Key Considerations:

 Language:

While English is widely spoken in business, learning some basic Arabic phrases can be
beneficial.

 Summer Travel:

Avoid business travel during the summer months, as many locals take extended breaks.

 Ramadan:

Be aware of Ramadan, as working hours become shorter and business activities may be affected.

 Hajj:

Be aware of Hajj, the annual pilgrimage to Mecca, which can also impact business travel and
schedules.