Short Takes
Selected new research by HBS faculty.

Culture Clash: Exploring Cross Cultural Conflicts in Business

"As different cultural traditions meet in the marketplace and inside organizations, managers face tough choices about the values that they and their organizations will live by," HBS professor Lynn Sharp Paine told participants at an HBS conference in Hong Kong last winter. At that event (which marked the inauguration of the School's Asia-Pacific Research Office), Paine added that "in order to be effective, managers must find ways to deal with differences in how people think about matters such as authority, fairness, responsibility, and even the very purpose of business."

An expert on organizational values and business ethics, Paine has long focused on American companies engaged primarily in domestic U.S. business. But faced with an increasing number of questions from international students about whether U.S. corporate standards and values were appli- cable in their home countries, she has begun searching for answers in a broader, overseas setting.

With a research agenda organized around eight major world cultures and belief systems - African, Confucian, Hindu/Buddhist, Islamic, Japanese, Latin American, Slavic-Orthodox, and Western - Paine embarked upon an ambitious course-development project in 1997. Writing cases on firms in China, Japan, Thailand, Argentina, Nigeria, and Russia, she focused on businesses indigenous to each culture as well as multinationals moving between cultures. She chose companies that aspire to excellence not only in terms of financial performance but also with regard to management practices and reputation in the community.

The result of her efforts is the MBA elective course Globalization, Culture, and Management. According to Paine, as they examine the values and beliefs embraced by companies striving for excellence from different cultural reference points, students learn to anticipate and deal with the kinds of value conflicts they are likely to face as global managers. They also develop a business philosophy and a set of values that will help them lead effectively when crossing cultural borders.

Two of the seventeen case sequences she has developed for the course so far - "Siam Cement Group: Corporate Philosophy" and "The Haier Group" - take place in Thailand and China, respectively. Named Asia's most ethical company several years ago in a survey of the region's executives by Asian Business magazine, Siam Cement Group (SCG) was one of the first firms in Thailand to develop its own written code of ethics. The company's philosophy is rooted in the Buddhist concept of fairness and also stresses product quality, the value of the individual, and concern for social responsibility.

As Siam Cement expanded beyond Thailand, however, managers sometimes felt pressured to make payments that violated the company's code of ethics. Paine's case illustrates a classic dilemma: should organizations conform to local ways of doing business, or should they adhere to their own corporate standards as they expand into unfamiliar regions? In Paine's view, framing the issue as "my way or your way" tends to heighten the dilemma and limit the possibilities for an effective resolution. Instead, she urges managers to look beyond differences in practice to underlying principles. In many instances, she believes, this approach can help managers find a strategy that honors the company's values and also works in the particular environment.

In another series of cases detailing the pressures of competing values systems, Paine writes about the Haier Group, a Chinese refrigerator and white goods maker aspiring to become a global brand. The cases explore how the chief executive found himself torn between, on the one hand, a deep-seated cultural code of ethics emphasizing loyalty to family and friends and, on the other, a desire to do what was needed to build a world-class company. "Going back to the time of Confucius," says Paine, "the primacy of personal relationships and interpersonal reciprocity has been paramount in China. This poses a problem for those who want to use strictly commercial merit when choosing suppliers and employees and entering into contracts."

While there are no easy answers to these kinds of predicaments, Paine views the challenges she is uncovering as a beginning for coping with cross-cultural conflict. "Astute managers learn about cultures in order to build bridges and bring about changes that will make their organizations more effective and responsible," she concludes. "As with any change process, that transformation is likely to take some time."

by Judith A. Ross

The Same the World Over: Focusing on Customers and Innovation Brings Success

Do successful firms in different countries share cultural traits? HBS professor Rohit Deshpandé's long-standing interest in this and related research has led him, with Professor John U. Farley of Dartmouth's Amos Tuck School, to examine the forces at work in companies across several Asian nations.

In a previous study of companies in Great Britain, France, Germany, Japan, and the United States, Deshpandé and colleagues from Tuck found that the most successful firms in these diverse countries had remarkably similar corporate cultures. Innovation, the researchers learned, was the strongest driver of performance in these organizations, regardless of nationality.

Eager to determine whether this finding would also hold true among developing economies, Deshpandé and Farley have expanded their study to include information they gathered from five hundred executives of firms based in China, Hong Kong, India, Thailand, and Vietnam. Together with the information acquired earlier from Tokyo-based companies, these findings will be published in a forthcoming paper.

The original study looked at the impact on business performance of four "strategic levers" - corporate culture, organizational climate, customer orientation, and innovation. "Corporate culture was perceived as the prevailing set of shared values held by a firm's managers," Deshpandé explains, "qualities such as loyalty and tradition. We defined climate as the nature of the workplace environment itself - for instance, an open and trusting atmosphere with decentralized decision-making."

In the initial study, Deshpandé and his colleagues found significant differences in the way companies operated from one nation to another. "But a more important discovery was that the most successful companies all shared a competitive, achievement-oriented culture," Deshpandé notes. Would this hold true among Asian firms?

For the purposes of the Asian study, the researchers labeled four basic culture types - Tigers, Rabbits, Monkeys, and Elephants - within the corporate culture lever.

The Tiger culture tends to be achievement-oriented and competitive, while the Rabbits are more flexible, creative, and entrepreneurial. Monkey and Elephant cultures reveal a more inward focus, with Monkeys epitomizing teamwork and loyalty, while Elephants favor strong hierarchies, organization, and order.

As in their first study, Deshpandé and Farley found that in Asia, the prevalent organizational culture varies among countries. "While we had previously seen that Japanese firms, for instance, typified the clan-like culture symbolized in the Monkey," remarks Deshpandé, "we found that Chinese companies tended to be more formally organized (Elephants), yet also entrepreneurial (Rabbits). However, we also discovered that joint-venture firms in China were more competitive and less bureaucratic than state-owned enterprises." Despite these differences, the similarities of corporate culture among the most successful companies continued to prevail - even when the companies were state-owned.

The role of innovation among high-performance companies in developed nations notwithstanding, Deshpandé points out that the most significant lever among emerging-market firms is customer-orientation. He also notes that the consistently high emphasis on marketing found among the most successful Asian firms in the study appears to hold true across the board - in consumer goods organizations, industrial firms, product companies, and service providers alike, without regard to the size of the firm. In each environment, the reigning corporate culture was market-driven and competitive.

Explaining the cultural consistency among high-performing companies throughout the world, Deshpandé observes, "Assigning top priority to innovation and customer orientation really does pay dividends. It is also clear that building and sustaining a strongly entrepreneurial culture drives companies toward success and high performance." But he cautions that no organizational culture should be of just one type. In the ideal corporate culture, there is room for Tigers, Monkeys, Rabbits, and Elephants to coexist. "The best representation of all," Deshpandé posits, "may be the Dragon, a common icon in Asia that combines the disparate and frequently beneficent attributes of lesser beings into one of extraordinary capability and power. In the best companies, the whole is truly the sum of several parts."

by Peter K. Jacobs

(This issue's "Short Takes" are adapted from articles that appeared in the Spring 1999 edition of Working Knowledge, a publication of the HBS Division of Research.)

The Entrepreneurial Venture
(Second Edition)
by William A. Sahlman, Howard H. Stevenson, Michael J. Roberts, and Amar Bhidé
(Harvard Business School Press)

At least one million new entrepreneurial ventures are begun every year. As Internet-based companies attempt to transform the industrial landscape, established companies find themselves more pressured than ever to innovate and redefine their own business models. In this highly uncertain time, thinking entrepreneurially is an essential part of any manager's job - whether that manager is part of a new venture or an established corporation.

The Entrepreneurial Venture, a volume of readings selected by HBS faculty members William A. Sahlman, Howard H. Stevenson, Michael J. Roberts, and Amar Bhidé, is designed to serve as a handbook for those considering or engaged in the entrepreneurial process. Filled with practical advice from experienced practitioners, this second edition offers 34 essays and articles, including HBS cases and pieces from the Harvard Business Review.

More than twenty of the articles are new, representing recent research on the subject. Among the topics covered are preparing a business plan, purchasing an existing business, obtaining venture capital, managing growth, handling bankruptcy, and starting a nonprofit venture. The pieces focus on the skills and abilities one must master to fill the entrepreneurial role, from creativity and innovation to building the structure and systems required to bring fledgling enterprises to an institutional level.

Written by researchers and practitioners, including HBS faculty members Joseph L. Bower and Clayton M. Christensen, as well as venture capitalist Arthur Rock (MBA '51), the essays call upon the reader to "consider entrepreneurship as a way of managing rather than as an economic function or a set of personal characteristics," write the editors in the introduction. The Entrepreneurial Venture will be useful to both practicing and would-be entrepreneurs.

When Sparks Fly: Igniting Creativity in Groups
by Dorothy Leonard and Walter Swap
(Harvard Business School Press)

Where do the best creative ideas come from? Most managers assume that gifted individuals - readily identifiable "creative types" - offer the quickest route to out-of-the-box, breakthrough thinking and that if you don't have an eccentric genius on your team, your group is doomed to mediocrity.

However, in When Sparks Fly: Igniting Creativity in Groups, Dorothy Leonard, the William J. Abernathy Professor of Business Administration at HBS, and Walter Swap, dean of the colleges at Tufts University, contend that most innovations today spring from well-led group interactions. They sweep aside conventional thinking to reveal that any group - if designed and managed effectively - can produce innovative services, products, and processes.

Unlike most books on creativity, When Sparks Fly focuses on the process as it applies to groups of people who may not fit the "creative" stereotype. Leonard and Swap offer managers proven strategies for generating the group dynamics that lie at the heart of innovative thinking, including specific techniques for rechanneling the tension of conflicting points of view into new ideas and alternative options. They show how forward-looking companies such as Fisher-Price, Intel, and Hewlett-Packard use group situations to maximize their creative potential.

When Sparks Fly explores how all aspects of the work environment, from leadership style to the use of space, sound, and even smell, can enhance innovation. It will serve managers who wish to motivate and lead groups of people in ways that ignite their full creative potential.

Right from the Start: Taking Charge in a New Leadership Role
by Dan Ciampa and Michael Watkins
(Harvard Business School Press)

More companies than ever are looking to jump-start change within their organizations by hiring executives from outside rather than promoting from within. But, note HBS associate professor Michael Watkins and consultant Dan Ciampa in their new book, Right from the Start: Taking Charge in a New Leadership Role, 64 percent of these new executives typically don't last beyond four years in their new positions, while only 38 percent of those promoted from within leave their new posts within the same period.

Outsiders don't fare as well as insiders because they don't adequately plan their transition into the new organization, argue the authors. In Right from the Start, Watkins and Ciampa draw on more than 25 years of experience counseling executives who have made leadership transitions to devise a practical, action-oriented framework to guide managers through their first six months in a new position. They examine the transition as a set of intertwined processes that require simultaneous learning, planning, and execution.

The authors identify the common traps that can derail leaders early on - such as becoming isolated or attempting to do too much - and offer prescriptive advice on how to avoid them. They describe three core tasks that new leaders should focus on: generating enthusiasm for change in the organization by securing early wins, creating a vision for the company and devising a coalition-building strategy to achieve it, and building a personal support system for advice and counsel. By following these straightforward guidelines, managers can face a new leadership challenge with confidence and competence. "Taking charge is an art," the authors write in their introduction. "It is mastered by those who have prepared themselves through the hard work of constant observation, practice, experimentation, and refinement."