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The Organizational Culture the success factor in companies adaptability to the Romanian business environment Mihai CERCEL PhD

D student University of Craiova, Faculty of Economy and Business Administration Craiova, Romania Abstract
The present study is proposing a dynamic analysis of the organizational culture of foreign companies established in Romania, evaluated through the perspective of business performance. This research will try to identify patterns, behaviors and values of the mother company which had been transposed into its Romanian organization, using two different tools such as Hofstede model and Denison model. One of the key assumptions in our study is the fact that the organizational culture in foreign companies is created by the interaction/collision between the local cultural area and the values, behavior and traditions translated from the mother company. The study will try to define an internal model conditioned by culture, in general, and by social and economic values of employees, in order to determine the organizations behavior, meaning and manner of action. The research methodology will use the survey method based on questionnaires, to which it will be added interviews with different levels of management. The results could be used both ways, either to better understand the necessary steps for better integration of a foreign company in order to perform according to its values but within the Romanian environment or to start a re-organizational change in order to better adapt the Romanian employees behaviors, values and tradition to the mother company organizational culture.

Key words
Organizational culture, organizational change, the Denison model, the Hofstede model, cultural traits and indices

JEL classification
M14

Introduction
"A culture is a set of basic tacit assumptions about how the world is and ought to be that group of people share and that determines their perceptions, thoughts, feelings, and, to some degree, their overt behavior" (Schein, 1996, p. 11). In our opinion, organizational culture can be defined as a system of joint actions, values and beliefs that develop within an organization and then guide all its members, changing their behaviors in line with expectations and values of the organization. Based on their collective experience, members of an organization must answer two key questions for the survival of the organization (Schermerhorn, Hunt and Osborn, 2002). The first one is what tasks must be executed and how? and the second one is how should the organization's members perform their duties while living and working together with others? The research started from the assertion of Geert Hofstede (Hofstede, 2001) that we are culturally conditioned, culture controls our behavior in an irrational but persistent manner and tries to provide answers a few questions that employees of any multinational in Romania ask themselves frequently:

What should I do or do not if I work in an organization where the majority of my colleagues are from other countries, from a different geographical and cultural environment, or if they have a different religions or a different mentality?

Could I easily adapt myself if my team colleagues were Japanese, French and Canadian, and I have a German as a leader? Shouldnt they adapt their culture, values, traditions, habits and perceptions, since they are working in this country?

On the other hand, in a globalized world, where cultural interactions are increasingly present in the current activity, the organizations are asking themselves the same questions. From this point of view, it is important for any company to know closely their own organizational culture traits, in order to develop policies and strategies in line with the accepted values, to understand the values and perceptions of its employees and to convey messages in accordance with their expectations. 1. The Research Issue The Organizational culture is a complex concept, therefore defining and analyzing it is a difficult process. Edgar Schein estimated that "the organizational culture is the key to organizational excellence is the pattern of basic assumption that a given group has invented, discovered, or developed in learning to cope with its problems of external adaptation and internal integration and that have worked well enough to be considered valid "(Schein, 1984, page 3). In our opinion, the national culture or, more precise, the societal culture 1 is among the strongest factors in modeling the organizational culture. We fully agree with Akio Morita, ex-president of Sony Corporation, who said: "culture has a 10% impact on products, services and operations, but this is the most important percentage. These 10% make the difference between success or failure. In the traditional theory of organization, employees were considered as simple executors of predefined operations. The essence of this theory is reflected perfectly in the concept of labor force. The focus is on the task accomplishment rather than on the individual satisfaction. The motivation policies are fulfilled mainly through financial incentives. In the modern theory of the organization, employees are a resource of the organization. For example, LOral goes even further by inventing the term of richesse humaines (human richness) instead of ressources humaines (human resources). According to this theory, the employees will perform as long as their work allows them to achieve professional satisfaction and personal accomplishment. Recent studies (Hofstede, 2001, GLOBE, 2005) show that there are certain cultural patterns that characterize different societies. These patterns reflect the thinking model of a group sharing the same values. Following this analysis, Hofstede defined four cultural dimensions: 1) small or large power distance power, 2) collectivism vs. individualism, 3) femininity vs. masculinity, 4) uncertainty avoidance. Michel Harris Bond complemented the model by adding another dimension, 5) orientation dimension on a short or long term. Hofstede (2001) showed that each organization creates its own cultural system, which contains residual structures of the national culture. Recent studies added two more dimensions: 6) Indulgence versus Restraint and 7) Monumentalism. In Figure 2 we shown the interaction between the Hofstede cultural dimensions for four European nations. Figure 1. Example of interaction between cultural dimensions calculated for Romania and three European countries according to the 5D Hofstede model

The researchers prefers the term of societal culture instead of national culture because the Organizational Culture is intrinsically linked to the values shared within a certain ethnical society, society which can be larger or smaller than the nation that society belongs to. An example is Canada, where the study shown that the organizational culture of English speakers is different than the organizational culture of French speakers. Another example could be the Romanian nation.

Source: Hofstede, 2011, website

Thomas Peters and Richard Waterman (2004) had a substantial contribution to organizational culture studies. The authors noted that the most performing organizations in the U.S. attach a great importance to human resources. The most effective organizational culture is a model based on encouragement, praise and motivation of employees. Values associated with this type of culture are fairness, honesty, job security, involvement and accountability. Furthermore, charisma and leadership are crucial in achieving the success of the organization. The study identified eight principles of excellence (Peters and Waterman, 2004, p. 89-306):

A bias for action, active decision making - 'getting on with it'. Close to the customer - learning from the people served by the business. Autonomy and entrepreneurship - fostering innovation and nurturing 'champions'. Productivity through people - treating rank and file employees as a source of quality. Hands-on, value-driven - management philosophy that guides everyday practice management showing its commitment. Stick to the knitting - stay with the business that you know. Simple form, lean staff - some of the best companies have minimal HQ staff. Simultaneous loose-tight properties - autonomy in shop-floor activities plus centralized values.

Our study proposes a cross-over approach, by analyzing the organizational culture in terms of management theories and by considering the essential elements of organizational psychology. We are interested to identify and define a certain cultural and organizational specificity, and to assess the degree of interpenetration of formal structures and informal structures, as well as the role of informal structures in the development and performances of the organization. We will review the organizational culture created by the interaction with the Romanian cultural area, with the aim to define an internal model conditioned by culture, in general, and by social and economic values of employees, in order to determine the organizations behavior, meaning and manner of action and development. Our research aims to achieve a descriptive-comparative analysis of the organizational culture of the multinational companies based in Romania versus the mother company, and to observe to what extent the organizational culture and management change at the interaction with the wider Romanian environment (culture, values, perceptions). Cultural traits will be considered following the Denison model (2006), in order to define a reference system of the organization studied, including rules and habits, myths, ceremonies, symbols and social standards. We aim to identify success factors and the necessary adjustments of organizational culture components to achieve corporate objectives and therefore its success. At the same time, we will review the pillow values of the mother company, those values that had to be implemented as such or even required in the organization. We will also search and highlight the failure factors (cultural

collision between foreign management and Romanian employees, cultural incompatibilities affecting the smooth running of the organization), aiming to outline a model of adaptation of a multinational company with an organizational culture well defined, to the socio-economic environment in Romania.

1. Models for assessing organizational culture at company level


R. E. Quinn and J. Rohrbaugh (1983) built an evaluation model of organizations based on four factors that are distributed on two intersecting axes: the control-flexibility and internal-external focus. This theory is underlying the organizational culture assessment tool called FOCUS (Quinn, Rohrbaugh, 1983, p 369-373).

Figure 2. The FOCUS model

Flexibility

Means: Cohesion, Morale Ends: Human Resources development Internal Focus Means: Information management, Communication Ends: Stability, Control \

Means: Flexibilty, Readiness Ends: Growth, Acquisition External Focus Means: Planning, Goal setting Ends: Productivity, Efficiency

Control

Source: Quinn, Rohrbaugh, 1983: 367 Vario us combinations of these features, in various degrees, provide the organizational culture orientation as a result of these factors: Support - Flexibility and External Focus - the organization is based on values such as cooperation, participation, involvement, accountability, cohesion, mutual trust, humanity and personal development. Their aim is growth and business development; Innovation - Flexibility and Internal Focus the organization promotes values such as risk taking, creativity, experimentation, initiative, anticipation and self-management. Their aim is to develop human resource capital; Rules-Control and Internal Focus - the organization has the values: formalism, standardization and rationalization of tasks, respect for authority. The aim is to achieve a stable organization; Goals - Control and External Focus the organization appreciates: performance, efficiency, management by objectives, planning, and clarification of individual and organizational objectives. Their aim is to improve its efficiency and productivity. (ibid.) Professor Daniel Denison (2006) developed the Focus model and submitted an analysis of the organizational culture the Denison model (Figure 3) as a result of four organizations cultural dimensions: Adaptability, Mission, Involvement and Consistency (Denison, Haaland, Goelzer, 2004):

The Mission refers to the organization's long-term orientation, its acceptance and ownership by its employees playing a key role. The mission shows the extent to which employees know "why" they do what they do and how they contribute every day to the "why"; The Consistency defines the values that form the basis of a strong organizational culture: cohesion, coordination and control. The Consistency creates a strong organizational culture based on a common system of beliefs, values and symbols that are understood and shared by every member of the organization; The Involvement allows human resources to develop their capacities, sense of responsibility, commitment and autonomy. The Involvement means encouraging the development of human capacities creating a sense of responsibility within the company and the idea that the smooth running of the organization will improve the life of every employee; The Adaptability emphasizes the ability of an organization to receive signals from the external environment, to interpret them and transform them into internal behavior changes, in order to increase the response capacity of the organization. The adaptability allows the translation of internal and external environmental requirements into action efforts. In relation to all sub-factors one can identify specific beliefs and faiths, the model being oriented on two global axes: stability / flexibility and internal focus / external focus. Empirical results show that adaptability and involvement contribute to improve on a long-term the organization's financial performance and on a short-term the turnover (Denison and others, 2006). Although the study has several limitations and we will mention only two - relatively small and unrepresentative sample of selected companies and simplified statistical analysis the empirical data obtained suggest the idea that the organizational culture is a form of social capital of any organization. The human resources, developed or acquired by the company, regardless their size and cultural specificity, show that they can have a significant impact on the performance of the organization and offer a competitive advantage. Figure 3. Fundamental components of organizational culture

Source: Daniel Denison & Others, 2006 Now we can examine the whole picture. Each pair of factors has distinct effects on the performance of the organization. Thus, mission and consistency can significantly improve the financial performance of the organization, consistency and involvement increase employees satisfaction and their motivation, involvement and adaptability contribute to the development of innovation capacity, to product development and services, and adaptability and mission influence sales growth as well as market share. Defining organizational cultures profile will allow, if necessary, to transform the organization, starting from changing employees behavior to changing their thinking (Shook, 2010, p. 64-66). Culture change will require defining a complex strategy to build on actions and behaviors that require change, through redefining work processes and bringing a change of organizational culture. This

strategy will start with defining the mission of the organization ("what we do"), how do we expect the organization to react (how we want to behave "), providing each member the necessary training session for attaining those purposes; once acquired, to strengthen those behaviors that we want them to keep (Figure 4). Changing the culture of the organization itself will naturally result from applying the strategy (ibid.). The essence of this change is to avoid replacing mother culture with a local one or developing a parallel culture.
Schein:M Figure 4. The Organizational culture change mechanisms Model: (old model) Changing the thinking in order to change the behavior odel (new model) Changing the behavior in order to change the thinking Shook

Mission une

Values and attitudes

Culture (observable data, actions and behaviors)

Source: Shook, 2010: 66 The difficulties relating to organizational culture change relate to the character of informal mechanisms which are created in any organization (intangibility, internalized control mechanisms), of the difficulty of coordinating them. That is why management intervention in changing formal structures, of organizational regulations, is much simpler compared with informal structures change (status, roles, identities, values of the group). In conclusion, interventions on organizational culture should be achieved through symbolic actions aimed at symbolic values, norms and beliefs.

2. Research Hypothesis
At this point we can make the following assumptions:

1. the Organizational culture is a success factor in company management, whereas it has direct 2.
effects on employees satisfaction, allows to optimize resources and therefore acts on financial performance and competitive capacity of the organization; Based on analysis of the organization's five cultural dimensions (Hofstede, 2011) we will try to prove that in the case of foreign companies based in Romania the organizational culture is a consequence of the interaction between cultural patterns of the two countries. For this purpose, we will analyze using the Denison model the mutual influence between the societal values of the employees with different origins, in order to create a pattern of possible cultural interaction model between Romanian and foreigners; Considerable differences calculated by Hofstede's model in the case of the two cultures might suggest a difficult interaction or even a fracture between employees of such companies. This is especially obvious when it comes to the size of PDI. In the case of a Romanian-German company we expect - based on the Hofstede assessment and we intend to verify this hypothesis in the case of our research to have disagreements, generating possible conflicts caused by cultural interactions between Romanian employees and German management. The same analysis will be conducted by choosing different European multinational companies that opened subsidiaries in Romania; As a continuation of these assumptions and in light of the same arguments we expect the identification of a specific local organizational culture of this company leads to the necessity of defining a strategy to change organizational culture in order to improve performances, in the

3.

4.

broad sense of business (economic-financial indicators, competitive capacity, social responsibility, attractiveness).

3. Methods and procedures of research


In investigating the above mentioned assumptions we intend to use the survey method based on questionnaires, to which we will add interviews with the management team of different foreign companies based in Romania. To the extent to which this will be accepted by the mother company, those of its managers who are responsible for Romania will also be invited to answer questionnaires. A first questionnaire will start from the hypothesis made by Hofstede on interactions between Romanian and foreign cultures and will seek to identify how organizational behavior and management of the company is influenced by: Sources of capital, history, traditions, values of the parent company, originating culture of the management, area in which it operates or its strategic objectives; Language, boundaries, power, rewards / sanctions, response to critical incidents, beliefs, traditions, values, resistance to change, perception of time, space, relationships between people; How the company promotes positive values and how it discourages the negative ones; Connection of the organization to environment (customers, suppliers, competition, CSR, etc.) Values and beliefs belonging to the parent company and which were imposed in Romania; Role granted by company management to organizational culture. Is organizational culture perceived as part of the business strategy or is it allowed to develop consequently; The role of organizational subcultures. This survey will identify the general features of the organizational culture for the companies included into the sample. Into a second stage we will use, with a certain frequency, the questionnaire based on Denison model for refining the research analysis and to determine with greater accuracy the specificities of the organizational culture in order to validate or invalidate the hypothesis that organizational culture is a success factor in company management. The data obtained in Romania will be compared to the Denison Normative database, which includes the benchmarks for 1.076 worldwide organizations.

4. Conclusions
Taking into consideration different studies regarding the Romanian organizational culture we can say that the Romanian society easily tolerates unequal distribution of power, is collectivist, but encourages individualism and aggression in social relationships with interpenetrated male and female values and with a high level of tolerance for uncertainty, which determine a higher resistance to change and the avoidance of risk by not assuming responsibility. (Neculesei A. & Ttruanu, 2008) Also, it is low-performance oriented and focused on present rather than the future, more concentrated on short or medium term than long term objectives. These results lead us to say that average people in a Romanian company has an organizational culture negatively affected by high power distance, individualism and internal competition for resources, resistance to change and low desire for assuming responsibilities. In our opinion, despite the differences between individual in terms of values, behaviors and perceptions, the organizational culture offers the right framework for developing a real synergy within the organization for overpassing the cultural divisions between its members. In order to accomplish in such an undertaking, the organization have to find or even to invent the common system of shared values, behaviors and rituals, i.e. to develop, through its leaders vision and actions, a strong culture of the organization, a culture that should be stronger that the individuals behaviors. For that reason, the success is one of the most important factors in creating a culturally synergetic organization.

Bibliografie
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