Large corporations from eastern and western countries are taking on each other’s management styles, according to RMIT researchers.
Dr Sean Watts, lead researcher from the Centre of Commerce and Management at RMIT Vietnam, said an increasing number of eastern and western firms were adopting overseas’ management styles into their corporate culture.
Watt’s research looked at the differences between South Korean-based Samsung Electronics and American multinational Apple Inc, and found Samsung had adopted many western ways of operating.
The company had significantly shortened its approval process, focusing its diversity strategy and combined its seniority-based staff promotion system with merit-based compensation.
Apple had also adopted eastern strategies, making changes focused on areas of strength in Korea like corporate social responsibility and customer service.
“The lack of co-ordination among Apple’s business units created inefficiencies like duplication of effort; as a result Apple redesigned the organisation, encouraging team-based activities to foster more cohesion in the workplace,” Watts said.
“After strong Greenpeace criticism of Steve Jobs making environmental and community concerns low priorities, Apple’s new CEO Tim Cook has begun donating to charities, taking on eastern collectivist values in corporate social responsibility.”
Watts backgrounded his team’s findings with previous academic research on typically eastern and western business models.
“In the west, workers usually have an individualistic mind-set and think mainly about the details of their own tasks and responsibilities,” he said.
“But about 70 per cent of the world’s population belongs to a collectivist (eastern) culture where the majority of people focus on the group and a sense of belonging.”
Samsung and Apple have both received wake-up calls on the insufficiency of their management from outside threats: the uncertainty caused by financial crises for Samsung in the 1997 Asian crisis and Apple in the 1989 recession and the 2008-2009 housing bubble crash.
Watts said characteristics of eastern businesses included respect for power structures, uncertainty avoidance and being aware of the long-term consequences of actions.
In contrast, Americans focus on short-term, bottom-line profit, individual career success and decentralisation due to low power distance.
But companies looking to compete globally needed to incorporate more than just local management styles.
“Before global managers can begin to think about other cultures, they must become aware of and overcome their own ethnocentrism,” Watts said.
“Only from this point of view can managers see the flaws in local practices and the potential benefits in foreign ones.
“Although it is often difficult to work with foreigners and to graft other management styles, doing this can result in a competitive advantage.”
The research will be published in the Journal of Economics, Business and Management.
Members of the research team include Dr Sean Watts, Pham Hong Hoa and Uyen La (RMIT Vietnam) and Giang Le Thi (Institute of Social and Medical Studies, Vietnam).
Story: Sharon Webb