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939540
research-article20202020
SGOXXX10.1177/2158244020939540SAGE OpenLee and Chung
Original Research
Cultural Entrepreneurship: BetweenOrganization Cultural Isomorphism and
Within-Organization Culture Shaping
SAGE Open
July-September 2020: 1­–12
© The Author(s) 2020
https://doi.org/10.1177/2158244020939540
DOI: 10.1177/2158244020939540
journals.sagepub.com/home/sgo
Seungdoe Lee1 and Goo Hyeok Chung2
Abstract
Cultural entrepreneurship is a process that focuses on entrepreneurial resources, identifies and legitimates new startups,
and improves organizational performance. Although scholars of this subject have viewed entrepreneurs as cultural agents,
for example, who either strike a balance between cultural resources and constraints or decouple their ventures from cultural
constraints while coupling them with cultural resources, they have overlooked another possible behavior that cultural agents
might display. In the present study, the authors attempt to uncover another facet of cultural entrepreneurship and conduct
a case study focusing on a new entrepreneurial organization (subcontractor) that became a parts supplier for an automaker
(user company). Our findings show that the subcontractor’s entrepreneurs shaped its culture by drawing on the external
cultural constraints coded by the user company’s culture (between-organization cultural isomorphism), and they also used
internal cultural resources to foster an entrepreneurial culture and to stimulate exploratory innovations (within-organization
culture shaping).
Keywords
cultural entrepreneurship, cultural isomorphism, culture shaping, user company, subcontractor
Introduction
For the last two decades, organization scholars have
attempted to understand entrepreneurship within the perspective of organizational culture. Lounsbury and Glynn
(2001) introduced the cultural perspective to the entrepreneurship literature by presenting the notion of cultural entrepreneurship, which refers to a process that focuses on
entrepreneurial resources, identifies and legitimates new
startups, and improves organizational performance. As a
result, many cultural entrepreneurship scholars now view
entrepreneurs as cultural agents (cf. bricoleurs; e.g., Baker &
Nelson, 2005; Rao et al., 2005). For example, O’Neil and
Ucbasaran (2016) suggested that a cultural entrepreneur
strikes a balance between cultural resources and constraints.
Überbacher et al. (2015) proposed that a cultural entrepreneur decouples his or her venture from cultural constraints
while coupling it with cultural resources. However, researchers have overlooked another possible behavior that a cultural
agent might display. In the present study, the authors attempt
to uncover another facet of the cultural entrepreneur later
labeled a cultural game player, which refers to an entrepreneur who actively judges and chooses appropriate behaviors—either balancing or decoupling (Kim et al., 2016).
Earlier studies adopting cultural approaches to organization have emphasized the structure of culture as a collective
meaning system and a cultural process (e.g., Barley, 1983;
Hofstede, 1980; Van Maanen, 1979). They considered the
concept of culture to be related to “fairly stable, encompassing, and often internalized constraints on individual thought
and action,” thereby highlighting “cultural persistence and
coherence”; this research stream viewed culture as a constraint on action (Weber & Dacin, 2011, p. 1). However, later
studies extended the concept of culture from endogenized
constraints to resources for strategic actions. For example,
individuals or organizations can select and use “cultural toolkits” such as “symbols, stories, rituals, and worldviews”
(Swidler, 1986, p. 273) to develop strategies or actions to
cope with different situations (Rindova et al., 2011). These
two research streams present a dichotomous dimension,
“cultural agency, which is understanding culture predominantly as a constraint on action versus a resource for action”
(Weber & Dacin, 2011, p. 3).
Another research stream posits a different dimension, cultural context, which refers to an understanding of the sphere
1
University of Ulsan, Ulsan, Korea
Dongguk University-Seoul, Seoul, Korea
2
Corresponding Author:
Goo Hyeok Chung, Dongguk Business School, Dongguk University, 30,
Pildong-ro 1-gil, Jung-gu, Seoul 04620, Korea.
Email: ghchung@dongguk.edu
Creative Commons CC BY: This article is distributed under the terms of the Creative Commons Attribution 4.0 License
(https://creativecommons.org/licenses/by/4.0/) which permits any use, reproduction and distribution of
the work without further permission provided the original work is attributed as specified on the SAGE and Open Access pages
(https://us.sagepub.com/en-us/nam/open-access-at-sage).
2
where cultural sense making or interactions occur either
within a single social group or across different social groups
(e.g., Fiss & Zajac, 2004; Gioia & Chittipeddi, 1991; Hannan
et al., 2007; Meyer et al., 1997; Westphal & Zajac, 1998;
Zuckerman, 1999). The cultural context can also be divided
into two: the internal cultural context, or “private culture
(symbolic interactions among members of a social group),”
and the external cultural context, or “public culture (cultural
processes involving external audiences that observe and
evaluate members but do not directly participate)” (Weber &
Dacin, 2011, p. 2).
Most studies on cultural entrepreneurship have adopted
this well-developed cultural framework, which is composed
of four domains in a two-by-two matrix comprising two
dimensions: cultural agency (either constraints or resources)
and cultural context (either internal or external). These
academic papers thus seemed effectively to disentangle the
cultural behaviors that entrepreneurs display in terms of
organizational identity, legitimacy, and performance (e.g.,
balancing, coupling, and decoupling; O’Neil and Ucbasaran,
2016; Überbacher et al., 2015). In practice, however, there is
another cultural behavioral pattern that entrepreneurs may
adopt.
Take, for example, a startup company that is a parts supplier for an automaker. The user company (automaker) is a
powerful evaluator that purchases the products of its subcontractor (startup parts supplier). Its subcontractor is usually
nervous not only about whether it meets the user company’s
target price and quality but also about how appropriately it
harmonizes with the user company’s social codes, follows
isomorphic pressure, and deploys good impression management (Weber & Dacin, 2011). In this sense, the subcontractor
can be considered to face external cultural constraints.
However, as the subcontractor is a startup company, its top
management team (TMT) might be composed of entrepreneurs who dominantly use internal cultural resources, such
as a cultural toolkit (e.g., storytelling, rituals), with its internal group or employees. In this example, the startup subcontractor is subject to external cultural constraints, but it can
utilize internal cultural resources at the same time: the
authors call the former process of cultural entrepreneurship
between-organization cultural isomorphism and the latter
within-organization culture shaping.
More conspicuously, a majority of management scientists
and practitioners have attributed the success of Korean,
Japanese, and Chinese firms in global markets to the
Confucian culture, characterized by high levels of collectivism, seniority orientation, and power distance (Hofstede,
2001; Leung, 2007). Recently, however, some researchers
have emphasized cultural distinctiveness in organizations
rather than cultural similarities across these East Asian countries. For instance, although Samsung and Hyundai are large
Korean global conglomerates, Samsung’s leadership and
management style are considerably different from Hyundai’s
but rather similar to a Japanese business model mixed with
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Western best practices (Shim & Steers, 2012). In particular,
these scholars (i.e., Shim & Steers, 2012), by cautioning
against overgeneralization of the role of national cultures in
organizational behavior, have called for studies of the cultural transfer of globalized Korean or Japanese firms to their
subsidiaries or others. For these reasons, the authors believe
that a case study on organization culture transfer is the best
approach to discovering “black swans” in a lake in which
the effects of national culture have been overemphasized
(Flyvbjerg, 2006, p. 228).
In the present research, the authors attempt to reveal how
external cultural constraints influence an entrepreneurial
organization and how its entrepreneurs use internal cultural
resources to foster and strengthen entrepreneurial culture and
to stimulate exploratory innovations, referring to an organization’s risk-taking behaviors in terms of using or implementing new business practices (cf. exploration; March,
1991). To this end, the authors raise the following research
question: How do entrepreneurs transform external cultural
constraints into internal cultural resources to enable its legitimacy and future survival? In the following, this article begins
by describing the inductive, qualitative methodology that the
authors adopted in the present study. Then, this article presents the findings, theoretical contributions, practical implications, and limitations.
Method
The authors employed a qualitative methodology to uncover
the relationships among the TMT’s entrepreneurship, entrepreneurial culture, and (exploratory) innovations in a startup
company that has been a subcontractor of a large-scale user
company since 1992, when it was established. Generally,
culture shaping in a startup company is a time-consuming
process, and thus, a qualitative methodology can be a suitable approach to explicate how the process proceeded (Berg
et al., 2010) and how the TMT’s entrepreneurship has influenced entrepreneurial culture and exploratory innovations in
the long run. Specifically, the authors adopted broader qualitative approaches (Hill & McGowan, 1999), such as the
triangulation method (i.e., interviews, archival data, and
observations), to collect “converging evidence from different
sources” to strengthen the study validity (Yin, 2011, p. 79).
In management research, building a theory from rich qualitative evidence has gained a strong foothold (Eisenhardt &
Graebner, 2007). In the following, the authors start by
describing the company backgrounds of the user company
and the subcontractor.
Company Backgrounds: The User Company and
the Subcontractor
The user company is Hyundai Mobis, an affiliate of Hyundai
Motor Company (HMC) group, which timely and exclusively supplies not only auto parts modules to HMC’s
Lee and Chung
production lines but also spare parts to repair shops across
the globe. It ranked sixth in the global original equipment
manufacturer (OEM) parts supplier, generating US$31.4
billion and hiring more than 25,000 employees in 2016. To
briefly describe Hyundai’s culture by comparing it with
Toyota’s, “If you ask the people at Toyota to make you a
chair, they will first develop a plan . . . if you ask people at
Hyundai to make you a chair, they will go and get some
wood” (Shim & Steers, 2012, p. 581). Hereinafter, the
authors use HMC interchangeably with Hyundai Mobis
because Mobis, as an affiliate of HMC group, is widely considered to have an organizational culture identical to HMC’s
and because most of its TMT members are still transferred
from HMC TMT.
The subcontractor is a spare parts provider that paints and
packs steel-made body panels for Hyundai Mobis. Prone to
corrosion, the body panels must be painted through an electrodeposition coating (EDC) process and packed with bubble
wrap in carton boxes before being shipped abroad. Since its
establishment in 1992, the subcontractor has operated three
domestic plants in South Korea and three overseas plants in
the United States, China, and Slovakia. It generated US$87.2
million and employed more than 200 full-time workers
worldwide in 2016.
Data Collection
The authors had the opportunity to observe the subcontractor
for 12 months in 2017. To obtain the full benefits from utilizing the triangulation method, the authors conducted in-depth
interviews, perused archival data (e.g., academic papers,
newspaper articles), and observed several company-wide
activities. First, the authors collected data from interviews
accompanied by past managerial practices (Miles &
Huberman, 1984). The authors conducted a series of semistructured, face-to-face interviews with five respondents: the
president (founder), the vice president (co-founder), the chief
human resources officer (CHRO), the plant manager, and the
chief HR manager. The authors asked two entrepreneurs (the
president and the vice president) to describe what they
remembered about the user company, the business environment, and important managerial decisions (e.g., either
exploratory or exploitative innovations, such as large investment in new business/equipment and quality improvement)
throughout the company’s history. The authors also asked
them to explain why they made these decisions. Then, the
authors asked the CHRO, the plant manager, and the chief
HR manager to describe the managerial behaviors of the two
entrepreneurs and the organizational climate when these
decisions were made. When most of the earlier decisions
were made, these three respondents were at an employee
level, not at a manager level; thus, they could describe the
real picture of organizational climate and entrepreneurial
culture better than the two entrepreneurs, who may have
painted a rosier picture. The authors audio-recorded all of the
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interviews and then transcribed them under the permission
for future publication in an academic journal. They also
wrote memos for ongoing on-site analysis during the interviews (Glaser & Strauss, 1967). The data that the authors
gathered included more than 17.5 hr of interviews (16 interviews with an average of 1.1 hr in length each) and consisted
of 107,000 words.
Second, the authors gathered the subcontractor’s archival
data, documentaries, certificates of awards, and even photographs for two reasons: to confirm the respondents’ 25-year
recall memory and to ask the respondents to describe company activities that the authors considered important but that
they did not mention. In addition, the authors perused academic papers and online sources (e.g., company websites)
about the user company (HMC and Hyundai Mobis) to define
its TMT’s entrepreneurship and entrepreneurial culture. In
particular, the second author has long been familiar with its
entrepreneurial culture because he attended several training
courses on Hyundai’s entrepreneurship when he worked for
Hyundai Construction Company, which was founded by the
same entrepreneur, Chung Ju-yung (also pronounced as Jung
Joo-young), who later established HMC and Hyundai Mobis.
The authors wrote field notes while accessing the data.
Finally, the authors observed several managerial activities, including a 1-day quality workshop and a 1-day company track meet (10-km marathon) to capture the invisible
entrepreneurial culture and organizational climate of the subcontractor. The authors also attended three quarterly TMT
meetings to observe employees’ attitudes and behaviors, as
well as those of the two entrepreneurs. The authors wrote
field notes while participating in these activities.
Data Analysis
The authors conducted data analysis both while gathering
data (e.g., interviews, archival data, and observations) and
after completing data collection because “the analysis of
field data actually begins during a study’s observational
phase” (Barley, 1990, p. 234). These are traditional qualitative methodologies (e.g., Eisenhardt, 1989; Miles &
Huberman, 1984; Yin, 1994). The authors also adopted the
advantages of several graphical methods, such as flow diagrams (Yin, 2011), concept maps (Maxwell, 2005), causal
loop diagrams (Masuch, 1985; Sterman, 2001; Weick, 1979),
conceptual frameworks (Miles & Huberman, 1984), and
integrative diagrams (Strauss, 1987). These different graphical methods are slightly different from one another, but they
all consist of concepts and relationships among concepts
(Maxwell, 2005). The authors further utilized either positive
or negative signs (+ or –) to clarify the relationships that
could change when a particular event occurs.
Specifically, when conducting data analysis, the authors
read the interview transcriptions and reviewed the memos
and field notes that they wrote when collecting the data.
Carefully perusing them to meet the objectives of this
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Figure 1. Flow diagram of culture shaping through cultural isomorphism.
*The parentheses indicate the effects of market maturity, which occurred long after cultural isomorphism, on subcontractor’s entrepreneurship and
entrepreneurial culture; the “=” sign indicates a long-term influence.
study, the authors categorized the data by drawing on the
subdimensions of the original concepts of (the TMT’s)
entrepreneurship, entrepreneurial culture, and (exploratory
or exploitative) innovations. For example, considering the
subcontractor’s decision-making style to be rapid, centralized strategic, and decentralized operational, the authors
categorized it into one dimension of entrepreneurial culture by drawing on a prior study’s findings on HMC’s culture (e.g., Shim & Steers, 2012; Steers & Shim, 2013).
Although this categorization is not perfectly mutually
exclusive, it could be moderately reasonable in meeting
the current study’s objectives: the first two (the TMT’s
entrepreneurship and entrepreneurial culture) might be
causes, while the last (innovations) might be effects. The
authors also identified patterns or the relationships among
them: the user company’s entrepreneurs cultivate its entrepreneurial culture and influence the subcontractor TMT’s
entrepreneurship in turn; the subcontractor TMT’s entrepreneurship shapes entrepreneurial culture and prompts
(exploratory) innovations; however, the level of market
maturity changes the latter relationship. The authors finalized a flow diagram that showed the relationships among
entities and developed a new theoretical framework that
integrates the study findings. The authors collaboratively
confirmed the concepts and relationships among concepts
by iteratively perusing data and by repeatedly modifying
flows (relationships). The authors depict the flow diagram
in Figure 1 and recommend that readers read the following
section by referring to it.
Findings
The User Company TMT’s Entrepreneurship and
Entrepreneurial Culture
Chung Ju-yung, the founder of Hyundai Group (e.g., HMC,
Hyundai Heavy Industries Co., Ltd., Hyundai Construction
Company), is famous for his entrepreneurial leadership that
(1) focuses on “creative problem solving and reasoned risktaking,” (2) anticipates and responds to “environmental
changes rapidly to capitalize on opportunities and manages
problems,” and (3) develops “flexible operating policies”
(Shim & Steers, 2012; Steers & Shim, 2013, p. 586). He led
the Hyundai Group in boldly overcoming the hurdles posed
by limited resources and severe competition. Myriad documents and studies tell the history of his legendary entrepreneurial activities, such as one episode of meeting production
schedules by building dry docks and ships together (Hyundai
Heavy Industries Co., Ltd.) and the other of saving overseas
labor costs by moving prebuilt iron-made marine structures
from Ulsan, South Korea, to Jubail, Saudi Arabia (Hyundai
Construction Company).
Lee and Chung
In a comparative study of the organizational culture of
Toyota and HMC, Shim and Steers (2012) argue that HMC is
most effective in driving the organization and employees on
edge under highly risky situations by establishing uncertainty and flexibility as norms. They list four factors of
HMC’s organizational culture: “(1) risk orientation—accepting risk to turn a crisis into opportunistic creativity, (2) work
commitment—a strong atmosphere of ‘must succeed’ created
by a repeated chain (challenge > response imperative > task
accomplishment > increased self-confidence), (3) in-group
collectivism, and (4) decision-making—rapid results-­
oriented decision-making with both centralized strategic
decisions and decentralized operational decisions” (Shim &
Steers, 2012, p. 586).
The Influence of the User Company’s Founder on
the Subcontractor’s Founder
The most important decision-making members of the subcontractor TMT are the president (founder) and the vice
president (co-founder). The president was born and raised in
Ulsan, South Korea, where its headquarters are now located.
Ulsan, the city where Chung Ju-yung bore his initial ambition for business, houses many plants of HMC and Hyundai
Heavy Industries Co., Ltd. From the late 1980s to the early
1990s, when the subcontractor was established, South
Korea’s annual GDP dramatically recorded a high growth
rate of nearly 10%. In particular, Ulsan was the most industrialized city in South Korea, and a large group of manufacturers and even landowners, who dreamed of being the next
Chung Ju-yung, flowed into the city to become parts suppliers of Hyundai’s plants. Before the president started the subcontracting company, he ran a small painting business as an
outsourced subcontractor at several plant construction sites.
His existing business could be characterized by a business
cycle that, once he completed painting at one construction
site, he had to search for new business at another. Sometimes,
when a painting worker sustained a severe injury at a construction site, he had to pay a penalty equal to a half-year of
income, as well as lawyer fees to settle the lawsuit. This
event stimulated the entrepreneurial learning process
(Sullivan, 2000) and inspired him to start his business of
operating plants. He described his memory as follows:
Ah! This [painting in a construction site] is a business that ends
if an accident occurs. So I made up my mind to stop doing this
business as soon as possible. I searched for a new business
opportunity related to operating facilities. If I owned a plant and
became a subcontractor of a big manufacturer, I would not need
to search for the next business opportunity. In Ulsan, there were
many Hyundai Group plants, and I decided to create my own
business operating plants, like Chung Ju-yung, the founder of
Hyundai, who developed and produced a car first made in Korea
without any knowledge and past experience. Like him, I invested
most of my money in a new business, taking high risks.
5
Historically, automakers had produced cars “within hierarchical, vertically integrated Fordist/Chandlerian firms,”
but in the 1980s, they began to assemble cars with a cluster
of “vertically disintegrated” parts suppliers (Herrigel &
Zeitlin, 2010, p. 1086). In the early 1990s, stimulated by this
structural change in the relationship between the user company and suppliers in the auto industry, HMC and Mobis
decided to outsource production of spare parts to subcontractors. At the time, the existing painting shops produced spare
parts with traditional painting methods (e.g., manual brushing, spraying, and dipping), not with the EDC method utilizing the automated painting production equipment, thus
failing to meet the quality level expected by HMC and
Mobis. In other words, the existing painting shops operated
on the basis of traditional resources (e.g., physical, financial,
and human resources); moreover, a new subcontractor operating the EDC process needed to have the brand-new knowledge and entrepreneurship that Peter Drucker additionally
emphasized because none of the existing painting shops in
Korea operated with the EDC process at the time.
The president of the subcontractor asked all around to
find an engineer who could build, operate a new plant, and
win orders from HMC and Mobis; after meeting several
engineers, he recruited the right person for the job, who later
became the vice president. They established the subcontractor in 1992, attempted to turn their company into a unique
subcontractor supplying EDC-processed spare parts to HMC,
and finally succeeded in winning orders. The president of the
subcontractor had been neither an employee nor a family
member of Hyundai. Nevertheless, as an admirer of Chung
Ju-yung characterized by entrepreneurial leadership, such as
risk taking and rapid response to environmental changes, the
president decided to invest all of his money in building and
operating a new EDC-processing plant, the first in Korea.
Cultural Isomorphism: The Subcontractor’s
Entrepreneurial Culture Similar to That
of the User Company
When the subcontractor began receiving orders from the user
company, there were already several existing subcontractors
who produced spare parts with the traditional painting
method. To take contracts over from its competitors, the new
subcontractor’s TMT decided to meet all of the user company’s needs (i.e., low price, high quality, and flexible production schedule) and even mimic all of the cultural aspects of
the user company. For example, when other subcontractors
(existing competitors) refused abrupt manufacturing orders
from the user company, the new subcontractor accepted the
orders and produced all of the auto parts by operating for 24
hr for several days. A key cultural factor of the user company
was rapidness (even in uncertain situations); thus, the subcontractor won over the user company by perfectly mimicking
the user company’s culture. The authors label this process
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between-organization cultural isomorphism, as a result of
which the subcontractor’s cultural aspects are similar to those
of the user company. In the following, the authors elucidate
them with rich evidence, drawing on prior studies (e.g., Shim
& Steers, 2012; Steers & Shim, 2013) that analyzed the user
company’s cultural aspects, such as (1) rapidness, (2) uncertainty and flexibility as norms and work commitment, (3) risk
orientation and centralized strategic, (4) decentralized operational decisions, and (5) in-group collectivism.
Culture Descriptions (1): Rapidness
The subcontractor’s culture is similar to that of the user company in that they both prioritize rapidness as the most important competence. In particularly, given the unexpected
workloads (urgent orders) from the user company, the subcontractor’s employees worked overnight and even on holidays, taking for it granted. As one respondent describes it:
It is matter of time that the user company quits ordering to a
certain subcontractor. If my company pays less attention to
rapidness, another subcontractor will take my company’s place .
. . My company’s secret to success is just working hard to
quickly paint, pack, and deliver our products to the user company
as soon as possible. I think the user company likes my company
because the two are identical to each other in that sense.
Similarly, another respondent’s comment also supports
how well the subcontractor sets rapidness as a top priority,
which is one of the user company’s cultural factors, as
follows:
A manager of the user company often said that my company has
the ability to do everything very quickly and to usually meet
deadlines, which corresponds to the organizational culture of his
company.
Culture Descriptions (2): Uncertainty and
Flexibility as Norms and Work Commitment
During the first decade of the 21st century, HMC abruptly
gained popularity across the world and dramatically
expanded its production quantity; thus, it had to establish
overseas plants every 2 years. As the global demand for the
cars that HMC produced was growing, the global demand for
its spare parts was also increasing. Consequently, Mobis
requested that the subcontractor build and operate overseas
plants in the United States, Slovakia, and China to participate
in its global supply chains. Like employees in the user company, those in the subcontractor, considering uncertainty and
flexibility to be norms, had a high level of work commitment. A respondent who was a former plant manager at the
time describes it in the following:
In 2007, there were serious problems at the newly built plants in
the US and Slovakia at the same time, and we could not expect
to meet the delivery schedule and quality standards. So the TMT
decided that I should go as a plant manager to the US. I was
fixing the problems with the new facilities and installing new
equipment in the US plant. Then, a plant in Slovakia that had to
start operating on November 1 had other serious problems.
Since the plant in the US had more time than that in Slovakia,
the TMT suddenly asked me to come to Slovakia. I went to
Slovakia and finished the preparation for operating the Slovak
factory . . . Later, something similar happened in China. I went
to the plant construction site in China with the vice president. He
looked around the site and told me to stay there a year, allowing
me to bring all my family over immediately. I had two sons. The
younger one was in the first grade, and the elder was in the third
year of high school. I brought my kids to China and let them quit
school for a year because my company’s business is a top
priority, not only for me but also for my family. If my company
no longer earns money, my family and I cannot live.
Culture Descriptions (3): Risk Orientation and
Centralized Strategic Decisions
According to Shim and Steers’ (2012, p. 586) study, “managers
[in the user company] encouraged to accept risk and uncertainty as a vehicle for opportunistic innovation.” Similarly,
whenever the subcontractor encountered a risky situation, its
TMT often made centralized strategic decisions and exploited
the situation by taking risks. One respondent described risk
orientation and centralized strategic decisions as a cultural
dimension as follows:
Hyundai Mobis confidentially planned to replace a large number
of existing orders given to my company by building its own new
plant and by producing by itself. One day, suddenly, my vice
president and I heard that news, and we contacted Mobis. It
asked us to estimate how much it would cost to build a plant. My
vice president let me make a proposal at thirty percent below
Mobis’ cost estimation. When we proposed our estimation,
Mobis cancelled its original plan to build its own plant and
produce by itself, accepting our proposal that we, not Mobis,
build and operate a plant. Although we paid a lot of money to
build an extra plant, by taking risks, we were able to avoid the
threat of losing existing orders and gained an opportunity to
generate more revenue.
Culture Descriptions (4): Decentralized
Operational Decisions
Once the user company TMT set its strategic directions and
goals, its employees would often be encouraged to find ways
to overcome “local challenges and environment” (Shim &
Steers, 2012, p. 589). This cultural aspect of decentralized
operational decisions is attributed to the so-called “can-do
spirit” of its founder, Chung Ju-yung: when he was told that
his employee could not complete something, he asked, “Hey,
have you ever tried it?”; he often attempted to inspire his
employees to develop a strong belief in the can-do spirit and
said that a person with a can-do spirit can always find a
Lee and Chung
solution that he or she has not yet found (Korea Herald,
2015). In a similar vein, the subcontractor TMT usually
emphasized the can-do spirit so that its employees could
make decentralized operational decisions by themselves in
urgent situations. A respondent stated this point as follows:
In 2003, when I was not at the manager level but an employee, a
devastating typhoon caused great damage. One side of the roof
was blown away by strong wind. The roof was just above the
space where [inventory] items already produced were waiting
for delivery and shipment. I alone decided to try to cover the
open roof with a large vinyl tent. It was fifteen meters high. I
didn’t have any safety strap. It was very slippery because it was
raining . . . There was no other person to climb up there, but I
went up because I was an employee with a duty to protect the
properties of my company.
Culture Descriptions (5): In-Group Collectivism
Southerton (2014, p. 47) considered one of HMC’s cultural
factors to be harmony, which is described as “strong collaboration and cooperation with family-like solidarity.” Similarly,
Shim and Steers (2012, p. 587) noted that the user company’s
culture shows “stronger commitment to the organization
itself, defined in terms of loyalty, pride, and team cohesiveness.” The authors found a similar cultural aspect, so-called
in-group collectivism, in the subcontractor when an interviewee described the following:
In 1997, a financial crisis struck East and South Asian countries.
Automakers ceased to produce their cars, and their contractors
did not receive sufficient orders from them. However, the TMT
neither closed the plants nor laid off any employees. Instead, the
TMT decided to overcome the crisis together. To maintain
employees’ psychological readiness to produce on time, the
TMT let all the workers and managers register for a marathon
race that would soon be held in the city where the plant was
located. Every evening, we ran at a nearby playground to train
ourselves for the race. After running, we sat on half-cut empty
paint drums and held small barbecue parties with sliced pork and
Soju [which is a popular, inexpensive Korean vodka] to pray
that we would all survive these hard times.
The Relationship among the User Company
TMT’s Entrepreneurship, the Subcontractor
TMT’s Entrepreneurship, and Exploratory
Innovations
In this case, the authors elucidate that the entrepreneurship
learned by the subcontractor TMT from the user company
led to exploratory innovations. For the timely construction
of the overseas plants, the subcontractor TMT ordered its
employees to design easy-to-assembly (modularized) facilities. With this method of shipping prebuilt modules to the
overseas plants, the subcontractor could save the additional
7
time and costs that might have been incurred by the poor
management of a local constructor. The subcontractor TMT
generated this modular idea by drawing on the Hyundai
Construction Company’s innovative construction case at
Industrial Port Jubail, Saudi Arabia, in 1976, where a marine
structure that was 375 m long and weighed 40,000 tons was
prebuilt in South Korea and transported to the gulf by barges:
it was an original idea of Chung Ju-yung, the founder of
Hyundai.
The Relationship Between the Subcontractor’s
Entrepreneurial Culture and Exploratory
Innovations
The subcontractor’s entrepreneurial culture consequently
stimulated exploratory innovations. A respondent recalled
his experience in designing a new IT project, such as enterprise resource planning (ERP) and supervising QS 9000,
Korea’s quality standard for manufacturing, modified based
on ISO 9000, as follows:
My company did not have sufficient number of engineers, so I
had to do it myself with a high commitment even though I didn’t
know how to. When my company had to design and implement
a new IT system, I formalized our business processes in line
with best practices and reflected them in the IT system. I had to
convince the programmers to implement customized processes.
I then did a lot of work spending several nights in redrawing our
work processes with the programmers . . . When my company
decided to apply for the quality certification called QS 9000,
many employees participated in off-site trainings without any
hesitation because all employees, believing in their TMT’s
decision, thought that the importance of quality would soon be
highlighted by the user company. Finally, we became the first
QS 9000 holder among subcontractors of the user company.
The Relationship Among the User Company
TMT’s Entrepreneurship, the Subcontractor
TMT’s Entrepreneurship, and Exploratory
Innovations
The user company’s entrepreneurship positively influenced
the subcontractor TMT’s entrepreneurship, entrepreneurial
culture, and exploratory innovations. There was an example
in which the user company gave the subcontractor an urgent
request. The subcontractor TMT, by recalling an episode in
which the user company’s founder searched for a novel solution during the Korean War, attempted to find an innovative
way to attain the best outcomes. A TMT member described it:
When a new plant in China was in the planning phase, HMC
abruptly requested that my company invite a group of Chinese
executives from HMC Beijing to our headquarters in Ulsan,
South Korea. The visiting group included a man who ranked as
high as HMC’s executives. We remembered an episode about
8
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Figure 2. Subcontractor’s revenue growth.
Chung Ju-yung: when UN officers were planning to visit the UN
military cemetery during the Korean War, they might have been
disappointed because there was no grass in late winter. To
delight the UN officers, Chung Ju-yung planted barley because
barley has green leaves even in late winter and looks like grass
at a glance. We suddenly contacted the police station near our
headquarters to ask police motorbikes to escort the Chinese
visitors on the road while monitoring their movement on the
radio. We also quickly made placards that covered the whole
outside wall of the office building and hung side by side, which
were printed with “We welcome you enthusiastically” in Chinese
on a red background and with golden lettering. We already knew
the Chinese really like red and golden colors. The Chinese
visitors were very delighted, and later my company’s business
had no problems in China.
The Effects of Market Maturity on the
Relationships Among the Subcontractor TMT’s
Entrepreneurship, Entrepreneurial Culture, and
Exploratory Innovations
All relationships among entities noted above could be considered positive. However, market maturity may negatively
influence the relationship between entrepreneurial culture
and exploratory innovations, whereas it may still positively
impact the relationship between the TMT’s entrepreneurship
and innovations. Specifically, Figure 2 shows annual domestic revenue from 1992 to 2015. Since 1992, when the first
plant was built, three factories were built over the next 7
years; thus, it took approximately 2 years to build another
plant. The subcontractor’s business grows in a step-wise
fashion because each new factory increases its revenue. The
revenue ceiling can be determined by the user company’s
demand, and thus, the subcontractor inevitably reaches a
growth limit. In 2004, diminishing revenue growth was
prominent, and the market matured.
When the dramatic growth in revenue was attenuated in
2004, the TMT of the subcontractor sought exploratory innovations through investment in an IT startup, by following the
social climate that caused the internet bubble in South Korea.
The TMT of the subcontractor decided to contact a group of
engineers and start a venture with them because its members
(president and vice president) still had strong entrepreneurship. The venture developed sensor chips that would be used
for commercial electronics such as mobile phones and small
digital gadgets. The president of the subcontractor directed
company-wide attention to this venture and tried to build a
similar cultural atmosphere to that of the mother company,
the subcontractor. For example, he invited the venture
employees to the subcontractor’s corporate events, including
an overseas family trip and an annual New Year’s Eve party.
A number of engineers had already obtained high academic
achievement in the related fields and had a high level of competency in gaining financial support from the central government’s R&D fund. However, they failed to meet development
deadlines, and the president of the subcontractor doubted
their abilities. In 2010, the venture was finally broken up,
leaving neither tangible nor intangible assets (e.g., equipment, engineers). An employee lamented, “Generally speaking, when a company closes, some skilled persons or facilities
would remain. However, the company [venture] left not even
a handful of ash.”
In 2010, upon closing the venture, the subcontractor again
bought out a linen-washing company whose main clients
were large-scale hotels in a nearby tourism complex. The
subcontractor TMT found that the EDC and the linen industry were similar to each other in terms of their business
Lee and Chung
processes and resources (e.g., continuous production system,
water and sewage treatment system). The TMT observed the
trend that people are increasingly spending more of their disposable income on traveling and less on durable goods such
as automobiles. However, many employees had a negative
view of the TMT’s decisions, and one respondent remembered the failure of the sensor company and commented on
the new business:
There was a negative climate against new business among
employees. It was an electronic industry very different from the
current [EDC] industry. In the electronics industry, the
consumable cycle is very short, whereas the development cycle
is very long. While competitors were producing high-quality
sensors at low prices, we were still developing basic technologies
. . . Now, the TMT decided to enter the laundry business because
it seemed to be similar to our current business model and
process. So we needed to watch what’s going on because we still
thought our competency fit with our user company’s demand
and worked well in this industry. None of us liked to participate
in the new business.
Discussion
In the present research, the authors attempted to elucidate
how cultural isomorphism emerges across organizations and
how culture, in turn, is shaped within a new organization.
Specifically, these findings suggest that, when a new subcontractor’s survival depends solely on the user company’s decisions to purchase its products, its TMT usually deploys good
impression management by harmonizing with the user company’s social codes or by following the user company’s culture (Weber & Dacin, 2011). In the case, the subcontractor
faces external cultural constraints. In other words, when the
relationship with the user company occupies the most central
place for the subcontractor, culture may act as a constraint
(Weber & Dacin, 2011).
One aspect of the current case—external cultural constraints—highlights the contractor’s cultural isomorphism in
relation to its user company’s culture. The authors define it
as a cultural process or structure developed by a following
new organization (subcontractor) that attempts to render its
culture similar to a leading organization’s (user company)
culture to obtain legitimacy in the same organizational field.
Interestingly, the notion of cultural isomorphism is closely
related to the term institutional isomorphism, which was
introduced by institutionalists (e.g., Meyer & Rowan, 1977)
and refers to “constraining process that forces one unit in a
population to resemble other units that face the same set of
environmental conditions” (DiMaggio & Powell, 1983,
p. 150). To survive, the subcontractor, whose products are all
purchased by the user company, cannot help but accept the
user company’s cultural code. Moreover, the concept of cultural isomorphism is associated with the proponents of population ecologists (e.g., Hannan & Freeman, 1977) in that “the
environment [user company in the organizational field]
9
selects in only those organizations whose characteristics
match the environment” (Nelson & Gopalan, 2003, p. 1118).
Another aspect of this case—internal cultural resources—
indicates the contractor’s culture shaping within its organization. The subcontractor TMT’s entrepreneurial identity is
influenced by the user company TMT’s (Werthes et al., 2018),
but the subcontractor, as a startup company, had to develop its
own culture within its organization (Choueke & Armstrong,
2000). Drawing on observations and archival data, the authors
posit that the subcontractor TMT used culture as a resource
for action by storytelling (e.g., company history), showing
rituals (e.g., repeating a company slogan), and attaching
material symbols (e.g., company logo) on employees’ workwear. Thus, the subcontractor TMT can be viewed as cultural
entrepreneurs (Lounsbury & Glynn, 2001) because it often
used pragmatic problem solving and even bricolage, which is
an action to “combine diverse materials for their own pragmatic ends” (Weber & Dacin, 2011, p. 3).
By emphasizing the subcontractor TMT’s cultural isomorphism and culture shaping, the authors label its overall
cultural role as a cultural game player. In social psychology,
the view of a cultural game player emphasizes that an individual actively judges and chooses appropriate behaviors,
not only by predicting anticipated responses from others but
also by comparing his or her own benefits to the costs (Kim
et al., 2016). In the present example, while the subcontractor
TMT attempted to harmonize with the user company’s cultural code to ensure future survival in its organizational field,
it also tried to actively use its cultural resources to form a
strong entrepreneurial culture within its organization.
More conspicuously, market maturity influenced the relationship between entrepreneurial culture and exploratory
innovations. Specifically, regardless of market maturity
(both in the short and long runs), the subcontractor TMT
always sought exploratory innovations because its members
were entrepreneurs. Nevertheless, the entrepreneurial culture
effectively stimulated exploratory innovations (Jackson,
2015) only while the market was growing (in the short run);
when the market matured or was declining (in the long run),
the culture exacerbated employees’ positive attitudes and
behaviors toward exploratory innovations. The authors elucidated this phenomenon with an inverse U-shaped graph, as
depicted in Figure 3.
This phenomenon can occur for the following reason. The
subcontractor’s entrepreneurial culture was transplanted by
its TMT, usually through mimetic or normative and sometimes through coercive culture isomorphism (DiMaggio &
Powell, 1983). When the market grew, most employees perceived the effectiveness of the entrepreneurial culture
(shaped through cultural isomorphism) toward exploratory
innovations because they believed that the more exploratory
innovations that they sought and implemented, the more revenue from the user company that they could generate (effectiveness of mimetic or normative isomorphic process).
However, when the market matured, they no longer believed
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Figure 3. Changes in exploratory innovations as the market grows.
in the effectiveness of entrepreneurial culture because they
did not expect to generate much revenue from the user company (ineffectiveness of coercive isomorphic process).
Theoretical Contributions
The present study makes three theoretical contributions.
First, the authors extended the practically applicable realm of
the existing conceptual framework, which has distinctively
divided organizational culture into four domains (internal
constraints/resources and external constraints/resources). In
particular, answering Überbacher’s (2014) call to build a
bridge between audience-centered (constraints) and actorcentered (resources) views, the authors found that cultural
entrepreneurs, as cultural game players, could positively
respond to both external constraints and internal resources.
Second, this research revealed the phenomenon of cultural isomorphism across organizations. Although a handful
of studies have been conducted with regard to cultural isomorphism, they have merely emphasized an isomorphic relationship between national and organizational culture (e.g.,
Nelson & Gopalan, 2003), not between two organizations.
However, the present study is the first to reveal cultural isomorphism, which occurs across organizations, in a mandatory setting for a startup subcontractor following its user
company.
Finally, to the authors’ knowledge, this study is the first to
theorize the critical effect of market maturity on the relationship between entrepreneurial culture and exploratory innovations. Specifically, as the market grows, the entrepreneurial
culture (shaped through cultural isomorphism) can boost
exploratory innovations; however, once the market matures,
the culture cannot prompt explorations. This finding suggests that market maturity plays a critical role in changing
the effectiveness of entrepreneurial culture, which is particularly shaped by cultural isomorphism.
Practical Implications
This study’s findings provide several managerial implications for practitioners. A startup TMT should become a cultural game player. A startup company usually strives for the
legitimacy of existing clients or user companies. Its TMT’s
attempts to learn and resemble the user company’s culture
could be perceived favorably by the user company, and if its
efforts are successful, it can vend more products to the user
company. Therefore, when a startup has only one user company, its TMT should adopt the positive aspects of the user
company’s culture through cultural isomorphism.
In addition, a startup TMT should carefully use the entrepreneurial cultural toolkits that are shaped through cultural
isomorphism. Its culture can positively stimulate employees’
Lee and Chung
11
willingness to search for and implement exploratory innovations when the market grows, but its culture attenuates while
the market matures. Thus, a startup TMT should remember
that its employees’ shared meaning of entrepreneurship—
within-organization shaped entrepreneurial culture through
between-organization cultural isomorphism—can be influenced by the maturity level of the market.
Limitations and Future Research Directions
Despite its several theoretical contributions and practical implications, the current study has some limitations. The authors did
not consider the effect of national culture. A prior study conducted by Nelson and Gopalan (2003) presented two possibilities, that is, that organizational culture can have an isomorphic
structure and process with regard to national culture and vice
versa. The authors cautiously presume that cultural isomorphism can exist only in countries with a national culture characterized by a high level of power distance and collectivism (e.g.,
South Korea; Hofstede, 1980), where coercive and normative
pressure usually prevails. Future research should replicate these
findings in Western settings for greater generalizability.
Although many studies of entrepreneurship have emphasized the role of personal characteristics and environment
(e.g., dispositions, social provision of entrepreneurship education; Chung & Lee, 2017; Farashah, 2015; Khalili et al.,
2015; Lumpkin & Dess, 1996; Shinnar et al., 2012), the present study did not consider TMT members’ dispositional and
other environmental effects on their entrepreneurship. Future
studies should examine the effects of personal disposition
and various environmental factors on cultural entrepreneurship in the same settings.
Acknowledgment
The authors would like to thank Jungsik Kim, professor at
Kwangwoon University, for his advice.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect
to the research, authorship, and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support
for the research, authorship, and/or publication of this article: This
work was supported by the National Research Foundation of Korea
(NRF) grant funded by the Korea government (MSIT) (No.
2019R1G1A1099483).
ORCID iD
Goo Hyeok Chung
https://orcid.org/0000-0002-1458-652X
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