Dioscuri Research Project
Eastern Enlargement – Western Enlargement
Cultural Encounters in the European Economy and Society after the Accession
DIOSCURI Final Conference
Institute for Human Sciences, Vienna
April 20-22, 2007
Paweł Kaczmarczyk & Mikolaj Lewicki
“LOST IN TRANSFORMATION”.
CULTURAL ENCOUNTERS IN MULTINATIONAL CORPORATIONS INVESTING
IN CENTRAL AND EASTERN EUROPE.
Work in Progress
Please do not cite or circulate without permission of the author
Only for conference discussion
In the following paper we are concerned with cultural encounters occurring in the
Multi-National Corporations (MNC’s), which invested in the CEE during transition
period (1989-2005), whereas we will refer to the various dimensions of the
encounters such as East – West, global – local, national – international, international
– regional, etc. They triggered multi-dimensional changes in the economic sphere,
which are of interest to our analysis.
The fall of communism was clearly a breaking point in the development of CEE
economies. One of its many consequences was the massive inflow of the foreign
direct investment (FDI) and appearance of modern MNC’s. According to many
observers of the economic scene, since early 1990s foreign investments played an
enormously important role in economic development of the CEE. One should bare in
mind that the period of MNC’s investment in the CEE was concomitant with several
economic and cultural processes transforming the MNC’s ways of operating,
particularly on the global scale. In this context, the authors would like to assess not
only the regional or local, but also some global processes associated with MNC’s and
their operation in the CEE.
The aim of this analysis is to focus on MNC’s as global organizations which interact
with various local environments, take part in shaping of local markets and can have
major significance in the cultural change of economic behaviors. The research was
made in 8 countries of Central Europe where various MNC’s were object of
qualitative research. This report is basing on various case studies from Dioscuri
project which were chosen by one predominant criterion.
From many analyses (including the outcome of the ACCESS Project) it follows that
East-West cultural encounters do not necessarily lead to clashes / conflicts but may
be rather described as mutual learning process. Moreover, in the late 1990s and
early 2000s more and more common strategy included a process of “hybridization” of
cultural and organizational patterns and behaviors within transnational companies.
The process of “hybridization” (i.e. mixing and complementary existence or even
synthesis of various encounters and cultural backgrounds) was referring in most of
the case studies concerning the field “Entrepreneurs” in the Dioscuri Project. The
analysis presented in this paper is based on following cases: Reiffeisen (Croatia,
Serbia, , Hungary, Poland, Romania), Unicredito (Czech Republic), (Z-Bank)
Bulgaria, Starobrno/Heineken (Czech Republic), Panonska pivovara/Carslberg
(Croatia), Karlovacka pivovara/Heineken (Croatia), Pecsi Sorfozde/Ottakringer
(Hungary), Gallaher Tobacco Company (Poland). As reference points and
comparative resources we refer to the cases of: Revoz Car Company (Slovenia),
Weifert Pivo (Serbia) and Carrefour Romania. The selected cases comprise both
services and productive branches. Hybridization is put here as a working hypothesis
which should describe complex relations inside and outside of companies, being
MNC’s subsidiaries established mainly during 1990-ties in CEE region. A more
general aim of this research is to give insights into observation of relations between
economy and culture as seen in social sciences. We propose to observe MNC’s on
various levels of analysis and try to combine them by using the term
interdependencies which refers to Elias’s concepts of interrelations between
sociogenesis and psychogenesis, where the macro-level analysis cannot be divided
from micro-analysis (Elias 2000). It is important to consider that we use the term
hybridization to indicate a process which does not have a prescribed and visible end
or outcome, therefore we abstain from using the term “hybrid” which would refer to a
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new, “accomplished” entity (in this case – a type of enterprise or even a type of
culture). Instead we realize that our research comprised just “a glimpse” of a broader
civilizing process in which what we call global and local seem to play more and more
important role and seem to be at least as important as difference between Western
and Eastern culture, from which this research started.
Hybridization was/is a mode of behavior of MNC’c subsidiaries in CEE region, which
consists of relatively deep interaction of local culture, patterns of behavior and
perceptional schemes and MNC’s rather universal norms and tendency towards
standardization. We try to shed some light on the causes of such processes and to
give certain hypotheses on the influence of such strategy not only to the corporation’s
actions (and taken strategies) but to the general transformation of Eastern European
societies.
During our analysis of case studies collected in the Dioscuri Project we observed that
MNC’s create interdependencies inside its structure and outside – with their
environment which result in mutual transformation – organizational one in the context
of companies and social and economic in the context of transformations of societies
and economies of CEE countries. Those relations are usually described by distinction
between local and global. Therefore we wanted to focus on the determinants of
success of MNC’s global expansion, not on the economic level (though we give
certain hypotheses in this area) but rather – as new forms of social organizations.
Hybridization is treated here more as a process and for researchers as a “tool” to
disclose those interdependencies rather than defining specificity and inherent
features of Eastern European economic culture. WE abstain from such definitions
since from our perspective such processes relate to long lasting civilizational
processes which were not objectives of Dioscuri Project since from the beginning its
scope of research included predominantly Post-communist transformation in this
region.
PART ONE - Methodological Issues and scientific context of the research
Scope of research
By referring to the interdependencies we would like to assume that processes of
transformation in MNC’s should encompass meta-, macro-, mezzo- and microperspective.
As a meta-scale we refer to the global transformations such as international
regulations, and transformations of international institutions such as EU. Regulations
– important to see the process of standardization on both: organizational level of
corporations (various commercial organizations) and economic (standardization of
regulations in such sectors as financial). Countries where research was conducted,
have been in the process of accession to the EU, already joined EU or were just at
the threshold of decision on accession. Therefore even to the same companies,
levels of regulations were enforcing certain centralization and standardization (e.g
financial sector) whereas others – enforcing diversification (barriers on duties and
trade exchange could hinder supply chains of MNC’s). Corporations presented here
tended to rather adapt to the environment, to use centralizing and decentralizing
forces to their strategies rather than pursued one-way model of investment. As
Saskia Sassen proposes in her account of national-state sovereignty vs. globalization
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and globalizing organizations (such as MNC’s), the whole process of globalization,
which in fact should be encompassed by meta-level, takes place in institutions and
processes which enforce trans-national communication, capital-flow, etc. and in
institutions which can actively react or play an active role in negotiating the overall
outcome of global processes (Sassen 2000) . One should see in the same time
forces which universalize and standardize (reducing the meaning of borders) such as
central banks in European Union and others – as decentralizing or limiting the global
processes. Such decentralizing tendency in the analyzed case studies played
networks of formal and informal markets, provoking global companies to modify their
global strategies in order to be more effective or competitive on national and
international levels.
Macro-scale: transformations of the MNC’s setting: regulations, institutions and
economic processes associated with the FDI’s (both on the global and regional, i.e.
Central European scale, particularly the latter seems extremely important due to the
fact that it places the MNC’s operations in the context of economies under transition).
Mezzo-scale: intra-organizational transformations (headquarters – subsidiaries, intersubsidiaries relations) of the given MNC’s: history of investment in CEE, perceived or
referred by actors, strategies of investment and control of the headquarters.
Micro-scale: relations (interdependencies) between the actors are to be observed,
particularly with reference to the difference in the discourse` between “locals” and
foreigners but also to other as soon as they are used by respondents.
On the micro-level, we are dealing with perceptional schemes, ways of establishing
relations, beginning with human resources strategies, through the perception of
responsibility and decision-making and understanding of work (work-identity) to the
motivations and emotional model promoted in the company by its managers and
normative regulations.
Meaning of locality
The global – local difference seems to be very common juxtaposition in accounts of
respondents. Whereas the global has rather unambiguous meaning, referring to
international organization, international processes and communications, the local
appears in few contexts. “Local” can be national setting, but also regional and
indigenous – local in a sense of local community and local tradition.
Here we would like to refer to the idea of local as juxtaposed to global and
international. Local is associated with natural, internal and known. Therefore those
companies which have looser control over subsidiaries and leave space for activity of
local managers or local setting, leave some place for local to be more visible and
identifiable. In this way, locality stays in accordance or in conflict with those
elements which are treated as global, external or unknown for locals. Therefore place
for local means – more visible appearance of contrasts and differences, and actions
determined strongly by local context.
It does not mean that in researched MNC’s strategies, the local was supposed to be
a “competitive advantage” by default. In some of them, basing on local resources
was a way to settle (or shall we say – embed) in local market. Those firms coming as
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first foreign players on the market had to use the local resources such as local
employees or local production lines at least for a certain period, in order to introduce
further, deeper changes. Preliminary “loose’ control and relatively light
implementation of standard procedures could be treated as only a phase in strategic
development. However even then, differences could have appeared in a stronger
way than in a “McDonald-like” corporation, to use one of our respondents’ terms.
For another corporation, “local” meaning Central-European, which referred to the
global, in a literal sense, was a source of identity and resource in the competition with
other Multinationals operating in the same branch. By referring to the “local”, the
company referred to strategy of engendering its business in local conditions and to
the use of local managers and employees.
The latter had its opposite reference in the pictures described by those employees of
hybridized companies, which had former experiences of working for international
corporations. To them, typical corporations have strict rules and procedures, globally
applied, standardization controlled by international (foreign) elites. Transfer of
knowledge in such corporation consists of “bringing piles of instruction brochures,
procedural instructions, uniforms, etc.’ (…RB Poland). Locality in such corporations is
a hindrance, an unnecessary element, to be quickly dismissed. So when the „locality”
is perceived in employees they are the first to fire.
We can divide case studies of MNC’s into five main types of center – subsidiary
relations.
1. Strict control by hierarchy and centralization, usually maintained by foreigners
and ex-pats. This is a model, where corporation is bureaucratized and
standardized; where the best managers travel around the world but they are
not the ones to make revolutions in merged, taken-over or established
company but rather to find the shortest path towards convergence with the
rest of organization. Employees and managers from CEE countries who
worked in such corporations, called them “McDonald-like”” and Unilever-like”
or even “totalitarian”.
2. Loose control of the center but dominating role of foreigners as controllers and
culture-brokers; rather formalized and “stiff” structure of the corporation but
possibility of local managers’ advancement (up-grading).
3. Strong corporative culture (normative integration in Ghoshal’s terms) but
loosened local structure in which dialogue between local and foreign
managers occurs.
4. Loose relationships with the center; center accounts for effects and proposes
rather than imposes solutions, possible to reject by subsidiary.
5. Absentee ownership – strong normative integration, relatively dynamic flow of
managers (as multinationals) effectively operating in changing cultural setting
and more or less facade-like dialogue with locals.
Dioscuri project embraced basically one MNC which could be qualified to the 1-st
type. There were at least 4 companies whose mode of operation was of the 2-nd
type. There were 3 firms which belonged to the 3-rd group. The 4-th was essential for
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one banking corporation researched in 5 countries. However it is important to
mention that among the bank’s investment we could find relations which fitted more
to the 2-nd type and those fitting to the 5-th type. There were two subsidiaries of one,
beer sector company which could be qualified in the 5-th group and also one
subsidiary of smaller TNC which proved to be the case of a failure of Western
management and pre-dominance of the local management. What seems to be
important the latter is also operating in beer production sector. .
Tradition of research on MNC’s transfer of (organizational) culture
The term organizational culture has many connotations, meanings and bibliographic
addresses. In order to “unpack” this term, it is useful to observe and categorize the
ways of relating economic actions of MNC’s with the perception of cultural factors. In
the following analysis we would like to focus on one of the problems associated with
this relationship – with transfer of organization’s knowledge and its internal structure.
One is tempted to refer to a very simple, taxonomic division between how economic
activity is linked with culture in approaches of managerial studies, economic theories
(basically – neo-classical, transaction cost economy and neo-institutional theories,
which could be placed also in between managerial studies) and sociology or
anthropology. In general, most of these studies refer to three basic problems;
-
control and coordination in complex, international organizations
-
transfer of knowledge (conditions of its absorption and adequacy to
circumstances)
-
communication and integration.
All of them are concerned with the most basic goal of such research: how to make
companies and then economies working more efficiently? Development analysis of
such organizations as MNC’s is seen through more or less utilitarian lenses.
Therefore it is no wonder, other factors such as culture or social relations appear as
secondary or tertiary. One is tempted to say – whenever tools of research cannot
account and measure those behaviors which are qualified as economic, the term
culture appears. More as a provocative argument than as a scientific statement, shall
we treat the observation that economic science “discovered” relations between
individuals and between organizations when the level of “interferences” in
measurability and accounting for market behavior began to question prerequisites of
such approach. MNC’s as presumably rational organizations observed internal and
external problems with account of individual’s or organization’s decision-making.
Some of them however could not be explicated merely in terms of irrational
(emotional) behavior or insufficient information needed to take decision. Different
approach, which involves observation of relations between units of analysis is
network analysis. It tries to see every individual (organization) as entangled in many
relations with his/her/its environment.
Whereas we would like to abstain from accounts of economic efficiency and
accountability in the research on MNC’s, we would like to see these organizations as
complex networks of social relations which are interrelated to their environment.
Tempting to simplify a bit, one could say – it is an observation of global organization’s
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development in conditions of dynamic change, occuring in its environment. As our
research disclosed, this “environment” interacts with the whole corporation (its
headquarters and subsidiaries),and creating new inner and external orders.
PART TWO – Methodological approach of the Research
Interdependencies – multi-level analysis of MNC’s
Before starting the research analysis one should distinct the approach with which the
study is offered. It is striking that analyses observing relations between political
sphere or “power-games’ and economic activity, presented in the following
description of sociological research on the socio-economic transformation in CEE
countries are similar to the way historical sciences usually tried to describe the
history “as it really is” (Ranke). Politicians, “the Nomenklatura” and politico-economic
networks in the Postcommunist countries play a similar role as descriptions of power
games between princes, aristocracies or land-lords and new estates evolving in
modern times, described in historical accounts of the transformation between
feudalism and capitalism. Patrons and clients are the perpetuators of new orders and
outcomes in the new social formations. As Norbert Elias assumes, such approach is
definitely justified but one should ask, what besides power-games precipitated and
then – changes and justifies such critical transformations? Without going into the
theory of Elias’s Civilizing Process, we would like to refer to one of his crucial terms
of “interdependencies” (Elias 2000, 11-66) . At the most basic level, one should say,
that power-games are always “embedded” in dependencies basically – of social
nature, but also – of geographical and technological one.. Elias’s perspective tends
to combine psycho-genesis with socio-genesis and assume that limitation of
sociological analysis to merely macro- or micro- perspective results in what could in
other terminology be named as “oversocialization” or “undersocialization”
(Granovetter 1985, 482-488); taking merely macro perspective, one is directed
towards assuming the determining role of institutions and cultures (“setters” of
values, norms and goals); by focusing on micro-level one would be submitted to the
“individualizing process” (Elias 1992 ) which derives the social from individual.
We propose to see interdependencies as social relations observed by researchers
from different angles and with a various intensity of focus on many instances of their
occurring, as if the same object was seen from different angles. Interdependencies
are practices of perception of the self and others as subjects which condition the selfunderstanding (and self-perception). However they are not only ways of perception;
interdependencies define and are defined by power-relations – by hierarchies and
asymmetries between individuals striving to attain higher social status. Power
relations regulate and coordinate individual actions and communication but they are
not the only mechanism of coordination. The interdependencies are in the making of
sets of formal and informal regulations. They are in continuous process of shaping
(or using Elias’s terms – figurating) actors’ behaviors (as members of a given society)
and perceptions of distance and involvement. Distance and involvement, determined
by position in social structure regulate psycho-genesis – the mental “baggage” of
given individuals. Distance enables to reflect on one’s own practices by perception of
broader scope. By distancing, individual can observe and reflect on dependencies
between his/her behavior and reactions or practices of others. Involvement signifies
emotional states which can be interpreted on one hand – as the level of commitment
to one’s activity but on the other – as “myopia” towards mechanisms which regulate
individuals’ activities.
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The focus is directed to relations instead of norms or individuals. However it seems
impossible to set the universal rule or build a model presenting which relations are
the final determinants and which – their concomitants. Certainly, power relations are
crucial to define the evolution of interdependencies. But interdependencies assume
that both of their elements (subject and object, dominating and dominated) are
transforming and transformed at the same time. Even in the most hierarchical
relations with the monopoly on the rational (as in the relation between king and knight
or senior and its servant), the level of uncertainty in relations justifies the assumption
that without the analysis of the “determined’, behavior of “the determining” is
incomprehensible.
Elias observes that one of the most enduring historical processes which can be
observed in the analysis of historical accounts is the enlargement of chains of
interdependencies between individuals (Elias 1992, 97-181). With the growing
complexity of relations between individuals and groups, interdependencies
encompass more and more individuals, by transformation of “external forces”
(Fremdzwange) to the internal ones (Selbstzwange). People learn to control
themselves and therefore, seemingly, the level of external – “social” control can be
lowered. Status-competition becomes the game of informal and formal relations
which cover not only visible, institutionalized procedures and ways of behavior but
presume also a certain level of virtuosity in the way individuals interpret formal and
informal rules. It is easy to conceive that the level of virtuosity is associated with
social hierarchy. However it does not mean that for dominating social groups,
interdependencies become transparent and controllable. Just in opposite, the growth
of knowledge (both technological, e.g. accounting and measurement of productivity
and one referring to social relations, e.g. human resources management) makes
individuals more uncertain due to the complexity of interpretations and relations one
has to overcome to maintain his position, his impression-management, in short –
his/her social status. Therefore neither the level of knowledge, nor level of rationality
or perception of interests decides solely on social actions. Norms and values are
submitted to the interplay of social actors and do not tend to determine directly goals
and activities of individuals. They can become determining factors of human action,
when involvement defies the search for alternative behaviors and construction of
interdependencies. This relatively long presentation of Elias’s approach is going to be
useful in the way we combine the macro-level of MNC’s analysis with its micro-level.
Hybridization
We use the term “hybridization” to signify the process of linking and combining the
natural with artificial. Both terms – natural and artificial refer to perceptional
categories of actors involved in the process of cultural encounters.The new, unknown
or incomprehensible behavior is described as artificial. Ane one which is old, known
and understandable is usually described as natural. For employees of MNC’s,
especially those newly established, some norms, behaviors, languages, strategies
are perceived as natural (i.e. normal and known or seen as rational) and other – as
artificial. It concerns e.g. Easterners (locals) perceiving behavior of foreigners but
also – foreigners perceiving locals’ behavior; the hybridization is therefore a process
of negotiating the meaning of common behaviors in terms of what is acceptable and
natural, what is artificial but acceptable and what is artificial and unacceptable in the
given MNC. We should mention that natural is definitely not identical with Western or
Eastern. And the same refers to the term of artificial. Westerners and Easterners (or
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generally – representatives of two potentially different groups) identify behaviors
which seem to be natural and artificial to both groups. Both groups can in the same
time observe differences in terms of natural and artificial. However in the context of
dynamic change, particularly when new institutions and organizational forms appear,
“natural” and “artificial” behaviors start to define such actions and human behaviors
which distinguish new strategies of action and old ones. In effect, natural signifies
rational and acceptable, whereas artificial refers to something which is obsolete,
irrational or ineffective.
We are describing hybridization taking place in MNC’s where actors establish their
own intra-organizational „universe” – framework of references for naming, referring
and acting. It consists of MNC’s entities (headquarters-subsidiaries) and subjects
(employees and employers, locals and foreigners) which create interdependencies or
even networks (Granovetter, Burt) resulting in specific behavioral and institutional
patterns.
Hybridization is a process which in this analysis is observed in a short period and one
should refer more to the process than any kind of outcomes; however different
phenomena are perceived by actors and researchers which are named as “new” or
patterns of behavior - as changed, modified, etc.
The term “Hybrid” has its tradition in the research on transformation (e.g. Nee on
China). It refers basically to the mixing of property relations in transforming economy,
where public ownership is “colonized’ by private (e.g. familial or politically
engendered) interests or supposedly private enterprises are controlled by more or
less formal, public (political) bodies. Hybrids, in this way, refer to a limited set of
“linking and combining of cultures”, proposed in this paper where institutional aspect
plays the major role. The authors would like to keep the idea of a new form,
consisting of a few cultures but first of all, it is the term “hybridization”, which is going
to be used more, to refer to the process and not its definite outcomes. Second – it is
the perception of “natural” and artificial” which guides towards “hybrids” and not only
institutions, which are perceived and defined through categories used by scientists.
The language of groups involved in the encounter exemplifies different coping
strategies, used by actors during the period of dynamic change.
Context of hybridization
The process of hybridization depends on many factors which combine above
mentioned dimensions. For the preliminary categorization it is worth to define the
main ones.
The institutional and organizational structure of the market determines, as in the case
of Chinese proprietor “hybrids”, described by Nee (Nee, Cao 1999), whether certain
solutions which are standardized in a given corporation can be applied in a specific
context. Beginning with the regulations on property, through regulations of economy
and labor relations in particular and ending with the legal acts on indigenous
language (e.g. in Poland, legal act on Polish language enforces foreign managers to
learn Polish) the legal context sets framework for the adaptation of MNC to the local
– national context.
The type of economic activity can be associated with certain regulations which
encourage hybridization and “localization” of firms. In public services, for example
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foreign firms can be forced to share their ownership with the country’s firms and
shareholders, in order to operate within the limits of foreign capital share in (public)
companies. In banking sector of EU countries, regulations enforce standardization
quite deeply, not only on the level of services but also - organizational structure
therefore the space for mixing and combining different ways of market behavior,
institutional structure and especially business regulations is very limited.
On the other hand, certain products, even if sold internationally and widely
recognized on international level, seem to be embedded in the local (national,
regional and even – local community’s) traditions, habits and perceptions such as in
the case of beer or many food products. Production in international brewery company
operating for example in Croatia or Czech Republic, targeted to the local market,
should refer to local tradition of beer drinking, by leaving traditional brand but also –
taking into account local culture of drinking. Analysis of one of the leading
international companies in beer production investment in the Czech brewery
illustrates not only this external, communicational aspect of tradition but also
describes how the company has to deal internally with local tradition of beer
production, which is a source of pride for employees and of an ethos of beerproduction. In some other countries, beer production can be source of communal
pride. Foreign investor can be forced to take into account such circumstances when
establishing its business and deciding on marketing strategy. Those aspects tend to
modify “normal” strategies of MNC’s or influence managerial decisions by leaving
some place for local ‘flavors’.
Time factor seems to be important for the understanding of hybridization. Certain
MNC’s investing relatively lately could use employees already experienced in work
for international companies or at least – educated for Western management
(particularly managers). Such people could have played the role of ‘culture brokers”,
or “negotiators” between MNC’s organizational, normative and managerial standards
and local perceptions of work, organization, procedures, managerial strategies, etc,
as illustrate case studies included in this analysis. Whereas at the beginning of
transformation, MNC’s were almost forced to establish their businesses by foreigners
and ex-pats, since mid/end of 1990-ties, companies could not only employ
experienced, local employees but also – were sometimes encouraged to design
strategies which would refer to local markets’ specifics (niches, specific regulations,
consumer trends determined by local ‘flavors” – life-styles, etc.).
Finally, one should mention that type of investment seems to play a role in potential
hybridization of MNC. Merger or an acquisition, especially in a context of privatization
was perceived by local employees as an uncertainty or threat, associated with
restructuring and downsizing. In this context, potential for articulation of local needs,
traditions, barriers but also triggers in the development of the company was very
limited. As it is going to be demonstrated in the next parts of this analysis, even
inside one international corporation which refers to locality in its mission, norms and
strategies of investment, certain type of investment – M&A is strongly associated with
much stricter control of headquarters, much stronger presence (or one should say –
dominance) of foreigners or ex-pats on the managerial level and with minimal input of
local context in the making of corporation’s subsidiary. Conversely, greenfield
investment, particularly when it occurs relatively late (few years after the fall of
communism) seems to be a good ‘background” for the corporation’s hybridization.
As demonstrate other, similar comparative researches, sometimes “re-embedding” of
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certain technologies or standards in management, in Western subsidiaries can be
more difficult than in newly established firms in CEE region, where innovations do not
replace already functioning behaviors or technologies but is treated as a part of new
(organizational) culture. (Harzing 2001).
Corporate „Universe”
Cultural encounters have also their own history when the area of scientific interest is
not restricted to macro changes – such as downfall of the communism, creation of
free market economy and of new conditions for economic operation. Instead they
are “brought down” to the level of specific organizations – companies. Their
employees are often referring to their own experiences with either Western or
Eastern culture as decisive for their functioning in MNC’s. It has turned out that the
history of individual actors – employees of corporations, specifically
their
employment experience with foreign companies plus, individual experience drawn
from contacts with culture and business of the countries, described as Western,
particularly before the fall of communism, have proved to be equally important.
Thus, the history of cultural encounters analyzed in this paper does not refer only to
the time of study, nor does it refer to investment chronology of a given corporation in
the countries of Central and Eastern Europe.
Therefore, despite the fact that the objective of this analysis is foreign investment in
the CEE countries, both in “territorial” and temporal terms, these changes are
described as an element of long-term processes. They cover a variety of areas,
and apply not only to the territories of individual countries, cultures (eg. Eastern or
Western), but also to individual experience, habits and perceptions of the actors
involved in these processes. These alterations contain the global context. It sheds
light to our understanding of the cultural encounters. As illustrated in one of the cases
of automotive company operating in Slovenia for number of years, according to its
employee and foreign managers, the production and management systems of the
company in Slovenia are closer to that in Japan than in France-the motherland of the
corporation.
This however does not mean that the comparisons deriving from the stereotype
perceptions of individual cultures do not exist in such corporate universe. One could
even say that these comparisons play an important role in corporations as they
permit to map ways of behavior and organization of work by both managers or
employees. It applies to both, senior management and to highly skilled personnel
who take up training abroad. By doing this, they learn the difference which is
described in national-identity based comparisons. Therefore, high concern for
precision and procedures is attributed to the German culture. The ability to
communicate directly/informally and “the gift” of improvisation are attributed to the
Italians, etc. The local “vocabulary” is created in a given corporation depending on its
geographical location. So if we take a corporation operating in the CEE countries or
the former USSR, the “vocabulary” of difference would not include the difference
between Western Europe and Eastern Europe, but also between Lithuanians,
Estonians, Russians or Poles. What is more important, this vocabulary will penetrate
and will be adopted, equally, both by the “local”, “home” managers, foreign managers
and expats. We would like to argue that those nationally-based vocabularies help to
describe relations between different kind of employees and particularly – between
Western managers and Eastern employees.
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In such context, we can talk, without any doubt, about their functional role as creating
group-identity against “out - group” (Tajfel....). Sometimes it becomes so strong that
it makes one group more distinct than the others. The car factory in Slovenia whose
contacts and co-operation - in fact, presence of the French car producer there, began
in 1970-ties, is in the opinions of French managers, distinct by its employees’ highly
developed sense of identity with the work place. However, the latter tend to stress
differences between their company and its branches in other countries of the CEE
region, or from a broader perspective, on the MNC’s investment map. Commitment
to the company becomes therefore “the Slovenian” feature of employees’ identity.
Hence the choice of differentiation categories through which actors define their
perception and explain their behavior, such as Eastern/Western, global/local,
new/old, etc. depends on their definition of possible strategies of action and creates
the context of their decision on choice of “tools”. Here – “Western”, “global” or
“rational” can refer to the interdependencies between actors – to their perception of
power, hierarchy, possibility of cooperation or of disagreement. It will depend on the
relation with headquarters and with the superior.
We refer to the concept of culture not as Aristotle’s “Immobile Mover” (Immovable
Perpetuator), as in Parson’s account, nor as an existing set of objectives and values
related to the goals (Theories of Rational Choice) but rather, as a set of operational
strategies which resemble a box of tools. Individuals look for a strategy of operation
adequate to their current situation. The choice of a strategy does not have to be the
same as the choice of a set of preferences selected by an individual. IT can be
concomitant of interdependencies which link the individual to his/her social
environment.
According to Ann Swidler, an individual is not free, as it is described and actually –
wished - in rational choice theory. He/She is determined by the culture but definitely
not more than by the existing relationships with others continuosly developing and
strengthening individual’s involvement in the interdependencies. The culture does not
provide patterns of conduct and does not determine objectives in the way that
individual activities follow a (culturally determined ) goal.
The culture is used by individuals – and makes up a repertoire of available actions
that suit the strategy of operation; elements of culture produce conditions for possible
action, and draw a framework in which specific tools of action may be used (as
elements defining relations of individual with the environment). In this sense, the
culture is more like a style of acting, than a set of preferences. As Swidler
emphasizes:
Action is necessarily integrated into larger assemblages, called here ‘strategies of
action’. Culture has an independent causal role because it shapes capacities from
which such strategies of action are constructed.(…) Strategies of action incorporate,
and thus depend on habits, moods, sensibilities and views of the world (Geertz,
1973a). People do not build lines of action from scratch, choosing action at one time
as efficient means to given ends. Instead they construct chains of action beginning
with at least some prefabricated links. Culture influences action through the shape
and organization of those links, not by determining the ends to which they are put.
(Swidler 1986, 277)
12
This analysis shows that interdependencies are discoursivized in various contexts, by
formal rules and regulations but in the same time stem from informal communication
and are maintained by meanings having their own context. This context cannot be
reduced to a set of norms and values which distinguish one culture (entity) from the
other. Instead culture is constructed by interdependencies and in the same time –
constructs interdependencies, by the fiat of individual actors behavior. It is much
evident when we take into account actions of the dominating groups and see “the
struggle” for status attainment. This behavior can be incomprehensible if defined
from the vantage point of just one set of values. Then it can be characterized as
some unexpected behavior, especially by those who expect strong standardization. It
becomes understandable however, if we see it in a context of hybridization.
As declared at the beginning of this text, we were interested in our research, how
certain types of corporations develop their organizations in CEE’s countries in order
to observe what are the social relations inside the company and what could be their
implications for accounts of relations between society and economy of transforming
countries.
PART III – Theoretical and Empirical Problems of Research in MNC’s and
Transformation in Post-communist countries
“There is just one economy”
This quotation of Leszek Balcerowicz’ s opinion, former Minister of Finances and
president of National Bank of Poland, could be useful to synthesize strictly economic
approach to the process of corporate investments (Balcerowicz 2006). Economic
science brings clear measurements and objective models to be applied universally.
“Shock therapy” consists not only of macro-structural transformations of financial
sector but also –drastic implementation of purely market-based criteria of production
and evaluation of companies’ investments and strategies (Balcerowicz 1997, …).
Culture in general, and particularly traditions or local culture are mainly impediments
and only sometimes - triggers of economic and organizational development, based
on economic calculation (Skidelsky???). One is tempted to refer to Stark’s term of
“capitalism by design” (Stark 1992?), as a way this approach assumes the role of
economic transformation. From this vantage point, MNC’s investments are crucial for
economic well-being of a given economy. They bring the most efficient and rational
modes of economic activities. Clark and Geppert propose to call this approach –
“structuralist” due to the assumption that the model has one universal structure
which, to a certain degree, can be filled with “local flavours”. The latter ones are
observed as a temporary replacement for the universal models to come with the
development. “Structuralist views tend to be consonant with economic transition
thinking and emphasize technical-economic aspects and convergent learning
outcomes. (…) The implication is that knowledge transfer and learning are one-way
processes, with the Western sources acting as the ‘senders’ and ‘teachers’ and the
‘East’ as the ‘recipients’ and ‘learners’. The formal interest in technical change and
economic outcomes leads to a focus on the transmission and reception of formal
codified knowledge, communicating management tasks requiring certain skills (e.g.
marketing and accounting) that had not existed in former SOEs [State Owned
Enterprises].” (Clark, Geppert 2002, 267) (moim zdaniem ich propozycja jest raczej
kontrowersyjna – według mnie w ekonomii podkreśla się raczej różnice między
teoriami funckjonalnymi albo teoriami równowagi, czyli teorią neoklasyczną i teoriami
13
głównego nurtu, a teoriami
instytucjonalizmem na przykład)
strukturalnymi
powiązanymi
jakoś
tam
z
For Olivier Williamson, organizational structure and what is especially important to
this analysis, relations in hierarchical organizations such as MNC’s with their
essential dependence of subsidiaries on headquarters, are just a function of
transactional costs1, which determine the level of hierarchical organization and
coherence of organization. When effective and efficient, MNC’s headquarters would
control and distribute resources needed by subsidiaries and by this way cooperation
between those units stays quite naturally dependent and centralized. Therefore one
could imply that not only structure but strategies and managerial modes should be
imitated by subsidiaries and their managers (Williamson 1979).
MNC’s in Institutional Account
Not only economists saw the power of effectiveness and measurability of Western
organizational or economic system and assumed more or less explicitly that
convergence is inevitable. The famous text of DiMaggio and Powell
(DiMaggio/Powell 1986) evidences that sociologists perceived the power of Iron
Cages as a great overwhelming process. It should transform any local setting into the
set of isomorphic organizations which coercively or by imitation and modeling would
become similar and finally – almost identical if we refer to their bureaucratic
organizational system and accountability. In DiMaggio and Powell’s opinion,
organizations but also professions and professionals are subsumed to the universal
processes associated with effectiveness of the bureaucratic organization and
inevitable distribution or shall we say, diffusion of models in formal institutions. The
process of transformation towards isomorphic forms is stronger than conscious
efforts of managers or even whole organizations to be more innovative and creative.
The process of intended or unintended differentiation is weaker than dedifferentiating power of control by effective organizations. They suggested that both
organizations and professionals are becoming subdued to the power of stronger and
more effective [Western] organizations which “do not have to adapt but adapt the
environment to their logic.” (DiMaggio/Powell 1986, …) In this way again,
transformation, even if social and not only economic, is a process of imitation and
more or less painful adaptation to universal forms. DiMaggio and Powell defined also
main sources of isomorphism, especially in professionalization – it was formal
education and “production” of academic specialists and experts. They have become
more and more homogeneous: “growth and elaboration of professional networks that
span organizations across the world, which diffuse new models rapidly.” (Di Maggio,
Powel 1983, 152) Another factor determining the homogenization was “filtering” of
personnel through universal academic and professional institutions subdued to the
logic of isomorphism. One should say – the power of centralization wipes out any
kind of discourse on cultural and indigenous differences among organization and
after all – inside organizations such as MNC’s.
Though broadly refuted or modified, theories mentioned above represent quite neatly
the perspective which persists in research on economic and managerial aspects of
MNC’s role in economy and society.
1
And, more precisely, transactional costs are closely associated with type of resources included in a given
transaction (specific, universal) and frequency of contacts between partners.
14
Whereas Clark and Geppert seem to be right about strictly economic approach, the
institutional (or neo-institutional) perspective differs in at least one crucial assumption
– as North presented – one should focus on the process of evolution – of historical
institutional development, where tensions, frictions and changes through
replacement, rejection or mixing occur.
Hybridization related strategies could be, at least to some extent, attributed to
developments within management theory, particularly with regard to so-called crosscultural management. In this context one may ask a question, whether recent
discourse on HR management does influence global convergence or, rather, local
divergence. Interest in the above questions has been growing over last almost 30
years, particularly due to intensification of FDI flows. Globalization as a process
meant also a presumption that world is “governable” and also in cultural differences.
Several studies have focused on work culture, management and organizational
development in multinational companies in different countries / different cultural
contexts: Hall (1969) on monochromic and polychromic cultures, Hofstede (1980)
and von Trompenaars and Hampden-Turner (1997) on dimensions of culture and
Schwartz (1994) on values (Schwartz Value Inventory). The authors of these studies
reached different conclusions about cultural/institutional influences on management
and organization in MNC’s. However, the most influential, seems to be the
proposition of Hofstede (1980: 25) whose analysis led to the conclusion that local
cultural and institutional factors are crucial in shaping the development of
management and organizational structures – idea of culture as ‘collective
programming of the mind which distinguishes the members of one human group from
another’. According to Hofstede, cultures are different but translatable, as a
consequence cultural differences can be managed in order to reach higher efficiency
of international ventures (in fact, it explains growing demand for normative research
on cross-cultural differences and management).
Hofstede’s work has been criticized widely (see McSweeney, Fleming and Soborg,
…). Criticism related to its assumptions (culture as a ‘software of the mind’, culture as
a static phenomenon, homogeneity of national cultures), methodology (particularly,
Hofstede generalizations were based on analysis of a few questionnaire responses
and research done in one MNC only). However, in the context of this paper the most
important issue relates to the consequences of the model (vision of the world of
cultures) for managerial education and, in fact, organizational cultures. Even
Hofstede after a few years had begun to acknowledge that there is cultural variety
within and between units of the same organization and there are no homogenous
cultures, his work was translated into many programs of cross-cultural management
courses all over the world. According to the most active critics, the discourse on
cross-cultural management started by Hofstede’s work not only ‘created’ a content of
national cultures but also influenced the way of thinking about the issue. Therefore
they suggest that ‘Hofstede’s reductive, closed, single-cause analysis that he has
legitimated with one-sided proofs and implausible assumptions should no longer be a
serious candidate for attention. Instead of seeking an explanation for assumed
national uniformity from the conceptual lacuna of an essentialist notion of national
culture, we need to engage with and use theories of action which can cope with
change, power, variety, and multiple influences - including the nonnational, and the
15
non-cultural’ (McSweeney: 7). Such alternative visions of cross-cultural management
were proposed, among others by Featherstone (1990), Garsten (1994), McSweeney
(2000) and Holden (2001). All these concepts propose a concepts similar to the idea
of ‘a third company culture’ (Featherstone) and see cross-cultural management as
‘knowledge management and collaborative cross-cultural learning’ (Holden).
Economy and culture in studies of MNC’s
Economic and Managerial theories concerning MNC’s had been modified due to the
problems of dynamic changes on the markets, as suggest ….. New modes of
production, stemming not from the supposed “centers” as Di Maggio and Powell
would claim, but from… Asia. “Toyotism”, appraised by Castells as a source of new
economy, consisting of enterprises operating in global networks triggered redefinitions of managerial approach later – economic and sociological and eventually
– if one refers to theories of organizations - economic sociology. It was “post-fordism”
which became a “catchword” symbolizing new work relations and new organization of
companies and their employees. (references!!!!) Without accounting for those
approaches, we can assume that approaches either strictly economic or institutional
in the sense used be DiMaggio and Powell, can hardly explain effects of global
tranformations in the MNC’s operations. Particularly if we refer to the variety (or shall
we even say – immensity) of managerial and business actions’ scientific
explanations.
Last few decades saw an unprecedented increase in the scale and scope of foreign
direct investment (FDI) and activity of transnational companies. Between 1960s and
1990s volume of international trade increased over 26 times and in case of
cumulated value of the FDI a similar growth was recorded. For example, in the 1990s
average growth rate of the world export equaled 6,2% while nominal FDI inflow’s
dynamics over 30%. According to Dunning, in 2003 there were over 60 thousand
active MNC’s controlling over 1 million companies. MNC’s are supposed to be
responsible for 1/10 of the world GDP and 1/3 of the world’s trade, together with
dependent companies they can control even ¾ of the total international trade.
Most important characteristics of recent FDI include, firstly, dynamic growth since
1980s and particularly in 1990s, secondly, the structure of sending/receiving
countries with well developed countries as the most important donors and recipients.
Share of the CEE and former Soviet Union countries is relatively low – it equaled only
3,2% share in the total value of world’s FDI in 2003 – however, FDI are typically
perceived as an important factor of change in the region.
Extraordinary dynamics of the process and its relative importance for both sending
and receiving economies caused a strong demand on explanatory models. Within the
economic framework three major issues are being raised. Firstly, whether companies
should operate on domestic on international level, i.e. whether a given company
should move its operational departments to other countries or just export goods or
services. Secondly, what are major incentives to create multinational companies
(having in mind the relative importance of cultural differences). Thirdly, why
entrepreneurs tend to choose a form of multinational company instead of such
organizational forms as franchising or joint ventures. These questions could be
answered among other by the so-called OLI framework (Dunning 1973, Markusen
16
2002). OLI stands for ownership, locational and internalization advantages, first are
associated with specific resources by a company needed to gain an advantageous
position on the new market, second result from economic and trade policy which in
many cases does not allow entering the market in a simple trade based way, the
latter ones emphasize the importance of transactional costs (internalization vs.
market relationship). Practically, business decisions are outcome of
interdependencies between following factors: tax and trade policy, market’s structure,
opportunities given by factors’ endowment, costs’ structure, with emphasis on
transactional costs.
Within economic theory following typology was proposed which aims at explaining
variety of organizational forms and type of integration of MNCs: vertical integration
(differentiation of production process, relative importance of intra-industry trade),
horizontal integration (unification of operations in various countries), conglomerates
(diversification with respect to many not related fields of activity) and complex
integration (both vertical and horizontal integration). Explanatory model was
proposed within the so-called new theory of transnational company (Helpman 1984,
Markusen 1998, Yeaple 2003). The authors of the concept attempted to explain why
companies tend to create (endogenously) horizontal or vertical structures, with
regard to two major factors – relative costs of labour and transportation costs. Taking
other factors (e.g. trade policy) as given, one should expect a tendency to vertical
integration in case of large differences in prices of production inputs (particularly,
labour) and tendency to build horizontally integrated structures when there are
relatively high costs of transportation (and similarly, when there are serious trade
barriers). In context of this paper it is important to note that this approach leads to
similar conclusions as proposed of representatives of management theory who
propose to distinguish following internationalization strategies: ethnocentric,
polycentric (multinational), geocentric (global) and transnational (interactive) (Bartlett
i Ghoshal 1989, Perlmutter 1969). These differences in causal factors and
organizational structures of MNC’s with respect to the CEE will be a subject of close
evaluation in the following parts of the paper.
If we juxtapose institutional and economic approach with cultural approach of
Hofstede, there is one central opposition and one central similarity which should be
delineated for the rest of the analysis.
In economic/institutional perspective, culture is reduced to “interferences”, in the
working of rational and universal mechanisms. But in fact, it is inherently present in
the anthropological vision of individuals or assumptions on property rights (one’s self
interest can be maximized in conditions of clear property relations), which theories
associated with strictly economic and institutional approach assume. It has been
extensively analyzed by sociologists (Fligstein, Granovetter). Conversely, Hofstede’s
perspective could be defined as typical “over-socialized” conception, where culture is
determining individual decisions and behaviors. Whereas in the first perspective,
transformation, either economic or social (though in fact it seems to be the same,
eventually) is a simple convergence, in the second – it is hard to explain deep social
and economic transformations such as those of post-socialist countries, since
(national) culture as a “program” is rather hard to be changed, redefined etc. Critics
17
of Hofstede’s concept emphasize that his 5 main dimensions of cultural differences
are ethnocentric and tend to reproduce many deeply embedded assumptions on
Western culture, dominated by male discourse (…references)
However the common feature of both perspectives lies in the fact that they tend to
neglect relations between actors, between organizations and even cultures, by
assuming simple relations of domination or one-way influence. Conflicts arise when
there is substantial ‘incompatibility” between models. In this way, Granovetter’s
concept of embeddedness and then – introduction of network analysis have changed
quite radically the perspective towards organizational and social transformations. In
his seminal article on embeddedness Granovetter took into question both
perspectives which here are exemplified by economic/institutional approach and
Hofstede’s cultural approach. As Granovetter argues;
But despite the apparent contrast between under- and over-socialized views, we
should note an irony of great theoretical importance; both have in common a
conception of action and decision carried out by atomized actors. In the undersocialized account, atomization results from narrow utilitarian pursuit of self-interest;
in the over-socialized one, from the fact that behavioral patterns have been
internalized and ongoing social relations thus have only peripheral effects of
behavior. (Granovetter 1985, 485)
As Granovetter continues, “the embeddedness argument stresses instead the role of
concrete personal relations and structures (or “networks) of such relations in
generating trust and discouraging malfeasance. The widespread preference for
transacting with individuals of known reputation implies that few are actually content
to rely on either generalized morality or institutional arrangements to guard against
trouble.” (Granovetter 1985, 490)
Crucial to Granovetter’s approach is the observation that hierarchies and control
systems do not depend on purely economical play, nor on power of “programming”
culture but on social relations. Therefore relations began to be a focus of analysis
also of MNC’s developments and transformations. Moreover, “(re-)discovery” of
networks meant that organizations are not isomorphic but tend to create complex,
functional networks, where resources, modes of (economic) behavior and information
on market, flow together with the ever greater dynamics resulting in tensions,
conflicts, synergies and local innovations.
According to Sumantra Ghoshal and Christopher Bartlett, internal differentiation of
MNC’s (and consequently – level of control, unification and standardization) depends
on complexity of external environment in which companies establish their businesses
and quantity (indirectly – quality) of resources needed to operate on the market.
Observing the dyad between headquarters and subsidiary, Ghoshal proposes to see
it as at the same time:
– dependency of subsidiary on center,
– interdependencies between both
– and relative autonomy of subsidiary which can be reached when a lot of
resources and/or complex environment are present.
Ghoshal presumes that interests of the center and subsidiary can be conflicting. It is
not a dysfunction but a sort of inherent tension in MNC’s internal relations. Therefore
this more or less dynamic configuration will result in different levels of formalization
and centralization. In case of subsidiary’s functioning in complex environment 18
external network (which by Ghoshal could be defined in Granovetter’s terms) will
tend to become more specialized towards the given (“embedding”) market or will
pursue its own more autonomous strategy. In such a case center will play a role of
controller rather than a sole strategic decision-maker. MNC in this perspective is an
“inter-organizational network”. (Ghoshal Bartlett 1990)..
Ghoshal and Nohria suggest that normative integration inside the corporation can be
an effective solution in the overall strategy, when despite relatively high costs of
normativization, formal control and complexity of environment impede a typical
centralized and formalized relation between center and its subsidiaries. (Ghoshal,
Nohria 1989)
Problems analyzed above find their reflections in another scientific conceptualization
of relations between the social and economic – ie. in Human Relations Management
and Theory. Whereas economic studies deal with macro-perspective, looking for
(global-)market conditions of growth and development, managerial studies focus on
the question of intra-organizational coordination and control. Usually they presume in
the same time that macro-level goals and economic circumstances are already set
up. Problems of control in theory of Human Resources Management could be
synthesized as:
- integration, coordination and communication in global macro-structures (as a
reference for control’s problem conceptualizations)
- bureaucratized, formal control (written regulations and forms)
- personalized control (the role of leadership and problem of hierarchy and
autonomy; role of head office)
- control by socialization and networks (role of corporate culture and role of expats; problem of culture brokers – to be discussed later)
- output control (performance measurements)
In most of the above mentioned researches and observations, culture and even
society as a complex system of relations do not appear as factors which would
influence economic behavior above the extent of individual interests and preferences
formation. The problems of how individuals and societies understand economic
behavior seem to be addressed by account of individual rationality. Whereas for
economists, cultural factors seem to play a role of “interferences” – unnecessary or
even faulty descriptions of market behaviors, in managerial studies, it is mainly
psychology and Human Resources Management’s approach. They mention culture
as a factor shaping social relations in economic sphere by the way individuals use
perceptional mechanisms (schemes, scripts, attitudes) in order to attain their goals.
In her typology of Management Studies involving culture, Nancy Adler proposes an
account which could put in order types of research on interrelations between
economic and cultural factors, appearing not only in management studies but also
generally in research concerning multinational organizations.
As universalistic could be described the account in which there is one economy,
described by measurable effects. It prescribes more or less universal design for
markets and institutions on both macro and micro level. There are clearly dominant
modes of behavior and decision-making in economic sphere (measured by
effectiveness) which should be imitated by others. Institutions are conceptualized as
derivatives or as a part of universal architecture of market. In this perspective, MNC’s
are presented as new, homogenizing and in the same time – market’s dominating
19
organizations. Adler’s parochial approach (scientific observation in one country is
transposed towards the others and taken implicitly as universal) and ethnocentric
approach (where comparison between various markets is measured from the
perspective of one, supposedly most efficient model) define perspective which sees
MNC’s as universal organizations.
In more institutional approach, historic evolution of institutions is taken into account
and therefore it implies that cultures are different though “translatable”, as in
Hofstede’s concept of cultural differences.
Therefore in Adler’s typology of
comparative studies, it should be treated as comparative concept.
Ethnological research and comparative institutionalist approaches, as clearly shown
by Clark and Geppert:
tend to affirm the complexity, uncertainty and ambiguity of knowledge transfer
between and learning processes in organizations embedded in diverse institutional
systems and cultures. The general thrust of such arguments coincides with the more
open, less formalistic assumptions embodied in transformation thinking. (…)
Limited or rather impossible comparability between cultures, as assume those
theories, provokes Adler to call this approach as polycentric.
Geocentric perspective on the other hand, searches for universal dimensions in
comparative work of scientifics but assumes that universal mechanism, such as
existence of networks and types of their formations should be limited by context
embedded in local social conditions (relations) and local culture. One could add here
also those approaches which observe technologies, both – of production and of
management or organization as “transparent” – as mechanisms which enable quite
obvious and universal transfer of know how. Here we reach one of the essential
problems for the theories of HRM and actually for all theories mentioned above. If
there is any communication between parts of MNC’s which one is forced to admit,
what is its nature? Is it a simple copying, an imitation (more or less succeeded)? Or
rather a transfer of knowledge which then can be translated to organizational and
managerial models? Even if it is one-way communication (top-down) what are the
conditions of information’s reception, acceptance or rejection?
Ethnological but not necessarily “polycentric” perspective assumes that:
Knowledge transfer makes use of bi-directional processes, including discussion and
exchange by both parties involved. To the extent that mutual negotiation over
meaning occurs, something new may be created in addition to the knowledge that
existed previously. Thus, it makes sense to consider this phenomenon in terms of
knowledge creation rather than transfer, and to speak, as some have, of the resulting
knowledge transfer as a process of ‘diffusion’ (see, e.g., Rogers 1995). Clearly,
‘diffusion’ denotes an abstract process and, for purposes of analysis, we follow
Latour who proposes that a consideration of the physical concomitants of knowledge
transfer, using the term ‘translation’ in place of ‘transfer’, is particularly useful.
(Dobosz ,Jankowicz 2002, 360)
One should mention also, that research on MNC’s operations and investments is
inscribed also in critics of globalization as in Klein’s account of Special Economic
Zones in Third-World Countries or as in the meaning of immaterial work and
“enterprises” in Hardt and Negri’s analysis of world expansion and hegemony of
20
(neoliberal) capitalism. Economic transformation, from this perspective is inherently
embedded in deep social and political processes, which are determining
development and structure of transformed societies. Game of power in the Empire
(or in more personalized account of Klein – of world capitalists) determines capital
flow and sees MNC’s as a tool of subsumption and domination of centers over
peripheries. Or total submission of those parts of the globe which until the coming of
the new epoch were not involved in global capital flow. Political context and
especially – meaning of power associated with economic activity are important to
mention here, since in discourse on CEE’s transformation this aspect seems to play
a crucial role.
Problems of HRM or more broadly – of management concepts are interrelated to - or
often derivative from - the complex of problems outlined above. It seems that crucial
to understand propositions raised in HRM is the concept of social control and
communication..
There are at least three more general questions which stem from this analysis and
are conducive for further exploration in the account.
The first refers to factors and conditions for the development of MNC’s. The second –
what is decisive for its dynamics and third – how can we observe the influence of
corporations on environment (particulalry – social environment) and of environment
on the development of corporations.
Economic Sociology of transformation: markets and their “Mobilizers” (to be
checked – Aristotle’s term)
Since “there is supposed to be just one economy”, one could start analysis of
observations on the role of MNC’s in CEE countries with reference to a vast literature
on economic impact of FDI’s in CEE economies, on transfer of knowledge through
foreign companies and on resources needed and produced for development of FDI’s.
As already mentioned, the inflow of FDI to Central and Eastern European countries
and, consequently scale of the MNC’s operation in the region, has been relatively low
so far. There are many factors which could be, potentially, responsible for this
situation. They include among others: the very fact that this is a relatively new
phenomenon, relative low political and economic stability in the first phase of
transition, scale and scope of privatization, low barriers to international trade which
favor trade instead of FDI, relatively minor differences in prices of factors of
production between major donors (Western European countries) and recipients,
prospects of potential gains, relatively lower than in other so-called developing
markets. However, it would be necessary to look more deeply at selected factors in
order to identify crucial characteristics of the process important in the context of
hybridization hypothesis.
Firstly, closer look at the major incentives to invest in the region leads to the
conclusion that they encompass a large variety of factors. E.g. in case of Poland, in
2003 major incentives for FDI inflow included economic growth prospects, low labour
costs and availability of skilled labour, and market’s size and its structure. Such a
21
composition of incentives may lead both to vertical and horizontal integration
(multinational or global structures).
Secondly, many authors emphasize relative importance of institutional factors (e.g.
Domański 20042), particularly speed and scope of privatization. In the very first phase
of transition, the privatization process strongly favored acquisitions and mergers,
then raised the importance of greenfield investments and finally, one may observe
again a tendency to invest in already existing companies (as a company of changes
in the market’s structure).
Thirdly, diminishing differences in factors’ prices while holding stable transportation
costs and more and more liberal trade policy strongly favored horizontal integration,
i.e. multinational strategies.
Fourthly, in the late 1990s the key role started to play factors associated with high
dynamics of economic growth and prospects of development. Previously, major
motives of FDI included access to resources, specifically cheap labour, in the second
phase more and more important was an opportunity to enter the market or gaining a
favorable position on it. In this context, multinational and not global strategy seems to
be more beneficial.
Fifthly, whereas in the very first phase FDI was almost exclusively a domain of large
global companies, already in the late 1990s an increase in activity of medium
companies was observed, particularly from German speaking countries. Additionally,
part of the total inflow of capital should be attributed to return migrants or Poles
staying abroad.
These observations are extremely important in the context of the research we refer
to. The analysis of structure and operation of MNC’s in Central and Eastern Europe
shows a clear change in organizational forms and strategies of corporations.
According to Domański (2004) these changes are more evolutionary than
revolutionary in character and often are a result of ad hoc activities and not
conscious development strategies. While analyzing qualitative material we gathered
through ACCESS and DIOSCURI project we had to remember that we focused on
MNC’s which entered the CEE’s market at the relatively late stage of development
and had to adapt to given market conditions. Additionally, organizational forms and
strategies of transnational companies are not only a result of economic and
institutional factors related to receiving countries but also (predominantly?) of factors
associated with the country of origin’s characteristics.
For sociologists however, emergence of free market economy and new culture of
capitalism, provoked questions on relations between market, society and politics.
Crucial, in their opinion seemed to be the problem of resources on which the market
could be developed. The problem of accumulation and of the “starting point” grasped
the attention of sociologists. Whereas privatization of state owned enterprises
grabbed the attention of sociologists, FDI’s were basically the main focus of
Domański B. (2004). Transnational corporations and the postsocialist economy: learning the ropes and forging
new relationships in contemporary Poland, in: Alvstam C. and E. Schamp (eds.), The ‘Networked’ World – Making
Sense of Globalization, London: Routledge.
2
22
managerial studies. Economy, since there was just one, took care with macroeconomic studies and imitated models, currents and concepts transferred from the
West. It seems like assumption on isomorphism was taken as self-fulfilling prophecy,
if one is referring to the economic research in CEE countries.
It is a tentative hypothesis to say that for social scientists, apart from economy, main
problem to be studied was the relation between economic sphere – the forces of
market, perceived as a sort of natural process, and political sphere, which by its
control of resources and redistributive mechanisms of state, should have been the
main determinant of the market’s shape and mechanisms.
Another approach, would implicitly assume, that economic sphere, through its
mechanism of selection of the most effective solution would eliminate in the longer
run any kind of inequalities and remnants of the former epoch and would determine
development of the middle class. (Domański, …) And middle class, as a major
defendant of democracy - interest group guarding democratic order - would on the
other hand, guard the market from the interferences of political sphere. The concept
of “un-finished transformation”, proposed by Mokrzycki, Rychard or Staniszkis and
Krasnodębski (references to other countries needed!) refer, again to the relation
between politics and economy as the most important one. Therefore the problems of
redistribution and accumulation of capital could be seen as those which grasped the
most attention of researchers. Property relations and distribution of privileges,
associated with public sector overwhelmed any other observations on emergence of
markets or relations between markets and cultural “equipment” for societies
constructing markets.
Victor Nee, exploring Chinese economy after 1989 and comparing it to other postsocialist markets assumed that path dependence theory is “a cornerstone concept
of comparative analysis of the transitions from state socialism” (Nee, Cao 1999; 800).
He pointed out to the historical transformations before the fall of communism,
implications of long lasting processes and dependencies between societies and
countries. As in Granovetter’s perspective, Nee refers to the embeddedness of
markets and to their networked relations inside and outside the analyzed ones.
Therefore, Nee analyses pre-existing power relations and relations which influence
new changes. To him, transformation is basically an ongoing conflict of the “old’ and
“new”: groups gain and loose during transformation, particularly in labor and property
relations. One should take into account that market is influenced by powerful actors,
whether one is analyzing a local, regional market or the overall – country’s market. In
this context one cannot exclude the role of the state, not only as legislator but also as
actor which, by its various representatives, plays with redistribution, continue Nee
and Cao. Government officials in villages and cities of Fjian region can play a role of
local entrepreneurs, controlling private enterprises, distributing privileges and working
places, and in fact “privatizing” public property by family ties and distribution of profits
among their family. In Nee’s analysis, as in Stark’s, Szelenyi’s and many others, the
crucial play takes place between market forces and politics. And the main question to
be answered is on what is stronger – political ties or market, dis-embedding powers
of competitiveness. But market is always in a certain way “localized” if not by the
state, than by Nomenklatura’s network. The main focus is given to the relations
between patrons and clients. And it seems to be stronger than “markets and
hierarchies’. We could suggest here, that indirectly, the main trend of economic
thinking is challenged. Powerful actors, equipped with privileges replace “natural’
forces of market selection and distribution, altering its positive effects. It is actually
23
intriguing how in fact the market itself is reflexivized; what are its essential features in
terms of social and cultural relations and not merely in political terms?
In Neil Fligstein’s opinion, though concerning merely Stark’s analysis on emerging
capitalism in Hungary, this seems to be the most important feature of such research,
if we want to explore the problem of market creation and MNC’s as its elements:
“It appears that Stark’s results were not produced by thousands of actors acting to
produce a new world on their own, but instead by actors armed with a pretty clear set
of rules produced by politicians. One could argue that all of this was precipitated by
Western advisors and international organizations who forced this kind of policy on the
Hungarian government.” (Fligstein 1996, 1078).
Even stronger critical concern towards neo-liberal or simply strictly economic
perspective which had its totally practical consequences in economic policies of
governments of CEE countries, was formulated by Lawrence P. King. For him,
The conclusion is that the neo-classical theory of transition, by itself, is inadequate.
The introduction of ‘markets’ and ‘private property’ by themselves do not create
‘efficient’ organizational outcomes. The equation of markets with efficiency, dating
back to Adam Smith’s notion of invisible hand, ignores the embeddedness of
economic activity and thus social structure, asserting that markets have the same
effects everywhere. Thus, privatization and markets themselves do not lead to
efficiency and development in the post-communist economy. Rather, their effects are
dependent on the local social structure of the societies they impact. (King 2001, 526)
King, like Nee and Stark concentrates on the process of property relations
transformation and political stance of elites involved in market processes. On one
hand, King demystifies formal neutrality and rationality of transformation “a la Jeffrey
Sachs”. On the other hand, it seems that his analysis was tending to discover main
hidden actors of transformation. As he emphasizes,
The structure of the new postcommunist capitalist economies primarily results from
the strategic action of socialist era managers. (…) like the domestic-based strategies
foreign led privatization also occurs (partially) as a result of managerial networks and
a reliance on the inside information of managers.” (King 2001, 501)
Whereas on one axis of a continuum, designed by King is a typical political capitalism
(or in Stark’s terms: comprador capitalists’ control) on the other – FDI’s of MNC’s
which by their fiat should have transformed postcommunist economies towards
effective, market governance, efficiency and innovativeness. However even FDI’s are
endangered by more or less politically “embedded” and active elites and also by their
supposed unwillingness or even hostility towards MNC’s, reflected in regulations put
upon countries’ economies.
King proposes to analyze post-communist, or more broadly – transformation
economies, according to five variables determining the shape of post-communist
economic order:
Considering all the cases we can say that the selection of strategies is based on five
variables: the inherited institutional order, the existence of networks of political and
financial power, privatization policies, the strength of democratic institutions, and the
24
existence of interested foreign direct investors. To the extent that countries have
different values for these variables, their economic systems will differ as described
above. (King 2001, 524)
It is quite clear that property relations, networks of political actors and institutional
setting are the most important to such analysis. The striking fact of this approach is
that building on opposition to the neo-classical economic approach, and in fact
creating a sort of juxtaposition for such analysis, such researchers as King, but also
Nee or Stark, assume that the most crucial for capitalism’s development are property
relations. Analyses begin with the problem of first accumulation and certain
institutional setting, which in fact is difficult to define as a model, due to the constant
grappling over essential features of the “capitalist spirit”. Therefore they play on the
same fundamental categories as economists but giving them different description of
social processes. Model of Sachs-like transformation is inadequate but categories on
which neo-classical theories form their observations are not rejected. Sociological
analysis of transformation, in this way seems to be engendered in classical,
economic approach to economic sphere or giving justice to descriptions of King and
Stark – to institutional approach.
The question on what creates market and how market relates to social or cultural
change should be juxtaposed to the questions on what politics does with the market
and how market has been constructed by politics. We see clearly, that the main
interest of sociologists focusing on economic sociology of (postcommunist) transition
is directed towards the role of the political. If we still bare in mind the entanglement of
private-public division, one can ask whether this description should be prevalent and
almost all-encompassing. As Fligstein continues his critique of the economic
sociology of postcommunism:
There are two great institution-building projects going on in these societies: state
building and market building (Dobbin 1994, Fligstein 1996). These projects cannot be
divorced from one another because much of state building is about market building,
both in terms of setting rules for markets and the state’s role in markets and also
deciding how societies will respond to markets in fields like social policy. (Fligstein
1996, 1080)
State and political sphere on one hand and economic sphere on the other have been
focused by researches since 80-ties. David Stark observed then the phenomenon of
mixed economy following Kornai’s insights and concepts. That is why for a long time
there were two models of market described in analyses of (post-)socialist
economies: market integrated economy (market allocation of capital) and. local
markets (where capital is allocated mainly by redistribution, i.e political power).
Afterwards, during 1990-ties the play between “cadres” and nomenklatura as human
resources for the post-socialist enterprises and the rest of society was described by
juxtaposition between winners and losers of transformation. In this account, there are
many capitalisms or shall we say – many faces of capitalism and its CEE’c model is
presented through its genesis and local entanglements. The managerial studies
approach is actually a sort of juxtaposition to this account.
It may be argued that the institutional approach can also be seen as a kind of
modernization theory, since Meyer and Rowan (1977) claim that the degree of
25
institutionalization depends on the modernity of a society. Each society has its own
culturally embedded institutions. In this context, transformation refers to a process of
re-institutionalization, which follows, in fact but not of necessity, the rationality of
mainly Western models. outline Lang and Steger (Lang and Steger: Odyssey of
management knowledge). They admit that transfer of knowledge, institutionalization
of Western business and economic solutions inadvertently results in “inconsistencies”
not only between Eastern and Western ways of behavior and perceptions but also
between various Western solutions, being applied or at least tending to be applied in
the CEE. Therefore they see that in spite of more or less thorough institutionalization
of Western knowledge there are different levels of adaptive strategies of Eastern
actors maintaining superficial, “façade-like” adoption of transferred knowledge while
keeping their own ways and modes of behavior (production). Through this
perspective we obtain already much more complex and ambiguous register of
transformation process. Additionally, communication between Western actors
(institutions) and Eastern ones is interactive; Easterners actively react to the new
models of behavior, being able to ‘de-couple” the form from the eventual sense of
behavior.
Whereas Fligstein points to the formation of the market on a macro-scale, it is at
least equally justifiable to mention other sources of capital on the market which
institutionalize certain type of organizations – such as MNC’s. If one is to analyze the
process of construction of markets, one should not forget about “thousands of actors
acting to produce a new world on their own”, i.e. entrepreneurs from SME sector and
employees making “economic” choices on the market and embodying or creating
their own rationalities. Transformation studies in social studies have been mainly
concerned with state formation and its influence on markets whereas they lost from
sight the way even globalizing organizations, such as MNC’s can influence and be
influenced by cultural and social context of CEE societies.
It would be unjustified to criticize transitional sociology of economy for its lack of
observations on MNC’s or SME’s since they tend to focus on one aspect of the
transformation, though acclaimed as the most important and do not claim to have the
most comprehensive description of postcommunist transformation. Those theories
however, rather paradoxically tend to refer to culture as just a secondary factor in the
analysis of CEE’s new market economy. Communist past and “heritage” of this
region’s societies appear rather as a secondary hero (???). And present
transformations of capitalism, with the exclusion of Szelenyi, Eyal and Szelenyi’s
observations (Szelenyi, Eyal, Szelenyi …Capitalism w/out…), do not seem to play
major role in analyzes of postcommunism. It is not surprising, then that the main
focus of analysis – the knowledge transfer and new relations between actors and
institutions in CEE countries were rather analyzed by managerial studies. One should
ask then, how the culture could be understood if not as in Hofstede’s approach which
seems to dominate the concept of culture in this area of research.
26
MNC’s as global organizations
If we see MNC’s activities not only in CEE’s countries but more broadly, as specific
organizations which operate on quite large scale, we can ask the same question as
Elias posed when analyzing transformation from feudalism to modernity:
Which dynamics of human interdependencies push towards the integration of ever
larger areas under a relatively stable and centralized government.” (Preface, s12,
Civilizing Process)
Classically economic and “managerial” answer to this question would be: hierarchical
relations in the “Iron cage” of bureaucracy. Complex organizations, operating in
various settings, should relate to universal standards enabling relatively simple and
“in-expensive” flow of information and resources from one entity to the other. In this
way, the most effective form of global integration could be acclaimed. The major
problem lies in those factors which block, interfere or hinder the flow between
entities. Another problem is the time of reaction of the center (or the top – if we look
at the hierarchy) to changing conditions in which certain entities (subsidiaries)
operate. Usually it is described as the problem of subsidiary’s innovativeness. Or as
a communication problem when ability to transfer new experiences and information
on the transformation of subsidiary’s environment to the center is lacking. And when
environment began to be less predictable, observers began to look at the relations
instead of merely internal rules of organizations. The field of network analysis
opened. However it should be mentioned that the circumstances in which
corporations were observed in this research was very specific – it was not a standard
operating of MNC (its headquarters with subsidiary) but the very moment of
investment, which by definition poses the problem of uncertainty and then –
particularly if investment is made in the country going through a deep structural
change. This affects not only regulative and institutional context of company’s
behavior but also level of “resources” and possibilities of market strategies.
One could say that integrative mechanisms are regulated by their economic
effectiveness – by market selection, by competitiveness. But then, as exemplify
certain MNC’s analyzed in this research, level of integration – or shall we say
centralization and bureaucratization does not determine commercial success of
MNC’s. We identified those companies which have rather decentralized structure and
relative low level of integration through bureaucratic procedures. They treat such
pattern of behavior as a part of their strategy, either temporal or even – inherent and
important. It proved to be as effective as others and sometimes enabled to innovate
and find a competitive advantage. It is impossible, basing on the collected material
and data, to assume that this type of MNC’s is more effective than hierarchical and
standardized companies but the question addresses conditions and determinants of
relations between integrative and disintegrative mechanisms in organizations which
operate “above” national, state and cultural borders. Organizations of this type
grapple with changing conditions on relatively much higher or at least comparable
level of dynamic transformation as those operating in the most dynamic markets
where “flexibility” seems to be the key notion for understanding of companies’
strategies and modes of operation.
Even if we see MNC’s as essentially bureaucratic and standardizing organizations,
which are submitted to the universal laws of market, the play with local conditions
27
and environment of MNC’s seems to build complex relations. Those relations can be
seen as reciprocal. As clearly demonstrated by case studies collected in this report,
these relations stem from the local or shall we say – from environment of MNC’s
subsidiary. At the same time – this specific network of relations affects
interdependencies not only inside the firm but seems to produce social relations
which can have much broader implications. In opposite to the declarations on
consumer culture as the determining present social relations in Western societies
(Featherstone, Bauman, Baudrillard) or to the declarations on the end of work (Rifkin
1996) we suggest that work-relations and the significance of work for identity of
individuals living in today’s capitalism are still crucial for understanding of not only
economic activities but in general - shed light to the present transformations of
societies. (Rose/Miller 2001). As Rose and Miller suggest:
For at least the last century, ways of thinking about and acting on work have been
fully engaged with the philosophical question of what kinds of persons human beings
are. Work has been a key site for the formation of persons. Individuals have been
encouraged to discover who they are not only in the domains of sexuality and the
family, but on the shop floor, at the work bench, on the production line, in a
manufacturing cell, and in other analogous domains. (Rose Miller 1995, 428)
On the level of work-relations as on the level of relations between company and its
environment the problem of uncertainty and coordination seem to be crucial.
Our approach consists of various levels of analysis and various references which are
integrated by the general assumption that observation of internal and external
relations in MNC’s with the observation of interdependencies can give an insight to
the way capitalism in CEE’s countries has been engendered and also – engenders
new or shall we say from vantage point of “locals” – sometimes artificial elements,
creating hybridal forms. We see MNC’s as networks of organizations consisting of
relations between their employees as members of organization but in the same time
– members of society. Those relations create the context and conditions of MNC’s
actions.
It differs from perspective of Ghoshal and Nohria or Burt’s concepts in assuming that
such “network” as MNC is determined by:
- power-relations between main institutional actors inside the company and outside;
- even if we conceive corporations as isomorphic organizations, one should ask - to
what extent is it internalized and understood by actors (employees) to enable
modifications of action’s patterns according to the transformation of environment?
- context (organizational and cultural) of MNC’s entities (basically – what is called
“resources” in managerial and economic discourse) “hides” various cultural and
institutional factors;
- timing of investment plays as important role as the geographical place where the
investment of a given MNC is made; (‘resources” at the beginning of transformation
were completely different than now); it has impact on decisions concerning mode of
investment (Greenfield or M&A) and way of organizing relations between
headquarters and given subsidiary
- interdependencies between actors are perceived by them in such terms as
“Western-Eastern”, global-local, old-new, own-strange, backward-modern, etc. which
are used to signify various relations and their understandings; it is the way the big
28
mental conversion (or using Elias’s terms – psychogenetic) occurs concomitant with
institutional and organizational ones, which could be seen as parts of sociogenetic
transformation.
PART IV – Comparative Analysis based on DIOSCURI Case Studies
Control and hybridization
At the beginning of this analysis, we pointed out that one of the major problems in
discussions on the MNC’s operation is the question of control and coordination
between headquarters and subsidiaries but also control inside any MNC’s company.
It seems to be an important element of the encounters between East and West in
CEE countries since the level and mode of control determines how much we can see
of “locality” or Eastern context when researching originally Western companies.
Among those observed in this research, control of headquarters over its CEE’s
countries subsidiaries was relatively weaker than in corporations called by our
respondents as “Unilever-like” or as “Mcdonalized”. Universalization of investment
process and then – market behavior of such corporations can be justified not only
through “economies of scale” argument but also – as the way of reducing uncertainty
when investment occurs in countries under dynamic transformation. Centralized
decision-making and fulfilling of well-verified procedures, expected from employees
prevents arbitrariness of individual decisions but also minimizes expectations
towards local employees since their basic task is to apply procedures and report on
effectiveness of applied rules.
Strict control of headquarters by formal rules, intensive communication of
subsidiaries with headquarters, centralized decision-making left in hands of foreign
managers controlling “local” employees and strongly hierarchical structure seem to
be the main features of typical, standardized MNC. Hybridized corporations can be
characterized by variable level of headquarters control, more freedom in decisionmaking left to the subsidiaries, very often controlled either by “local” managers or
foreigners who gained their work-experience either in CEE region or in Post-soviet
countries. If not procedures and hierarchies or decision-making then what is the
mechanism of uncertainty-avoidance in such organizations? It seems that control in
such organizations is based predominantly on the level of employees’ formal and
informal competencies. It is quite obvious that more freedom in decision-making can
be left to those who understand management and are experienced in working for
such organizations as MNC’s. Hybridization can basically occur in those firms which
utilize employees socialized or experienced in working for foreign or multinational
firms. Therefore the process of employee selection seems to play fundamental role in
such a kind of organizations. If the newly established firm is built from the beginning,
selection seems to be quite easy. Almost all of the managers or higher ranked
employees are recruited according to the work-experience and (young) age. Workexperience could have been gained either in those companies which were operating
before the “hybridized” one established its new company or by employee’s work in
Western countries. Another crucial category for selection is the age and education:
those who gained their experience and competencies during communist times can be
selected to work almost exclusively when some experience in work for Western firms
is testified. Young candidates are expected to be socialized in business education
29
(but not necessarily) consisting of good foreign language skills, good interpersonal
competencies and preferably – education certified by some kind of Western
institution (either by studying in Western countries or by attending schools with
Western-academic institutions certificates). Lower ranked employees are selected
predominantly through their technical skills (needed for the position to which they
apply) and interpersonal competencies such as responsibility, communication skills,
creativity, etc.
However when MNC takes over or merges with another one, then employees’ level
of uncertainty and decision-taking avoidance occur much more frequently. The
reason is quite obvious – it is a fear of lay-offs. The situation of uncertainty proved to
be a good opportunity for selection of those who can accomplish the tasks in a
hybridized corporation. The older ones usually seem to use the strategy known as
“wait and see”, of those experienced in communist-type industry (Kostera, Proppe
Szatkowski 1995). Younger ones tend to be more keen on decision-making. However
this simple division by age does not reflect, as it is going to be presented, factors
which influence the selection and control of an MNC.
In order to analyze mechanisms of control and coordination, we should take into
account various strategies used by actors when put in new, from their perspective uncertain circumstances. It refers not only to “local” staff but also to foreign
managers, who tend to reduce their uncertainty with hierarchization. And only
gradually they can find the way to other means of control, unless the organization
leaves them some level of freedom in decision-making. Therefore hierarchy seems
to be just one and not necessarily the most effective way of control and coordination
in MNC’s.
Hierarchy vs. partnership and leadership
As it was mentioned above, MNC’s are seen basically as hierarchical and
bureaucratized organizations which operate predominantly with formal procedures
and with strictly established level of competencies and expectations towards their
employees depending on their position in the hierarchy. On the other hand,
employees are expected to demonstrate their commitment towards the firm –
towards its values declared and communicated to every employee. It is not only
operation within rational set of rules which is accounted and evaluated in the work.
Every corporation establishes its own world of values. It refers not only to a set of
strictly business-like categories which hark back to economic theories but rather to
the set of emotional categories addressing the emotional commitment of their
employees. As one of the managers in brewery company established in Croatia
declares:
We took the values which are very similar it’s only the matter of the formulation, not
so much of the meaning. The meaning is the same, we only formulated them the way
to be connected to us as XXX Croatia. (…) And we decided definitely that it’s
international (…) Then we are innovative in many ways concerning production and
reliable in marketing activities because we are obliged to it by that business code,
management code, (…) and I really think we are a respective firm not only in this
local community but in all Croatia, too. We also said we are passionate. We are
passionate in what we do and about what we are, which is definitely necessary to
30
achieve the success we have achieved. Three years ago our share in the market was
only 6%, and now in nine months of this year it’s 15%, which is a very big growth in a
bear market of Croatia, which is constantly going down. It means that your share is
growing in the market, which is going down; you must work very hard for it.
And finally we mentioned satisfaction. Satisfaction results from our work, as well as,
from all our activities, and also from our products, and we think we generate
satisfaction among people (….).
(middle level manager, Carlsberg, Croatia).
This mixing of business categories with personal ones in fact refers to two sets of
meanings. On one hand it refers to strictly economic meanings of innovativeness,
effectiveness and “codes” of business conduct. On the other – to the personality of
employees (e.g. passionate and satisfied). In the same time, it refers to the general
goals of the organization and to the very personal ones. One should ask then, where
is the place for rational, well-defined and bureaucratized behavior and where – for
passion and personal satisfaction?
As Kamil Mares describes standardization in Czech subsidiary of a leading MNC in
brewery sector:
There are key instruments (and slogans) of standardization for the various fields of
company performance: Balanced Scorecard for the whole company, TPM (Total
Productive Management) particularly but not only for the field of production, PM
(Performance Management) as a tool for human resources, “hunt for cash” for
finances and “winning portfolio”, as the portfolio of winning products everywhere, for
marketing. In short, the ever-present stress on emulation (and, of course,
performance), with constant scoring and matching within corporate “future oriented
culture” based on common values characterized not only as “culture of winners” but
also “feedback culture” (VV and ZZ materials), which is drifted by software of specific
values, political guidance, slogans and symbols, are present.
As Mares illustrates, MNC uses both – “hard” – strictly managerial and economic
standards and “soft” ones - referring to mentality and interrelations between
employees. The values based on an universe of symbols peculiar to a given
corporation and its specific techniques, shall be internalized and acclaimed by all
employees with just a various level of understanding, operating and using in routine
tasks.
We could refer to analyses of transformation of “ideologies” of work in the managerial
discourse throughout post world war development of managerial capitalism. As
illustrates Donzelot in his article on “Pleasure at Work” and concepts of Miller and
Rose (Rose, Miller 2001) the main task of managers was to make their employees
committed. We can see, claim those authors, certain tendency towards
“psychologization” of managerial science and practices in which not only hygiene,
efficiency counted in productivity and financial incentives play the main role in
managing relations with employees, but also the way they are involved in the workprocess, how they react on changes inside the organization and mostly – outside, on
the market. In order to make the corporation more effective one has to commit the
employees to understanding and foster initiative to reach the corporate goals. To
attain this purpose, managers have to understand motivations of their employees and
“inscribe’ work activity into the mental universe in which their employees find their
meaning of work and private (free) time. On the other hand, this psychologization
31
resulted in more individual approach towards working positions which should
nowadays refer to “pleasure” and personal satisfaction (“being passionate”) instead
of merely rational references to accountability, effectiveness and profitability.
Many accounts of respondents referring to their preliminary expectations towards
Western (foreign) companies establishing in CEE countries, relate to the meaning of
rationality. Western companies were/are seen basically as ultimately rational in a
sense of economically effective and organizationally efficient organizations. Welldefined rules and relations between employees should have replaced communisttype relations rarely based on the account of skills and entangled in more or less
political relations. Rationality of Western firms was supposed to be funded on almost
perfect unification of personal and common (collective) goals and interests. When
one is fulfilling well his well-defined and strictly evaluated duties, one is supposed to
be well rewarded and satisfied. Respondents admitted that this expectation could not
have been maintained as soon as certain decisions and modes of operating not only
happened to be not so rational, but tended to remind former-epoch behaviors. As
admits one of our respondents working for multinational, financial institution:
I thought that I would see a model built on the German rationalism and pragmatism,
and on Austrian perfectionism. I was imagining it as a desire, my desire for a
European type of banking. I couldn’t see such rationalism and pragmatism. I even
saw elements from socialism, like a trial-and-error approach.
The communist experience or a simple reference to it, even for younger employees
who did not work during the communism, symbolize irrational in a sense of economic
account. But also appears as an expression of mistrust towards those meanings and
actions of management which in the eyes of local employees seem to be “staged” or
even artificial. As artificial are treated those values or arguments used in
management, which abstract from the rational perceived as effective and procedural
and address collective values stressing common emotions or emphasizing common
interest.
Local managers gradually start to distinguish conflicting interests in such complex
structure as MNC and become much more distanced towards ideology of MNC’s
productivity, rationality and efficiency. This could be illustrated with the perception of
personal and general interests conflicting in the banking corporation, operating in
Bulgaria:
[The board members] defend the interests of this bank. On the other side,
however, the Westerners [Western managers working in Bulgaria’s subsidiary]
are representatives of the owner’s interests. These interests might happen to be
in contradiction. For instance, 20 expatriates working here because they do not
have job there. It is good for them but for the budget of this bank it means terribly
much. In all cases, there is a conflict of interests to certain extent. Their positions
depend on the owners. …. I am already not sure – whether the interest which is
got through is to help the bank with specialist, who will contribute or it is not this
interest. They, most probably, bought this bank on order to ensure working
places for part of their personnel, there is also stagnation over there. (BG11)
Why then Eastern employees seem to divide the rational and emotional? One could
say, it is a completely secondary problem, since the adherence to the procedures
32
and to the rational seems to be the most important for operations of MNC’s. But here
we find the problem which is very neatly and visibly associated with hybridization. As
it was said above, looser managing structure means that managers and employees
are encouraged to be active, innovative and entrepreneurial in order to utilize local
potential for development of the organization and its economic growth. This however
assumes that employees are committed to goals and interests of the company.
Therefore it is the commitment which seems to play as important role as skills or
experience, since dis-loyal or too individual and too distanced employees would not
work for the benefit of the company but for the benefit of themselves.
In our respondents’ accounts on their encounters with the Western business we
could see a gradual development, a process of perceptional transformation of the
attitude towards organization and their goals. At the beginning of their experience
with Western companies, they were focusing on institutions and abstract rules
(perceived as rational and effective) but steadily expectations towards Western
companies were becoming individualized – companies have been understood
predominantly through one’s own career, opportunities for better work, better wages,
etc. Therefore, their perception of the general order becomes as they say “more
realistic” and on the other hand – much more individualized. If they refer to their
further experiences with Western companies, they abstain from general statement
and if they do them – it is mainly in the critical accounts. Their relation to the working
of organization becomes more distanced and reflexivized. As we observed in our
research, this tendency towards individualization and distancing is particularly visible
among upper-level managers. The ones who are supposed to be the most
committed. Therefore one should ask, what are the interdependencies which regulate
distance and commitment?
Most of the employees emphasized that in opposite to the communist times work and
as one of the main features of working for Western company, are formal and informal
ways of demonstrating one’s commitment to work. On a formal level it is quite clear –
there are measurements which show development and goal-attainment of
employees. However new technologies and norms of production mean that
employees should often react flexibly and actively to the circumstances appearing
during the production process. They should observe it, control it and as it is needed –
to change it. This is the main dimension of technologies basing on quality
management. As Paweł Kaczmarczyk describes new modes of production in a
Tobacco company:
One of the most important dimensions of the transformation was the change of the
quality control. It did not base on the introduction of the new, more rigorous norms.
These were left unchanged. What changed were the control method and the attitude
to the problem. Before, the control of the system – production line – had taken place
before the work (production) started and the whole thing would function without
changes until the end. The problem of such work organization was that if an error
occurred (e.g. an element of the production line got damaged), its consequences
were found after some time, what generated large loses.
[The Company] introduced a new quality control system, which relies on almost a
constant observation of the production process: the quality check takes place every
half an hour now. According to our interviewees, after several months the system
33
took root so deep that the majority of the masters are able to control the quality “au
courant” and constantly. Moreover, it is treated as an obvious solution.
Employees submitted to such production system are expected to be active, to
understand the production process and voice their observations or proposals for
change. It is just the opposite to the general attitude of communist workers, as claim
our respondents:
“we have a common target which spreads to every level, at least I wish to be like
that…and again I would compare, even if my past experience isn’t so relevant
because it is achieved in state sector…but for there a worker who knew that at
eleven o’clock should start up a pump and stop it at two o’clock in the afternoon,
made this automatic because he didn’t have any idea why he should do like that.
Some blockhead was telling him to press some buttons there and he just executed. I
like to believe that my tele-bankers know why they must have 100 calls by day:
because we should be at clients’ service, because those services should be of
quality, because this is the number of calls we expect to receive for the next year
and those calls bring some benefits for the bank.
(Romanian, Middle Level Manager; RB Banking Institution)
The understanding of company’s goals is a prerequisite for decision-making, as could
seem quite obvious in this account. However, as many foreign managers
complained, quite often, local (Eastern) employees tend to abstain from decisionmaking. In Hofstede’s approach it is a clear example of feminine, uncertainty
avoidance culture. But theoretical problem with such approach appears when in the
same country some of MNC’s managers refer to this problem but other, usually from
hybridized companies, do not. If we take into account not the “cultural programming”
but the level of uncertainty and individual or group strategies for dealing with dynamic
changes in the environment, we can assume, that interdependencies in hierarchical
organizations, and consequently – proneness to decision-making depend strongly on
the type of investment, on the mezzo-level and on the type of competencies
expected from employees, on the micro-level. In companies which were taken over
by foreign investor (MNC) the major threat in the eyes of employees is downsizing. In
such circumstances decision-making and being active is usually perceived by local
employees as a situation of grand-risk. Therefore they tend to avoid it. It seems to be
common when take-over or merger occurs. In Greenfield investment this problem
appears rarely, since it is eliminated by selection of personnel. Employees expected
to take decisions and be active are usually young and not “biased” through
communist-type behavior. Opposition between the young and the old is quite crucial
here. Younger employees or those who demonstrated their commitment to work and
ability to deal with responsibility are upgraded and take higher positions in the
company.
This seems to be proved by one of the MNC”s observed in this research. Whereas in
case of its greenfield investments, the level of hybridization was higher, level of
employees autonomy in decision-making towards the headquarters was high, in
companies taken-over by the investor, employees were submitted to stricter
procedures and control of the headquarters, also – by higher amount of foreign
managers.
But as mentioned before it is not only the type of investment which plays major role in
power relations and decision-making but also relations between employees and
34
managers . In order to overcome the problem of uncertainty, in hybridized
corporations we observed specific attitude of managers which is associated with their
position of “mediators” or “culture brokers”. The condition for their activity is the way
relations between headquarters and subsidiary are established:
In situation when a decision has to be taken, the Bulgarian managers only try to react
– to only announce what the problems are and wait for some boss to tell them what
to do. Y.I. has changed in this respect – when she feels that someone “is playing the
communications game”, she stops reading the written things, picks up the phone and
asks what the problem is. In these situations it is better to stop the written
communication, to pick up the phone and to take a decision on the spot.
The Austrians do not impose their way, but try to find the best way for Bulgaria. They
do tell how it was approached elsewhere in Eastern Europe. Harold has actually said
to Y.I. on occasions: “You do not need to coordinate all this with Vienna, we are in
Bulgaria here.” Still, people in Vienna are very cooperative and quickly react to
provide assistance. From Vienna “they do raise the red flag, but do not slap with the
stick.”
(HVB Bul. Man. 2-nd level; Corp. Com. Tanya Chavdarova )
One could say that this kind of attitude is more common in the hybridized firms where
culture brokers “translate” unspoken, informal behavior of employees as expression
of uncertainty, as in this case but also other attitudes and try to explain and negotiate
the meanings between Western way of operating and Eastern attitude.
Usually such approach implies a different, gradual way of implementing new modes
of operation and organization:
Standards have been establishing in the process. Standards of working hours,
standards of work, and they have been establishing gradually. By time, they became
a new habit. What I consider important is that each of the new standards was brought
in successively, which made a change more acceptable, and less frightnening. This
is important because I think that our people take a strong negative attitude toward
everything that is happening all at once. Our general manager knew it too well, for he
has already had an experience from Montenegro (Z.E.)
Culture brokers are usually: foreign (Western) managers who gained experience in
working for subsidiaries operating in a given region (i.e. CEE), local managers
educated and socialized in MNC’s, very often those who began their work in “Mcdonalized” MNC’s and changed their job to companies where they have more
decision-making autonomy and treat it as another step in their career. Foreign
managers experienced in work for subsidiaries in the Eastern Europe are perceived
also differently by local employees:
These Western managers, this is a bit confusing. Because in reality these
managers were from the East. […] It was not a person who came from
Germany or England, from an office, as it was the standard. No, he had built
on his own a sales department in Russia or Kazakhstan, he knew it from the
scratch, it is in general more difficult there. And they knew these markets from
this other, difficult side, with that mafia and the strings. And they probably made
better listeners. So it wasn’t a typical authority from the West. Because these
35
people knew how to collaborate with the Eastern markets. I think that it was
England’s choice (Polish middle level manager in Tobacco Comany)
Therefore they were called “Eastern Westerners”. This paradoxical expression
emphasizes the role of Western managers’ understanding of local environment in
which the corporate investment has been developed. “Culture brokers” could not only
be foreign managers but also ex-pats or people who worked for Western companies
either before the transformation or just after the fall of communist rule.
In both cases – of Eastern Westerners and of socialized in Western culture local
managers, called in the same company as Westernized Easterners, understanding of
interdependencies between employees is a condition for effective “translation”
between Western and Eastern norms and patterns of behavior. Their strategy
consists of letting ‘the locals” to voice their expectations and attitudes and to adjust
means to company’s goals:
So I would sit down, very often, as such a mediator, and we would find some
common areas where the manager has to help his people, what they had to
learn, how I can help. I was also very often present to be sure that the
translator, who translates, translates it so it is understandable, or that what was
said, even if they nod and all, I’d say: Brendan, go on, because they don’t
understand a damn thing. And he would start all over. [W3]
The process of “mediations” consists of merging corporate knowledge with the way
local employees react towards new standards. It is an unspoken rule that employees
do not voice their lack of understanding or opposition, therefore one has to “read”
their behavior. Employees do not voice their discontent because they treat the new
rules as basically unchangeable and un-negotiable. It is a certain authority in
hierarchical structure and personal skills which enable to adjust and “mediate”. Ability
“to translate” especially to the lower levels of employees is associated with
dominating positions in the company.
Decision-making
As already stated, ability to take decision depends largely on the level of employee’s
experienced uncertainty but also – on the age. Younger employees, socialized
through Western-type education or having experience in the work for Western
companies know that the “Voice strategy” is evaluated positively and as an
expression of commitment or active attitude, whereas older employees choose more
often passive attitude:
I think that the people who used to work here before, they feel inferior to some
extent, very closed, they don’t say if they don’t like something or if they have
any comments. Before they could not complain, and this is how it stayed with
them. They are afraid of any contact with us, they are afraid that when the HR
comes it is to let them go. They see us this way, very negatively. Even if I tried
so hard, I was open to all people, I talked to them on the production line. But it
is better with the young ones, the young employees. They see it differently, this
is the only place they’ve ever been, so surely it is better, easier for them. They
come to us more eagerly, boldly; they are usually young people, what makes
36
any contact with us easier. And the older employees do what is expected of
them, they try to stay in a shadow. (Polish HR specialist in Tobacco Company)
However the „voice strategy” is mainly reserved for experienced, higher level
managers who operate with sufficient level of communication skills such as the way
of argumentation, rhetorical strategies such as „putting the fist on the table”:
There is also another way [of voicing disagreement], but it requires courage – and it
is to put a fist on the table and loudly to state your disagreement. This is followed by
freezing, because they [Western managers] are not accustomed to such an
approach. But she [Bulgarian manager] has found out that if she states her opinion
extremely firmly and seriously, they start listening. But she needs to have a really
well ordered and convincing set of arguments, which are also very short and clear.
Her approach is the following: “here are the risks associated with this decision. I do
not agree to carry this risk, so if you find someone to take responsibility and to sign
the orders, then go ahead, but without my signature…- writes Tanya Chavdarova, in
her report on the Western Bank’s take over of Bulgarian bank.
Such ability of open and strong opposition or simply – disagreement towards
decisions and action taken by higher level (foreign) managers happened to be quite
rare in the accounts of respondents. Decision-making as it was stated, depends
heavily on the level of (un-)certainty, felt by employees. It can be reduced when they
understand the rules and expectations they face. But it becomes much more complex
under the set of formal AND informal rules and behaviors.
On one hand, Eastern employees receive “job-descriptions”, scorecards, etc in order
to have a clear view on the factors which are evaluated. But on the other, as writes
Irena Kasparova in her report on investment of Italian Banking corpotation in Czech
Republic:
Competency evaluation and development plans are conformed to this job
description. It also serves as a ´safety net,´ especially for the employees, since it
contains their duties and rights and as such specifies the additional workload,
working hours, overtimes etc. Nevertheless, every job description includes a passage
´open to interpretation´, wherein the loyalties and additional duties of the employees
are described. It is this ambiguous passage which provides the management with
clearly recognisable space for manipulation while leaving the employees in
uncertainty.
Procedures and new modes of management seem to play a crucial role in powergames inside the corporation. It is structuralized by personnel selection but also – by
relations which determine individual career paths, additional education and training,
etc. Understanding of not only formal but informal (or at least – awareness of such
informal code) seems to be one of the key competencies needed for individual
development in MNC. Those who do not understand which rules are to be fulfilled
strictly and fully and which are “open to interpretation” have an attitude which was
aptly characterized by the Croatian manager of the same global MNC in brewery
sector as in the Czech case:
37
Managing director had his goal and often happened that in order to fulfill these goals
sometimes moves were made which we would not. … Maybe that role of planning
and determined budget sometimes was treated like the Holly text. . (Croatian middlelevel manager in brewery sector)
In view of more experienced local managers, interpretation of standards is submitted
to interdependencies made in the local context. Decisive for goal-attainment is not
only accountancy of standard factors but rather perception of risk as a chance for
development. The risk can be taken by those who realize how to manage
interdependencies between people with different levels of responsibilities and their
ability to comply to decision-making procedures.
The problem of decision-making could be treated here as an illustration of
interdependencies between actors, both local and foreign who use various strategies
(Swidler’s “tools”) to control their interdependencies which seem possible and at
hand. Prior experience in work for MNC or Western company seems to be the basic
asset in control, hierarchy, decision-making and coordination of MNC’s. Whereas in
companies basing predominantly on procedures, experience is much less important,
it becomes crucial in hybridized companies. One should repeat that hybridization
exhibits processes which can have major impact on economic and social change in
the area of corporate activity. And here not only “young-older” employees’ division
appeared to play a role.
Our reports exhibited tensions concerning decision-making process when two
different (national) traditions of behaviour in bureaucratized, mutli-level organizations
interact in local context..
As mentioned above, in banking sector standardization of procedures and structure
of financial sector’s MNC’s is relatively high due to the European Union’s regulations
preferring standards of accountancy, transparency and financial transactions,
pushing banks towards concentration and standardization. In the case of Western
banking corporation originally based in Italy, taking over Czech bank, we could see
clearly the process of standardization and meanwhile tensions between Italian
managers and local Czech, lower level managers and employees stemming from
different perception of decision-making and problem solving. Standardization
consisted on establishment of one universal structure of “back-office”. Therefore local
structure of Czech corporation was to be modified according to corporation’s
standards. Locality in this context was perceived as a temporary feature which would
be gradually replaced by general regulations and procedures. However the way of
attaining them and in the same time – developing the company on Czech market was
left to Italian and Czech managers. Italian managers expected that Czechs would
take the initiative in solving current and also strategic problems associated with goals
posed by the headquarters. Czechs accepted the goals but seemed to be lost in the
way goals were supposed to be attained.
Italian managers criticized Czech employees for their lack of decision-making and
problem-solving by referring to the difference between two cultures:
Czechs have a German approach, which is: tell me where to go and how and I
will go there. However, what is expected, is that one will begin to search for
solutions…it is not the existence of the problem that is significant, but the
solution…[ITA1]
38
But in Czech’s employees view, Italian approach is based on unclear rules, emotional
attitude associated with a temporary circumstances and changing strategy:
It mostly concerns the effort of individuals to understand. If you want to
announce something to your people and you get inaccurate fragmentary
information, it is then difficult to communicate it to your people. They say, you
are a manager, so tell us how to do it. If an individual does not understand
how to do something, it is wrong. It is important that you know that it is this
way, that he behaves like that and knows it but if he and his subordinates do
not know it, then those emotions always cause ineffectivity. [CZ1]
As the author of this case, Irena Kasparova emphasizes:
Italians were coming from a different business environment and pushed
people to make things possible, not bring forward problems and rules why things are
not possible. Italians have seen this ´problematization´ of everything as the main
problem on the side of the Czechs. Czechs on the other hand complained most
about bad, chaotic and partial communication of vision into the future by the Italian
side. This was tightly bound with their fears of losing jobs in the new merger.
Czech managers and employees search for procedures and clearly declared ways of
goal-attainment. Whereas Italians expect Czechs to create ways of goal-attainment
and quick decisions. Not hierarchy but understanding of company’s goals seems to
be predominant in their thinking.
Italians decide more emotionally…I cannot say whether it is limiting because in
business typology you devote yourself to what matters….it is limiting
especially for a short-term strategy. Italians decide very quickly…and mostly
intuition, emotions help them…this is our biggest asset but also the biggest
problem...we decide under bigger exposure and flexibility. That is the reason
why we were able to radically change the strategy of the bank...[ITA3]
In both Italian and Czech accounts, Italian managers decide “intuitively” – in fact
basing their decisions on experience. Most of them are relatively older than most of
the foreign managers and usually much older than Czech managers. It is a part of
Italian business culture, as declared one of the respondents that higher level
managers are experienced and older. This is just one factor which differentiates
opportunities of local Czech managers for such an “intuitive” decision-making since
prevailing majority does not and could not have obtained such experience as Italians.
In Czech employees view, Italians work through informal relations, spending a lot of
time chatting, meeting other managers and people instead of working according to
procedures and meaning of hard work which is crucial for Czech sense of goal
attaining. Italians , in fact claim that they collect information and recognition of intraorganizational and external conditions for doing business and making decisions on
the future of their scope of activity. Moreover – Italians are used to strong informal
hierarchy based on business experience and actually – age. This seems to be
incomprehensible for Czechs who see performance of employees and managers
through their skills and cooperation in organization based on procedures
(bureaucracy). Those two perceptional schemes or shall we say - strategies of action
based on cultural (national) differences determine power relations and mechanisms
of control or coordination in the described MNC. One could say that those
39
perceptional mechanisms determine ways of managing due to their influence on
interdependencies between actors inside the organization. “Locality” of Czech
business culture does not fit to the Italian “tools” of management, though
paradoxically seems to be well-fitted to the standardization of banking sector. The
latter is based on regulations and transparent goal-setting. We see also, that “power
distance” is not merely determined by uncertainty and its reduction through hierarchy
(on the side of management) or abstinence of decision making (on employees’ side).
Italians expect Czechs to use local resources and business opportunities. Therefore
they expect Czechs to propose new solutions and tactics. But Czech’s understanding
of actions (or shall we say – its lack) taken by Italians, since often considered as –
“accidental” and un-expected, prevents them from “hybridizing” corporate modes of
operation and investment in CEE and modify their actions according to goals set by
foreign managers. Czechs prefer cooperative mechanisms of decision-making and
working than individually established strategies of problem solving. They expect that
working in strongly hierarchized structure such as in (Italian style) banking
corporation would imply clearly set goals and tools for their attainment. For them,
combination of strong hierarchy and expectation of quick decision-making are an
artificial and incomprehensible combination. Therefore we can say that
interdependencies between managers and employees consist of formal and informal
rules of behavior which assume certain fitness of employees’ mentality. When there
is a lack of mental predisposition, employees distance themselves from creative
activity expected by foreign managers. What is lacking is in fact normative
commitment of employees to the ways of behavior (strategies of action, in Swidler’s
terms) pursued by Western managers. Strong hierarchy is in conflict with
individualism and quick decision-making, in Czechs’ employees perception.
Differences in perception are activated when Czechs choose available strategies of
action. Hierarchical interdependencies hinder individual proneness to take decisions
or pursue goals by different than officially (hierarchically) prescribed ways of attaining
them. One could say, the differences are “activated” and then – expressed in
differences between “national” cultures. But this articulation seems to be just one of
possible (accessible) ways to set the differences between strategies of action. We
see here, that the place left by foreign (Western) managers for locality can not solely
determine the process of hybridization. We should repeat again – these are
interdependencies, especially power-games which are prerequisites for hybridization.
Normative Integration
The problem of normative integration becomes crucial in the interdependencies
between local (Eastern) employees and foreign (Western) managers not only in the
case of tensions between Italian and Czech employees and managers but also in the
corporations which build their strategies on the use of local personnel and local
environment. In order to use them well, corporation has to refer to the normative
integration and commitment of employees. It becomes even more evident when we
look at the motivations of MNC’s employees from Eastern Europe. Particularly of
those who work in hybridized companies. If we compare dynamics of divisions
between old and young employees and division between national cultures, we see
that there is an interplay between hierarchy, decision-making and perception of
power. It is not a question of efficiency or (individual) interests which merely regulate
those interdependencies but rather perceptional schemes and practices expressed in
formal and informal ways of conduct. Mutual expectations of Western and Eastern
40
MNC’s employees refer to universal set of norms and procedures implemented in a
given corporation. But when local context is taken upfront, during the process of
hybridization, we see clearly that universal norms are variously received, with
different level of understanding and acceptance. It is particularly important in those
corporations which refer to the normative integration. Their main strategy consists of
setting general goals to be attained by “localized” strategies and tools of managers or
employees in a given environment (ie. given country, region or even community). In
order to fulfill strategies, managers of higher level – in headquarters and decisionmakers in each country should motivate people to pursue the goals. But it is not only
motivation as such which plays role here. In the meantime, understanding and
expression of motivations is submitted to the process of negotiating power relations
and to the understanding of what the work is for individuals employed in a
corporation. And this relates directly to the ways hybridized corporations shape
employees’ identities.
Motivations to work and Motivational work of MNC’s in CEE countries
The process of employee selection plays essential role in every corporation. But it
becomes particularly decisive and not only for a given corporation, in times of
dynamic change – during the transformation from communism to capitalism. In this
context, employee selection can be decisive for promotion of certain attitudes and
behaviors and a way of eliminating others, by elimination of those who are not “fitting”
the new system of work, new rationality and new ways of behavior. This banal
statement would be agreed probably by scientists from various fields. Skills and
effectiveness started to dominate - till now – inefficient, communist system of work,
would claim proponents of “one economy”. Researchers exploring politically
established power in post-communist economies would add that the mechanism of
rational goal attainment becomes enmeshed in politically based rationalities of
interest groups. But it seems that for managers coming from West and those who
were well acquainted (by their professional or educational experience) with
corporative work, the decisive criterion for employee selection was motivation.
Employees even without skills should express their motivation for change, education
and goal attainment. This seems to be equally applied towards every level of
employee hierarchy. As Tanya Chavdarova writes in her report on Banking
Corporation investing in Bulgaria,
When the bank was state-owned everyone was on their own. Now everyone is on
their own, but knows that things reflect on the whole group. For example the previous
leader of her [Bulgarian Manager] group used to not be very engaged, he would tell
that something could wait for two days, and then do it himself. Now she tries to
distribute tasks which makes her people feel more included, that they are not treated
as a mere document processors, but as problem solvers, they become more active
and take on additional tasks. An example is to send an ordinary lowest level courier
to take a present to the President of the country- for the courier this is a compliment.
Signs of recognition are important – they were very happy when invited to participate
in the bank magazine.
Managers are supposed to “empower” their employees with “internal motivation”, as
it is going to be shown with reference to the collected material. But equally important
here seems to be the question of difference between “state-owned” (communist)
41
enterprise and MNC. “Everyone on their own” – seems to be a paradoxical term here,
since more frequently we are used to see communist power-relations in terms of all
encompassing power and enforcing to collective action. But if we refer to the Polish
sociologist’s – Wincjusz Narojek’s analysis of interdependencies between individual,
collective and state, we should mention that it was the public decision-maker (the
state) which presented itself as founder and animator of collective life. The most
important was the hierarchical relation with representative of official order and other
relations were supposed be secondary. Therefore recognition of hierarchical order
and relation with the state - the sole, official distributor of privileges and resources,
embodied in the higher position of manager (or simply – higher level employee) was
the main mode of behavior. Waiting for orders, complying to the prescribed rules and
externally motivated action were crucial for keeping the job in bureaucratic,
communist enterprise.
These were not the “internal motivation” nor the creativity and “problem-solving”
which were promoted. One of the first things, employees of MNC’s in CEE, postcommunist countries were supposed to express, was their commitment to the job, not
merely in terms of their ability to use their skills and willingness for effective use of
company’s resources but also in their mental attitude.
“First of all, they should be highly motivated people, with – what we like to say
– intrinsic motivation... - declares Croatian manager of multinational banking
corporation, and continues - They should be prone to team work, they have to.... For
example, I never said to my girls: 'You must stay overtime!', 'cause they do it in that
way, every day they stay after regular working hours to finish and do something what
has been left from before. So, these are the people who are motivated to finish
something they have to do, with high quality, in a very professional way, and they
were thought to be very quick and very effective... (manager, Croatia,RB)
Whereas skills can be testified through recruitment system, motivation to work has to
be identified by manager and expressed by employee. Work commitment is
expressed in various ways – starting with fulfillment of prescribed task, through active
search for problem solutions in situations when procedures do not prescribe clearly
the actions to be taken and eventually – by overcoming of procedural “limits” such as
formally set working hours. Managers refer very often to informal criteria which serve
to diagnose employee’s commitment, such as staying in work after regular working
hours. Those expectations are higher in the case of managers:
Croatian managers need (only) to improve teamwork. All managers must accept the
life philosophy that job has number 1 position in their lives, and family and everything
else is on the second place. Maybe there is little resentment at the side of Croatian
managers because expatriate managers come here for two years and in that time
they can be completely job involved. For some local managers regarding family
situation and life circumstances it is sometimes hard to keep on. (Croatian Higher
Level Manager, Banking Corp.)
This account of Croatian manager expresses the common presumption in the workattitude of employees in MNC’s of CEE region. Work, at least on declarative level
should be treated as priority in individual value system. It is usually expressed not
only in terms of attitude towards work (work-commitment) but also as a “certain way
of life”, promoted by foreign managers. We find this meaning of commitment in the
expression of another Croatian manager, employed in brewery company:
42
R: Foreign managers like when person is determined and goal oriented – they
demand results. They preferred life-style business as way of life. And you are
expected to be part of the team.
T.: Is a middle or higher-level manager expected to devote himself to work more
than was the case in local firms, in the sense of “work as a way of life”?
R: It seems so, although no one tells you to. That comes naturally when you’re a
person who takes work seriously. That is part of the reason why we do what we do,
and this is our way of life actually. Not because someone forced it on us. In a way we
wanted it ourselves. We want progress, we want challenges in work and career, but
challenges demand time. And that’s what it means to live your work. I think that
everyone in this middle and higher level of management lives that way. It is usual to
work longer, not because someone tells you to, but because life dictates it.
Well, I stayed longer hours because I had work to do. I hope that it will be over in a
certain period of time. However, I think there will always be certain times in the year
when the amount of work will force us to stay longer, even 2 hours longer. 1, 2, or 3
hours, and then afterwards we’ll work normally again. That’s inevitable. (...) I have a
lot of work to do, but a lot of middle management staff got assistants this year. (...)
Obviously they realized that we were under too much strain, and young people have
also been hired... (Croatian Middle level manager, banking corporation)
Work-commitment is associated with “the progress” of the whole organization.
Individual goal-attainment should be submitted to the general goals of the
corporation. Therefore employees are expected to understand that their individual
pursuit is just a part of a bigger picture consisting of normative order set by the
company. Moreover, they should know it, though “no one tells you so” – certain rules,
not inscribed in procedures and regulations should be complied in order to proof
one’s own commitment. It is a good illustration, how supposedly Western “artificial”
idea becomes “naturalized” by Western Easterners understanding of organizational
culture. Employee should have those norms and ideas internalized:
We’ve implemented a project named Mission/Vision/Value from the [Western] Bank
in which people are introduced to mission, vision and values of the company (values
of the organization). But I think part concerning accountability, identification with
company values, assuming responsibilities, about how to make for a common sense
with the whole organizational system must be started with the recruitment process…
what I mean is that every new entered individuals should have these values
internalized…starting from the first one who works here…” (RB ROM, Rom.
Manager. Int no2)
Responsibility for goal attainment of the whole corporation can be expressed by
longer working hours and attitude towards employees which is based on self-control.
As … manager assumes:
The feature of so-called Western business culture is (people management)
communication with your subordinates – it is not permitted to raise voice or shout at
them – just arguments and self-control. And general business logic is to cut down
production cost and invest in the marketing (demand). It’s (relatively) easy to produce
43
beer – it’s hard to make a market product of it. (Croatian middle-level manager, beer
company)
Goal attainment, by managers should be seen as a way of associating individual
motivation with clear perception of corporation’s general vision and implemented by
the use of different managerial techniques which would replace hierarchical order by
more personalized relation called partnership
“But now, since [Banking MNC] took over, we have a common target, that is, we
guide our people in the same direction and all small conflicts we had before are no
longer like ‘look at those stupid, they aren’t capable of doing something good!’ but
emerged into ‘ please, help us to our job better’. So it is clear that everyone has the
same objective. And the praiseworthy goes to PR department who worked very hard
for this project named Mission/ Vision/Values, which even if it looks like a
demagogical approach, had good results on falling into one line. (Romanian high
level manager, Banking corporation)
Hierarchical relations are enmeshed with techniques which would get employees
involved in goal-attainment by their commitment to “the common values” and their
mental proneness to solve problems they face by “consensus”:
So, here, in our culture nobody believes that the highest level of management allows
you to speak open and say “it can’t be done!” or “it can!” and despite this you can
keep your position or even get a better one. I think it’s a matter of routine… we’ve
learned it through the 50 years of communism, when it wasn‘t good and safe for you
to say “no”.. While nowadays you are expected to say “ It can be done!”, “ it can’t
be”…you shouldn’t bother no one, neither shouting to one another, but instead
reaching to a consensus”. (Rom RB; Rom. Man.)
Potential uncertainty stemming from the situation of decision-making, particularly in
new circumstances (which used to be quite common in the work for newly
established MNC’s in postcommunist countries), was supposed to be eliminated by
expelling of a typical communist rule: having a problem with tasks faced by an
employee meant going to a manager to recognize his power as problem-solver and
decision-maker. Therefore, foreign managers started their “mental revolution” with
the transformation of vocabulary used in the work:
She said that they often talked about the difference between “problem” and “issue”.
“Problem” sounds, according to her former American bosses, as something very
dramatic and dangerous. That is why they were supposed to avoid using that word. “
Issue, on the other, connotes something casual, a daily problem which may be
solved with minimal procedures. (Romania, Rom. Manag. HR; RB)
When a problem becomes an “issue” and one is supposed to believe in the attitude
„It can be done”, no decision-making hesitancies should occur. A common employee
should understand that problem-solving and goal attainment consists not only of
fulfilling formal and prescribed (in his job description) tasks but rather makes him
think of the whole organization:
44
We have about 50 persons who work on such jobs and who are committed enough
and paid enough so that they don’t look at the watch. When work needs to be done,
you work, when there’s free time, you can have a long weekend. You can arrange
that with people. It becomes obvious how committed a person is when he has to stay
an hour longer to finish up a job. Some people would never volunteer except if
something really big happened and than you would have to order them to go. Of
course, every time you ask, you find someone who is willing to help out. Some are
never willing. It is not a question of money, it’s about commitment. If that person
wants to go up the professional ladder, it’s obvious. So what do we expect of nonmanagement employees: we expect everyone to see that their work affects a lot of
other things. When someone says: “That’s not my job”, that’s a first sign that
something is not right. You have to invest in order to progress. (Croatian high level
manager,; banking Corporation)
Attainment of individual goals is supposed to be strongly associated with the goals of
organization. And to fulfill them, one has to “sacrifice” other non-occupational
activities. In opposite to the ideology of personal satisfaction, for Eastern managers
and employees such informal rules as working overtime are a consequence of either
general backwardness of Eastern, post-communist societies or a part of “nature” –
the way new capitalist system works. In both cases, individual preferences are
mitigated by organization’s values, goals and mission.
However in this way, criteria of accountability become blurred since it is not only
formal relation with manager nor formally prescribed tasks which count but
predominantly – the way of internalization of company’s values. In order to invest in
individual career path, one has to make the whole team progressing.
The set of informal rules and ideologies used to define company’s normative order,
involves understanding and evaluation of their internalization. Whereas for managers
it seems to be more clear, since their understanding of informal rules seems to be
higher, for lower ranked employees, criteria for job-promotion or evaluation become
blurred. It is illustrated in the case of Diana Mihaloiu and Liviu Chelchea who analyze
work relations in Banking corporation’s investment in Romania:
As for the criteria of getting promoted, experiences of our respondents are different.
Managers are pointing out that the main criteria are commitment to work, experience
and professional knowledge, while some of the low ranked employees disagree with
that: “The main criteria is employee’s personal relationship with the supervisor,
regardless of the level of education, commitment to work or personal characteristics.”
Associating individual goals with general goals seems to be crucial here. On one
hand, MNC’s employees start to think in terms of their individual career and their
individual satisfaction, so well acclaimed as a value for companies operating in the
post-fordist capitalism. On the other – collective action is a prerequisite and
therefore ideology of “team-spirit” comes as another important element of the new
corporate culture. “Team-spirit” seems to be the opposite of communist
“individualization” - predominance of relation between an employee and his superior,
eliminating horizontal relations. (Narojek 1996). In the new work-ideology (Miller
Rose 1995, Donzelot 1991), horizontal relations are promoted in the same time as
competition. The choice between cooperation and competition becomes unclear for
(Eastern) employees, since they are either habituated to hierarchy or seem to be
45
attached to their understanding of career-path as fulfillment of individual goals.
Difference between collective and individual goals and horizontal vs. vertical relations
create quite complex structure of relations. The employee should find the right
balance between those juxtapositions. He is more or less forced to combine his
understanding of “team-spirit” and individual career-path – how they interrelate and
what kind of collectivity is expected from him/her and his/her partners.
Collectivity can be understood quite differently by Eastern employees, as in the case
of Serbian employees who understand it through references to collective forms of
management existing during the communist times. As the official ideology of
corporation reminding former-epoch official declarations on their value, forms of
collectivity can cover the interplay of individual strategies of attaining individual goals
by informal relations. What is of particular interest here is that such elements of work
ideology as “team-spirit” involve recognition of distance and attachment. As in the
account of one Romanian Manager, “team-spirit” refers to emotional attitude or rather
– involves emotional attitude in employees working for MNC’s:
We took it too personally, understanding that the team means... to love each other...
Thus, I like a person, or the way he/ she looks, in the team, or I don’t, therefore I get
along with him/ her, and then I join up in the team or I don’t... So, we either fall into
being emotional, or on the other side, where “individualistic” behavior gets first,
because, this is it, I want to be the first. (Romanian high level manager, banking
corporation)
Managers and employees from Eastern Europe do not face merely new economic
rationality; they are confronted with the whole universe of values and models of
behavior which are to be internalized quickly. Some of “strategies of action” refer to
well known but non-occupational relations and modes of behavior. And those nonoccupational modes of behavior are used (as tools) by people who face such
sophisticated divisions as between team-spirit and friendship or personal attachment.
It seems as if the new corporate culture was referring to non-occupational activities
and ways of behavior. One is tempted to say that these are perceptional schemes
which would legitimize strong work commitment essential for corporate culture. But in
local Eastern-European context they are perceived not by experience of growing
complexity of work-relations but rather through non-occupational meanings such as
“personal sacrifice” or partnership. Eastern European employees tend to “import”
meanings of officially business terms, from non-occupational space, governed by
different dynamics of intedependencies. Transfer of new economic knowledge and
business culture involves new modes of behavior which refer not only to strictly
business categories such as efficiency or profit but also to the understanding of
“modern people”:
“H”: “This is different for each sector of economy. I think that people in banking sector
are very hard working. This prejudice about clerks in banking sector being lazy is not
referring to reality anymore. These are all modern people, which do not waste your
time. These changes happened when foreign banks entered the market, and when
competition became real. I think that foreign banks brought new manners of behavior
and new business culture.”
This account of Bulgarian manager refers to the juxtaposition of bureaucratic model
of communist (modern?) model of banking and new (post-fordist?) understanding of
46
service economy perceived through the life-style of modern societies in which
competitiveness consists also on sparing somebody’s time – on flexibility of
organization fitting its services to the needs and expectations of customers. But does
it mean Eastern managers and employees internalize perfectly new modes of
behavior, new “tools” in work area? As already stated, new modes of behavior
confront the old ones or those which exist outside the occupational activity. The gap
between old or known and new ones results in a distance which is based on at least
few factors:
- the level of personal understanding of career; those managers and employees
who are experienced in working for MNC’s (or generally for Western-type
business) begin to understand what is formal and informal, what needs to be
staged with commitment and where one’s own interest should prevail, if one
wants to attain his personal goals
- the level of potential disillusionment with those values or modes of behavior
which refer to non-occupational ones but in fact are used as techniques of
management and work-commitment;
- experience with work during communist times, when strategies such as “wait
and see” or strict adherence to hierarchical relations seemed to be efficient
from individual’s point of view and in new relations can become the only
accessible strategy of action; this seems to be quite obvious in the area of
decision-making, already described in preceding part of the report.
Assuming that motivations are crucial for efficiency of employees in an organization,
we should see that they depend on complex relations between managers and
employees, between Western and Eastern ways of behavior and between collective
and individual strategies of goal attainment. We tried to explore what is the “tool” by
which Eastern employees and managers understand the way to express their
motivations. On the other – we wanted to explore what is the way of motivating
Eastern employees to work efficiently in a corporation. We observed that for Eastern
employees the most “accessible”, the one “at hand” – is the strategy of expressing
commitment by overtime in work. This is also a clear proof of commitment for
Western managers. The difference is that Eastern employees seem to treat it as a
regulative rule which shows predominance of work-time over private time, as it is
going to be presented in the next part of the report.
Hybridization depends on the way of adopting corporate standards, by local
employees. This process involves not only reference to the local resources such as
skilful work force, structure of the market or competitiveness of a given company –
subsidiary of MNC, but also the way local resources can be used by Western and
Eastern managers. The local resources can be used or shall we say – activated,
when local employees and managers understand and accept norms and goals set by
the corporation. In order to pursue the goals, they need to be motivated. Motivation
depends on the normative integration between perceptional schemes of local and
foreign managers. Even if we point to the role of culture brokers as “translators”
between meanings and behaviors of Western and Eastern employees, we should
mention that hybridization can occur when local employees internalize values of a
corporation and understand their work as a kind of mission in which personal goals
are associated with the goals of the corporation. The way to attain this goal depends
on interdependencies between hierarchical and horizontal relations in the
organization. Relations, however are shaped by identities of employees – their
understanding of work, feeling of power and freedom to take decisions.
47
Identity and meaning of work
For Eastern (local) managers, new work-relations are more or less natural even if not
completely transparent. They realize quite quickly the play between commitment and
distance, between what should be treated as informal rule and what is just a formal
procedure to be overcome or kept as universal, in particular circumstances. But what
is more important, their work consists of intellectual and mental activities which by
their nature – get them used to various roles and identities they should choose while
managing in an MNC. For workers and qualified but lower ranked employees the
difference between the formal and informal is not transparent, criteria of
advancement often blurred and meaning of work – unclear. The work made by
managers or new professionals such as in marketing, distribution or sales
departments, does not involve production nor tangible effects. The gap between
lower rank employees experience and understanding of work and what is new (and
perceived as artificial) is much wider. It could be illustrated by two factors determining
interdependencies between local employees (workers) and managers (Western and
Westernized Easterners).
The first difference refers to the meaning of work in companies which produce
tangible goods. New organization of company involved creation of occupations
basically unknown to the workers of communist type enterprises. They stem from
capitalist market’s development. Such elements of company’s activity as marketing,
distribution through delivery chains and representatives and new forms of
management focusing on processes (of production, sales and quality control) involve
occupations which are not directly related to the production. But the position of
employees responsible for those occupations is usually higher in company’s
hierarchy. Ildiko Erdei describes workers perception of those occupations, by
referring to the difference between work associated with production and work
associated with different kinds of services which determine the final position of a
given company on the market:
It could be simply put that two simultaneous processes are involved into a dynamics
of the particular economic change: at the level of macro-economy/global economy,
the ruling logic is an old Marxian anxiety that “all what is solid is melting into air”. This
means that an old meaning of concreteness, solidity is increasingly diminishing,
leaving behind indeterminate, fluid, changing realities. One of the “realities” that is
going through this kind of change is work itself, and also a field of production that
once relied on the conception of hard and concrete work. Loosing its substantiality it
also looses its relative value within organizations, and sectors as marketing and
sales now came to be even more important than production proper, in the process of
adding value to the product. For the workers, it is a hard fact to reconcile with,
because in the time past, and particularly within the social and ideological frame of
socialism, work was considered as an outmost source of value, and the workers as
its protagonists were put on the top of the hierarchy of the social imaginary.
In the case of post-Yugoslavian Republics it is probably the most intense but could
be found out in other post-communist countries – there is not only a mismatch
between employees understanding of work and evaluation of work in MNC’s but also
mismatch between modern, managerial capitalism and (post-)communist tradition of
48
collective forms of property and collective forms of management (Workers Councils).
Foreign managers have the problem to explain the difference between owner’s
capitalism and managerial capitalism. In order to make local workers committed to
actions and goals of the company, they refer to the understanding of private property,
whereas for local (Eastern) workers the factory or company is supposed to be
dependent on their actions, decisions and attitudes. Therefore it should somehow
respect their participation in management. To them, property relations seem to be
secondary in the context of their position in production process and even pride of
being the final producers of sold goods. The account of Serbian manager evinces
this problem as one of the most visible in his experience of work for MNC’s:
I tried to explain that to the workers, that there are no more Workers councils,
Assemblies, Managing boards consisting of professionally incompetent people. I
suggested them to try to think professionally, it cannot be that everyone should be
asked for everything. Even our former director tried to illustrate to the employees how
they should think and behave. He used to say: “Imagine that I am Mr. Hans, and that
this is my factory, that I own it, not just manage it, and that we all should work our
best to make profit out of the business. I, as an owner, am interested only in
organizing the work in the manner that will bring me profit”. Of course, just a few of
us, who already were working as managers, have understood what he was trying to
do. The rest of the employees simply didn’t want to listen” (M.I.)
The new sense of work is also evaluated by formerly unknown management
technique of Human Resources. Every employee is submitted to the new kinds of
evaluations which on one hand are supposed to give workers a clear view of criteria
and expectancies management sets for its staff, but on the other – the process of
evaluation as such is again submitted to the techniques of building relationships
between superiors and their employees. In the case of an MNC operating in the
Czech brewery sector, it consists of “Personal Management” technique. The latter
consists basically on constant control and coordination of working activities through
establishing close partner-like relations of supervisors with supervised employees.
Superiors are supposed to assist and give counseling to workers. Evaluation of
workers activity takes place in a “quasi free spirit”, which should remind a partner like
conversation. Both sides – superior and employee evaluate outcomes of the work,
point to the problems and search for their solutions. This however blurs hierarchy and
puts workers in the new position which results in an uncertainty – they can hardly
understand what kind of criteria are used for the evaluation of their work.
It is more striking if we take into account the fact that beer production is associated
by workers with the long, local tradition of production. Here we see the tension
between work ethos of the “brewer man” – a specialist who knows indigenous modes
of production which result in a supposedly unique quality of a product (Czech beer)
and MNC’s mode of production, universal for a given corporation which consists of
quality control through the process of “Total Productivity Management”. In the most
general terms it consists of getting employees in the process which would show them
interrelations between work performance in different parts of the production process.
It is supposed to give every employee a sense of how his personal work is related to
the activities in other areas of production process. Therefore it involves creation of
new posts which ensure control of the whole process. Local employees who took
such positions had problems of explaining their role to other workers having clearly
set occupation and duties. For Czech employees, particularly specialists in beer
49
production, work in a brewery is related to the ethos of a brewer man: a specialist
who is experienced in the production of unique local beer flavor. Whereas TPM
relates to the abstract processes governed by procedures which should upgrade
productivity and quality of production, brewer man identity refers to personal qualities
of workers and to their indigenous knowledge, supposedly hardly translatable into
abstract formulas and processes.
As Kamil Mares emphasizes, „The identity of the production man was demarcated by
an image of salesman, a man who did not experience the brewery with his own body,
and it is the same to him “whether he sells beer or milk”. It is interesting that we can
find the same or similar image described not only by production men but also in the
interview with a man from the financial department, who used it to describe his
affinity to the brewery. This ‘derived’ affinity we called “brewer man” identity, using a
name often used by respondents no matter from what division they were.” (Mares, pp
…))
Local pride and assumption on the uniqueness of production process of Czech beer
is juxtaposed to the universal, corporate techniques of production which involve the
work of those who understand abstract, often symbolic rules and encompass the
production process as such, independently of whether it is beer production or milk
production.
Traditional (in a sense of locality) meaning of work in both cases of Serbian workers
and Czech beer producers is altered by new modes of management and new
meaning of work, consisting of a series of more abstract, sometimes symbolic
activities. For managers new meaning is rather clear – they are encouraged to
encompass whole processes of production or service delivery, as in the case of
banking services, mentioned extensively in this report. Lower ranked employees, feel
that their identity or sometimes – ethos of work, is stripped from dignity and meaning.
New modes of management and new occupational positions involve unclear
interdependencies with managers and also – their partners from the production line.
Their “strategy of action” can turn into “wait and see” attitude or result in a distance
towards new work ideology. Therefore they treat the new discourse on production
processes or on team-spirit as a new form of the well known, communist type
ideology which covers the interplay of interests of managers and higher level
employees.
However hybridization here consists of a different level of combining local with global.
The beer company, described here, as many other Multinational beer production
corporations, left the local brand and focused on building the internal and external
image of Czech beer as unique product which should be a source of pride for
employees as members of local community (be it region or even a country).
Therefore, sales managers are taught how to present indigenousness of Czech beer
flavor and even – beer production. Whereas in the area of production process, new,
supposedly artificial in the local employees’ eyes, ways of production replace the old
and local ones, their sense of locality is kept on the level of brand and its public
imaginary. In order to enable such hybridization, the given company teaches its
higher ranked managers how to sense and then – use the locality as an advantage in
motivational work with their employees. There is even a special center in the mother
country of the corporation which identifies and shows various “local flavors” to the
incumbent manager responsible for investment in a given country. We should
50
emphasize here that new identities created in hybridization process tend to be more
abstract due to the transformation from the sense of locality engendered in the work
ethos to the locality recreated on the symbolic level. This however creates a new
‘task”, a new responsibility of managers and employees. As Mares continues his
analysis, This hybrid way of interpreting new institution of the new corporate culture
remained us to the central value of this corporate culture - to the responsibility even
for interpretation of the culture itself and for the project of the career self. This mode
of corporate culture is of course typical in its uncertainty, but the uncertainty itself is
not problematic before it is conceived of as a problem. (….)
In both, Serbian and Czech accounts, managers try to delegate responsibility and
activity aimed at company’s profit towards employees. What seems to be natural and
self-evident in capitalist system of work, seems to engender a completely new selfunderstanding of what the work is for an individual, ie. for the employees from
Eastern Europe.
If we refer here to the already mentioned Foulcaudian methodology of researching
work relations (Miller, Rose, Donzelot) we can say that new managerial techniques
involve new ‘technologies of self”, which assume that the employee is responsible
not only for the externally set procedures and duties, but he/she is responsible for the
meaning of processes “translated” to his partners and especially his employees. He
should, in the same time, manage his emotions in order to make himself and others
committed to the work process:
Personal Management (PM) also corresponds to company’s political philosophy
accenting personal ability to change and develop oneself as a substrate for the
company development and its pecuniary gains. PM is, in brief, the method and the
way of setting the personal and corporate aims up and is characterized by the
hybridization of corresponding and interlacing languages and projects of personal
(managerial) and economical development. (Mares, …..)
Only then is the processual management effective and possible; managers and
employees, though highly specialized in their ordinary duties, should express their
affinity towards general goals of the company; they should control themselves and
their partners. In this sense, “internalization” of corporate norms consists in fact of
internalization of identity construction. It is the result of abstract, symbolic work
involved in the new management techniques. Interpretation of symbolic, corporate
universe results in an uncertainty of those who are not used to the interpretative
work, to those who cannot follow distinctions between formal and informal rules,
present in the company. This uncertainty is submitted to the power game of
especially foreign managers, as suggests one of the Bulgarian managers of banking
corporation:
Before I imagined that we, as Bulgarians, are a bit too rude, while foreigners are
more intelligent, well-behaved, polite. I am not talking only about this bank, but in
general – after working in different multinational organizations I found out that they
also have hits under the waist – a bit more polite, but not less painful. Even maybe
with Bulgarians this is more open, even if ruder, and more predictable. So I make the
conclusion that my expectations were too idealistic, while reality is different. I even
tried to talk to people about it, and was told: “That’s corporate life.”” There are no
open, transparent relationships, sometimes they are deliberately distorted,
51
manipulated to protect some hidden interests, which obviously happens in this
business. So if I hoped that in this bank it would not be like this, I do not hope any
more. Obviously interests trump everything else in this type of relationships. By
manipulation here it is meant manipulation of opinions, often depending on business
interests, but sometimes it may be mixed with personal interest if the issue is about
bonuses. (Bul. Bank, Bul. Man. 1-st level; s.63))
Interpretative work involves recognition of complex interdependencies between
personal interests of managers both Eastern and Western ones. It is useful here to
refer to Elias’s or Bourdieu’s analyses of distinction, used by various groups, in their
strategies aiming at status attainment. Again this involves a strong emphasis on selfcontrol, attained through imitation of (Western) manners:
“…things that are work related and we didn’t have and also we couldn’t achieve from
somewhere else. From the way you dress, table manners, what is allowed to be
discussed at a business meeting, what it isn’t, what means an informal
discussion…so there are some information that you can’t get from (learn in) school,
it’s not like teaching someone about it, and me working there all the time I started to
learn as I went and I tried to adapt to their practices, because I was forced in a way
to do it. I think this was the matter trough the foreigners had influenced in..”
(Romanian high level manager, banking corporation)
For those who participate consciously and try to control their own interdependencies,
symbolic universe of Corporation is a source of information necessary to recognize
power games and relations inside the corporation. They learn a certain “virtuosity” in
interpretation of norms or behaviors. And for those who lack such interpretative skills,
corporate universe can become a bit incomprehensible, external reality to which one
has to adjust himself. Referring once more to Elias’s theory, we could say that game
for status attainment does not involve merely formal competencies or skills nor only
formal relations. Employees and managers are involved mentally and emotionally
in…the work on themselves and relations they create with others. Those relations
become gradually more complex and relate to more and more realms of society.
Particularly to personally established relations and emotions such as satisfaction,
passion, self-fulfillment, joy etc., in the emotional realm, and as friendship and
partnership as references to social relations.
Though relations between work (as institution and as activity) and other activities was
not in the main focus of Dioscuri research, its case studies reveal how Eastern
employees are socialized not only to the working for MNC’s but also – to models of
the self which are reckoned (needed) to work in such organization and fit also lifestyles of consumers. As an illustration of problem and another field of research, we
should refer to just one, though quite important topic of time-management and
temporal relations Eastern employees create under the influence of corporate
culture. As already mentioned in one of the accounts of our respondents working in
banking sector, customer-oriented service (or shall we say – market) “does not waste
the time of its customers” and people working with clients are just the opposite to
“boring banking officer”. Time-management of individuals and processual
management (such as Six Sigma system, developed in one of the banking MNC’s
researched by our team) focusing on the shortest way between customers
expectancies and needs and corporation’s procedures necessary to meet the
52
expectations, actually force individuals to work in a very strict temporal discipline.
What is particularly emphasized in managing techniques is the goal-attainment
attitude and time necessary for their fulfillment. This technique is “exported” to the
personal self-controlling attitude of employees. The clearest expression of this
process was voiced by a Romanian employee of the banking corporation:
So, the West imposes you a discipline, including at the levels that we couldn’t think
of, including managing the private life. I, as individual, had “an action” as my boss
characterized it “have you already taken the heroic version?”. I mean, one must
know: the target! I discovered myself, before having the child, I went to the gym, to
have a nice body condition. Now my daughter gets nine, and I haven’t done any
sports since then. And I realized that what I did as a young person does not work
now. And I feel it, to clear my mind after work. For me it was fashionable to do sports.
In the university I practiced handball, ping pong, athletics. It was close to my soul. I
know it now, that I cannot relax after work, you cannot escape it, that, pin fact, we
have our nights full of the work thoughts. And I said “I must find a solution”. When
you spend your time with the child, you spend your time with the child… And I
reached the conclusion: I must work out, to help myself. And I feel it inside, not as a
fashion. Now I understand what is useful for me. So, if God helps me to go this year
to a gym, I’m gonna do it, I need it, everybody does it I need to start organizing my
time exactly because I need it, and I understand the positive effects on al spheres of
life, including my job. I need to disconnect! There was a time when I used post-its. I
used them even on my furniture, not to forget something, an idea. (Romanian high
level manager; banking corporation)
At the beginning the idea of “work out” seemed to be a fashion, external, new idea
offered with the life-style of a student or an employee of MNC. Then it had to be
“placed” in the personal timing and activities such as those associated with family.
But what is the most important here – the idea of work out as activity “only for
yourself” becomes essential for the well being and seems to be deeply internalized: “I
feel it inside. It is not a fashion”. Post-its, setting the targets, etc. are tools to fulfill
strategies of action, perceived and received mainly through professional life and
professional timing discipline. Another account of a young Romanian professional
from the same corporation, reveals how this new regime affects personal relations:
Working over time affects your personal life! I remember I had a girlfriend who came
along with me from Iasi, but left in the mean time due to my awful schedule: I was
waking up early in the morning, before her and coming home long after she had got
home. So, she couldn’t bare this thing and eventually we broke up. It was worth. I
don’t regret anything now, I mean it’s not a sacrifice but you start to think about what
is going on with your time and yourself. You know, I guess, what is like to go through
something like this, eventually you get over it, but you get the first job-related blow
and you think that you don't know to plan your schedule well enough.
It is definitely not surprising that new working regimes transformed working attitudes
and employees’ identifications or actions. They transformed also identity construction
of a person as an employee or a manager and also – affected personal relations.
The most striking is the way those transformations are induced in the lives of Eastern
European employees of MNC’s and how they understand (or justify) such
metamorphoses. New work-regimes are treated as something which is natural and
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rational, to which one should adjust his actions and expectations. Thus if the working
overtime affects the personal life, it is assumed that the cause of mismatches and
conflicts with other activities is caused by bad planning and insufficient self-control.
We did not find any kind of assumption that job-related satisfaction (to use corporate
vocabulary) is in conflict with personal satisfaction associated with non-occupational
activities. There is a strong assumption that professional career needs personal
devotion. Whereas we observed that elements of new work regimes and new workideology referring to the collective forms can be pictured as artificial, new
requirements and meanings associated with individual career path and individual
development seem to be taken as natural ones. The ones to be internalized.
Trying to interpret such perception, we would like to associate it with an idea
expressed in many accounts of respondents appearing in the case studies on
MNC’s. “To catch up with the West” was not only a popular catch-word of politicians
and mass-media. It was used by Eastern European employees, too. Workload,
pressure towards professional career, acceptance of strong rivalry are justified by the
backwardness stemming from communist times inefficient economy. What is
interesting however is that it does not justify merely general, institutional
inefficiencies of certain CEE countries’ enterprises or public institutions; it also
justified the growth of tensions and personal conflict in individual lives such as
presented here - conflict between time regimes of work and free-time. Therefore “the
run” (rush) of Polish market, as in this account is similar to the rush of all CEE
markets:
As to the cost of labor. In fact - a disadvantage. It is characteristic of the people
working their way up, because everybody in Poland runs in order to catch up with
the West and make differences even. This determination and motivation to reach
this goal is clearly visible. When travel East-West it is quite distinctive. (Polish
Manager of the Banking Corporation; no 9)
There is a general discrepancy between modern corporate discourse and its
understanding by Eastern employees. The former emphasizes the role of work for
individuals as the way to obtain personal satisfaction, of work as “passion”,
nevertheless enabling individuals to reach their personal goals outside the work
activity. For Eastern European employees it seems to be associated more with
devotion - temporal or constant - of their own personal plans in order to “catch up”
with the Western life-style and Western professionalism.
Hybridization in the Making
What is the outcome of hybridization – would be the main question, if we treat it as a
process occurring in MNC’s in CEE region. As emphasized before, we abstain from
defining outcomes, however our analysis of interdependencies in MNC’s in which we
observed hybridization on many levels and with many different causes, revealed
particularities which shall be presented as preliminary assumptions concerning
hybridization process. They refer to “strategies of action” chosen mainly by Eastern
managers and employees whose autonomy in MNC’s enabled to search and find
such strategies as presented below.
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Reflexivity
The difference between new and old, unknown and known, “artificial” and “natural”
behaviors was a stimuli for development of reflexivity as understood by Giddens or
Beck. Eastern employees learned to operate with distance and to ongoing re-defining
of the given circumstances. As one of the managers describes his change:
One of my deficiencies is that I react quickly and without restraint. My first
reaction is often wrong. And I started asking myself – did I clarify to myself the
meaning of things. I have always been uncompromising before, but our reality
changes quickly – do I catch everything which changes?” (BG Manag. W Z-Bank)
Before reacting to the new or unknown such managers redefine their situation, try to
understand it and combine elements which are common with those coming as new.
We could observe it on the level of “strategies of action” used by mainly managers,
when confronted with new problems. We did not observe reflexivization of the new
modes of behavior on the level of individual motivation and identity building. We
should admit though, that this area was not the main focus of the research, therefore
it should be treated as preliminary hypothesis.
Risk as opportunity
Just in opposite shall we place another strategy of coping with change. This one was
often called by quite mis-guiding term of flexibility which actually referred to the
openness towards radical changes – deeply rooted perception of circumstances
constantly transforming situation and placing the organization and its employees
(managers) under risk. This attitude was identified not only in Eastern managers
behavior but also in behavior of “culture brokers”. Stewart is the name of a Western
manager who is responsible for new investments in a Tobacco company, researched
during the Dioscuri Project in Poland:
So the West cares more about what could go wrong and could be done, so it
doesn’t. Stewart cares more about what could go very well and what will be
done to make sure that it goes well, so they focus on different spectrums.
Managers in the West they are always managing risk whereas managers here
in the East and Stewart are managing opportunity, so it is a different concept of
doing business. I can, I will put into place seven projects at a time and knowing
that three of them are going to fail, but I will put them, because I expect that
seven will go right and I expect that seven will outweigh the loss of three and I,
more or less, I will be ok. I will also keep some escape routes, so if something
goes wrong I can cut my losses. And I will not go all the way just because I
have to say „I failed”, which certainly happens a lot in the West. So I think it is
about styles and in the West I see a lot of fear to failure and here I see fear not
to do anything, which is a different kind of fear, so you do a lot. [W1]
This account of foreign manager emphasizing differences in decision-making seems
to be quite significant for a company which based its investment strategy on the use
of local resources. Most of the managers are local and they are basically accounted
for their results. Therefore both – foreign managers and local ones accept failures
and higher level of risk. This common attitude enables to use such business solutions
which can become crucial for business success but in the same time – are new and
55
unknown for foreign managers. This can be illustrated by the strategy of product
distribution, proposed and developed by local, Polish managers and accepted by
foreign superiors. The latter ones assumed that company’s products should be
distributed by supermarket chains what seems to be quite obvious in typical Western
market. However, prices and conditions offered by supermarket chains operating in
Poland were defined by company’s management as extremely expensive and incompetitive. To them – selling company’s products in supermarkets seemed to be a
must since all of the other, rival brands were already on big stores shelves. Local
managers proposed an alternative; they argued that Poland is covered with a net of
small-scale, local distributors. This net of smaller scale distributors can be treated as
an opportunity rather than a risk, associated with working on many relations with
small distributors. Area of distribution of an ordinary retailer is rather small but on the
other hand – he knows the best where to locate, what and when to deliver to local
shops and kiosks. Polish managers proposed to “invest” in the development and use
of already existing distribution nets of local retailers in order to promote new brands.
Their price could be lowered or at least kept lower because they would not include
additional costs of entrance into the supermarket chains. This strategy proved very
efficient. The company raised its market share from 1,5 to 8 percent in 2 years. Both
local and foreign managers emphasized that it would not be possible without the use
of local, both human (local managers) and local market’s features.
We should see however this issue a dynamic process in which time factor seems to
be crucial. Firstly, transformation of market takes place in a very dynamic way, in
which recognition of an opportunity in a given time seems to be crucial. It is
particularly visible if we see strategies of MNC’s using hybridization strategy. When
first on the market (e.g. first foreign bank in a given national market), corporation is
almost forced to rely on local resources before implementation of its corporate
standards, whenever the investment is an M&A and not the Greenfield. But
paradoxically, local resources can be crucial for those companies which enter the
market relatively lately, when other MNC’s in the given sector already established
their business. Then, usually new entrants can rely on a combination of local staff,
experienced in working for MNC’s and promotion of searching market’s niches and
local peculiarities. Local managers seem to understand this logic of dynamic
development, since describing local, Eastern market they refer to the difference
between a walk (Western markets), running (Eastern Markets) and sprints (on
Russian market). They realize that their work is under ongoing stress and
enforcement to take decisions quickly. In such conditions, high risk acceptance of
Eastern European managers seems to be an additional asset.
Distance towards collective
Our analysis pointed out a kind of mistrust towards those elements of new corporate
culture promoted in MNC’s operating in CEE countries which concentrate on building
of collective employees’ identities. It refers to all levels of company’s hierarchy. For
lower-ranked employees it is often associated with communist type ideology of
collective which can either demonstrate discrepancy between former (worker’)
collectivity as a source of power and pride and the new one, being a sort of illusion,
or to treat it as a coverage of managers’ interests. Meanwhile local managers
perceive such actions as team-spirit building or meetings during which employees
are supposed to voice their opinions on company’s strategy as rituals. Sometimes
56
expression of their distance demonstrates even irony as in the case of Romanian
employees of the bank, described by Liviu Chelcea and Diana Mihaloiu:
During teambuilding retreats, the company wants to increase creativity and
compatibility of the personnel. One way to do that is to allow people to use
videocameras in order to create short movies. A favorite genre used by people is
to create movies about their company, movies about life in business. They divide
up between actors, screenplay writers, directors, editing, costumes and so on.
Some of the most serious things that managers do, are turned into comedy topics
and even managers enjoy that. They laugh about endless meetings, about
receiving orders and so on.
This kind of distance towards forms of collective identity building in the workplace
discloses relatively strong individualization of Eastern employees. They seem to
perceive their work in terms of their own careers. And even if they feel the drive
towards commitment such as working in overtime, they still treat it as their own,
individual obligation towards the company. There is a strong tendency to look at the
work activity as submitted to the individual decisions, individual experiences and
institutional constraints which are treated rather as determined and unchangeable.
What one can do is to take a distance and reflect on one’s own commitment or
opportunity for development.
What characterized transformation of the meaning of work during 1970-ties in the
Western society, outlined by Rose and Miller seems to describe quite well
transformations of work meaning and identity building during 1990-ties in Eastern
Europe:
Individuals had to be governed in light of the fact that they each sought to conduct
their lives as a kind of enterprise of the self, striving to improve the ‘quality of life’ for
themselves and their families through the choices that they took within the
marketplace of life. The task for management was to ensure that the maximum
benefit to the firm was obtained through the interplay of these autonomous entities,
each seeking to maximize its own advantage in a competitive market, taking risks,
striving to do better, calculating what would best advance its own interests. (Rose
Miller 1995, 455)
Locality as a Source of Pride
At least two case studies disclose how local managers perception of locality as an
asset of the company becomes a source of pride and then – source of conflict
between local managers and headquarters of the company. Polish and Croatian
managers of the same banking corporation, using extensively the strategy of
hybridization, emphasized, referring to different values though, that the introduction
of corporate standards and further unification of norms and procedures of the
company would make their company (subsidiary) less competitive and strip away the
biggest advantages of the bank on local market. In the case of Croatian managers,
the most important is the difference in attitudes and problem-solving between
Western and Eastern managers:
Well, I do not know where that thesis - that West made strong influence on us - is
coming from!? Maybe we also made a strong influence on them! ...Look, that is
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something what the West will never understand, that is something what
integrates our Bank and employees here, and that they will never have; they will
never have it because they are or too big or (that is impolite, yet I have to say it!)
too bureaucratic or too administration - oriented: for them you can not go left or
right, only straight ahead. They have no flexibility and spontaneity which our
people express. Our man will find a way, if it is necessary he will manipulate even
the law – which is of course something bad, yet he will find a way to do
something faster, better and more efficient than the others do (Cro….).
When confronted with “issues” (not problems) Croatian managers seem to be more
creative, to think in unconventional ways which can also counter procedures (laws)
but should give a right solution, declares the manager. Again we see that Eastern
managers who were given more autonomy, conceive their perception as more
accurate than Western headquarters’ view and evaluation of risks and opportunities.
Polish managers, try to show that their success consists of adjustment between riskcalculation, market opportunities and identification of effective criteria which would
diagnose potentialities of local market in the area of credits for SME’s. The system of
risk evaluation was based on the identification of “qualitative” criteria which took into
account local peculiarity of SME sector. However this system is supposed to be
eliminated due to the general European Union’s regulation (Basel’s Committee) and
bank’s strategy of unification from “group of banks” towards “banking group”. Local
logic of Polish managers demonstrates possible losses stemming from unification
and giving no clear advantages particularly on the level of managers’ performance
and potentials for better results.
Both cases reveal the situation where perception of locality by local (Eastern)
managers is a source of resistance and misunderstanding of global processes such
as unification of regulations or diagnosing the risks of each market. Though it seems
quite evident that in both cases, standardization of the bank would eliminate or
minimize local autonomy and adjustment between the subsidiary and local market,
rich local resources can become an obstacle for MNC’s global strategy. It is the
situation which seems to run counter the assumptions of Ghoshal and Nohria’s
assumptions on the determinants of headquarters-subsidiary relations. Strong locality
does not prevent standardization and development of headquarters-subsidiary
relations towards strong predominance of the headquarters or strong standardization.
This is also important for the analysis of hybridization, since it gives us a reason to
assume that hybridization can be only a temporary process which should be treated
as a specific period in the development of not only MNC’s but in general – in the
development of global economy.
Conclusions
Conditions of hybridization
Hybridization occurs in those MNC’s in which subsidiary’s autonomy is relatively
greater. This autonomy can be an effect of a clearly defined by MNC’s headquarters
strategy but also an effect of internal or external conditions of a given company. Inner
factors comprise the interdependencies between employees and managers and
between managers of the subsidiary and headquarters. Bigger autonomy can be
attained in those subsidiaries which are governed by not only well-skilled managers
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but managers who can “bargain” and negotiate with headquarters the level of
autonomy. Certainly autonomy can be presumed at the beginning of MNC’s
investment though in such case there are usually leaders who gained confidence of
headquarters and in the same time are able to define local resources, establish
crucial relations with employees and boost the enterprise “fitted” to the local
environment. In the case studies comprised in the Dioscuri Project, this role was
taken by “culture brokers”. Nevertheless, all managers of hybridized companies
should be able to motivate local employees by establishing relations with them and
between employees, so as the corporation’s goals would be pursued, its norms
accepted and gradually internalized. External factors comprise both – structural
features of a given MNC’s activity (products/services, position on the global market,
regulations under which a given subsidiary should operate and be fitted to, etc.) and
perception of the environment by managers. If local managers are given voice, than
probability of more local and new actions is much higher than in the situation in which
local managers do not voice their opinions, neither take active position and decide.
This however depends on their level of their perceived uncertainty and risks
associated with decision-making. In hybridized companies, local managers are
usually accounted for their results and supervised but not – controlled by the
mechanism of headquarters acceptance of every decision. This leaves space for
good and bad decisions but also – for local “wisdom” (know-how) which engenders
locality as a source of competitive advantage.
What is the Hybridization
Hybridization takes place when interdependencies between actors result in strategies
of action which include on one hand natural elements for both cultures which are
brought by institutions and people (their understanding, customs and behaviors,
associated with interdependencies they create in their working activity) and on the
other – those which are recognized as artificial but acceptable. When local, Eastern
European managers internalize such strategies as management by informal rules
and through informal interdependencies, in the same time, Western managers can
be socialized to the much higher risk acceptance whenever local managers show
new opportunities or develop their own “natural” sources such as interdependencies
on local markets with various business partners or access to information.
Hybridization occurs when:
- either managers and key-employees internalized Western skill in a given area
of responsibility and rules of decision-making
- corporation leaves more autonomy to local managers under presumption of
strong normative integration of the personnel which assumes that employees
and managers would work for the profit of company and not only their own.
We treat hybridization as an ongoing process, a structural transformation which
exposes clearly tensions, conflict but also similarities or convergences between
global and local, Easter and Western. We tried to stay close to our respondents when
using both distinctions.
What is the outcome for corporation
Activation of local resources which is in fact – creation by corporation and in
corporation, of complex relations between employees and managers where various
strategies of action appear and are used, seems to pose seemingly contradictory
tendencies. On one hand, corporation can gain competitive advantage on local
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market by the use of market’s specifics, its local resources and “indigenous”
knowledge of the local managers and employees. On the other – localization hinders
standardization and communication between subsidiaries since they can use
different “vocabularies” and different approaches to the universal norms, funded by
headquarters.
It is much less contradictory though if we look at this problem from the perspective of
dynamic change on global markets. We see then, that in order to react quickly to the
changing circumstances on local markets the MNC cannot rely on the process of
standardization since, as mentioned in the first part of this paper, it has problems with
innovativeness, communication and adaptation. In circumstances of more or less
radical transformation of markets such as occurred in CEE countries in the last 17
years, it seems that strategy of hybridization proved effective. However it raises a
problem of not only common standards for the whole corporation but also of the
growing pride of locals and their sense of their market’s uniqueness and their
personal advantages.
What is the outcome for employees
Self-control and self as enterprise: we cannot assume that such forms of identity
building either in work relation or apart from them did not exist before the coming of
capitalist economy. However we suggest that they have become a part of discourse
on business relations (management, relations in organization, etc.) and precondition
for success in such institutions as MNC’s.
Power-relations create uncertainty in those whose position does not enable to
develop “technologies of self” which determine the influence to the interdependencies
inside and outside company (organization), mainly through operation with distance
and involvement. Status attainment consists of keeping informal rules under control
of higher groups (in our case – managers). To a certain extent, managers can control
or play with the level of uncertainty of their employees. It can influence further
potential hybridizations – what would be accepted from local strategies of action and
what – rejected.
Distinctions between new employees and old ones, young and old define potential
identities of employees in managers’ view. Whereas young ones (new ones) should
show their commitment to work, old ones – their ability to cope with new
circumstances, to get liberated from old customs or strategies and obviously express
their commitment too. However in the interdependencies between foreign and local
managers and between local managers and local employees both sides have to
grapple with uncertainty. Managers – of new circumstances for decision-making,
employees – with new rules which are often ambiguous. There are different
strategies of coping with uncertainty. Some of them stem from communist type
enterprise economic reality. But the biggest hybridization seems to appear when we
confront ideology and (managerial) strategies of (post-fordist?) capitalism and those
embedded in the local context – either of the past or of the present power games for
status attainment. Individualization plays crucial role here. We tried to suggest that in
opposite to official ideology, during communist times, a specific individualization
occurred in a sense that horizontal relations with power (superior) prevailed over
horizontal ones, at least if we take into account reality of communist type
organization. In the new economic circumstances, collective forms of organization
seem to be hardly accepted, too. They are often treated as reminders of communisttype ideology. It does not stem directly from personal memory of employees but
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rather occurs when new expectations on “soft” management techniques and new
ways of building relations in the enterprise are not embedded in the formal or
informal professional rules. Then it seems that Eastern European employees were
“using tools” from the repertoire of informal, personal or non-occupational relations.
The gap between Western (or Westernized) managers’ expectations and supposed
effects of new techniques application and reactions of employees creates distance of
employees towards new normative forms of collectivity. However it does not question
individual strategies of status attainment. In most of the corporations researched
during the Dioscuri Project, researchers observed problem of internal rivalry and lack
of cooperation between employees (lack of horizontal relations).
The Spirit of Eastern-European Capitalism?
As a result of new work regimes (disciplines), we observed that employees of MNC’s
accept relatively high level of stress, risk and rush which is not only associated with
every beginning of a new organization, with every new investment. The state of
continuous mobilization, in which they should express their commitment to the idea of
“work as a way of life” is associated with:
- the level of uncertainty which is submitted to the power game with managers;
- common justification of work overload as not only a by-product, but inherent
feature of backward economies (markets). One has to commit to work more
than decalred in rules and procedures because one works in backward
economy, in which every one takes responsibility for civilizational
backwardness.
Eastern-European employees and managers accept very high level of devotion
towards professional life as a part of their own (!), individual “share” in the historic
transformation. In this way, individual costs of transformation, at least subjectively do
not belong to the sphere of “artificial”, in a way – manipulative sphere of (constructed)
reality but rather to the “natural” sphere of determining mechanisms, to which one
has to submit him-/her-self. However such mental disposition (strategy of action)
does not presume exclusively “ascetic” attitude”. On the other hand, employees and
managers are facing “ideology” of “pleasure at work” (Donzelot 1992) in which the
sphere of work and non-occupational activity is regulated by self-management, by
what was called by Rose and Miller – the enterprising self. It seems to be inherently
individualized attitude which presupposes strong attachment to the idea of selfresponsibility. Therefore, “the spirit of capitalism” appears as “deffered gratification”
but on the other hand it does not presume some kinds of collective consciousness on
what the overall shape of economy (market) should be, since it is treated as a reality
which can not be molded by individual or even collective effort besides the one aimed
at individual or corporative profits. In circumstances of ongoing dynamic change, one
is limited in long-term thinking and encouraged to the individualized “career-path”
activities. If we take into account those situations which result in an individual’s
distance towards new work-ideologies, we can presume that this distance prevents
Eastern-European employees from collective bargaining meanwhile engendering
individualizing process (Elias 1992).
What is the relation between global and local
Paradoxically – the use of local resources, disclosed by the analysis of hybridization
results from… “Westernized” Easterners and Easternized Westerners. Both types of
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actors bring West in the East and East in the West. Experiences and perceptional
schemes of such people predestine them to play crucial role in the transfer of
knowledge and global standards to the local environment, be it MNC’s subsidiary. In
fact they do not participate in the process of transfer but rather “translation” as we
refer to the distinction of Latour, mentioned by Clark and Geppert. Certain parts of
“original” Western and Eastern understandings of strategies of action are lost (…in
translation), certain – get a new meaning (as flexibility, for example) and some of
them – are reinterpreted.
Probably the most important to our research was assumption that managers and
employees of (hybridized) MNC’s internalize new “technologies of self” which
individualize (leaving behind possibilities of new forms of collective identities of
employees) and then – socialize very neatly to the working in the global organization.
This would conduct us to the assumption that eventually, hybridization is a temporary
process which is associated with exceptional time of very dynamic (or shall we say –
radical) change of environment. Regarding such circumstances certain MNC’s rely
on local resources in their investment strategies. But as we tried to show in this
analysis, identities of actors are at least as important as interdependencies between
them. These interdependencies result from actions on various levels of analysis. We
would like to follow Elias’s tradition in saying that we cannot establish one model of
relation between interdependencies. We should rather see them as ever more
dynamic processes which involve transformations of not only societies and their
economies but also transformations of individual identities. In this context we would
like to suggest that transformation of MNC’s identities in the CEE countries has a
great impact on the development of modern capitalism, since it socializes to action
occurring in the uncertain environment, in which one has to constantly re-define
one’s own position, rely and develop self-control, focus on goal attainment, etc. But
this cannot occur unless relations between actors become uncertain and constantly
transformed due to the ever more complex sets of formal and informal rules
regulating and coordinating communication on global scale.
This leads us to the more general hypothesis on relations between cultural context
and economic factors and actions. Usually, managerial studies tend to look how
managerial strategies and companies’ behavior is transformed by local context, local
circumstances. We propose to turn this perspective upside down and focus on how
MNC’s transform local cultures not by transfer of technological knowledge and knowhow, neither by socializing to new life-styles, associated with consumption but how
they bring specific interdependencies creating new kinds of identities. The latter
ones, in our opinion should be researched with reference to “external” world –
outside corporations and outside purely economic sphere.
Culture encounters could be understood from such a vantage point more as
multilayered tensions and co ordinations between various strategies of action used
by actors who are embedded in interdependencies. The cultural encounters do not
occur merely on the level of what actors find artificial but as in the case of Eastern
Westerners or Western Easterners, become parts of their “natural” identity.
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