African Journal of Business Management Vol. 6(6), pp. 2391-2402, 15 February, 2012
Available online at http://www.academicjournals.org/AJBM
DOI: 10.5897/AJBM11.615
ISSN 1993-8233 ©2012 Academic Journals
Full Length Research Paper
Multidimensionality of organizational culture and its
relationship with bureaucratic, market, clan and output
control in MNCs
Burcu Guneri Cangarli1* and Mustafa Delen2
1
Izmir University of Economics, Department of Business Administration, Sakarya Cad. No: 156 Balcova,
Izmir/Turkey 35330.
2
Heraeus Tokmak Company, Egypt.
Accepted 25 July, 2011
The aim of this study was to investigate the reciprocal relationships between different types of
organizational control (market, bureaucratic, clan and output control) and different dimensions of
organizational culture in different subsidiaries (located in Germany, USA, India and China) of a
multinational corporations (MNCs). In order to identify which types of organizational control
mechanisms were related to which dimensions of organizational culture, firstly, organizational culture
of each subsidiary was analyzed. It was found that organizational culture change across the different
subsidiaries of the same MNC. Moreover, it was identified that organizational control mechanisms had
very different effects on organizational culture dimensions in different subsidiaries. Specifically, a
control mechanism had a positive effect on an organizational culture dimension in a subsidiary, while it
had no significant or had significant negative effect on the same organizational culture dimension in a
different subsidiary.
Key words: Organizational control, organizational culture, multinational corporations (MNCs).
INTRODUCTION
As the companies become larger and multiculturaly
diverse, the concepts of coordination and integration
among diversities become more and more important
(Robbins and Coulter, 1998; Mintzberg, 1979; Child,
1973). Although diversities of the global market affect
almost all the companies which conduct business across
nations, these challenges become more important in the
case of multinational corporations (MNCs) that are
geographically dispersed and diverse in terms of,
heterogeneity and hostility (Fayerweather, 1982).
MNCs are seen as compositions of various subsidiaries
which deal with different environmental challenges as
well as employ people who have diverse cultural
backgrounds. It is expected that diversities in national
*Corresponding author. E-mail: burcu.guneri@ieu.edu.tr Tel:
0090232-4888551. Fax: 0090232-2792626.
cultures reflect themselves in organizational cultures of
the subsidiaries. Hence, subsidiaries may be different in
terms of their culture even if they are the sub-units of the
same MNC (Garsten, 1993; Hamada, 1989).
Previous research emphasize that organizational
control which is one of the most powerful tool for
management has a reciprocal relationship with
organizational culture (Ray, 1986; Hofstede et al., 1990;
Muringaseril, 2007). More specifically, organizational
control mechanisms can be used to manipulate organizational culture while organizational culture emerges as a
contingency factor that affects the composition of appropriate control mix. Although, understanding this reciprocal
relationship is crucially important for designing effective
organizational control mix as well as manipulating appropriate organizational culture in each subsidiary, research
that investigates the issue from this perspective is
surprisingly limited. Therefore, based on the vitality of the
subject and the gap in the organizational control and
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Afr. J. Bus. Manage.
culture literature, the aims of this study is to identify how
organizational cultural characteristics change across
nations and how they are related to different types of
control mechanisms.
THEORETICAL BACKGROUND
Multidimensionality of organizational
multinational corporations (MNCs)
culture
in
Organizational culture which is defined as “a system of
shared values and norms that indicate appropriate
attitudes and behaviors for organizational members”
(O’Reilly et al., 1991) has been an important and a very
popular topic in organizational psychology for several
decades. Deal and Kennedy (1982) clearly identified the
reason why organizational culture is important by arguing
that
“… The way to manage employees is not directly by
computer reports, but by the subtle cues of culture. A
strong culture is a powerful lever for guiding behavior; it
helps employees do their jobs a little better”.
Thus, managers show considerable effort to create a
strong organizational culture which conveys values that
are in accordance with the organizational strategy.
Quantitative studies which allow statistical factor
analyses show that organizational culture may include a
wide range of values that are likely to be collected under
independent dimensions (Chatman, 1991; Chatman and
Jehn, 1994; Calori and Sarnin, 1991; Hofstede et al.,
1990; Litwin and Stringer, 1968; O’Reilly et al., 1991;
Sheridan, 1992; Wallach, 1983). Among these studies,
probably the most known ones were conducted by
O’Reilly et al. (1991) and Chatman and Jehn (1994).
They developed profiles for organizational culture and
showed that cultural characteristics can be assessed
under seven dimensions; namely, attention to detail,
outcome orientation, people orientation, team orientation,
aggressiveness, stability, innovation and risk taking.
Moreover, number and content of these sub dimensions
may change according to organizations’ external
environment (Hofstede et al., 1990).
Regarding the effect of organizations’ external environment on their cultural characteristics, Chatman (1991)
demonstrated that when organizations operate in similar
industries and in similar environments; they tend to
develop similar cultures. Conversely, when they operate
in different environments, their cultures are likely to be
different. At this point, national culture may appear as a
powerful external force that affects the number and
content of organizational culture dimensions. Hofstede et
al. (1990) argued that organizational cultures are
predetermined by national culture and hence number and
content of organizational culture dimensions are likely to
change across nations.
Their argument has been supported and tested in previous research that was extensively reviewed by Delobbe
et al. (2002). In their comprehensive review, they outlined
how dimensions of organizational culture change across
nations and which dimensions are visible in which
countries.
Based on the studies that emphasize the role of
national culture on characteristics of organizational
culture, it can be argued that a MNC’s subsidiaries
locating in different countries may have different cultural
characteristics reflecting themselves with different cultural
dimensions. Hence, MNCs cannot be seen as being
composed of identical subunits. Instead, they should be
viewed as compositions of various subunits which have
different cultural characteristics. Based on this argument,
the following hypothesis of the current study has been
formed as;
H1: Multidimensionality of organizational culture may
change across different subsidiaries of a MNC.
Accordingly, different cultural dimensions may be
observed in different subsidiaries of the same MNC.
Organizational control in multinational corporations
(MNCs)
Control is defined as the process of monitoring activities
to ensure that they are being accomplished as planned
and of correcting any significant deviations (Merchant,
1985). Scholars have agreed on that organizational control is a strategically important mechanism of managerial
function in order to achieve desired organizational
outcomes (Child, 1973; Flamholtz, 1979; Jaeger and
Baliga, 1985; Tannenbaum, 1968).
Consistent with the importance of organizational
control, scholars have paid attention to this topic and
classifications regarding control mechanisms have
developed. In the literature, among many, four main
approaches to control mechanisms have been
established; Ouchi’s three control mechanisms (1979,
1980), outcome-based control, behavior-based control,
and relational approach to control.
This study mainly follows Ouchi’s (1979, 1980) three
control mechanisms, as it is seen as the most
comprehensive one by scholars (Das, 1989). According
to Ouchi (1979, 1980) market, bureaucratic and clan
control are three main control mechanisms which are
sufficient to create an effective control mix. Ouchi
(1997,1980), defined market control as the use of
external market mechanisms, such as price competition
and relative market share to establish the standards in
the control system. This control mechanism is associated
with organizations producing a specified goods and
services operating in a competitive business environment
(Robbins and Coulter, 1998). The second type of control
Cangarli and Delen
in his classification is bureaucratic control. It is defined in
relation to organizational authority based on administrative rules, regulations, procedures and policies. Ouchi
(1979, 1980) specified this type of control as a basis of
standardization of activities, predefined job descriptions
and other administrative mechanisms like budgets to
ensure that employees exhibit appropriate behaviors and
meet performance standards. Finally, the third type of
control identified by Quchi (1979, 1980) which is clan
control that represents the role of values, beliefs, corporate culture, shared norms, and informal relationships
on regulating employee behaviors and facilitating the
reaching of organizational goals (Ouchi and Jaeger,
1978). In organizations that use clan control, employees
are assumed to perform predefined standards and
objectives given minimal direction and standards.
The summary of Ouchi’s classification above indicates
that it is based on social agreements, information
sharing, and the methods concerned cost, application
and processes. Therefore, this classification provides a
kind of cumulative framework ranging from market performance to employee behaviors. In other words, although
market control is only based on a simple logic or rational;
bureaucratic control converges both reciprocity and
authority; further, clan control adds shared values and
beliefs.
Although the classification developed by Quchi (1979,
1980), provides a useful framework to analyze and build
effective control systems, it can be enriched if outcome
control is added. Outcome control is identified as a way in
that central authority establishes the criteria for
objectives, actions and process (Abbeele, 2006; Oliver
and Anderson, 1994). Therefore, organization using
outcome control can easily set standards and criteria for
performance and success to reach not only organizational but also individual objectives as well as performance
requirements.
It can be argued that the aforementioned dichotomies
of control become blurred in the process of globalization
in which a complex and interwoven mechanisms of
controls have been conducted. For managers in MNCs,
control becomes a complicated activity that requires a
balance and compromise not only among employees but
also between global and local levels of management. On
the one hand, strict controlling from headquarters is
required to ensure “minimum levels of duplication,
wastage and ineffective processes”. On the other hand, a
certain amount of autonomy at the local level is also
required in order to obtain local knowledge and
innovation. Therefore, a MNC’s control function needs to
balance between the dynamics of globalization that
include local responsiveness and global autonomy
(Fenwick et al., 1999).
Accordingly, in this increasingly diverse and complex
international business environment, the achievement of
this balance seems to be difficult. In other words,
accomplishing effective “control mix” is identified as a
2393
major challenge to MNCs. Hence, managers need to
overcome this challenge by establishing an appropriate
control mix which is the proper composition of market,
bureaucratic, clan and output control.
Relationship between organizational control and
organizational culture
The relationship between organizational control
mechanisms and organizational culture has been
investigated by scholars for few decades (Ray, 1986;
Hofstede et al., 1990; Muringaresil, 2007). Two important
topics have been emerged during the discussion; how
organizational culture can be used as an informal control
mechanism (Ray, 1986; Hofstede et al., 1990) and how
formal control mechanisms can be utilized to manipulate
organizational culture (Ray, 1986; Hofstede et al., 1990).
The emergence of aforementioned themes clearly
showed that, there is a reciprocal relationship between
organizational control and organizational culture. In other
words, formal control mechanisms are used to manipulate organizational culture while organizational culture
appears as one of the contingency factors which affect
the composition of an effective control mix.
Although it is limited, previous literature provides valid
arguments for explaining the role of control mechanisms
in manipulating organizational culture. For instance, as a
reference to control mechanism, predefined criteria
based on rules, regulations and policies are important in
performance management (Evans, 1992; Gregersen et
al., 1996, Harvey, 1997, in Fenwick et al., 1999), and employees are expected to shape their behaviors based on
the criteria and rules dictated by the control mechanism
in order to achieve better performance evaluation results
and to be promoted. Hence, control mechanisms are
used to manipulate employees’ behaviors and perspectives, and in turn, organizational culture. Moreover, as a
reference to personal control, MNCs recruit parent
country nationals for international subsidiary positions. By
this way, MNCs attempt to use role modeling as a tool for
manipulating employees’ behaviors’ and in turn,
organizational culture in the subsidiaries (Muringaresil,
2007).
Regarding the role of organizational culture as a
contingency factor that affect the appropriate composition
of a control mix, previous literature emphasizes the
utilization of organizational culture as a control
mechanism. Accordingly, in MNCs, managers can determine the level of utilization of each type of organizational
control (market, bureaucratic, clan and output) for each
subsidiary based on the characteristics and strength of its
organizational culture (Muringaresil, 2007). For instance,
if the characteristics of subsidiary’s organizational culture
are in accordance with the parent company’s culture and
also if it is strong, it will act as a powerful control
mechanism. In this case, for an effective composition of
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control mix, less bureaucratic and more clan control will
be appropriate (Muringaresil, 2007). Conversely, if
organizational culture of the subsidiary is extremely
different from the headquarters’ culture, intensive usage
of formal control mechanisms such as bureaucratic and
outcome control will be appropriate.
Based on aforementioned arguments, it can be said
that managers in MNCs should understand the reciprocal
relationship between organizational control and organizational culture because it offers two vital benefits; it will
provide useful implications to understand how they can
manipulate organizational culture through control
mechanisms as well as to determine the appropriate
composition of control mix based on organizational
culture of each subsidiary. Although, understanding this
reciprocal relationship is crucially important and there is
an extensive body of literature which examines the
relationship between organizational control and culture,
research that investigates the issue from this perspective
is surprisingly limited. Thus, based on this gap, this study
aims at identifying which types of organizational control
are in relationship with which dimensions of organizational culture in different subsidiaries of a MNC.
Accordingly, in our second hypothesis, we claim that
the relationship between different types of organizational
control and different dimensions of organizational culture
may change in different subsidiaries of a MNC.
H2: Different types of organizational control (market,
bureaucratic, clan and output) will be in relationship with
different dimensions of organizational culture in different
subsidiaries of a MNC.
0.9% (n=1) held masters’ degree. 58.6% (n=58) of them were white
collar, 26.3% (n=26) blue collar employees and 15.2% (n=15) of
them had managerial positions.
USA
89 participants responded to survey. The average age of the
respondents M=37.4 (SD=8.95) ranging from 21 - 59. 42.7% (n=38)
were male. 8% (n=8) of the participants were graduated from high
school, 87.7% (n=78) from vocational school/ university and 3.4%
(n=3) held masters’ degree. 38.6% (n=34) of them were white
collar, 37.5% (n=33) blue collar employees and 23.9% (n=21) of
them had managerial positions.
China
82 participants responded to survey. The average age of the
respondents M=38.1 (SD=6.67) ranging from 24 - 57. 53.1% (n=43)
were male. All of the participants were graduated from vocational
school/ university. 36.6% (n=30) of them were white collar, 39%
(n=32) blue collar employees and 24.4% (n=20) of them had
managerial positions.
India
71 participants responded to survey. The average age of the
respondents M=38.1 (SD=8.71) ranging from 24 - 57. 53.5% (n=38)
were male. 1.5% (n=1) of the participants were graduated from
primary school, 97% (n=65) from vocational school/university and
1.5% (n=1) held masters’ degree. 63.8% (n=44) of them were white
collar, 17.4% (n=12) blue collar employees and 18.8% (n=13) of
them had managerial positions.
Measures
MATERIALS AND METHODS
Participants and procedures
Data for the current study was collected from a MNC’s different
subsidiaries that were located in China, India, Germany and USA
via survey method. All the questionnaires were written in English.
After receiving written permission from the headquarter of the MNC,
questionnaires with envelopes were sent to human resources
managers of each location. Envelopes which included questionnaire form and cover letter were distributed to employees by human
resources professionals in each location. In the cover letter,
participants were ensured that data collected would be used for
only scientific purposes and their identities would not be disclosed.
Participation was totally voluntary. A month later, total of 357 usable
questionnaires were returned. 32% (n=115) of the attendants are
from Germany, the headquarter country. 25% of attendants are
from USA (n=89), 23% (n=82) of the attendants are China, 20%
(n=71) of the attendants are from India. Below, participants’
demographic characteristics for each location are explained.
Organizational culture
In order to measure organizational culture, 19 items which was
adapted from O'Reilly et al. (1991) organizational culture profile
were used. Participants indicated their level of agreement for each
item on a five point Likert scale from 1=strongly agree to 5=strongly
disagree. As the scale was utilized in four subsidiaries of a MNC,
exploratory factor analyses were conducted for each region. Factor
structures were changed across regions.
Organizational control
Organizational control was measured by four control types;
bureaucratic control, market control, clan control as suggested by
Ouchi (1979), and output control which has been seen as the final
control mechanism in traditional control theory (Gomez and
Sanchez, 2005).
Bureaucratic control
Germany
115 participants responded to survey. 63.4% (n=71) were male.
The average age of the respondents M=36.4 (SD=8.57) ranging
from 24 - 61. 13.1% (n=14) of the participants were graduated
fromhigh school, 86% (n=92) from vocational school/university and
Bureaucratic control was measured by four items on which
participants indicated their level of agreement on a five point Likert
scale ranging from 1=strongly agree to 5=strongly disagree.
Reliability of the scale was found α=0.71 in Germany, α=0.87 in
USA, α=0.78 in China and α=.82 in India.
Cangarli and Delen
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Table 1. Eingenvalues and variance explained in factor anaylsis conducted to German data.
Dimension
1
2
3
4
5
6
Name
Innovation
Decisiveness
Outcome orientation
Change
Aggressiveness
Team Orientation
Eingenvalues
6.146
2.529
1.927
1.547
1.358
1.072
Variance explained
32.35
13.31
10.14
8.14
7.15
5.64
Table 2. Eingenvalues and variance explained in factor anaylsis conducted to US data.
Dimension
1
2
3
4
Name
Innovation
Outcome orientation
Aggressiveness
Decisiveness
Eingenvalues
8.75
3.66
1.67
1.51
Variance explained
46.03
17.71
8.88
7.95
Market control
Germany
Market control was assessed by using two items. Five points Likert
scale (1=strongly agree to 5=strongly disagree) was used. The
scale was found reliable in Germany (α=0.76) and in USA (α=0.84)
where as its reliability analysis results were not sufficient in China
(α=0.55) and in India (α=0.31).
All 19 organizational culture items which had higher than
0.40 loading distributed to six factors whose Eigenvalues
were higher than 1. These six factors explained 76.73%
of total variance. Names and reliabilities of the factors
that extracted from German data are Innovation (α=
0.89), decisiveness (α= 0.78), outcome orientation (α=
0.75), Change (α= 0.93), aggressiveness (α=0.80), team
orientation (α= 0.77). Table 1 shows Eigen values and
variance explained by each factor. In Appendix 1 factor
loadings which are higher than 0.40 are represented.
Clan control
It was measured with four items on which participants rated their
level of agreement on a five point Likert scale ranging from
1=strongly agree to 5=strongly disagree. Reliability of the scale was
found α=0.62 in Germany, α=0.67 in USA, α=0.61 in China, and
α=0.80 in India.
USA
Output control
Respondents indicated their level of agreement on 8 items, each
related to different kinds of output (financial, market etc.) on a five
point Likert scale (1=strongly agree to 5=strongly disagree).
RESULTS
Dimensionality of organizational culture scale across
different branches
The first aim of the study was to investigate how
organizational culture dimensions differ across different
subsidiaries of a MNC which were located in different
countries; Germany, USA, China and India. To examine
it, exploratory factor analysis using principal component
extraction with Varimax rotation was conducted for each
branch. Results showed that factor structure of
organizational culture varied in different subsidiaries. For
each, results of factor analysis are shown.
Results of the factor analysis indicated that 19 organizational culture items had higher than .40 loadings in four
factors with higher than 1 Eigenvalues. Names and reliabilities of the factors are as; Innovation (α= 0.94),
Outcome orientation (α= 0.92), aggressiveness (α= 0.93)
and decisiveness (α= 0.91). These four factors explained
80.57% of total variance. Table 2 shows Eigenvalues of
and variance explained by each factor. Item loadings
which are higher than 0.40 are also shown in Appendix 2.
China
19 items were distributed to six factors whose Eigenvalues are higher than 1. Variance explained by these six
factors indicated 69.29% of total variance. Factors are
named as; innovation (α= 0.80), team orientation (α=
0.66), outcome orientation (α= 0.75), supportiveness (α=
0.65), risk taking (α= 0.75) and aggressiveness (α= 0.73).
Eingenvalues of and variance explained by each factor
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Afr. J. Bus. Manage.
Table 3. Eingenvalues and variance explained in factor anaylsis conducted to Chinese data.
Dimension
1
2
3
4
5
6
Name
Innovation
Team orientation
Outcome orientation
Supportiveness
Risk taking
Aggressiveness
Eingenvalues
5.70
2.56
1.45
1.34
1.08
1.04
Variance explained
29.98
13.49
7.61
7.07
5.68
5.46
Table 4. Eingenvalues and variance explained in factor anaylsis conducted to Indian Data.
Dimension
1
2
3
4
Name
Innovation
Outcome orientation
Aggressiveness
Supportiveness
demonstrated in Table 3. Moreover, items’ loadings that
are higher than 0.40 are represented in Appendix 3.
Eingenvalues
8.01
2.51
1.95
1.42
Variance explained
42.15
13.20
10.25
7.45
and aggressiveness(r=0.361). Interestingly, output
control was not significantly correlated with any of
organizational culture dimensions.
India
USA
Results of the factor analyses indicated that all 19 items
organizational culture scale were distributed to four
factors explaining 73.04% of total variance with higher
than 1 Eigen values. Names and reliabilities of the
factors are as follow; innovation (α= 0.92), outcome
orientation (α= 0.89), aggressiveness (α= 0.79) and
supportiveness (α= 0.84). Table 4 shows each factor’s
Eigenvalues and variance explained them. Appendix 4
demonstrated factor structure-items that is higher than
0.40 loadings.
Correlations between organizational control types
and organizational culture dimensions
To explore relationships between organizational control
types and organizational culture dimensions, correlation
analyses were conducted. Descriptive statistics and
correlations among variables were shown in Table 6.
Thus, output control was negatively correlated with
aggressiveness (r=-0.303) while clan control was
positively correlated with innovation (r=0.275), decisiveness (r=0.324), aggressiveness (r=0.253) and outcome
orientation (r=.281). Similarly, market control was found
to be significantly correlated with innovation (r=0.232)
and decisiveness (r=0.342). In the US branch, bureaucratic control had no significant association with any of
organizational culture dimensions.
Germany
China
Table 5 provided descriptive statistics and correlations
among organizational control types and organizational
culture dimensions. As shown in Table 5, some of
organizational control types were significantly correlated
with some organizational culture dimensions. Specifically;
bureaucratic control was significantly correlated with
decisiveness (r=0.316), outcome orientation (r=.191) and
aggressiveness (r=0.221). Clan control was found to be
positively correlated with innovation (r=0.201), decisiveness (r=0.284) and change (r=.301). Moreover, there was
positive significant correlations between market control
and decisiveness (r=0.244), outcome orientation (r=.186)
The same procedure was followed to identify
relationships between organizational control types and
organizational culture dimensions. Correlation analyses
showed that output control was negatively correlated with
team orientation (r=-0.295) and bureaucratic control was
negatively correlated with innovation (r=-0.248). There
were positive significant correlations between clan control
and team orientation (r=0.459), outcome orientation
(r=0.477), supportiveness (r=0.284), risk taking (r=0.396)
and aggressiveness (r=0.459). Moreover, market control
was positively associated with supportiveness (r=0.286)
and aggressiveness (r=0.226). Table 7 demonstrates
Cangarli and Delen
2397
Table 5. Means, standard deviations and correlations among variables in German branch.
Key variable
Innovation
Decisiveness
Outcome orientation
Change
Aggressiveness
Team orientation
Output control
Bureaucratic control
Clan control
Market control
N
97
95
115
97
97
97
97
113
115
115
Mean
2.69
0.252
2.58
2.41
2.57
2.52
2.59
2.51
2.55
2.56
SD
0.96
0.65
0.67
0.76
0.77
0.69
0.89
0.68
0.62
1.03
1
2
3
4
5
6
7
8
9
0.075
0.392**
0.338**
0.187*
0.179
0.159
0.114
0.201*
0.102
0.398**
0.394**
.487**
.602**
-0.013
0.316**
0.284**
.244**
0.248**
0.351**
0.393**
0.111
0.191*
0.168
0.186*
0.379**
0.391**
0.007
0.179
0.301**
0.139
0.430**
-0.174
0.221*
0.135
0.361**
-0.018
0.157
0.115
0.121
-0.339**
0.122
-0.279**
0.252**
0.596**
0.526**
*,Correlation is significant at the 0.05 level (two-tailed); **, correlation is significant at the 0.01 level (two-tailed).
Table 6. Means, standard deviations and correlations among variables in US branch.
Key variable
Innovation
Decisiveness
Aggressiveness
Outcome orientation
Output control
Bureaucratic control
Clan control
Market control
N
88
88
86
88
86
87
87
88
Mean
2.61
2.57
2.58
2.50
1.91
2.45
2.70
2.68
SD
0.78
0.75
0.78
0.75
1.07
0.70
0.55
0.72
1
2
3
4
5
6
7
0.605**
0.464**
.274**
-0.201
0.083
0.275*
0.232*
0.455**
0.296**
-0.105
0.119
0.324**
0.342**
0.634**
-0.303**
-0.004
0.253*
0.185
-0.191
-0.150
0.281**
0.207
-0.108
-0.209
-0.119
-0.006
-0.038
0.268*
*,Correlation is significant at the 0.05 level (two-tailed); **, correlation is significant at the 0.01 level (two-tailed).
descriptive statistics and correlations.
India
Relationship between organizational control and organizational culture dimensions were finally explored for
Indian branch. Descriptive statistics and correlations are
shown in Table 8. Accordingly, output control was positively correlated with outcome orientation (r=0.578), and
bureaucratic control with outcome orientation (r=0.271)
and supportiveness (r=0.315). There was a significant
positive correlation between clan control and supportiveness (r=0.354) where as a significant negative correlation
between market control and innovation (r=-0.275).
DISCUSSION
The aim of the study was to investigate the reciprocal
relationships between different types of organizational
control and different dimensions of organizational culture
in different subsidiaries (located in Germany, USA, India
and China) of a MNC. In order to identify which types of
organizational control mechanisms are related to which
dimensions of organizational culture, firstly, we analyzed
organizational culture of each subsidiary. As claimed by
previous research, we found that multidimensionality of
organizational culture change across the different subsidiaries of the same MNC (Delobbe et al., 2002; Hofstede
et al., 1990). The change in multidimensionality of organizational culture expresses itself in both numbers and
contents of dimensions. Regarding the number of cultural
dimensions, we found that organizational culture can be
analyzed under six dimensions in Germany (innovation,
decisiveness, outcome orientation, change, aggressiveness and team orientation) and China (innovation, team
orientation, outcome orientation, supportiveness, risk
taking and aggressiveness), while it can be assessed
under four dimensions in USA (innovation, outcome
orientation, aggressiveness and decisiveness) and India
(innovation, outcome orientation, aggressiveness and
supportiveness). Although, number of organizational culture
dimensions are the same in Germany and China and in
USA and India, their contents, and hence labels are
different. Therefore, data provided a full support to our
first hypothesis that claimed that multidimensionality of
organizational culture changed across different
subsidiaries of a MNC; different cultural dimensions could
2398
Afr. J. Bus. Manage.
Table 7. Means, standard deviations and correlations among variables in Chinese branch.
Key variable
Innovation
Team orientation
Outcome orientation
Supportiveness
Risk taking
Aggressiveness
Output control
Bureaucratic control
Clan control
Market control
N
82
81
82
82
82
81
49
82
82
82
Mean
2.59
2.53
2.43
2.49
2.51
2.47
2.67
2.49
2.61
2.55
SD
0.51
0.55
0.53
0.57
0.62
0.67
0.41
0.56
0.50
0.59
1
2
3
4
5
6
7
8
9
0.259*
0.359**
0.150
0.504**
0.231*
0.002
-0.248**
0.157
0.159
0.486**
0.404**
0.394**
0.545**
-0.295*
0.000
0.459**
0.198
0.108
-0.033
0.477**
0.215
0.055
0.010
0.284**
0.286**
-0.153
-0.017
0.396**
0.176
0.074
-0.017
0.459**
0.226**
-0.169
0.117
0.101
0.170
0.109
0.423**
*,Correlation is significant at the 0.05 level (two-tailed); **, Correlation is significant at the 0.01 level (two-tailed).
Table 8. Means, standard deviations and correlations among variables in Indian branch.
Key variable
Innovation
Outcome orientation
Aggressiveness
Supportiveness
Output control
Bureaucratic control
Clan control
Market control
N
71
71
71
71
37
71
71
71
Mean
2.53
2.35
2.42
2.49
2.11
2.50
2.33
2.61
SD
0.56
0.63
0.53
0.61
0.68
0.68
0.57
0.63
1
2
3
4
5
6
7
0.471**
0.232**
0.597**
0.109
0.215
0.198
-0.275*
0.428**
0.398**
0.578**
0.271*
0.055
-0.185
0.322**
-0.252
0.093
0.162
0.026
0.090
0.315**
0.354**
-0.086
-0.032
0.100
-0.082
0.156
0.223
0.395**
*, Correlation is significant at the 0.05 level (two-tailed); **, correlation is significant at the 0.01 level (two-tailed).
be observed in different subsidiaries of the same MNC.
The comparison of cultural dimensions in different
subsidiaries yield that the common cultural dimensions
among the four subsidiaries are innovation, outcome
orientation are aggressiveness, while there are subsidiary
specific dimensions like change (only in Germany) and
risk taking (only in China). These findings contribute to
organizational culture research and provide useful clues
to managers working in international business environment as they clearly showed that creating a unique
culture across the different subsidiaries of a MNC is quite
challenging, and significant differences in organizational
culture are visible due to external factors such as national
culture and dynamics of business environment in each
country. In our case, we have determined only three
common culture dimensions. If they were congruent to
headquarters’ expectations, remaining differences could
be treated as expected diversities. However, if the
headquarter aimed to develop more similar cultures or
make other dimensions such as risk taking common in all
subsidiaries, managers should work on it through formal
management mechanisms.
Regarding utilization of formal mechanisms to manipulate organizational culture, the current research also
provided valuable insights to managers as it identified the
reciprocal relationships between different types of
organizational control and different dimensions of
organizational culture in different subsidiaries; located in
Germany, USA, India and China. Results showed that
organizational control mechanisms had very different
effects on organizational culture dimensions. In fact, a
careful examination of correlation analysis (between
organizational control mechanisms and organizational
culture dimensions) yield that there is no common effect
of organizational control mechanisms on organizational
culture dimensions. Specifically, a control mechanism
may have a positive effect on an organizational culture
dimension in a subsidiary, while it has no significant or
has significant negative effect on the same organizational
culture dimension in a different subsidiary. This may
address the philosophy of thinking global but acting local.
Therefore, managers need to understand the subsidiary
specific effects of organizational control mechanisms on
organizational culture dimensions before designing and
implementing control mix in order to create a culture
which is congruent to the goals and expectations of
headquarter.
Although there is an extensive body of literature which
Cangarli and Delen
examines the relationship between organizational control
and culture, research that investigates the issue from this
perspective is surprisingly limited. Thus, by identifying the
diverse effects of organizational control mechanisms on
organizational culture in different subsidiaries, the current
research provided valuable contribution to the gap in
organizational control as well as culture literature.
As expected, this research has some limitations that
may affect its potential contribution. For instance,
potential effects of external factors such as level of
competition, government regulations and national values
were not included in the current study. Thus, by designing a more comprehensive research that investigates
the effects of all these factors in a model will provide
deeper understanding regarding the relationships
between organizational control mechanisms and
organizational culture.
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APPENDIX
Appendix 1. Organizational culture items’ factor loadings in German data.
Innovation
α= 0.89
Item
1- Flexibility
2- Adaptability
3- Stability
4- Being innovative
5- Decisiveness
6- Risk taking
7- Being careful
8- Being team oriented
9- Sharing information freely
10- Tolerance
11- Informality
12- Being aggressive
13- Being demanding
14- Taking individual responsibility
15- Low level of conflict
16- Not being constrained by many rules
17- Being results oriented
18- Being competitive
19- Being highly organized
Decisiveness
α= 0.78
Outcome orientation
α= 0.75
Change
α= 0.93
Aggressiveness
α= 0.80
Team orientation
α= 0.77
0.883
0.872
0.875
0.885
0.635
0.742
0.780
0.433
0.671
0.567
0.408
0.477
0.640
0.760
0.667
0.413
0.547
0.456
0.403
0.802
0.845
0.572
0.476
0.876
0.901
0.499
Appendix 2. Organizational culture items’ factor loadings in US data.
Item
1- Flexibility
2- Adaptability
3- Stability
4- Being innovative
5- Decisiveness
6- Risk taking
7- Being careful
8- Being team oriented
Innovation α=
0.94
Decisiveness
α= 0.91
Aggressiveness
α= 0.93
Outcome orientation
α= 0.92
0.877
0.858
0.911
0.875
0.750
0.789
0.878
0.876
Cangarli and Delen
2401
Appendix 2. Contd.
9- Sharing information freely
10- Tolerance
11- Informality
12- Being aggressive
13- Being demanding
14- Taking individual responsibility
15- Low level of conflict
16- Not being constrained by many rules
17- Being results oriented
18- Being competitive
19- Being highly organized
0.543
0.678
0.762
0.861
0.868
0.913
0.428
0.815
0.836
0.825
0.753
0.627
0.519
0.409
0.669
Appendix 3. Organizational culture items’ factor loadings in Chinese data.
Item
1- Flexibility
2- Adaptability
3- Stability
4- Being innovative
5- Decisiveness
6- Risk taking
7- Being careful
8- Being team oriented
9- Sharing information freely
10- Tolerance
11- Informality
12- Being aggressive
13- Being demanding
14- Taking individual responsibility
15- Low level of conflict
16- Not being constrained by many rules
17- Being results oriented
18- Being competitive
19- Being highly organized
Innovation
α= 0.80
Team
orientation
α= 0.66
Outcome
orientation
α= 0.75
Supportiveness
α= 0.65
Risk taking
α= 0.75
Aggressiveness
α= 0.73
0.741
0.905
0.800
0.489
0.574
0.830
0.656
0.527
0.733
0.800
0.617
0.832
0.609
0.552
0.736
0.740
0.419
0.507
0.779
0.687
0.551
0.570
2402
Afr. J. Bus. Manage.
Appendix 4. Organizational culture items’ factor loadings in Indian data.
Item
1- Flexibility
2- Adaptability
3- Stability
4- Being innovative
5- Decisiveness
6- Risk taking
7- Being careful
8- Being team oriented
9- Sharing information freely
10- Tolerance
11- Informality
12- Being aggressive
13- Being demanding
14- Taking individual responsibility
15- Low level of conflict
16- Not being constrained by many rules
17- Being results oriented
18- Being competitive
19- Being highly organized
Innovation
α= 0.92
0.826
0.818
0.846
0.821
0.805
0.609
0.659
Outcome orientation
α= 0.89
Aggressiveness
α= 0.79
Supportiveness
α= 0.84
0.451
0.918
0.873
0.517
0.548
0.613
0.869
0.702
0.907
0.751
0.737
0.671
0.872
0.875
0.427