MBA 552
Organizational Behavior and
Leadership
Introduction to the
Field of
Organizational
Behavior
Organizational behavior (OB)
The study of what people think, feel, and do
in and around organizations.
Values
Stable, long-lasting beliefs about what is
important in a variety of situations
What are Organizations?
Groups of people who work
interdependently toward some purpose
– Structured patterns of interaction
– Coordinated tasks
– Work toward some purpose
© N. B. Scott
Why Study Organizational Behavior
Understand
organizational
events
Organizational
Behavior
Research
Influence
organizational
events
Predict
organizational
events
Organizational culture
The basic pattern of shared assumptions,
values, and beliefs governing the way
employees within an organization think
about and act on problems and
opportunities
Trends: Information Technology
• Affects how employees interact
–
Virtual teams
– Telecommuting
• Affects how organizations are
configured
–
Network structures -- alliance of several
organizations
Trends: Globalization
• Global companies:
– Extend their activities to other parts of the world
– actively participate in other markets
– compete against firms in other countries
Trends: Globalization
• Implications of globalization:
– New organizational structures
– Different forms of communication
– More competition, change, mergers,
downsizing, stress
– Need more sensitivity to cultural differences
Network structure
An alliance of several organizations for
the purpose of creating a product or
serving a client
Virtual teams
Cross-functional groups that operate
across space, time, and organizational
boundaries with members who
communicate mainly through information
technologies
Contingent work
Any job in which the individual does not
have an explicit or implicit contract for
long-term employment, or one in which
the minimum hours of work can vary in a
nonsystematic way.
Trends: Employment Relationship
• Employability
– employees perform many tasks, not a specific job
• Contingent work
– no explicit or implicit contract for long-term employment
• Telecommuting
– working from home, usually with a computer connection
to the office
• Virtual teams
– operate across space, time, and organizational
boundaries; mainly communicate through electronic
technologies
Trends: Changing Workforce
• Primary and secondary diversity
• More women in workforce and professions
• Different needs of Gen-X, Gen-Y, and babyboomers
• Diversity has advantages, but firms need to adjust
through:
– cultural awareness
– family-friendly
– empowerment
Primary Dimensions of Diversity
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•
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Ethnicity
Race
Mental/Physical Qualities
Age
Gender
Sexual Orientation
Secondary Dimensions of
Diversity
•
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•
•
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First Language
Life Experiences
Geographic Location
Behavioral Style
Education
Income
•
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•
•
Work Experience
Work Style
Parental Status
Marital Status
Occupation
Religion
More women in workforce and
professions
Women represent 50% of the paid workforce.
Women represent 50% of professional accountants
Women represent 43% of medical school enrollment
Women represent 4% of the leadership of corporations
Different needs of Gen-X,
Gen-Y, and baby-boomers
Baby-boomers born 1946-1964 desire job
security and are workaholics
Gen-X born 1964-1977 less loyal seek and
expect less security
Gen-Y born 1978 – 88? Expect plenty of
responsibility and involvement in the
employment relationship.
Different generations bring different values and
expectations
Trends: Values and Ethics
• Values
– Stable, long-lasting beliefs about what is important
– personal, cultural, organizational, professional
• Importance of values
a. Globalization -- more awareness of different values
b. Values replacing command-and-control
c. More emphasis on ethical business conduct
• Ethics
– Moral principles/values -- determines whether
actions are right/wrong and outcomes are good/bad
Organizational Behavior Anchors
Multidisciplinary
anchor
Open systems
anchor
Organizational
Behavior
Anchors
Multiple levels
of analysis
anchor
Systematic
research
anchor
Contingency
anchor
Multidisciplinary Anchor
Psychology – Motivation, perception, attitudes,
personality, job stress, leadership
Sociology- Team Dynamics, roles, socialization,
communication patterns, organizational power
Anthropology- Corporate culture, organizational rituals,
cross-cultural dynamics
Political Science- Inter-group conflict, coalition
formation, power and politics, decision-making
Economics- Decision-making, negotiation, power
Multidisciplinary Anchor
Industrial engineering- job design, productivity, work
measurement
Communications- Knowledge management, electronic
mail, corporate culture, employee socialization
Information systems- Team dynamics, decision-making,
knowledge management
Marketing- Knowledge management, creativity, decisionmaking
Women’s studies- Organizational power, perceptions
Systematic Research Anchor
Systematic collection of data about
organizational principles and practices
Scientific method
A systematic, controlled, empirical, and
critical investigation of hypothetical
propositions about the presumed
relationships among natural phenomena
Contingency Anchor
It depends ------ on the situation
Selection of the best strategy depends on
the conditions under which a decision must
be made.
Contingency approach
The idea that a particular action may have
different consequences in different
situations
Multiple Levels of Analysis
Anchor
Individual Level - includes the
characteristics and behaviors of employees
including thought processes such as
motivation, perception, personalities,
attitudes, and values.
Multiple Levels of Analysis
Anchor
Team Level – considers interaction of
people, teams dynamics, decisions, power,
organizational politics, conflict, and
leadership.
Organizational Level- focuses on how
people structure working relationships and
how organizations interact with their
environment
Open Systems Anchor
Organizations that take their sustenance
from the environment and, in turn, affect
that environment through their output
Open Systems Anchor of OB
Feedback
Feedback
Subsystem
Inputs
Subsystem
Organization
Subsystem
Subsystem
Outputs
Stakeholders
Shareholders, customers, suppliers,
governments, and any other groups with a
vested interest in the organization.
They influence the firm’s access to inputs
and ability to discharge outputs.
Knowledge Management Defined
Any structured activity that
improves an organization’s
capacity to acquire, share, and
use knowledge for its survival
and success
Intellectual capital
The sum of an organization’s human
capital, structural capital, and relationship
capital
Intellectual Capital
• Human capital
– Knowledge that employees possess
and generate
• Structural capital
– Knowledge captured in systems and structures
• Relationship capital
– Value derived from satisfied customers, reliable
suppliers, and others
Knowledge Management Processes
• Knowledge acquisition
– Grafting
– Learning
– Experimentation
• Knowledge sharing
– Communication
– Communities of practice
• Knowledge use
– Awareness
– Freedom to apply knowledge
Grafting
The process of acquiring knowledge by
hiring individuals or buying entire
companies
Organizational Memory
• The storage and preservation of
intellectual capital
• Retain intellectual capital by:
–
Keeping knowledgeable employees
– Transferring knowledge to others
– Transferring human capital to structural
capital
Fully describe intellectual capital, and
explain how an organization can retain
this capital
Intellectual capital is the sum of an organization's
human capital, organizational capital, and
relationship capital. Human capital refers to the
knowledge that employees possess and generate.
Structural capital is the knowledge captured and
retained in an organization's systems and
structures. Relationship capital is the value derived
from satisfied customers, reliable suppliers, and
other external sources that provide added value.
Intellectual capital retention continued
Retaining intellectual capital refers to retaining
organizational memory. This includes keeping
good employees and systematically transferring
their human capital into structural capital when
they must leave. It also includes documentation - bringing out hidden knowledge, organizing it,
and putting it in a form that can be available to
others. It also includes embedding knowledge in
the organization’s systems and structures.
Communities of practice:
Informal groups bound together by shared
expertise and passion for a particular activity
or interest.
Organization Culture
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•
•
•
•
Defining culture
Does it matter?
Describing culture
Acquiring culture
Changing culture
Defining Culture
• What is it?
– “...the shared patterns of thought, belief, feelings, and values that
result from shared experience and common learning”
– “system of shared meaning”
– “The social glue that holds the organization together”
• Characteristics:
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–
–
–
–
Holistic
Historically determined
Socially constructed (perceptions)
Soft
Difficult to change
Climate vs. Culture
• Climate = actual events
• Culture = individuals’ perception of events
Does It Matter?
• Enhances group members’ ability to adapt
and survive
• Reduces uncertainty about what to do and
how to do it (and thus, reduces anxiety)
• Provides sense of mission
• Strong or widely-held culture may lead to
high performance (jury’s out on this one)
Single or Multiple Cultures ?
• Multiple cultures may be a sign of conflict
– Mergers
– Top-down attempts to “manage” culture
• Subcultures (core culture + adaptations)
• Countercultures
What is Included?
•
•
•
•
•
Common language and conceptual categories
Group boundaries and criteria for inclusion and exclusion
Power and status
Intimacy, friendship, and love
Rewards and punishments: what is rewarded and punished,
as well as what rewards and punishments are
• Ideology and “religion”: that is, how to manage the
unmanageable and explain the unexplainable
Recognizing Culture
• Events:
– Rites
– Ceremonials
– Rituals
• Communications
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Myths
Sagas
Legends
Stories
Folktales
• Things
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Symbols
Language
Gestures
Physical setting
Artifacts
Really minor
distinctions
among these
Layers of Culture
Symbols
Rituals
Heroes
Values
Practices
Cultural Dimensions (Hofstede)
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•
•
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Process vs. results
Employee vs. job
Parochial vs. professional
Open vs. closed
Loose vs. tight
Normative vs. pragmatic
Cultural Dimensions (another
perspective)
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•
•
•
•
•
•
Innovation and risk-taking
Attention to detail
Outcome orientation
People orientation
Team orientation
Aggressiveness
Stability
Yet Another Perspective….
I.
II.
III.
IV.
V.
Managing change
Achieving goals (how effective)
Coordinated teamwork
Customer orientation
Cultural strength
Sources of Culture
•
•
•
•
Founders
Historical events
Industry
National culture
Acquiring Culture
• Selection process
• Socialization of new members
• Rites and ceremonies
– Rite of passage
– Rite of renewal
– Rite of integration
Changing Culture
• Can it be changed?
– In a new organization: The founder effect
– Maybe yes?
– Maybe no?
• Should it be changed?
– Strong culture can be a barrier to innovation,
growth and change
OB in the Cross-Cultural Context
• Why are cross-cultural issues important?
• Growing impact of global business
– New markets
– Demand for global services
– Low cost manufacturing
• U.S. management practices not necessarily likely
to translate to different cultures
• Paradox: may be easier to adjust to a very different
culture than to a very similar culture
Why International Management?
• Important to have a global perspective
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–
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–
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Overseas suppliers or markets
Low cost production
Emerging markets (Eastern Europe, LDC)
E-business has no borders
Immigrant labor force even in U.S.
• Culture critical to global business, yet hardest to
understand
– Based on unspoken values and assumptions
– Human behavior isn’t logical
– But, human behavior is very complex
Approaches to International
Business
Geocentric
Use the best
methods, no matter
what the source
Ethnocentric
Home country
methods are the
best
Polycentric
Host country
methods are the
best
Basic Principles of Culture
• What is logical and important in one culture may seem
irrational and unimportant in another
• In describing cultures, people tend to stress the differences
and overlook the similarities
• Stereotyping may be inevitable for people who lack
frequent contact with another culture
• Cultures are not homogenous; differences exist due to
gender, age, socioeconomic status, education
• Understanding another culture is a journey, not a goal
Barriers to Cross-Cultural
Understanding
• Cultural chauvinism / corporate imperialism
/ ethnocentrism
• Stereotypes (positive and negative)
• The highly successful organization may find
it more difficult to adapt
Cultural Values
• The ethical dilemma
• Are there common values?
– Basic idea of social organization, goal orientation
– Personality structure (Big 5)
• What about cultural convergence?
– Cultural evolution
– Cultural diffusion
– Immigration and acculturation
What Kinds of Differences Make
a Difference?
• Some specific items:
– Language
– Religion
• Business practices and etiquette
– Different laws
– Different customs
• Culture in general
Language Issues
• U.S. one of few countries where we don’t learn a
second (or a third) language
• Languages learned in school often do not translate
to business usage
• Do you try?
– Not in France, not unless you can pronounce it right !
– Other countries, yes: it’s a gesture of goodwill
• But, even if the language is the same, will we
understand? (Britspeak)
Millions of Speakers
Languages of The World
1,000
900
800
700
600
500
400
300
200
100
0
in ish ish ali ndi se se ian an u) ese an ch
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n
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a
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B
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G ese Jav
tu Jap
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M
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Po
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Source:http://www.infoplease.com/
World Religions
Catholic
Orthodox
Protestant
Other
Christianity
Chinese Folk
Other
Islam
Buddhist
Hindu
Judaism
Source:http://www.infoplease.com/
Religious Issues
• Islam:
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Ramadan fasting
5 daily prayers (15 minutes or so), even at work
Modest dress for women (including head scarf)
Friday, not Sunday (noon prayers on Fridays)
Legal Issues
• Sample of Mexican employment laws
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Individual employment contracts required
Strict limits on overtime
Unionization by facility
Full pay for workers while on strike
Discrimination covers political doctrine and
social condition
Different Country, Different
Customs: Dress and Address
• Dress
– “Casual Days” are a U.S. custom
– Removing one’s shoes
• Addressing Other People
– Herr und Frau, not first names in Germany
– Titles (Dr., Professor, “Assistant Vice President”, etc.)
very important everywhere but U.S.
• Business cards essential in Latin America, Europe,
Japan
• Personal space: much smaller in Latin America,
Spain, Italy
Different Country, Different
Customs: Time
• Time
– Time fluid in Latin America, Spain, Italy
– Time off work: Germany, France, Scandinavia: 6 weeks
vacation, August in the country
– Africa: everyone attends funerals (impact of AIDS)
• Working hours and pace
– Europe (esp. Germany) isn’t open 24/7
– Latin America, Middle East, Japan: take time to
establish relationship before getting down to business
Different Country, Different
Customs: Eating and Drinking
• Drinking
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Tea in Japan
Coffee in Egypt
Vodka in Russia
A pint over lunch in the UK
• Dietary Restrictions:
– India: no beef
– Islamic countries: no pork or alcohol
Perceptions of Corruption
12
Higher score = less corrupt
10
8
6
4
2
ex
ic
o
U
ga
nd
a
R
us
si
a
N
ig
er
ia
M
Ita
ly
d
n
Ja
pa
la
n
Ire
le
C
hi
an
y
m
U
S
U
K
Source: Transparency International
G
er
Fi
nl
a
nd
C
an
ad
Si
ng a
ap
or
e
0
Economic Freedom
4.00
3.50
Higher score = less freedom
3.00
2.50
Nigeria
3.6
2.00
1.50
1.00
0.50
Source: Wall Street Journal
U
S
C
hi
le
U
Fi K
nl
a
C nd
an
G ad
er a
m
an
y
Ita
l
Ja y
pa
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U ico
ga
nd
N a
ig
er
R ia
us
si
a
Si
ng
ap
o
Ire re
la
nd
0.00
Cultural Dimensions:
Hofstede’s Big 4
• Based on survey of IBM employees worldwide
• The dimensions
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Collectivism - Individualism
Power Distance
Uncertainty Avoidance
Masculinity / Femininity (quality of life)
• Weaknesses:
– Data 20 years old
However, recent research
confirms this structure
Change in Cultures
• Hofstede’s data indicates some shift to
individualism, but no change in other dimensions
• Disneyland phenomenon
– That is, surface indicators change, but meaning does
not
• But….the case of Hong Kong
– Management values in Hong Kong intermediate
between PRC and U.S.
– Indication of flexibility / change?
Collectivism - Individualism
• Identification with group vs. identification as an individual
• Collective cultures:
– Think in terms of in-groups and out-groups
– Life decisions made by group
– Look after one’s in-group, no matter what
• Individualistic cultures
– Concern for self and immediate family
– Individual privacy
• Association with level of economic development
Collectivism - Individualism:
Where
Collective…………...……Individualistic
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•
•
Venezuela
Pakistan
Taiwan
Portugal
Greece
Brazil
India
Japan
Arab countries
•
•
•
•
•
•
•
•
•
Spain
Israel
Austria
Germany
Norway
France
Canada
Great Britain
U.S.
Power Distance
• The extent to which a culture accepts that power is
distributed unevenly
• High power distance
– People have a place in society, high or low
– Superiors are to be respected
– Less trust and cooperation
• Low power distance
– Equal rights for everyone
– Hierarchies are established for convenience
– Power can be judged to be legitimate or not
Power Distance: Where
High…………………...……...……Low
•
•
•
•
•
•
•
•
•
Philippines
Mexico
India
Brazil
Hong Kong
France
Turkey
Pakistan
Japan
•
•
•
•
•
•
•
•
•
Argentina
U.S
Canada
Australia
Germany
Sweden
Ireland
Denmark
Israel
Uncertainty Avoidance
• The extent to which a society feels threatened by
ambiguity and uncertainty
• High uncertainty avoidance
–
–
–
–
Lots of policies, rules, regulations
Hard work valued, time is money
Acceptance of authority
Conflict avoided
• Low uncertainty avoidance
– Look to common sense
– Tolerance, constructive conflict
– Aggression less accepted
Uncertainty Avoidance: Where
High…………………...……...……Low
•
•
•
•
•
•
•
•
•
Uruguay
Belgium
Japan
France
Mexico
Israel
Italy
Austria
Arab countries
•
•
•
•
•
•
•
•
•
Germany
Switzerland
East Africa
Canada
U.S.
India
Great Britain
Sweden
Singapore
Masculinity / Femininity (Quality
of Life)
• The extent to which society values typically “masculine”
values, such as assertiveness, and acquisition of things, as
opposed to caring for others and quality of life.
• Masculine cultures
– Clear gender roles; machismo
– Live to work
– Ambition, success valued
• Feminine cultures
– Sympathy for the unfortunate
– Work to live
– People are important
Masculinity / Femininity: Where
High…………………...……...……Low
•
•
•
•
•
•
•
•
•
Japan
Italy
Mexico
Ireland
U.S.
Australia
Hong Kong
Arab countries
Brazil
•
•
•
•
•
•
•
•
•
Israel
Indonesia
France
Spain
South Korea
Portugal
Finland
Netherlands
Sweden
…Plus One
• Confucian Work Dynamic
• Based on work done in East Asia by “Chinese
Cultural Connection” group
• Focus on:
–
–
–
–
–
Long-term
Order
Thrift
Persistence
Respect for tradition
Different Dimensions…Same
Result
• Company provided housing, marriage brokers, etc.
in Asian countries
– Feminine concern for people?
– Taking care of the in-group?
• Cooperative labor negotiations
– Japan: collective orientation
– Netherlands: feminine quality of life
• Economic growth and development
– Europe: Protestant Work Ethic (Individualistic, High
Power Distance, Masculine)
– Asia: Confucian Work Dynamic
Do National Borders = Cultural
Borders?
• Multiple cultures
– Canada
– Belgium
– India
• Culturally homogeneous areas
– Scandinavia
• Cultural clusters
Cultural Clusters
Asians
Northern
Europe
East-Central
Europe
Anglos
Developing
Countries
Latins
Arabs
General Expatriate Issues: The
Sojourners
• How many are there?
– Nobody really knows
– Estimated 350,000 or more (estimate from 1996)
• Who are they?
– 87% male
– Managers
– Sales, technical, professional
• What happens?
– Estimated 25% to 50% of assignments fail
– Cost…$50,000 and up
Why do Expatriates Fail?
• Family problems (60%)
• Inability to adjust
– Lack of flexibility
– “Culture shock”
• Lack of sensitivity to host culture
Culture Shock
• An emotional and psychological reaction to
the confusion, ambiguity, value conflicts
and hidden clashes that occur as a result of
fundamentally different ways of perceiving
the world and interacting socially between
cultures. Disequilibrium
Aspects of Adjustment
• Sociocultural
– Social skills needed to operate in different
culture
• Psychological
– Well-being, satisfaction
– “Culture shock”
What Can Be Done?
• Selection procedures
• Organizational support: before, during, and
after assignment
• Training
– Few U.S. firms train expatriates (30%)
– Most European / Asian firms do
– Different success rates clearly establish value of
training
Training for Expatriates
• Knowledge-based
– Language
– Cultural differences
• Cultural sensitivity
– General
– Specific
• Include spouse and, if possible, family
members
Other Support Mechanisms
• Mentor or buddy systems
• Trips home
• Assistance with schooling and other family
needs
• Housing / cost of living differentials
• Security
– Safe housing
– Guards, kidnapping insurance, etc.