Unpacking the relationship between national and or

The globalization of operations in Eastern and Western countries:Unpacking the relationship between national and organizational culture and its impact on manufacturing performance

Michael Naor a ,*,Kevin Linderman b ,1,Roger Schroeder c ,2

a

Information Systems and Operations Management Dept.,School of Management,George Mason University,MSN 5F4,Enterprise Hall,Fairfax,VA 22030,United States b Operations and Management Science Dept.,Carlson School of Management,University of Minnesota,32119th Ave.S.,Minneapolis,MN 55455,United States c

Donaldson Chair in Operations Management,Operations and Management Science Dept.,Carlson School of Management,University of Minnesota,32119th Ave.S.,Minneapolis,MN 55455,United States

1.Introduction

In the age of transnational manufacturing (Ferdows,1997),as organizations expand overseas there is a growing need for multi-country and cross-cultural research in operations management (Prasad and Babbar,2000).Such research can provide both the theoretical underpinnings and practical implications to manage processes such as offshoring and adoption of best practices (Metters and Verma,2008).Research shows that national culture can play a significant role in international operations (Flynn and Saladin,2006;Nakata and Sivakumar,1996;Pagell et al.,2005),but research also shows that organizational culture can affect operations (Bates et al.,1995).The question then becomes:what is the interplay between

national and organizational culture in global manufacturing?Addressing this question requires investigating culture at multiple levels—national and organizational.Several scholars call for empirical research that crosses levels of analysis (Hackman,2003;Rousseau,1985).For example,Klein et al.(1999)discuss the benefits,barriers,gaps,and new developments of multilevel theories and encourage additional multilevel research,particularly in the area of culture.Developing a better understanding of the interplay between organizational and national culture can assist in the implementation of operations management practices.

Scholars have debated the effect of national culture on management practices.From the management literature,the convergence hypothesis implies that as nations develop,they embrace work-related behavior common to industrialized coun-tries (Ralston et al.,1997,p.182).Consequently,organizations in different industrialized countries will become more alike and adopt universal practices about work and corporate culture (Shenkar and Ronen,1987;Child and Keiser,1979).Thus,organizations can alter the behavior of people and undermine the effect of national culture (Von Glinow et al.,2002).Conversely,

Journal of Operations Management 28(2010)194–205

A R T I C L E I N F O Article history:

Available online 10November 2009Keywords:

National and organizational culture GLOBE

Convergence/divergence Country development

Manufacturing performance Hierarchical Linear Modeling

A B S T R A C T

Understanding national and organizational culture becomes increasingly important in the era of transnational manufacturing.As the world becomes flat and boundaries break down,manufacturers need to understand the proper role of culture in order to obtain competitive advantage.Thus,the current study conducts a multilevel investigation of the impact of eight national and organizational culture dimensions (according to GLOBE framework)on manufacturing performance.An ANOVA comparison of 1manufacturing plants between Eastern (Japan and South Korea)and Western (Germany,United States,Finland,and Sweden)countries indicates that organizational culture inside plants differs in three dimensions (power distance,future orientation,and performance orientation).Hierarchical Linear Modeling analysis further suggests that organizational culture has more of an effect on manufacturing performance than national culture or the fit between them.In addition,Country Developmental Indexes,both Economic and Infrastructural,do not impact manufacturing performance,reinforcing our conclusion about the weak influence of the national level factors on manufacturing performance.In an era of globalization,these results have practical implications for organizations expanding across national boundaries by developing an internal organizational culture consistent with high performance manufacturing.

Published by Elsevier B.V.

*Corresponding author.Tel.:+17039934756;fax:+17039931809.E-mail addresses:mnaor@gmu.edu (M.Naor),linde037@umn.edu (K.Linderman),rschroed@umn.edu (R.Schroeder).1

Tel.:+16126268632;fax:+16126248804.2

Tel.:+16126249544;fax:+16126248804.Contents lists available at ScienceDirect

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0272-6963/$–see front matter.Published by Elsevier B.V.doi:10.1016/j.jom.2009.11.001

This study investigates the convergence versus divergence debate(Child and Keiser,1979;Shenkar and Ronen,1987)in the manufacturing context.Despite the growing body of cross-cultural studies,the debate on the convergence or divergence of manage-ment practices has not subsided(Rungtusanatham et al.,2005). Furthermore,the debate has gained more importance in an era of globalization,when organizations increasingly expand across international boundaries.In order to enlighten the debate through an operations management prism,this study investigates whether organizational culture in plants differs across countries and how it relates to national culture.In addition,the study examines the effect of organizational culture,national culture,and the con-gruence between them on manufacturing performance.

In an era of a‘‘flattening world’’(Friedman,2006),it is important to understand the interplay of national and organiza-tional culture.On the one hand,asfirms share innovative practices through benchmarking,mimicking and mergers,they may become more efficient and more homogenous(convergence).On the other hand,the values and norms underlying new practices may conflict with the beliefs embedded in the local culture and thus retard adoption and potential organizational performance(divergence). This is the fundamental issue addressed in this paper:does national or organizational culture dominate,and what is the resulting effect on manufacturing performance?

The following section reviews the literature and related theory to establish a set of research hypotheses.Next,we describe the data,sample,and measures.Analysis of variance and Hierarchical Linear Modeling provide the basis for analyzing the data.We then discuss the results,limitations,and future avenues for research. Finally,we point out the contributions to both the academic and practitioner literature.

2.Theoretical background and hypotheses

2.1.GLOBE culture framework

Over the last three decades,several scholars have developed frameworks for measuring the dimensions of national culture (Hofstede,1980;House et al.,2004;Schwartz,1994;Smith,2006). GLOBE(Global Leadership and Organizational Behavior Effective-ness)provides the most updated data gathered in the recent decade on national culture in61different countries(House et al., 2004).The GLOBE framework consists of nine cultural dimensions: power distance,institutional collectivism,in-group collectivism, future orientation,performance orientation,gender egalitarian-ism,assertiveness,uncertainty avoidance,and humane orienta-tion3.Table1provides definitions of these cultural dimensions. Although GLOBE provides data only at the national level,the conceptual definitions of the GLOBE cultural dimensions also apply to the organizational level,which can measure the organizational culture inside thefirm(House et al.,2004,p.21).

2.2.The interplay between organizational and national culture

The interplay between national and organizational culture can potentially lead to tensions that could present a double-edged sword to globalization.While the best practices might be shared globally(homogenized),this might provoke local cultural conflicts. Sharing best practices globally could potentially be problematic if they conflict with national cultural values.As a result,we examine the possible tensions between national and organizational culture through the convergence/divergence hypotheses.

On the one hand,several studies suggest that national culture does not constrain people’s behavior(Dastmalchian et al.,2000; Muijen and Koopman,1994).These studies assume that indivi-duals enter the organization as malleable entities.Management can create,maintain,and change the organization culture.People are independent and their choice of behavior has the potential to erase the effects of national culture(Adler and Jelinek,1986).

On the other hand,national culture could affect organizational culture since managerial assumptions about employee nature and behavior may be influenced by national culture.A study by Aycan et al.(1999)on culturalfit gives support for this perspective.Theyfind that several dimensions of national culture influence organizational culture.For example,power distance and uncertainty avoidance at the national level create low autonomy in the organizational level.In addition,the national cultural dimensions of paternalism,loyalty toward the community,and self-reliance influence managers’assumptions about employee reactivity and obligations towards others.In a similar vein,Schneider(1988)argues that employees and managers bring their cultural background to the workplace.

Table1

Definition of GLOBE culture dimensions.a.

Power distance The degree to which members of an organization or society expect and agree that power should be stratified

and concentrated at higher levels of an organization or government.

Institutional collectivism(collectivism1)The degree to which organizational and societal institutional practices encourage and reward collective distribution

of resources and collective action.

In-group collectivism(collectivism2)The degree to which individuals express pride,loyalty,and cohesiveness in their organizations or families.

Future orientation The degree to which individuals in organizations or societies engage in future-oriented behaviors such as

planning,investing in the future,and delaying individual or collective gratification.

Performance orientation The degree to which an organization or society encourages and rewards group members for performance

improvement and excellence.

Gender egalitarianism The degree to which an organization or society minimizes gender role differences while promoting gender equality. Assertiveness The degree to which individuals in organizations or societies are assertive,confrontational,and aggressive in

social relationships.

Uncertainty avoidance The extent to which members of an organization or society strive to avoid uncertainty by relying on established

social norms,rituals,and bureaucratic practices.

Humane orientation The degree to which individuals in organizations or societies encourage and reward individuals for being

fair,altruistic,friendly,generous,caring,and kind to others.

a Source:House et al.,2004,pp.11–13.

3The current study discusses eight out of the nine GLOBE culture dimensions.

Unfortunately,the important dimension of gender egalitarianism could not be

included because lack of data(i.e.the original survey did not inquire the

respondent’s gender).

M.Naor et al./Journal of Operations Management28(2010)194–205195The convergence/divergence dichotomy represents two well-established opposing intellectual tendencies in academic thought. Without being biased toward one perspective or the other(Nelson and Gopalan,2003,p.1139),we follow the approach of Rungtusanatham et al.(2005,p.49)by suggesting two alternative hypotheses.

Consistent with the divergence perspective:

Hypothesis1a.Organizational culture in manufacturing plants is different between Eastern and Western countries.

Conversely,following the convergence perspective: Hypothesis1b.Organizational culture in manufacturing plants is not different between Eastern and Western countries.

These hypotheses address the question of how homogenous or different are organizational(plant)cultures and do these differences reflect national cultural differences?

2.3.The impact of GLOBE culture dimensions on performance

This section answers the question of whether certain under-lying norms and values are supportive of high performance manufacturing.If that is the case then an argument can be made that there exists a set values and beliefs that seems to support practices across diverse national settings.Possibly investigating specific dimensions of culture and the relationship between national and organizational culture can better inform our under-standing of the culture performance relationship.Manufacturing, in particular,can benefit from a deeper understanding of culture since manufacturing increasingly occurs across national bound-aries.Specific dimensions of culture are more consistent with manufacturing performance.The following set of hypotheses specifies the relationship between GLOBE culture dimensions and manufacturing performance.

2.3.1.Power distance

Lower power distance improves performance because it fosters communication and openness.It allows employees to make independent decisions irrespective of their hierarchical level in the organization,and it improves motivation and morale(Nakata and Sivakumar,1996).Decentralization leads to empowerment and creative freedom,and it signals a trust and belief in an individual’s capabilities.Employees are more motivated since decentralization gives them both a voice in the decision-making and responsibility over the outcomes.In addition,it increases the accessibility of supervisors to shopfloor employees.The quality management literature postulates that management should function as a facilitator rather than supervisor.Empowerment should lead to higher performance(Anderson et al.,1994). Hypothesis2a.Power distance culture is negatively related to manufacturing performance.

2.3.2.Institutional collectivism

Scholars have argued that high institutional collectivism creates teamwork.It increases the involvement of the employees in the organization and breaks down barriers between depart-ments.Organizations adopting cooperative relationships and cross-functional teams have lower costs,less scrap,and higher productivity.Collaborations between employees avoid misunder-standings that can lead to delays in delivery time.Team activities such as quality circles have been found to improve quality and decrease the number of defects(Flynn et al.,1994).

Hypothesis2b.Institution collectivism culture is positively related to manufacturing performance.2.3.3.In-group collectivism

The literature argues that in-group collectivism makes employ-ees proud of their own work and their organization’s achieve-ments.This generates commitment and loyalty since the employees feel they can make valuable contributions and improve performance(Deming,1986).Employee commitment promotes pride of workmanship(Deming,1986).Arthur(1994)finds that firms that emphasize the development of employee commitment have lower scrap rates and higher productivity thanfirms that maintain tight employee control.Anderson et al.(1994)identifies employee commitment as a key quality construct since committed employees expend more energy on organizational tasks and provide high process,product,and service quality to satisfy the customers.

Hypothesis2c.In-group collectivism culture is positively related to manufacturing performance.

2.3.4.Future orientation

Scholars have argued that in a manufacturing setting a future-oriented culture encourages employees to utilize new innovative technologies,which can enhance long-term performance.A future orientation helps develop a tolerance to errors and encourages risk taking and experimentation to improve process performance (Naveh and Erez,2004).A future-oriented culture promotes continuous improvement,which leads to higher performance (Flynn et al.,1994).In supply chain management,Choi and Hartley (1996)also found that creating an extended planning horizon leads to higher performance.

Hypothesis2d.Future orientation culture is positively related to manufacturing performance.

2.3.5.Performance orientation

The performance orientation dimension in the GLOBE framework (House et al.,2004)was derived from McClelland’s(1961)works on need for achievement.A performance orientation encourages challenging goals and creates motivation to achieve bottom line results(Snell and Dean,1994).Goal directed behavior focuses the organization on improving performance and encourages the employees to work harder(Linderman et al.,2003).Von Glinow et al.(2002)concluded that employee incentives,appraisals,and compensations systems enhance performance.

Hypothesis2e.Performance orientation culture is positively related to manufacturing performance.

2.3.6.Assertiveness

Lower assertiveness behavior is characterized by an emphasis on communication in order to seek consensus.Negotiation,compro-mise,and sensitivity are vehicles for conflict resolution.These traits make relationships between various functions and divisions more productive,which can help implement high performance manu-facturing practices(e.g.Total Quality Management).Low assertive-ness promotes employee involvement and encourages a willingness to share resources and information.These attributes can also be useful in negotiating with suppliers and customers.

Hypothesis2f.Assertiveness culture is negatively related to man-ufacturing performance.

2.3.7.Uncertainty avoidance

A higher degree of uncertainty avoidance can be achieved by implementing a fact-based managerial decision-making rather than relying on intuition.The utilization of scientific methods and

M.Naor et al./Journal of Operations Management28(2010)194–205 196data improves the accuracy of forecasts,leading to reduction in manufacturing costs associated with excessive inventory and a better ability to provide on-time delivery.Deming(1986)pointed to reduction of variance in processes as an essential ingredient of quality management programs.In a similar vein,the Six Sigma methodology(Schroeder et al.,2008)reduces variance in process by employing quantified metrics,adhering to a stepwise problem solving approach(DMAIC),and analyzing data with a set of statistically rigorous tools(Regression and Design of Experiments). Flynn and Saladin(2006)find that the quality management practices of Information and Analysis,Strategic Planning,and Process Management are positively associated with uncertainty avoidance.

Hypothesis2g.Uncertainty avoidance culture is positively related to manufacturing performance.

2.3.8.Humane orientation

The humane orientation dimension in the GLOBE framework (House et al.,2004)has its roots in Kluckhohn and Strodtbeck’s (1961)dimension titled‘‘human nature as good versus human nature as bad’’.Human goodness encompasses many positive traits that ultimately lead to higher performance.For example,fairness in the internal relationships between employees as well as in the external treatment of both suppliers and customers is a key quality attribute.Another important characteristic of human goodness is self-sacrifice,in other words,the ability and willingness to prioritize the organization’s goals above personal benefit. Hypothesis2h.Humane orientation culture is positively related to manufacturing performance.

2.4.Effect of congruence between national and organizational culture on manufacturing performance

If certain national cultural dimensions lead to higher manufacturing performance,then one would naturally expect that organizational cultures thatfit the national culture have higher performance.In other words,when there is no tension between national and organization culture,manufacturing practices are easier to implement and hence will have higher performance.In contrast,divergence between organizational and national culture could make implementing manufacturing practices problematic.

Studies in the management literature build on contingency theory(Lawrence and Lorsch,1967)to explain the relationship between the environment,organizational characteristics,man-agement practices,and performance.The underlying premise in these studies is that organizational context and characteristics should match in order to perform well.The concept offit(Drazin and Van de Ven,1985)frames the relationship between key constructs and performance.Contingency theory contends that organizational characteristics(organizational culture)shouldfit their environment(national culture)in order to achieve high performance.Consequently,misfit leads to a decline in perfor-mance.

Recent studies suggest national culture as a contingency variable influences the effectiveness of management practices. For example,Jaeger(1986)conducted research on thefit between organizational development techniques and national culture. Pagell et al.(2005)found that national culture explains interna-tional operations management decision-making.Newman and Nollen(1996)investigated thefinancial performance of European and Asian work units as a function of the congruence between Hofstede’s(1980)five national culture dimensions(power distance,uncertainty avoidance,individualism,masculinity,and long-term orientation)and analogous management practices. They argued that work units whose management practicesfit better with national culture have higherfinancial performance (return on assets and return on sales)than work units that have a weakfit.Their results support a congruence relationship with all of Hofstede’s culture dimensions,except for uncertainty avoid-ance.

The notion that organizations mustfit with their surroundings can also apply to organizational culture(Nelson and Gopalan, 2003;Weber et al.,1996).In our study,national culture dimensions represent the environment,and organizational culture corresponds to the plant’s internal characteristics.Therefore, contingency theory implies the following hypothesis:

Hypothesis3.Thefit between organizational culture in manufac-turing plants and national culture where the plants reside is positively associated with manufacturing performance.

3.Methodology

3.1.Data

This study defines the unit of analysis as the manufacturing plant.Operations management studies suggest that this unit of analysis provides afine-grained understanding of how competitive advantage comes from manufacturing operations.The data were gathered during the year2005from1manufacturing plants as a part of Round3of the high performance manufacturing(HPM) Project.The previous rounds of data collection occurred in1991 and1996and were part of the World Class Manufacturing project (Schroeder and Flynn,2001).Data collection involved a team of researchers from several universities in the sample countries.Six countries participated in the HPM project(Germany,United States, Japan,Finland,South Korea,and Sweden).Industries were identified based on four-digit SIC codes in the United States portion of the sample and comparable classification systems in other countries.Only one plant per business unit or parent corporation was included,to prevent interdependence of observa-tions.

A mail survey was used for data collection.The survey response rate was65%.This high response rate was obtained byfirst personally contacting each plant’s manager by phone in order to obtain the plant agreement for participation before the mail survey was delivered,and by promising a feedback report as a benefit to the participating plants.

Data in each country were gathered in the native language of each country and questionnaires were translated.To check for accuracy,a different person then translated the questionnaires back to English.Necessary modifications to the instrument were made for clarity and consistency across translations(Cua et al., 2001).

Upon agreement to participate in the study,the plant manager appointed a survey coordinator within the plant.The set of questionnaires was sent by mail to the coordinator.The survey coordinator administered the set of13questionnaires to21 informants at different levels in the plant from supervisors to shop floor employees.Respondents were asked to return their ques-tionnaires to the coordinator in sealed envelopes in order to maintain anonymity of responses.In each country,three industries (transportation,electronics,and machinery)were randomly sampled,with a target of10plants in each industry,for a total of approximately30plants per country and1plants overall. These industries were selected because they represent major sectors of industrialized production in the world(Schroeder and Flynn,2001).The plant size was restricted to plants with more than 250employees to insure that a sufficient number of managers and

M.Naor et al./Journal of Operations Management28(2010)194–205197

employees would be available to complete the survey.Table 2provides additional information about the distribution of the plants in each country and industry.3.2.Independent variables

3.2.1.National culture

The research uses the GLOBE (House et al.,2004)data on national culture values for the countries where the manufacturing plants reside (Germany,United States,Japan,Finland,South Korea,and Sweden).We use the corresponding set of values for each cultural dimension provided in GLOBE (Power distance—p.540,institutional collectivism—p.470,in-group collectivism—p.471,future orientation—p.306,performance orientation—p.251,humane orientation—p.574,gender egalitarianism—p.366,uncertainty avoidance—p.623,and assertiveness—p.411).

Table 3gives the GLOBE national culture values (1–7Likert scale)for the six countries in this study.There are some differences in culture across the countries in the Table.For example,as expected,institutional collectivism is very high in the Asian countries (South Korea and Japan)along with Sweden.Other differences could also be highlighted,but we only note here that variance exists across countries on most of the cultural dimen-sions.Having a sample of countries from different regions across the world contributes to the variance in culture.More specifically,the GLOBE project categorizes the 61countries into 10regional

clusters (House et al.,2004,p.191).The six countries included in our study are classified into these four GLOBE regional clusters:Confucian Asia (Japan and South Korea),Nordic Europe (Sweden and Finland),Anglo (United States),and Germanic Europe (Germany).

3.2.2.Organizational culture

Appendix A gives the organizational cultural scales base on the definitions of the GLOBE dimensions provided in Table 1.The instrument in Appendix A utilizes a 1–7scale.In order to apply the GLOBE framework (initially designed by organizational behavior scholars)to the operations management area,we looked at the handbook Metrics for research in operations management (Roth et al.,2007).Based on Roth et al.(2007)and the HPM questionnaire,we identified items in Appendix A to measure the GLOBE cultural dimensions in a manufacturing setting.

Three shop floor employees,three supervisors,and one human resource manager responded to the specific scale items pertaining to culture in the survey at each plant.Prior to analysis,the responses were aggregated to the plant level,using the mean response per item.Inter-rater agreement (Boyer and Verma,2000)among these respondents is tested by the R wg coefficients according to the ratio method (James et al.,1984).The inter-rater agreement coefficients for the culture scales are as follows:power distance (.83),institutional collectivism (.92),in-group collecti-vism (.85),future orientation (.90),performance orientation (.90),assertiveness (.91),uncertainty avoidance (.),and humane orientation (.91).All these values are above .70,the acceptable level of agreement among the respondents.

3.2.3.Country development

Although the focus of this study is on national culture,it is important to consider the potential influence of other country level factors on performance.Factors related to national devel-opment could affect manufacturing performance.As a result,we include the role of national development in the analysis.World Bank (2005)online database in the section ‘‘Key Development

Table 4

Country developmental data indexes.a .

Germany

U.S.A.Japan Finland South Korea Sweden Economic

GNI (per capita,$)

34,780

43,210

38,930

38,500

15,880

40,950

Merchandise trade (%of GDP)

6321246968Infrastructure

Time required to start a business (days)24631141715Energy use (kg of oil equivalent per capita)

4,180

7,3

4,152

6,6

4,426

5,782

a

Source:World Bank (2005).

Table 2

Distribution of 1plants in Round 3of the HPM data.Country

Industry Electronics

Transportation Machinery Germany

91913United States 9911Japan 101311Finland

14106South Korea 101110Sweden

7

7

10

Table 3

National culture values according to GLOBE.a .Culture dimension Germany U.S.A.Japan Finland South Korea Sweden Power distance

2.54 2.85 2.86 2.19 2.55 2.70Institutional collectivism 4.82 4.17

3.99

4.11 3.90 3.94In-group collectivism

5.18 5.77 5.26 5.42 5.41

6.04Future orientation

4.85

5.31 5.25 5.07 5.69 4.Performance orientation

6.01 6.14 5.17 6.11 5.25 5.80Humane orientation 5.46 5.53 5.41 5.81 5.60 5.65Gender egalitarianism 4. 5.06 4.33 4.24 4.22 5.15Uncertainty avoidance 3.32 4.00 4.33 3.85 4.67 3.60Assertiveness

3.09

4.32

5.56

3.68

3.75

3.61

a

Source:House et al.,2004(power distance—p.540,institutional collectivism—p.470,in-group collectivism—p.471,future orientation—p.306,performance orientation—p.251,humane orientation—p.574,gender egalitarianism—p.366,uncertainty avoidance—p.623,and assertiveness—p.411).

M.Naor et al./Journal of Operations Management 28(2010)194–205

198

Data &Statistics’’provides a comprehensive set of Developmental Indexes for each country (Germany,United States,Japan,Finland,South Korea,and Sweden).Two types of developmental indexes were collected—Economic and Infrastructure.The economic indexes include GNI (Gross National Income)and Merchandise Trade,and the Infrastructure Indexes include Time Required to Start a New Business and Energy Use.Table 4summarizes this data.

3.3.Dependent variable

3.3.1.Manufacturing performance

The operations management literature identifies four principal dimensions to assess manufacturing performance:cost,quality,delivery,and flexibility (Rosenzweig and Roth,2004;Ward and Duray,2000).The manufacturing performance scales used are grounded in this literature and similar to the scales validated in previous studies (Cua et al.,2001).Appendix B gives the scales used from the HPM database.The plant manager in each plant responded to the questionnaire items on performance.The overall measure of manufacturing performance is obtained by taking the mean of the four manufacturing dimensions.This method has been used in other studies to assess overall manufacturing performance (Cua et al.,2001).

4.Analysis and results

4.1.Measurement validity and reliability

Tables 5and 6report the means,standard deviations,and correlations of the study variables.We replace a small number of missing data points by the means.

We assessed the organizational culture and manufacturing performance scales for validity and reliability.The two standards for ensuring content validity are whether the instrument contains a representative collection of items and whether sensible methods of test construction were used.These standards were achieved by grounding the organizational culture scales (Appendix A )and the manufacturing performance scales (Appendix B )in the literature,and by asking several experts to read and assess the content validity of the scales.Furthermore,pilot testing of the questionnaire items included structured interviews with managers,supervisors,and workers,in addition to a tour of the facility and administration of the pilot questionnaires.

Cronbach’s alpha is used to assess the reliability of scales,existing scales should have alpha values higher than .70and new scales should be above.60(Flynn et al.,1990;Hair et al.,1995).For scales with lower alpha values,factor analysis is used as a guide for deleting items that do not contribute strongly to the scales.The Cronbach’s alpha scores for newly constructed scales are as follows:power distance (a =.66),institutional collectivism (a =.70),in-group collectivism (a =.91),future orientation (a =.76),performance orientation (a =.69),assertiveness (a =.77),uncertainty avoidance (a =.60),and humane orienta-tion (a =.67),and manufacturing performance (a =.81).Further-more,the items of each scale dimension loaded on a single factor.

We perform confirmatory factor analysis using the statistical software SPSS 14.0to validate that the data scales used to measure plant organizational culture load on an eight-factor structure corresponding to the GLOBE culture dimensions.The recom-mended value of the fit measures NFI,RFI,CFI,IFI and TLI is .90or higher (Hair et al.,1995).Our results yielded acceptable fit measures of RMSEA =.073,x 2/df =2.01,NFI =.96,RFI =.95,CFI =.98,IFI =.98,and TLI =.97.We did not observe any significant cross-loadings or measurement error

correlations.

T a b l e 5M e a n s ,s t a n d a r d d e v i a t i o n s ,a n d c o r r e l a t i o n s b e t w e e n c u l t u r e a n d m a n u f a c t u r i n g p e r f o r m a n c e a .

S i z e —l o g (n u m b e r o f e m p l o y e e s i n t h e p l a n t ).a N =1.*p <.05.**p <.01.

M.Naor et al./Journal of Operations Management 28(2010)194–205199

Common respondent bias is not a problem in this study because the independent variables(culture)and the dependent variables (performance)are assessed by different respondents.For example, the plant manager responded to the manufacturing performance items(Appendix B),whereas three shopfloor employees,three supervisors,and one human resource manager responded to the culture items(Appendix A).In addition,a different response format for the dependent and independent variables further helped avoid common method bias problems(i.e.,the performance items (Appendix B)make use of a1–5Likert scale,whereas culture items(Appendix A)employ a1–7scale).

4.2.Organizational culture across countries

In order to test Hypotheses1a and1b,we divided the data into two groups of countries,Eastern(Japan and South Korea)and Western(Germany,United States,Finland,and Sweden).First,we perform a Hotelling’s T-square test in order to investigate whether the organizational culture treated as a whole construct composed of a complete set of eight dimensions differs between the two regions of the world.The results indicate that organizational culture in plants is statistically different(T2=50.46,p<.01) between Eastern and Western countries.

Since a difference exists between the regions,we conduct an ANOVA comparison between Eastern(Japan and South Korea)and Western(Germany,United States,Finland,and Sweden)countries tofind out which specific dimensions of culture differ.The assumptions of the ANOVA and regression models(Hair et al., 1995;Kutner et al.,2004)used in this study were tested by several statistical methods.First,predicted values were plotted against standardized residuals to show a random scattered pattern, supporting the assumptions of linearity and homoscedasticity. Additionally,the partial regression plots for each independent variable provide further evidence of linearity.Furthermore,all values of the variance inflation factors(VIF)are below 3.0, suggesting that multicollinearity is not a problem for this data (Hair et al.,1995).Next,normality and independence of error terms are supported by appropriate histograms,normal prob-ability plots of standardized residuals,and partial regression plots. Overall,the analysis indicates no significant departure from the assumptions.

Table7gives the ANOVA results for each organizational cultural dimension.Overall,wefind mixed results between the divergence(Hypothesis1a)and convergence(Hypothesis1b) schools of thought since a significant difference(p<.01)between Eastern and Western countries appeared in only three of the eight cultural dimensions.More specifically,Hypothesis1a is supported for the dimensions of power distance,future orientation,and performance orientation,whereas Hypothesis1b is supported for the dimensions of institutional collectivism,in-group collectivism, assertiveness,uncertainty avoidance,and humane orientation. These results support Rungtusanatham et al.(2005,p.49)approach of testing simultaneously the two alternative hypotheses since the convergence/divergence dichotomy represents two opposing camps in the academia.

4.3.The impact of culture on performance

Because of the nested nature of the data(plants embedded in different countries),we conduct the analysis using Hierarchical

Table7

Analysis of variance of organizational culture inside manufacturing plants by Eastern and Western countries.a.

Organizational culture

dimensions

Sum of

squares

df Mean

square

F

Power distance

Between groups 3.331 3.3310.53** Within groups59.12187.32

Total62.45188

Institutional collectivism

Between groups.211.21 1.04 Within groups37.48186.20

Total37.69187

In-group collectivism

Between groups.161.16.44 Within groups66.74186.36

Total66.90187

Future orientation

Between groups 6.081 6.0813.68** Within groups82.21185.44

Total88.29186

Performance orientation

Between groups 6.231 6.237.23** Within groups161.05187.86

Total167.27188

Assertiveness

Between groups.261.26.69 Within groups70.16187.38

Total70.41188

Uncertainty avoidance

Between groups.291.29. Within groups60.84187.33

Total61.12188

Humane orientation

Between groups.471.47 1.31 Within groups66.35184.36

Total66.82185

a Eastern countries:Japan and South Korea(n=65).Western countries:Germany, United States,Finland,and Sweden(n=124).

**p<.01.

Means,standard deviations,and correlations between industry,country developmental indexes and manufacturing performance a.

Variable Mean S.D.123456

1.Manufacturing performance 3.71.45

2.Electronics.31.46À.08

3.Machinery.32.47.09À.47**

4.GNI(per capita,$)35094.0241.34À.02.01.02

5.Merchandise trade(%of GDP)51.3220.48À.07.02À.04À.52**

6.Time required to start a business(days)18.628.01.08À.07À.02À.11À.06

7.Energy use(kg of oil equivalent per capita)5382.751412.33À.09.09.00.51**À.28**À.88**

a N=1.

**p<.01.Linear Modeling(Raudenbush and Bryk,2001,p.6,),also known as random-effects regression in the Econometrics literature(Greene, 2007).More specifically,the plant level data(n1=1plants)is nested within the country level data(n2=6countries)and can be treated as an unbalanced panel.We note that the results should be interpreted with caution due to the fewer number of observations at the country level(Raudenbush and Bryk,2001).We perform the data analysis using the Software STATA10(Rabe-Hesketh and Skrondal,2008).In the regression equation,thefit between organizational and national culture is incorporated as cross-level moderation(Davison et al.,2002).We estimate a separate regression equation for each culture dimension as independent variable,resulting in a series of eight regression equations.

We test each of the culture dimensions using STATA the

following model:

P i j¼b0þb1Size i jþb2OC i jþb3NC i jþb4ðOC i jÂNC i jÞþe i j(1) where,Size ij controls for the number of employees in the plant in plant(i)in country(j),OC ij represents the organizational culture dimension,NC ij represents the commensurate national culture dimension,and P ij represents the plant manufacturing performance.The cross-level moderation of Level2on Level1is represented by the interaction term(OC ijÂNC ij)in the random-effects model.Prior to analysis,all predictors were standardized and grand mean centered to reduce multicollinearity.

Table8reports the random-effects regression coefficients for size,organizational culture,national culture,and their interaction. We note that all of the models were significant based on the p-values of the Wald chi2(x2).Furthermore,the Hierarchical Linear Modeling results show that the main effects of the organizational culture are consistently significant for all of the eight culture dimensions,supporting hypotheses2a–2h(see Table8).The interactions terms,which test thefit between organizational and national culture,are not significant in any of eight models.Thus, the analysis does not support hypothesis3.Furthermore,none of the national culture dimensions are significant for the eight models,which reinforces the conclusion about the overall low country level effect.

In addition,to verify robustness of the results,we also analyzed the data using polynomial regression methods,by incorporating quadratic terms in the model and plotting the corresponding three-dimensional surfaces(Edwards,2002).In all of the eight culture dimensions the polynomial regression technique yields the same results as the Hierarchical Linear Modeling methodology, which increased our confidence in the results.See the authors for further details.

Finally,in order to incorporate the impact of other country level factors,we conducted an additional regression analysis testing the influence of country development indexes on manufacturing performance(Table9).It was necessary to conduct this regression separately from the previous Hierarchical Linear Modeling analysis because of the limited degrees of freedom associated with our sample of six countries.The regression included as predictors Economic and Infrastructure developmental indexes(Table4).Industry dummies served as control variables(Table2).Table9shows that neither any of the country development indexes nor any of the industry dummies are significant.

5.Discussion

This study investigates the interplay of organizational and national culture and the associated impact on manufacturing performance.As the world becomes more global(flat),research must become more global.Researchers should not ignore national differences that may still exist.Naisbitt(1994,p.26)believes that ‘‘the more universal we become,the more tribal we act.’’Without scholarly research,practitioners may over emphasize or under emphasize national differences.Our data set provides an ideal setting to test a multilevel theory of the relationship between national culture,organization culture,and manufacturing perfor-mance.

On the one hand,our results show that the cultural dimensions of power distance,future orientation,and perfor-mance orientation differ between Eastern and Western coun-tries.An explanation for this result is that these dimensions are strongly influenced by the organization’s structure and strategic policy.For example,hierarchy,bureaucracy,and red tape impact power distance.Incentives,compensations,and awards for Table9

Regression results of manufacturing performance on industry and country development indexes.

Independent variable Manufacturing performance ElectronicsÀ.05À.03 Machinery.07.06 GNI.11 merchandise tradeÀ.17 Time required to start a businessÀ.37 Energy useÀ.52 R2.01.03 D R2.02 N=1.

Hierarchical Linear Modeling results of manufacturing performance on organizational and national culture dimensions.a.

Independent variable Power

distance Institutional

collectivism

In-group

collectivism

Future

orientation

performance

orientation

Assertiveness Uncertainty

avoidance

Humane

orientation

Size.07.03*.02*.02.04*.04**.04**.03** Organizational culture(oc)À.12**.15**.13**.16*.09**À.16**.07*.10** National culture(nc).07.04À.06À.01À.02.05À.02À.05 OrganizationalÂNational(ocÂnc).03.00À.04.01À.01À.06.03.00 Within R2.08.10.10.15.04.12.03.06 Between R2.06.57.32.07.06.00.22.28 Overall R2.05.13.11.11.04.09.03.07 s u.11.05.10.09.22.24.10.09 s e.43.43.43.42.44.42.45.44 Intraclass correlation(r).06.01.06.04.20.25.05.04 Wald chi2(x2)10.*30.57**27.77**29.24**12.01*30.**12.00*15.68** a Size—number of employees in the plant N=1.

*p<.05.

**p<.01.outstanding achievements influence the cultural dimension of performance orientation.Technological capability and execu-tive strategic planning affect the future orientation cultural dimension.

On the other hand,the non-significant difference between Eastern and Western countries for the dimensions of institutional collectivism,in-group collectivism,assertiveness,uncertainty avoidance,and humane orientation can be attributed to their strong link to people’s behavior and work-related attitude.The organization can train people to cooperate as a team,avoid conflicts,and generate commitment through pride of membership. Similarly,uncertainty avoidance can be implemented by training employees to strictly follow statistical data analysis processes instead of relying on gut-feeling.Overall,our mixed results reinforce the simultaneous legitimate existence of both schools of thought(i.e.,divergence versus convergence)in the international management literature.

Hierarchical Linear Modeling results indicate that organiza-tional culture is more dominant than national culture in predicting performance as evidenced by the significant main effects of the organizational culture dimensions in Table8. Furthermore,none of the four country developmental indexes (both economic and infrastructural)influences manufacturing performance(Table9).This provides further evidence that national differences have a weak impact on manufacturing performance.Overall,thesefindings are consistent with Bran-nen’s(1995,p.343)argument that the‘‘culture of work’’matters more than national culture in the degree to which manufacturing practices can be applied across countries.Therefore,plants that have a supportive organizational culture,which may be different from the national culture in which they reside,have higher performance manufacturing.The operations management litera-ture provides further evidence for this phenomenon.The adoption of Japanese management practices by western countries(Ouchi, 1981)helps illustrate this point.Doing it the Japanese way became fashionable in the1980s,as Japanese practices such as Lean,Just in Time(JIT),and Total Quality Management(TQM) were successfully emulated in many other countries(Schroeder and Flynn,2001,p.91).

Similarly,when Toyota began expanding outside of Japan,many believed that its Eastern culture was more conducive to high quality manufacturing and western countries(especially in the United Sates)would not be capable of implementing the Toyota Production System.Toyota proved that its approaches can work everywhere and became a global manufacturer(Evans and Lindsay,2005,p.86).The empirical results from this study confirm this contention.One of the critical tasks of managers is to develop an organizational culture that supports high performance.

6.Conclusion

6.1.Limitations and future research

A limitation of this study is that it assumes that national culture in each country is unified since our study uses the GLOBE cultural values(Table3).We were unable to take into consideration the existence of different subcultures inside the country since such data was not provided in GLOBE(House et al.,2004).On the positive side,it should be mentioned that the assumption of a unified country culture is a very common methodological practice in cross-cultural studies that rely on Hofstede’s or GLOBE’s data sets.

An avenue for further investigation is to expand the study to include additional countries.Other regions of the world such as South America,Africa,Middle East,and parts of Asia represent different clusters of national culture according to the GLOBE framework(House et al.,2004).It may be that in these clusters national culture plays a more dominant role.

6.2.Contribution and implication for practice

The current study contributes to the literature in several ways. First,it brings the convergence/divergence perspectives(Ralston et al.,1997;Shenkar and Ronen,1987)into the operations manage-ment literature and examines the debate between them in a manufacturing setting,whereas the vast majority of past studies on this topic where conducted in the international management literature.

Also,it answers scholars’calls for empirical research that crosses levels of analysis(Hackman,2003;Rousseau,1985),by investigating the interplay between national level culture dimen-sions and commensurate organizational level culture dimensions. Klein et al.(1999)assert that the multilevel organizational literature is dominated by a focus on two levels of analysis (individuals and organizations).We address this gap by broad-ening the theorists’focus to encompass an additional level of analysis(national).

In addition,the cross-cultural literature tends to be rhetoric, descriptive,and qualitative in nature,whereas this study conducts an empirical quantitative investigation of the varia-tions in organizational culture dimensions across countries and links them to their commensurate national culture dimensions. It also employs recently developed cultural constructs from the GLOBE cultural framework(House et al.,2004)and utilizes the most recent data on national culture provided by GLOBE(Table 3).Past studies relied on Hofstede’s data that was collected at the 1980s and does not reflect recent global changes around the world such as the end of the cold war at the90s that revolutionized many countries,especially in Europe(McSwee-ney,2002).

This research also contributes to the international operations management literature.Prasad and Babbar(2000)argue that there is a lack of research in the area of international operations management.Our study addresses this need by including six countries across the world(Germany,United States,Japan,Finland, South Korea,and Sweden)from three continents:North America, Europe,and Asia.

Finally,in an era of globalization(Metters and Verma,2008; Zhao et al.,2006)when multinational corporations invest overseas by initiating startups and entering into joint ventures, mergers and acquisitions,this study provides insight for practitioners.We are moving rapidly into an age of transnational manufacturing,where items produced in one country are being shipped across national borders for additional process,storage, remanufacture,recycle,or disposal(Ferdows,1997).Our results indicate that plants can establish an organizational culture that is different from the national culture in which they reside. Furthermore,this study provides guidance to managers about which dimensions of organizational culture lead to high performance.More specifically,an organizational culture characterized by low power distance and assertiveness and high institutional collectivism,in-group collectivism,future orientation,performance orientation,uncertainty avoidance, and humane orientation leads to enhanced manufacturing performance.

Acknowledgements

The authors thank Professor Aravind Chandrasekaran for his invaluable contribution to the statistical analysis.Also,many thanks to the special issue Associate Editors,and three anonymous reviewers for their insightful comments.

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