The Corporate and Workforce Culture of India

Pam D. Stokes

January 26, 2003

OMBA 606D

Executive Summary

The traditional and business cultures of countries that corporations are looking to enter must be thoroughly evaluated. Although India has its benefits, the nation is constrained by its slowness in adapting sound ethical rules and standards. Additionally, the country is steeped in traditional values and beliefs that are not easily swayed. A balance of traditional culture and global business can be obtained through the understanding of Indian and Western culture. In fact, India is making strides to participate in globalization, but they are being stifled by their own workforce culture as identified by the Hofstede and Cronbach measurements. The country has come far but has much work to accomplish.

Introduction       

In examining national and international corporate environments, businesses should examine the traditional and organizational cultures and values of countries that are of interest. The business and workforce cultures of another country will surely differ from that of the host country. In its complexity, culture can be defined as “the shared set of symbols, values, beliefs, and rituals which are used to make sense of the world” (Sullivan, 1999, p. 335). Each country values and believes in various rules, standards, and situations. As such, cultural stereotypes can be beneficial to the business wishing to expand globally by determining how an individual or a group of individuals will act given specific circumstances. To be useful, cultural stereotypes must be used with care (Ibid). For the expatriate, “stereotyping is a starting, not an ending point” (Ibid). To this end, consolidating all citizens of a country into one group would be disastrous. Also problematic is the fact that Western corporations tend to disregard or lessen the importance of cultural values of other countries.

The business values of the United States are very different from other countries. In particular, American culture dictates that “new technology leads to progress, optimism leads to a better future, rational behavior involves the calculation of costs and benefits, and change is usually for the better” (Sullivan, p. 336-337). American values and beliefs “may be considered odd by other peoples” and are therefore perceived as American arrogance (p. 337). These values are steeped in individual successes and endeavors rather than group or organizational accomplishments.

While it is making an effort to don the “Golden Straightjacket,” India is deeply rooted in traditional culture and values. It fears the “Americanization” that globalization brings to countries that have largely adapted to the construct. There are some Indian businesses that are globalizing in a brilliant manner without losing their cultural heritage. When Rashme Hedge Gopi decided to use her theatre and dance background to “preserve the near-extinct tribal dance forms of India,” she found a profitable market in Western companies such as Motorola, Oracle, and CitiBank (Sekhar, 2001, p. 2). These corporations are more than happy to give their employees “a taste of Indian art and culture” (Ibid). India truly desires to maintain its culture and beliefs.  There are innovative and creative ways that India can preserve its culture and still become part of globalization.

Staples Inc. continues to help small businesses by ensuring that they can access the “products, prices, and service they demand” (Staples Annual Report, p. 2). The organization’s “Back to Brighton” paradigm (named after the Boston town where the organization was founded) allows the company to maintain its core organizational values and beliefs (Ibid). Staples business culture, which is designed to address customer business needs in a competitive market, helps to support the mission and the vision of the company.

A Comparison of India and Western Culture

Hofstede Analysis of India

           When preparing for the move to India, an expatriate manager should study the cultural differences between the Unites States and India. “While several systems have been developed for performing cultural analysis, the approach most used in international business is that developed in the 1970s by Geert Hofstede, a Dutch organizational psychologist” (Sullivan, p. 339). Hofstede’s five dimensions of culture have been used to analyze India and the United States. The analysis showed that Indian managers express different values compared to those of their Western counterparts (Fisher, Shirole, Bhupatkar, 2001, p. 5). Similarly, the table below lists the scores for India and the United States. The scores range from the highest score (n=100) to the lowest score (n=0).

(Adapted from Sullivan, table 9.3, p. 342.)

It is apparent that the U.S. believes in individual accomplishments, while India cherishes collective group or team successes. The most widely studied cultural value, the degree of individualism for both countries is significant (Brett, 2001, p. 15). The wide variation in scores (n=48, n=91) connotes that the U.S is an individualist culture and that India is an intermediate culture (p. 16). This analysis suggests that conducting business may prove to be challenging. Power distance, the relationship between superiors and subordinates, will also be an issue with Indian-U.S. business relations (Sullivan, p. 341). While the U.S still has many bureaucratic, paternal organizations, it is swiftly moving in the direction of flatter, participatory corporations. India, on the other hand, scored relatively high (n=77) for the power distance dimension of culture. Accordingly, its culture supports strong hierarchical organizations and autocratic superiors. The degree of long-term orientation connotes the range in which cultures value the past, present, and future. India deeply “values persistence and saving for the future” and the U.S strongly “values living in the present and consumption” (Ibid). These key dimensions must be fully understood before deciding to conduct business in India.

Traditional Culture in India

          Due to India’s steadfast devotion to its culture and traditions, it has unfortunately fallen behind the globalization bandwagon. “India is a country that has actively tried to resist much of this global cultural homogenization. But even there, among India’s elites, the Electronic Herd is fast at work” (Friedman, p. 292). The author cites an anecdote by “one of India’s most enlightened politicians.” His concern was that the Indian culture may suffer from complete Americanization, like Canada. “No more Canadian music, theater, film, culture, or language” (Ibid). Many in India fear that globalization means surrendering to all that is American.

India’s Tolerance of Western Culture

          India has made significant attempts to accommodate the West with regards to corporations entering their country to conduct business. This will, of course, bring employment and growth opportunities to India. However, culture preservation is a real concern. “Unless you preserve at least some of your own olive trees in your own backyard, you will never feel at home in your own house” (Friedman, p. 292). No one wants to feel homeless. However, many Indians have a “perception of the lack of trust in their industry” (Kracher, Chatterjee, & Lundquist, 2002, p. 10). As a component of the business culture, professionals in India believe that trust and ethics are less important than pleasing customers (Ibid). However, “Indian CEOs stated that poor ethics in Indian companies is a result of systemic corruption; sixty-five percent said there is a poor implementation of laws and it is to blame for unethical business practices” (Ibid). Therefore, India’s tolerance of American culture will increase if they can somehow be assured that they can maintain the good business culture traditions and conduct global business.

India’s Culture: A Hindrance to Globalization?

          The tension between Indian and Western managerial values has developed from deeply rooted Indian culture (Fisher, Shirole, & Bhupatkar, p. 5) and the ignorance of the West. As such, Indian managers may face the clash of traditional values within the supervisory roles.

“Indian managers, in the spirit of their own tradition, should focus on the ethical quality of the means used to achieve ends rather than simply on the achievements of ends. These values, emerging from the Bhagavad Gita and other Hindu and Buddhist texts, claim that it is right to achieve a sufficiency of wealth and possessions but wrong to seek economic growth for its own sake” (p. 5-6).

Here, moral wellness is more important than economic success. This, in many ways, comes into direct contradiction with the construct of globalization.

In addition, the ideal of downsizing is a taboo in Indian workforce culture. “Employees enjoy protection at the expense of the unemployed and those in the unorganized sector” (Chemical Business, 2002, p. 2). With the rapid expansion of globalization, India realizes that “they must adapt to downsizing, mainly on account of modernization and upgradation of technology” (Ibid). This has to be accomplished in order for Indian industry to become competitive.

Indicators of India’s Business Culture

Potential Conflicts and Pitfalls

          Indian labor laws, regulations, and workforce standards are extremely outdated. If Staples were to invest in India, this would be an enormous concern. India labor legislation would also clash with American labor laws, which is an issue. Staples would want “to go into India, asking all these questions: ‘Can we have what we want? Do we trust you here? Will we get tax breaks?’” (Friedman, p. 347). Sure, many people in India would welcome the investment, but many more would question Staples’ motives. In lieu of the inadequate labor regulations, Staples would need some assurances that it could conduct business in the manner necessary for success.

Additionally, India is plagued with corruption. “India has been ranked 9 in a list of 75 countries where corrupt practices are prevalent, which is indeed a dubious distinction” (Chemical Business, p. 3). The corruptions, delays, bureaucratic red tape, and archaic labor laws are ingrained in India’s business culture. These pitfalls have deterred foreign investors from investing in India. Staples will probably follow suit.

Ethical Concerns

Unfortunately for Staples, India’s business culture supports ideals that are not supported in the U.S. For instance,

“the emphasis on moral judgment, on finding a proper balance between ends and means, suggests that the Indian tradition would favor the stances of the contribution a person makes to the organization’s objective and if a person finds it difficult to make the compromise over values involved in a problem solving approach” (Fisher, Shirole, & Bhupatkar, p. 6).

This construct, in lieu of examining factual data to address issues, is one of the ways in which bribery, corruption, and ethical deterioration continue to fester in India.

Organizational Culture and Climate

          Organizational culture is “an organization’s shared beliefs, values, assumptions, and rituals” (Sullivan, p. 338). Another cultural measurement method, Cronbach’s scale, supports the notion that the Indian industry and business culture are highly bureaucratic. As aforementioned, it is this bureaucracy that holds the corruptive and unethical practices in place.

(Adapted from Cronbach’s Scale, Deshpande’ and Farley, 1999, p. 117.)

While Indian culture maintains a substantial organizational climate of consensus and “groupthink,” it also supports innovation and entrepreneurship. It can then be stated that India’s overall culture does not necessarily reflect India’s business and workforce culture.

Necessary Competencies for Staples to Invest in India

          Presently, Staples is streamlining the company and flattening its organizational structures in order to operate more swiftly and efficiently. “From new stores, to new geographic areas, to new products and services, Staples addresses opportunities in a growing industry” (Staples Annual Report, p. 2). The company is growing rapidly which is straining Staples’ operations in the U.S. and Europe. Although it is planning to expand into other foreign markets, the company understands that this type of expansion is not without special risks. Thus, taking on India, with its red tape, ethics violations, and corruption, is unwise. As such, Staples would make an enormous mistake if it decided to invest in India.

Conclusion

In order to remain competitive, Staples has to continue growing to ensure profits and revenue. The culture of Staples, like most American business, is to expand and grow without a heavy bureaucratic layer of management. Since India’s workforce culture is laden with this and other forms of obstruction, there is no reason for Staples to expand their operations to India.

Even with its changed views on the necessity of business practices like downsizing, India still has lots of work to accomplish a balance between traditional, business, and workforce cultures. The country could examine how the workforce is affected by contradictory business and social cultures. “India must take a cue from China, where wages are fixed and a disciplined workforce is working hard to enhance national productivity” (Chemical Business, p. 2). As a step in this direction, India labor unions have frozen worker wages and bonuses to generate more employment opportunities (Ibid). A paradigm modification is necessary, along with a complete change in the mindset of India employees so that Indian business can become competitive and foreign investors can enjoy the benefits of globalization in this country.

References

Brett, J. M. (2001). Negotiating globally: How to negotiate deals, resolve disputes, and make decisions across cultural boundaries. San Francisco, CA: Jossey-Bass.

Deshpande’, R. & Farley, J. U. (1999). Executive insights: Corporate culture and market orientation: Comparing Indian and Japanese firms. Journal of International marketing, (7), 4. Retrieved January 16, 2003 from http://mdusa.lib.umd.edu

Fisher, C.M., Shirole, R. & Bhupatkar, A. P. (2001). Ethical stances in Indian management culture. Personnel Review, (30), 5/6. Retrieved January 16, 2003 from http://mdusa.lib.umd.edu

Friedman, T. L. (2000). Understanding globalization: The lexus and the olive tree. New York, NY: Anchor Books (a division of Random House).

Kracher, B. Chatterjee, A. & Lundquist, A. R. (2002). Factors related to the cognitive moral development of business students and business professionals in India and the United States: Nationality, education, sex, and gender. Journal of Business Ethics, (35), 4. Retrieved January 16, 2003 from http://mdusa.lib.umd.edu

Sekhar, A. (2001). Corporate culture. Asian Business, (37), 9. Retrieved January 16, 2003 from http://mdusa.lib.umd.edu

Staples 2001 Annual Report. (2002). Retrieved from: http://ccbn8.mobular.net/ccbn/7/84/93/.

Sullivan, J. J. (1999). Exploring international business environments. Needham Heights, NJ: Pearson Custom Publishing.