Background and institutional factors affecting organizational effectiveness in assignment environments

¶ … Environment Affects Organizational Effectiveness

To achieve an ethical institution, individuals must concentrate as much on institutional culture as on individual behavior. When individuals focus on these two, they will find that culture is created by two processed the establishment of institutional values and the implementation of those values. This study focuses on the role of the environment in shaping the organizational culture.

A number of ethical issues derive from vice, error and weakness. However, most of these stem from an institutional culture that promotes prudently or internal values at the expense of the ethical ones. In such a culture, good managers will make right decisions that are sometimes ethically problematic. This implies that they will make knowledgeable decisions, with strength of virtue and character, but those decisions will be unethical.

The environment in which an institution operates also shapes the cultural values, goals, norms and institutional beliefs. Therefore, because of such a consistent decision seem to be institutionally correct even when they do not align with the broader ethical standards. In its wider perspective, such consistency becomes a mindset, a filter through which managers view their institutions. In addition, it does more than simply motivate some attitudes; it creates a conceptual scheme (Green, 2011).

For institutions to deploy resources in a new country successfully, multinational corporations need to identify and compete with a number of differences between the country of origin market and the new foreign markets. Regulations and legal environment of acquiring property, license hiring employees, exporting and importing factors of production, payment of taxes, contracting suppliers, and government licenses vary widely across nations. Even in zones with where regulations and laws appear similar, distinctions in legal systems might have significant effects on such relevant outcomes as the security afforded to shareholders and creditors. Studies indicate that costs and official procedures required to start a new business differ (Usunier, 2008). Besides the start-up costs, regulatory and political hurdles impose considerable costs on the daily operations of subsidiaries. Where the policy maker has high certainty that allied legislature and judicial branches will support their decisions, future policies can be extremely volatile in response to either changes in the identity of policy makers, exogenous shocks or changes in the presence of seating policy makers. Such alterations resulting from direct lobbying by competitors or incumbents in the host country are of particular concern to multinational institutions.

Differences in culture between countries also influence the entry strategies of multinational institutions. For instance, considerable evidence on cross-national differences in factors such as employee expectations and administrative practices or the adoption of institutional management illustrate the challenges with which management models are transferred from one country to another. Empirical studies provide evidence that supports these differences in the organizational strategies and industrial arrangements found in countries such as Taiwan, Japan, and Korea.

Business practices are rooted in cultures. In business management, cultural variations determine business structure, policies, and style of the institution. When managing an institution in a domestic field with a homogenous culture, people appear to speak the same language, have similar values, understand the same cues, and have same norms. According to experts, to Americans the role of a manager is viewed as a problem solver contrary to the French counterparts who view a manager as an expert. In addition, businesses have rapidly advanced on the global front; management is no longer limited to the domestic field, as it has extended beyond national borders and constantly confronts cultural diversity (Green, 2011). An American manager working in a French subsidiary may appear ineffective, as a problem solver for the French workforce is likely to view him incompetent. On the other hand, a French manager working in a U.S. subsidiary might be seen too directive in his response to employees' questions.

At the institutional level, culture tends to influence the structures and behaviors of different stakeholders. Excepting the synergistic approach, the institutional norms and its culture override the national culture norms. Nevertheless, such a universal perception of a corporate culture does not erase cultural effects. Obviously, institutional culture magnifies cross-cultural differences instead of reducing them. Therefore, cultural differences in institutions operating internationally have their greatest influence mainly in teamwork, motivation, decision-making, negotiations and mergers and acquisitions (Scarborough, 2011).

Institutional differences between countries magnify the challenges in gathering, interpreting and organizing relevant data necessary to erect a successful market entry. Markets, which are similar in structure, political structure and culture pose minimal uncertainty, relatively low entry costs and thus reduces hurdle rates of return. As a result, investors are more expected to enter nations where it is relatively easy to predict future policy regime. In relation, investors and more likely to enter nations that are culturally similar and where organizational structures are comparable. Culturally dissimilar markets and unstable policy regimes are more associated with performance penalties, too. Countries such as Taiwan and Korea experience high mortality rates for newspapers during periods of political unrest (Scarborough, 2011). Additionally, the failure rates of foreign institutions in the financial service industry are higher in less globally integrated and tightly regulated markets. This reveals an analogous association between survival and cultural proximity.