Organisational culture is crucial to the success of any company since it shapes employees’ attitudes and behaviours, as well as organisational values and internal processes. However, corporate culture does not exist in a vacuum; it is influenced by the external context of the organisation, including the local culture. HSBC Holdings Group Limited is a multinational financial corporation with offices in the United States, the United Kingdom, Japan and Singapore. Each of these regional cultures influences the company’s corporate culture while it conducts business internationally. The present paper will seek to summarise the effects of regional cultures on HSBC’s corporate culture and the explanations as to why these effects occur.
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Culture and Group Dynamics
The concept of group dynamics is at the foundation of the corporate culture. According to the definition provided by Levi (2017), group dynamics includes the behaviours and psychological processes that affect how people interact and work in groups. Group dynamics have a direct effect of corporate culture since they shape interactions between workers, the overall workplace climate and employee’s attitudes. Depending on group dynamics, employees can work collaboratively towards achieving shared goals and contribute to the organisation or compete with one another relentlessly for rewards and recognition (Levi, 2017). In both cases, group dynamics will have a vital influence on corporate culture.
There are various factors that affect group dynamics of people within the organisation, including organisational policies, individual goals and beliefs, people’s backgrounds and diversity. However, one of the most critical factors affecting group dynamics is culture. As explained by Levi (2017), “international cultures affect the ways that individuality, status, and risk taking are accepted and used” (p. 310). Moreover, local cultures impact people’s values, views and attitudes toward themselves and others, which are crucial to group dynamics. In organisations, local cultures also shape people’s preferences with regard to communication, authority, decision-making and other concepts (Schein and Schein, 2019). As a result, they have a significant impact on group dynamics and corporate culture as a whole.
The corporate culture of HSBC Holdings Group Limited is comprised of two key components. On the one hand, the primary source of its corporate culture is the head office, which is located in New York. The head office has a significant effect on organisational culture because major policies, procedures and changes that impact work processes throughout the organisation stem from it (Schein and Schein, 2019). For instance, the head office is responsible for developing organisational policies in areas such as information security, confidentiality and employee misconduct, which influence the behaviours of employees in all branches of the company. On a broader level, the head office also develops organisational strategies that translate into corporate goals and values, both crucial components of organisational culture.
On the other hand, multinational companies often find that local cultures in which they operate influence organisational culture in various ways. Meyer (2015) explains that translating corporate culture into new international contexts makes it open to additional influences, including cultural ones. As a result, the immediate effect is that the corporate culture of a multinational corporation becomes less homogenous and more prone to variations from one branch to the other. Some examples of such variations can be seen in areas such as communication, leadership and autonomy. While in the head office in New York, managers will usually be more informal with employees and less controlling of them, managers in the Tokyo office could limit the degree of workers’ autonomy by monitoring their results more closely and using a stricter approach to performance evaluation. Additionally, the characteristics of leaders and people’s attitudes to them would likely differ in the two contexts. While in New York, leaders tend to be more accessible and democratic toward employees, Japanese leaders could be more authoritative in decision-making. Thus, the corporate culture in the two offices would be different despite stemming from the same source.
In order to understand the long-term effect of regional cultural issues on the corporate organisational culture, it would be useful to consider two potential scenarios. Firstly, the head office could push for the strict implementation of the head office’s corporate culture throughout the company (Meyer, 2015). In other words, HSBC could work on developing local managers’ understanding of its corporate culture and encourage them to apply it in their branches without changes or even place American managers to work in HSBC’s international offices. This could help to achieve a high level of homogeneity, thus preserving the American corporate culture throughout the organisation. However, in this case, the corporate culture could be affected by new problems, such as negative attitudes to specific policies and internal strategies, delayed decision-making and impaired communication with external stakeholders (Ferraro and Briody, 2017). These difficulties would be particularly apparent if the cultural distance between the corporate culture and employees’ local cultures is considerable. Under these circumstances, workers might struggle to adapt to new rules and processes or resist them entirely, leading to poor outcomes.
Secondly, the company could attempt to translate its corporate culture into local contexts in a way that preserves the crucial components of both cultures. This process is usually referred to as cultural integration, and it represents a softer approach to handling cultural distance in global business contexts (Ferraro and Briody, 2017). As part of this process, the company would take time to understand each local context in which it operates and devise a new, international corporate culture that would reflect the same core values while being more flexible to specific cultural contexts (Meyer, 2015). While this approach requires stepping away from the existing corporate culture in one way or another, it would help to prevent adverse outcomes and ensure that offices in all locations have sound working processes that are in line with the local cultural values.
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On the whole, culture plays a significant role in shaping group dynamics, which is why it affects organisations’ corporate culture to a considerable extent. Multinational companies have to understand local cultural influences on their corporate cultures in order to develop strategies for effective cross-border operations. In the case of HSBC Holdings, corporate culture stems from the head office in New York and is further influenced by local cultural contexts in Japan, the UK and Singapore. The short-term effect of cultural issues on HSBC’s corporate culture is the heterogeneity of organisational practices across locations, which is particularly evident in leadership and communication. The long-term effects differ depending on the approach to culture translation chosen by the company. Pushing for cultural homogeneity could impair internal processes in local divisions, whereas cultural integration would result in the formation of a new and more flexible corporate culture.
Ferraro, G. P. and Briody, E. K. (2017) The cultural dimension of global business. 8th edn. Abingdon: Routledge.
Levi, D. (2017) Group dynamics for teams. 5th edn. Thousand Oaks, CA: Sage Publications.
Meyer, E. (2015) ‘When culture doesn’t translate’, Harvard Business Review, 93(10), pp. 66-72.
Schein, E. H. and Schein, P. A. (2019) The corporate culture survival guide. 3rd edn. Hoboken, NJ: John Wiley & Sons.