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Cross Cultural Management: AnInternational Journal

Vol. 15 No. 4, 2008pp. 335-352

# Emerald Group Publishing Limited1352-7606

DOI 10.1108/13527600810914139

From an ethnocentric to ageocentric approach to IHRM

The case of a French multinational company

Maral Muratbekova-TouronInstitut Superieur de Gestion, Paris, France

Abstract

Purpose – The purpose of this paper is to study the case of one French multinational companywhich has undergone a process of radical restructuring and ‘‘internationalization’’ because ofacquisitions of Anglo-Saxon multinational companies. It examines how the organizational changesinfluenced the company’s approach to the international human resource management (IHRM).Design/methodology/approach – The methodology of this research is the single case study.Sources of evidences are direct participation and observation, interviews with top managers, anddocumentation.Findings – The results show that the ethnocentric model, when French managers were placed on thetop of the foreign subsidiaries, becomes non-efficient in the company which doubled its size and thegeographical spread of its activities. It is argued that the forces of globalization constrained thismultinational company to change from an ethnocentric approach to a geocentric approach to its IHRM.Originality/value – The case demonstrates that national and organizational cultures are importantcontextual factors which influence the company’s approach to its IHRM. The paper outlines theinterconnectedness of globalization and the geocentric approach to the IHRM.

Keywords France, National cultures, International business, Human resource management,Multinational companies, Ethnocentrism

Paper type Case study

IntroductionGlobalization processes during the past decades has led to the development of the largemultinational companies expanding their activities across countries and continents.One of the main issues facing the development of the global companies has alwaysbeen to find the right balance between the local autonomy between subsidiaries andthe control of the corporate headquarters. The objective of this paper is to show howthe acquisitions made by a multinational company influenced its approach to humanresource management. This paper studies the case of one French industrialmultinational company which is under an obligation to change the way in which itdeals with global integration – local adaptation dilemma. For the sake ofconfidentiality a pseudo-name of Lemma is chosen for this enterprise.

The Lemma group, a world leader in its domain, has expanded rapidly over the pastseveral years due to its growth-by-acquisition strategy. The group doubled its size,workforce, sales, and net income as a result of the acquisition of the Anglo-Saxonmultinational companies in the late 1990s and in the beginning of 2000s. Thus, it added30 new countries to its operating base. The Group underwent major restructuring inthe end of the 1990s. The organization of the company by Divisions broke away from ahighly centralized approach to authority and established a decentralized structureheaded by the Corporate Centre.

The ethnocentric model, when French managers were placed on the top of theforeign subsidiaries, becomes non-efficient in the organization which doubled its sizeand the geographical spread of its activities.

The current issue and full text archive of this journal is available atwww.emeraldinsight.com/1352-7606.htm

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Research propositionsAccording to the scholars (Schuler et al., 2002; Sparrow et al., 2004), in order tocomprehend the international human resource management (IHRM), one should avoidits contextual isolation. IHRM policies and practices are influenced by the company’sstructure and strategy; its institutional and cultural environments (Ngo et al., 1998;Schuler and Rogovsky, 1998; Schuler et al., 2002; Sparrow et al., 2004). National cultureand the country of origin of the MNE influence HRM policies and practices (Ngo et al.,1998).

Under the assumption of a strong link between national and organizational culturesdeveloped by different scholars (Laurent, 1983; Hofstede, 1991; Adler andBartholomew, 1992 and others), the propositions regarding the organizational cultureof Lemma should be formulated taking into account dimensions proper to the Frenchbusiness culture. These research propositions on the Lemma culture will help todevelop the proposition related to the IHRM approach.

Cultural categorization studies have been largely criticized for being simplistic andmethodologically limited (e.g. D’Iribarne, 1996-1997; McSweeney, 2002; Brock, 2005).However, some cultural dimensions proved to be useful since they are easy tocommunicate, they show validity, ‘‘they are at the right level between generality anddetail; they establish a link among individual, organizational, and societal phenomena’’(Aycan, 2005, p. 1085). In the absence of a better way, the scholars continue to useHofstede dimensions to compare cultures which remain the most complete comparativeempirical research with at least some dimensions found to have predictive ability (e.g.Brock, 2005).

Famous research by D’Iribarne (1989) describes ‘‘the logic of honor’’ or ‘‘the rationaleof honor’’ that reigns in French society. The principle of the logic of honor is based onstatus or rank. The fact of belonging to one’s rank is determined by tradition rather thanimposed by the group. Thus, honor is defined by tradition, neither by law nor by reason.It is tradition that defines what kind of work should be done by different social groups.

Concerning the dimension of hierarchy, France is considered as a large ‘‘powerdistance’’ country, where there is considerable dependence of subordinates on bosses.According to Hofstede’s (1991) conclusions, France has a rather high Power DistanceIndex. D’Iribarne (1989) writes about traditional existing images of French hierarchy:centralization and a respected distance between superior and subordinate. Barsouxand Lawrence (1991) assert that France has a long tradition of hierarchical rigidity,respect for authority, and centralization. According to them, French companies arehighly hierarchical with the President-Directeur-General (PDG) at the head. Accordingto Hall and Hall (1990), French managers have a reputation to be tough bosses with atendency toward autocratic behavior. They are preoccupied with status, rank, andformality, and they are indifferent to the needs of their employees. Laurent (1986)observes that French managers perceive the organization as an authority network(p. 96): the hierarchical position gives power to its holder. Thus, mastering the powerrelationships is crucial for managers.

Hofstede’s (1991) findings concerning masculinity and femininity place France on35/36 position (among 53 countries). Thus, France has a rather moderate feminineculture where tender, non-aggressive behavior for both women and men is appreciated.Compromise and negotiation, rather than a good fight or even physical violence, are themethods for conflict resolution.

As far as uncertainty avoidance is concerned, French culture is found to be ratherstrongly oriented toward the high level of uncertainty avoidance (Hofstede, 1991).

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It means that French culture is characterized by the existence of many rules regulatingthe duties and rights of workers.

Hofstede’s findings concerning the dimension of masculinity/femininity anduncertainty avoidance are contested by D’Iribarne (1996-1997). The questionnairecharacteristics and the way it is interpreted are criticized by the partisan ofethnographic research.

France could be considered as a particularistic (comparing to Anglo-Saxon) culturewhere task prevails over relationships. There is a specific network of graduates fromthe Grandes Ecoles which plays a significant role in the government and businessstructure of France. People at the top levels are mostly people of this elite group ofgraduates who maintain school ties after graduation (Hall and Hall, 1990). Roussillonand Bournois (2002, p. 52) argue in the same vein: ‘‘The French social system ischaracterized by the importance that it attaches to its elite. . .’’ Therefore, whenspeaking about French culture, one has to keep in mind its particularistic nature.Personal contacts are extremely important in doing business. In addition, Hall and Hall(1990), in their comparative study of French, German, and American cultures, mentionthe importance of not only professional, but social connections also: they point out thatit is possible to find a general director of a company who obtained his position throughmarriage or connections. D’Iribarne (1989) highlights the fact that informal relationshold a significant place in French management practice. It is very important for peopleto ‘‘have contacts’’. To achieve a high level of professional cooperation, one needspositive relations. The importance of connections extends to the close long-termrelationships between salespeople and their customers, for example (Hall and Hall,1990).

In comparison with the German and American business cultures, France isconsidered as high-context (Hall and Hall, 1990). It is a high-context culture becauseinformation does not flow freely; subordinates often do not have all the necessaryinformation from their bosses. Implicit rather than explicit communication is valued inFrench organizations (Hall and Hall, 1990). D’Iribarne (1991) also emphasizes thischaracteristic of French organizations by referring to their ‘‘opacity’’. As stated by thescholar, the life of French enterprises is concerned by a significant difference between‘‘official’’ and ‘‘officious’’ (D’Iribarne, 1991, p. 100). Franck (2000), in his comparison ofAmerican and French styles of management, states that the way meetings areconducted is linked to the context creation and information exchange for Frenchmanagers. And they are the place of concrete confrontation and decision taking forAmericans. Thus, French business culture can be considered as a high-context culture.

Thus, the main features of the French business culture, which are examined andconfirmed by different scholars, are:

. high respect for authority (Laurent, 1986; Hall and Hall, 1990; Barsoux andLawrence, 1991; Hofstede, 1991);

. particularism (D’Iribarne, 1989; Hall and Hall, 1990; Roussillon and Bournois,2002); and

. high-context (Hall and Hall, 1990; D’Iribarne, 1991).

Before the acquisition of two Anglo-Saxon companies, the organizational culture ofLemma, which was strongly influenced by the French national culture, could bedescribed as particularistic and high-context, with a high respect for authority. In thisperspective, the following research propositions are formulated as following.

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P1a. The Lemma organizational culture is characterized by a high respect forauthority.

P1b. The Lemma organizational culture is a particularistic culture.

P1c. The Lemma organizational culture is a high-context culture.

Setting up the context of the organizational culture of Lemma makes it possible todevelop the research proposition regarding the company’s IHRM approach and the wayin which it deals with global integration – the local adaptation dilemma.

According to Ferner and Quintanilla (1998), French enterprises underwent majorrestructuring in the 1990s because of globalization processes. As the company’sstrategy and structure influence its approach to IHRM (Dowling and Schuler, 1990), therestructured multinational enterprises are under an obligation to change theirapproach to their IHRM.

It is claimed that the acquisitions of two Anglo-Saxon multinational companiesinfluenced the organization and structure of the Lemma group, and therefore its IHRMapproach. Taking into consideration high-context and the particularistic nature of theLemma culture postulated above, the socialization methods of the company correspondto the ethnocentric approach to its IHRM. Before the acquisitions Lemma had a highlycentralized organization with French managers occupying the key positions of thecompany. It is argued that this ethnocentric approach does not correspond to itsmodified needs anymore. In view of the significant increase in size, the company willnot have enough expatriates to staff foreign subsidiaries. The reorganization intodivisions changes the orientation: the global integration favored in the ethnocentricapproach has to be balanced by local responsiveness.

Another consequence of the acquisitions regards the origins of integrated companies.According to Bartlett and Ghoshal (1989), the Anglo-Saxon enterprises preferformalization as a process to manage global integration – the local adaptation dilemma.The formal systems and policies play the role of the common language shared by allmanagers. The scholars also argue that European companies favor socialization as a wayof coordination (Bartlett and Ghoshal, 1989). Socialization is based on the managers’understanding of the company’s objectives and solid personal relationships. It wasassumed above that Lemma has particularistic and high-context culture, which is inconcordance with the arguments of Bartlett and Ghoshal (1989). Therefore, it ishypothesized that by integrating the Anglo-Saxon companies, Lemma faces the necessityof choosing more formalized procedures and rules that are legitimate in all subsidiaries.

Thus, Lemma deals with the dilemma of how to think globally and act locally. Ageocentric approach to IHRM is considered to be the best way to deal with globalintegration – local adaptation dilemma by different scholars (Bartlett and Ghoshal,1988; Adler and Bartholomew, 1992; Kamoche, 1996). According to Caligiuri and Stroh(1995), this approach makes it possible to balance between the conflicting priorities ofglobal integration and local responsiveness. Thus, it is argued that the acquisitions ofAnglo-Saxon companies by Lemma necessitate the choice of a geocentric approach toits IHRM in order to manage the dilemma. This discussion leads to the development ofthe following proposition.

P2. The forces of globalization (the acquisitions) constrain Lemma to change froman ethnocentric approach to a geocentric approach to its IHRM.

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MethodologyThe methodology of this research is based on the single case study (Yin, 1993). Themost important source of evidence for this research is direct participation andobservation. I served as a part-time employee of Lemma for three years. While workingfor the group, any member of the organization has his/her own perception of themanagement culture. This close proximity could be considered as a shortcoming or abias for the researcher; however, it allowed me to have a deeper understanding of theprocesses occurring in the organization. Working for Lemma also allowed me to followits rituals, traditions, and everyday habits. Participating in informal organizationalevents and talking to employees is the informal aspect of direct observation. And themost important part is the job itself: my everyday tasks regarded different HR projects.

Interviews, which are another significant source of case study evidence of thisresearch, were conducted with the help of an adaptation of the ‘‘critical incidenttechnique’’ developed by Flanagan (1954). Critical incidents are characteristics of theLemma organizational culture considered as typical or fundamental by the interviewedmanagers. In other words, a critical incident is an event or behavior described bymanagers that helps to define the cultural dimensions of the Group. Where applicable,critical incidents are categorized into the existing cultural dimensions developed byAdler (1986), Hall and Hall (1990), Hofstede (1991), Trompenaars and Hampden-Turner(1998), and others. All items are inserted in table, which lists each category (culturaldimension).

By defining the largest critical incident categories, the method allows determiningthe key cultural dimensions of Lemma. The levels of frequency of critical incidents’emerging or the sizes of each category are classified following the quarterly percentinterval. The intervals and their coding are presented in Table I.

In total, 24 semi-structured interviews were conducted with managers of Lemma,which were chosen from the list of 700 top managers. In addition, one interview wasconducted with an external consultant who contributed to the development of thecompetency-based leadership model at Lemma. Interviews lasted from 40 min to 2 h.The interviews were conducted in French and English. I have tried to provide diversityregarding the functional positions and nationalities of managers taking into accountgeographical constraints that reduced the possibility to speak to managers locating incountries other than France and who could not come to Paris for the interviews.Nevertheless, three interviews were conducted by telephone with the managersworking for business units locating in Turkey, Chili, and Greece.

Table I.Level of critical incidents

frequency

Interval (%) Frequency of emerging Coding

0-24 Low The cultural dimension is insignificant for the Lemmamanagers

25-49 Moderate The cultural dimension is moderately significant forthe Lemma managers

50-74 High The cultural dimension is significant for the Lemmamanagers

75-100 Very high The cultural dimension is highly significant for theLemma managers

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With no surprise, ten of the interviewed managers are French as Lemma preferred tosend French expatriates to foreign business units recent time. Other interviewedmanagers are from European countries (Belgium, Germany, Italy, and England),Canada, and theUSA. Half of the interviewed managers are from Human ResourcesDepartments; other departments include General Management, Strategy, Finance, andPerformance.

For the sake of confidentiality and managers’ feeling of protection, anonymity of allinterviews is provided. While quoting interviewed managers, only their function ismentioned in order to preserve the anonymity. Consulting company is not named forthe same reasons. Divisions and corporate headquarters were referenced as divisionsfollowed by the numbers. Table II gives some details on the profile of the interviewees.

Documentation was also used as a source of case study evidence. The archivaldocuments including the letters of the CEO, annual reports, and HR brochures werehelpful to understand the HR policies and procedures developed by the organization inthe past.

Before going deeper into discussions about the organizational and cultural changeswithin the group, it would be worth describing the origins of the Lemma culture and itsmain characteristics prior to the major acquisitions.

Organizational culture of Lemma prior to acquisitionsThe critical incidents regarding the cultural dimensions of Lemma were gatheredduring a series of interviews with the group’s organizational managers. As described in

Table II.Profile of theinterviewees

Number Function DivisionSeniority in thecompany

Interviewmethod

1 HR Division 5 Less than 3 years Direct2 HR Division 5 More than 10 years Direct3 General Division 2 More than 10 years Direct4 HR Director Group More than 10 years Direct5 General Division 2 More than 10 years Direct6 HR Division 3 5-10 years Direct7 General Division 1 Less than 3 years Direct8 Strategy Division 2 More than 10 years Direct9 HR North American activities More than 10 years Direct

10 Country Manager Division 1 More than 10 years Telephone11 Finance Division 5 More than 10 years Direct12 Marketing Division 5 5-10 years Direct13 Consultant Consulting company Direct14 Country Manager Division 1 More than 10 years Telephone15 General Manager Division 1 Less than 3 years Direct16 Country Manager Division 1 More than 10 yeas Telephone17 HR Division 5 3-5 years Direct18 Performance Manager Division 2 More than 10 years Direct19 Performance Manager Division 2 More than 10 years Direct20 HR Division 5 5-10 years Direct21 General Manager Division 2 More than 10 years Direct22 HR Division 1 More than 10 years Direct23 HR Division 5 3-5 years Direct24 HR Division 5 More than 10 years Direct25 HR Division 2 More than 10 years Direct

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the methodology section of this paper, critical incidents are features of the Lemmaorganizational culture considered as typical or fundamental by the interviewedmanagers. For example, the following quotation of one of the interviewees wasclassified as an incident related to the particularistic nature of the Lemma culture.

It is a ‘‘personal’’ culture. Interpersonal relations are more important than organization. Theylook for personal arrangements; problems are solved only through direct contacts (StrategyManager, Division 2).

Numerous incidents described by the same manager but relating to one culturaldimension are counted as one critical incident. The critical incidents are summarized inTable III.

Four categories – ‘‘dominance of French’’, ‘‘consensus’’, ‘‘Christian culture’’, and‘‘weak human resource management’’ – are by no means new cultural dimensions.These categories are developed during the collection of data. They are separated intodistinct columns because they were judged as necessary in order to give a morecomplete picture of the organizational culture of Lemma prior to the acquisitions made.

According to the results obtained, the cultural dimensions ‘‘particularism/universalism’’, ‘‘femininity/masculinity’’, ‘‘hierarchy’’, and ‘‘high/low context’’ have ahigh or very high level of frequency. In relation to the gathered data, one can describeLemma’s culture as a particularistic, feminine and high-context culture with a highrespect for authority. Thus, propositions 1a, 1b, and 1c are corroborated.

Another proposition concerning the femininity/masculinity dimension can be madebecause the size of this category is the highest among all categories (88 per cent). Thecritical incidents related to this dimension (‘‘humanism’’, ‘‘respect for people’’,‘‘exceptional quality of relationships in the company’’, ‘‘family relationships’’, etc.) willbe described in the course of this paper. The absolute majority of the managersinterviewed emphasized the ‘‘humanistic’’ nature of the Lemma culture. One can statethat the Lemma organizational culture is a feminine culture. The proposition istherefore formulated as follows.

P1d. The Lemma organizational culture is a feminine culture.

But before delving deeper into the description of these dimensions, I propose to paycloser attention to the French origins of Lemma, which are extremely important inunderstanding its culture. Despite the moderate level of frequency emerging for the‘‘importance of the French language’’ and the ‘‘dominance of French managers’’, thesetwo issues will be briefly described in the following part of this paper in order to bettercomprehend the group’s organizational procedures.

French originsThe origins of the Lemma culture are perceived as lying deeply in French culture. TheFrench language and culture are still the key building blocks of the internal reality ofLemma. According to the Lemma managers, the Frenchness of Lemma is representedby two factors: the predominance of French among executives and the use of French asthe company’s official language.

The first factor concerns the top management of Lemma which is dominated byFrench managers.

Lemma culture is still French culture. What does it mean? First of all, it means – managed byFrench. . . (General Manager, Division 1).

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Table III.Critical incidents:dimensions of theLemma organizationalculture

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While French employees represent only 12 per cent of Lemma’s workforce, they occupy45 per cent of the top management positions. And the members of executive committee(as the interviewee points out below) are almost all French.

Lemma culture is really French. Today it is even more French than ever. The best way to see itis to look at the executives. 90 per cent of them are French. . . The only way to change it is tochange the executives. They have to do it by representation. For example, one-third of thegroup is North American. Therefore, about one third of executives should be North American(General Manager, Division 2).

Adler and Bartholomew (1992) argue that in order for a transnational human resourcesystem to be effective, one of its characteristics should be transnational representation.This means a multinational composition of the managers and executives of theorganization: ‘‘the firm’s portfolio of key executives and managers should be asmultinational as its world-wide distribution of production, finance, sales and profits’’(Adler and Bartholomew, 1992, p. 55). Obviously, transnational representation is notyet the case at Lemma. The absolute majority of the Executive Committee is made upof French or French-speaking (French as native language) executives.

The second aspect of Frenchness at Lemma is the use of the French language. Thefact that the French language remains one of the official languages of the companycommunicates to all organizational members the importance accorded to thecompany’s French origins. It also means that those managers who do not master theFrench language are not admitted to the highest executive positions as they are notable to participate in team decision making.

This willingness to keep French language as one of the official languages of theGroup is not always welcomed by new arrivals.

Two official languages cost a lot. Translation, verification of coherence – it is highly costly. Inaddition, if you work in Paris, you have to make efforts to speak French. The organization isnot international yet (General Manager, Division 5).

Thus, it is argued that the Lemma organizational culture is considered by themanagers as being based in French culture. Despite the moderate level of frequencyemerging regarding this issue, it is an important characteristic to be taken intoconsideration in trying to fully understand the Lemma culture.

The following parts of this paper are devoted to the description of the culturaldimensions which are significant for the interviewed managers.

FemininityThis cultural dimension, related to the ‘‘femininity vs masculinity’’ dimensiondeveloped by Hofstede (1991), has the highest level of frequency of critical incidents: 88per cent of the interviewed managers highlight the ‘‘humanistic’’ side of theorganizational culture. What does this mean for them? ‘‘Humanism’’ is deciphered as‘‘respect for people’’ at Lemma.

Respect for people is still a reality at Lemma. The quality of relationships is exceptional (HRManager, Division 5).

The Lemma managers appreciate the human atmosphere of their group; for them it is acompany where people want to work.

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At Lemma. . .it is a softer approach than in US companies. Advantages of such culture are theability to call for help and mutual support. If you need help in different countries in differentdivisions, usually it is OK (General Manager, Division 3).

The organization with its exceptional ‘‘humanistic’’ culture is known for a lowturnover: employees remain within the Group a long time. Some managers describetheir company in words more fitting family relations.

One enters Lemma as one used to enter a convent: one comes and never leaves Lemma. It waslike this in industries also: it was the business from father to son with family attachments(Country Manager, Division 1).

Another aspect of the femininity of Lemma culture is certainly management byconsensus. As stated by Hofstede (1991), the members of feminine cultures prefer acompromise to a confrontation; they prefer pleasant methods of conflict resolving. Thetendency of the Lemma managers to come to a decision through consensusdemonstrates the feminine nature of the organization.

We really worked by consensus before . . . we did not move without consensus (CountryManager, Division 1).

High respect for authorityAccording to the gathered data, the ‘‘hierarchy’’ dimension is significant for Lemmamanagers. Fifty-six per cent of the interviewees state that the Lemma organizationalculture is characterized by a high respect for authority.

Managers of the company describe its culture as a culture where the distancebetween superior and subordinates is well maintained and authority is respected.

It is an autocratic culture. . . There is a high respect for authority. People dispute authoritymore in North America. Somebody who comes from North America gets a cultural shock inFrance. For example, if you do not understand or do not agree with a decision taken by yourboss, you question it. In France, you follow . . . (General Manager, Division 2).

ParticularismThe Lemma managers consider the organizational culture of their company as beingparticularistic. Sixty per cent of the interviewees emphasize the importance of thisdimension at Lemma. Before acquiring two Anglo-Saxon multinational companies, itwas a company where managers gave their priorities to interpersonal relationships inthe construction of their careers.

In the past, new arrivals were put in contact with existing staff. That’s how they learnedabout Lemma behavior (Country Manager, Division 1).

The interviewed managers state that ‘‘everything is built on the system of networking’’(General Manager, Division 1). It was and still is the force of Lemma: Lemma works bycreating networks of people.

The high level of manager rotation across the different business units in differentcountries contributes to the reinforcement of the network. However, networking has itsnegative sides. It is extremely difficult for managers who are out of seraglio to join theorganization. The following statements of the interviewed managers show a commonunease among newcomers:

If you are not French and not an existing Lemma staff member, it is difficult for new arrivalsto enter the circle of confidence. It is the characteristic of the French culture. It is more difficult

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to fire an existing Lemma manager than somebody in foreign parts of Lemma (GeneralManager, Division 5).

Today, homogeneity is very strong in the Group. It is close to ‘‘consanguinity’’. Of course, theytry to recruit people with different profiles; however, they do not care to make efforts tointegrate them in the Group (General Manager, Division 1).

The informal mechanisms of networking rule the selection processes. Thesemechanisms are implicit, difficult to identify and therefore extremely frustrating fornew comers.

High-contextAccording to the gathered data, the high-context nature of the organizational culture issignificant for Lemma managers. Fifty-two per cent of the interviewed managers referto the importance of this dimension:

It is a culture based on a failure of expression (non-dit) at Lemma. Little is formalized (HRManager, Division 5).

At Lemma, we do not like formal procedures, formal organization. It is difficult to understandthe organization. We need to simplify things; we should not read between lines. We shouldclarify a lot (Strategy Manager, Division 2).

Franck (2000) states that American managers experience great difficulties inunderstanding the functioning of French enterprises. For them, the relationshipsmechanisms and decisions processes are less transparent in France than in NorthAmerica. We have seen that this affirmation may be easily generalized to individualswith Anglo-Saxon values. They would prefer to have a more formalized method ofcommunication. While being expatriated to work at the Corporate Center in Paris, theyoften feel uncomfortable with this unwritten debrouillez-vous (sort it out yourself) rulethat reigns at Lemma.

I spent hours in meetings without any agenda. I know from others that it was frustrating forthem also. . . In American companies, it is quick to understand organization: who decideswhat. Lemma has a confusing structure and unnecessarily complicated and slow decisionmaking (HR Manager, Division 3).

Thus, one can describe the Lemma culture before acquisitions as high-context, wherethere were failures to express things and where communication processes were implicitand not formalized.

The Lemma paradigm prior to acquisitionsAccording to Schein (1992), the essence of culture or its paradigm can only beunderstood if the basic cultural dimensions and their interrelationships are decipheredand explained. While analyzing the Lemma organizational culture, I have attempted todiscover these basic underlying assumptions and the interrelationships that they couldhave. Figure 1 presents the Lemma paradigm before the acquisitions. It is not arguedthat this paradigm covers all subtleties of such a complex phenomenon as anorganizational culture; any schematic representation of organizational culture isreductive in nature. However, it is believed that it helps us to understand the essentialaspects of the Lemma culture.

It is incontestable that Lemma had a remarkable organizational culture valued bythe former company managers.

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Changes in the Lemma organizational cultureTwo major acquisitions of Anglo-Saxon multinational companies have significantlyinfluenced Lemma. The critical incidents regarding the changes in the company’sculture and gathered during the interviews are summarized in the Table IV.

Three categories have a high level of frequency emerging: efficiency values,formalization, and size. This level of frequency allows us to confirm the argumentsdeveloped in the theoretical part of this paper.

First, it was supposed that the increase in size as a consequence of the acquisitionswould induce changes in the organizational culture of Lemma, and therefore in theIHRM approach of the company.

Second, it was argued that the Anglo-Saxon origin of the acquired companies wouldplay a significant role in the choice of the IHRM and in the way in which the dilemma ofglobal integration and local adaptation would be managed. It was supposed thatLemma, which had a high-context and particularistic culture, would be under anobligation to choose more formalized methods of management to fit the preferences ofAnglo-Saxon companies.

During the data collection, it was seen that another aspect of the Anglo-Saxon wayof management – efficiency values – is an important change factor taken intoconsideration by Lemma managers.

The other two categories presented in the table concern critical incidents on the‘‘appearance of the new profile managers’’ and ‘‘time’’ issues. The percentage offrequency of the ‘‘time’’ category (44 per cent) being close to the threshold of 50 per centis judged significant for Lemma managers. The category ‘‘appearance of the newprofile managers’’ is explained to facilitate better comprehension of the changesoccurring in the company.

The results of the collected data allow a validation of P2 stating that Lemma isunder the obligation to change its approach to IHRM from an ethnocentric to ageocentric one. The proposition is schematized in Figure 2. ‘‘Time’’ category is framedby a dotted line because the moderate level of frequency emerging does not allowformal deduction. However, taking into account its proximity to the high level, thecategory is presented in the figure.

Figure 1.The pre-acquisitionLemma paradigm

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Thus, acquisitions lead to three different kinds of pressure on the Lemmaorganizational culture: Anglo-Saxon influence – formalization and efficiency values;the changed size of the company; and time problematic. They are described below inorder to better understand Figure 2.

Anglo-Saxon valuesEfficiency valuesAs described by the interviewed managers, the Lemma culture had the traits of aheavy industry culture: long time, priorities given to cost management and strategicplanning, the market and the client being secondary. The acquisitions have broughtAnglo-Saxon values of short-term efficiency to Lemma. Sixty per cent of theinterviewed managers indicate the appearance of new efficiency values at Lemma.

The Lemma system has implicitly favored the informal mechanisms of managers’selection due to a strong network. The new arrivals, the Anglo-Saxon managers,criticize such a ‘‘social’’ performance as they call it. They believe that results are nottaken into account when managers’ promotions are being decided. This is why theyclaim the importance of economic performance indicators. For the ‘‘outsiders’’, it is theonly chance to break a wall protecting a strong network and to be promoted.Apparently, new points of reference become important for Lemma: result- andperformance-orientations.

Table IV.Critical incidents:

changes in the Lemmaorganizational culture

Number allocated tomanager/change factors

Appearance of newprofile leaders Efficiency values Formalization Size Time

1 � � �2 � � �34 � � � � �5 �6 � � � �7 � � � �8 � �9 � � � �

10 � � �11 �12 � � � �13 � �14 � � �15 � � �1617 � �18 � � � �19 � � �20 � �21 � � �22 � � �2324 � �25 � �Frequency 8 15 15 14 11% 32 60 60 56 44Level of frequency Moderate High High High Moderate

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Now, Lemma is changing. . . It is a more performance-oriented culture. . .the former culturehas to change from just being nice and intelligent: it is not enough to run the business (HRManager, North American activities).

These efficiency values considered by the interviewed managers as Anglo-Saxonvalues influence the organizational culture of the company. Another Anglo-Saxonvalue – formalization, which also has an effect on the Lemma culture, is describedfurther.

FormalizationAccording to the frequency percentage of critical incidents (60 per cent), theformalization matter is significant for Lemma managers. The interviewed managersrecognize the necessity to formalize in order to cope with structural changes in theorganization.

The ‘‘ancient’’ managers understand that the company’s high-context andparticularistic culture, despite its highly appreciated advantages, has the significantdisadvantage of being ambiguous.

Lemma is experiencing a cultural evolution. Yesterday, the way in which it functioned variedaccording to each small group. A disadvantage of this method is that it was vague, not clear(HR Manager, Division 5).

The willingness to formalize is clearly expressed by Lemma managers. Thus, the highlevel of critical incidents’ frequency emerging allows us to argue that the acquisitionsinduced the need for formalization at Lemma.

Another aspect of changes generated by the acquisitions concerns the appearanceof new profile managers.

Figure 2.Necessity to change theIHRM approach

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Appearance of new profile managersEven though the level of frequency emerging for this category is moderate, it isnecessary to describe what Lemma managers think about the changes regarding theparticularistic dimension of their culture. According to 32 per cent of the interviewedmanagers, Lemma is making efforts to open its networks.

The process of ‘‘Anglo-Saxonization’’, meaning the process of searching for moreinternationalized companies from the Anglo-Saxon world (Ferner and Quintanilla,1998), brings constraints to the way in which management used to be practiced byLemma. To lead the ‘‘internationalization’’ process, managers who do not conform tothe stereotype of the Lemma manager – French engineer from a ‘‘Grande Ecole’’ – arebeginning to be recruited and appointed to key roles in the Corporate Center and seniorposts in operations abroad. One can notice changes in staffing policies of Lemma.

Now, overall, the Lemma culture is result-oriented and performance-oriented. If you achieveresults, the Group takes notes of that. I am an example of that. I worked in different countries,I changed different jobs, different businesses. This year they appointed me as CEO of acountry. Lemma has been in my country for 11-12 years. This is the first time a local managerhas been head. They never trusted us before, they always sent French expatriates. My caseproves that Lemma is changing. The appointment of a non-French manager at the head of abusiness unit outside France was not possible ten years ago. Today, I am at the top and I amvery glad that my qualities were recognized (Country Manager, Division 1).

The acquisition of Anglo-Saxon multinationals brings different cultural values to thecompany.

With acquisitions, we have another profile of leaders. They are active: they do not askpermission to proceed. They are efficient, they show results. They come from another culture,the culture of factual demonstration (HR Manager, Division 5).

Thus, one can observe a tendency toward a universalistic approach in theorganizational culture of Lemma. This tendency is reinforced by the increase in thecompany’s size.

SizeAnother important factor influencing the culture of Lemma is obviously size. Asignificant increase in size obliges the company to change its previous style ofmanaging by network. Fifty-six per cent of the interviewed managers emphasize theweight of this factor in the organizational culture of Lemma.

‘‘Size changes culture’’ – this comment by a HR manager (North American activities)describes the process of changes in the Group. Lemma’s operational methods wereadapted to a small-sized company: managing by network. However, with an importantincrease in the company’s size, it became impossible to continue a close follow-up ofmanagers. The particularistic nature of the Lemma culture causes difficulties with theshift to the new dimensions of the group.

Size says . . . it cannot allow informal relations of such a scale. It is impossible to follow morethan one thousand people personally (HR Manager, North America).

The geometry of the Group is increasing. It is not easy to develop networks. And if you haveno network, you are stuck (Country Manager, Division 1).

Changes in size bring difficulties in staffing also. There is a need for more contributionfrom potential leaders.

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It was good when you are small and you have a fantastic management team, but if thecompany becomes larger, middle management has to be more involved (General Manager,Division 1).

TimeTaking into account the particularistic and high-context nature of the Lemma culture,it is not surprising that managers needed time in order to create their network and gainthe confidence of the ‘‘ancient’’ Lemma managers. Functional and geographicalmobility contributed a lot to such socialization processes, which need time to beefficient.

You spend more time building relationships at Lemma than in companies of Anglo-Saxonculture. In American companies, you can be introduced to people during meetings and youmay immediately discuss and take decisions without knowing people. At Lemma, you have toinvest time in building a network; business comes later (HR Manager, Division 3).

With the arrival of newcomers, the time issue emerges. Managers of acquired entitiesshould understand the group’s operational methods as quickly as possible. Timebecomes precious for the integration of newcomers.

Lemma was always excellent in the development of its leaders using international andfunctional mobility. As we know that people learn 80% of what they know on the job, movingmanagers from one position to another was an ideal means for their career development. Butnow, in the world today, we need to develop more formal training that allows people to learnfaster. Of course, we will keep our former methods as well. New arrivals do not have the samenotion of time as us . . . we do not have 5 or 10 years to integrate people (HR Director of theGroup).

The time issue is judged as an important aspect of change regardless of theimpossibility of formally validating this statement. However, as was argued before, thefrequency percentage of this category (44 per cent) illustrates its relative significance.

ConclusionsThe Lemma Group underwent a process of radical restructuring and‘‘internationalization’’ in the last decade of the previous century. The ethnocentricmodel, when French managers were placed on the top of the foreign subsidiaries,became non-efficient. While increasing the size and the geographical spread of itsactivities, Lemma faces all the problems of ‘‘internationalization’’. The new arrivalsbring new assumptions to the organization.

The Lemma organizational culture prior to the acquisitions had features associatedwith the French way of management: high respect for authority, high-context, andparticularism. Certain cultural dimensions proper to the Anglo-Saxon business cultureare of an opposing nature: low context (more explicit and formalized) and universalism.Thus, by acquiring Anglo-Saxon companies, Lemma challenges the organizationalchanges due to integration issues.

The case of the Lemma group demonstrated that national culture influences theorganizational culture of the company. It has also been explained that theorganizational culture, in turn, determines the way in which IHRM is organized. Thus,the organizational culture of the multinational company is an important contextualfactor influencing its IHRM approach. It has been demonstrated that the high-contextand particularistic culture of Lemma prior to the acquisitions favored an ethnocentricapproach to IHRM: French expatriates constituted a strong informal network. It has

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been argued that the organizational culture of Lemma is experiencing changes. Thesechange factors necessitate more formalized and standardized practices regardingleadership development, global recruitment, and uniform selection which correspondto a geocentric approach to IHRM.

The case studied in this paper outlines the interconnectedness of globalization andthe geocentric approach to the IHRM. It provides an empirical confirmation of theproposal that geocentric approach to IHRM is the best way to deal with the globalintegration – local adaptation dilemma (Bartlett and Ghoshal, 1988; Adler andBartholomew, 1992; Kamoche, 1996; Caligiuri and Stroh, 1995). However, the study hasits limitations in that it was assumed and demonstrated that the origins of the acquiredand acquiring companies (French and Anglo-Saxon in the present study) influence theway how the acquired company copes with the dilemma. Future research consideringcompanies with different origins (e.g. French and Chinese; German and Japanese;Chinese and Kazakhstani) may propose different conclusions.

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About the authorMaral Muratbekova-Touron is Professor of Human Resource Management and OrganizationalBehavior at Institut Superieur de Gestion (ISG), Paris, France. She received her PhD in HumanResource Management from HEC Business School in Paris. Her research interests lie in the areaof intercultural management, organizational culture, and leadership development. She can becontacted at: maral.muratbekova@isg.fr

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