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Executive Summary

The aim of this report was to examine and discuss how culture may influence human behavior and organizational culture. The scope of this report focuses on how South Korean culture has influence Samsung Electronics organizational culture. South Korean culture is characterized as collectivist culture in accordance with the Hofstede’s Dimensions of Culture as a result Samsung used to employ a hierarchical system of leadership and a top-down decision making model before making key changes owing to global pressures and forces. In response to global competition and the ambition to dominate the global market, Samsung has abolished the hierarchical model in favor of a system in which employees are compensated or paid based on performance and merit rather than on seniority. Key recommendations generated from this report include proper alignment of organizational culture with national and lean manufacturing practices with intent of improving organizational performance, competiveness, ability to attract and retain talent, and to ensure sustainability in a competitive global market.

Introduction

The aim of this report is to explore and discuss the impact of culture on human behavior and on organizational culture. Culture is defined as the manner in which people speak, perceive, think, and behave. Culture may also be used to describe the way in which shared understanding of meaning can be generated or the general operating norms in a given environment (Rani et al. 2016, 606). The scope of this report includes analysis of how South Korean culture impacts on Samsung Electronics. Samsung was founded by Lee Byung-Chul as a small trading company in 1938 in Su-dong, which is neighboring Daegu city, in South Korea. The Company began with 40 employees. Its major trade at the time was in production and distribution of groceries within the Daegu city. In 1947, Lee started a successful sugar refinery and in 1954 he founded the largest woolen mill industry in South Korea, which was situated in the suburbs of Daegu city. From 1954 onwards, Lee ventured into different sectors including securities, retail, and insurance. Lee was a pro-industrialist and his vision was to transform Samsung Group into a leader in almost all the sectors. In the 1960s, Samsung ventured into the electronic industry, a step that transformed it into a global success and a giant in the global electronic market. Samsung’s first electronic product to be released into the market was a black and white television set. Currently, Samsung has six divisions that center on different products such as telecommunications, semiconductors, hardware and so on (Rani et al. 2016, 605). Samsung culture has been influenced a to a large extend by the South Korean collectivist culture; however, the organization has changed its leadership and management culture to gain more ground and increased penetration effect in the global market.

Literature Review

South Korea National Culture based on Hofstede’s Dimensions of Culture

            South Korea is a distinct collectivist society. Korean culture is influenced by Confucianism philosophy, which is a belief that human beings are improvable via moral action and cultivation, and that in a collective manner, a harmonious society can be fashioned when all members accomplish certain obligations (Cho, Mallinckrodt, and Yune 2010, 83). Collectivism cultural values emphasize harmony, filial devotion, and willingness to sacrifice for the benefit of the group (Cho et al. 2010, 83). It is characterized by relative ethnic homogeneity. Shared norms tend to constrain behavior and emphasis on woori (or the sense of ‘we’) and cheong (or emotional connection) in interpersonal relationships tend to reinforce the importance of emotional relatedness in South Korea (Cho et al. 2010, 82). Koreans tend to identify themselves with an in-group and develop a form of emotional connection to the group (Lee 2012, 186). In consequence, South Korean tends to participate in collaborative activities (Chang et al. 2018, para. 1). However, in the current times South Koreans are experiencing intense push toward individualistic cultural values. According to Hofstede’s Cultural Dimension theory South Korea was ranked as the 43^rd individualistic country in 2001; whereas, the U.S. was the top individualistic country (Cho et al. 2010, 82). Individualistic cultural values put emphasis on competition, self-reliance, individual goals, personal control and autonomy. Hence, South Korea can be conceptualized as a bicultural country; however, collectivistic values are still far more entrenched in the framework of the society than individualistic values (Cho et al. 2010, 82-4). In fact, South Korea is characterized by low individualism score of 18; thus, it is a collectivist rather than individualist society (Self, and Haynes 2011, 42).

Impact of Korean Culture on Samsung’s Decision-Making Approach

            South Korean culture has made Samsung to develop its own company culture (Rani et al. 2016, 606-7). The K-type (Korean-type) management style has been the dominant management style used in Samsung. The K-type management style is characterized by a top-down decision-making approach, clan management, paternalistic leadership, compensation based on merit ranking and seniority, personal loyalty, and high mobility of workers (Rani et al. 2016, 606). South Koreans are sensitive about status and titles (Lee 2012, 186-7). Samsung has been ruled as a hierarchical and authoritarian conglomerate, which mirrors the bureaucratic and imperial system of government of South Korea. The emperor-like power and network strength tend to offer Samsung some form of competitive advantage compared to Western companies that employ’s agile decision-making process and group-wide management (Chang 2012, 1436-7).

The dominant culture in a given country tends to influence the organizational climate. On the other hand, organizational climate may determine the kind of culture that a given organization will adopt (Schneider, Ehrhart, and Macey 2013, 361-3). Influenced by Korean culture, Samsung’s organizational culture has long-been traditionally seniority-oriented. Benefit of this approach includes faster speed of decision making and achievement of higher levels of employee loyalty. However, seniority-oriented organization culture may discourage junior employees from voicing their concerns or communicating their proposed initiatives and/or ideas (Dudovskiy 2019, par. 1).

An organizational culture is based on certain norms and values. Hofstede’s dimensions of the traditional South Korean culture indicate that South Koreans values filial piety, hard work, and modesty. In addition, South Korea is a slightly hierarchical and a collectivist society (Buja 2016, 173-6). On the other hand, South Korea is a feminine society and that managers strive for consensus, people value solidarity, equality, and working life quality. However, South Koreans tend to avoid uncertainties. Punctuality and precision are the norms; people work hard and are always busy (Buja 2016, 171). Bribery is prohibited in Samsung. Samsung put more emphasis on diligence, fairness, and loyalty, as influenced by the South Korean culture (Dudovskiy 2019, par. 3). These norms and values can be influenced by the society or the environment in which a given organization operates (Jahmurataj 2015, 205). Organizational culture entail mission, strategy, leadership, structure and human resource practices. It may also involve the underlying beliefs and assumptions shared by members of an organization and which tend to operate unconsciously (Körner et al. 2015, 1).

Samsung has transformed its organizational culture to meet global demands. Samsung executives have been the champions of change. For example, during Chairman Lee Kun Lee’s speech, in what came to be known as the Frankfurt Declaration of 1993, he emphasized on change by staying that “Change everything but your wife and children” (Rani et al. 2016, 606). Frankfurt Declaration also referred to as New Management Initiative, made the Company to re-evaluate its culture to promote its sustainability in the global business (Rani et al. 2016, 606). Today, Samsung is the global leader in supply of smartphones, memory chips, and televisions. Besides, it is considered as a global leader in display panel manufacturing (Rani et al. 2016, 606).

National Support

Strong national support is regarded as one of the success factors that made Samsung to thrive in South Korea and now in the global market. Samsung enjoy a strong national support. Samsung and Apple had been entangled in a lawsuit over patenting claims. Unlike the U.S. newspapers that kept a neutral stance on the issue, the South Korean newspapers presented the issue in favor of Samsung with a strong nationalistic angle of framing (Lee et al. 2018, 46). Similarly, Samsung employees express a strong sense of nationalistic attitudes since they tend to sacrifice their personal interest with intends of seeing the Company prosper (Dudovskiy 2019, para. 1-2). Samsung’s employees works under enormous stress; regardless they are extremely disciplined (Buja 2016, 172).

Joint Ventures and Transformation in Leadership Styles

            Samsung has engaged in cross-border joint ventures. Volvo-Samsung joint venture is one of the many such ventures that captured global attention. This development occurred with cultural implications. For example, cultural clash was witnessed during the Volvo-Samsung cross-border merger. Abolishment of the seniority pay system dissatisfied South Korean employees but Swedish employees were used to the pay for performance system (Lee et al. 2014). The Company has eliminated its rigid corporate structure by cutting of the internal ranking system to four levels from the previously seven levels. In other words, the seniority-based performance-system has been changed into a four-level career system. The new changes allow all employees to call each other using their English names, a move which have improved communication experience in the organization (Rani et al. 2016).

Implications

Effective cross-cultural communication is vital for multinational companies, such as Samsung in this case, to create a competitive advantage in the global market. Development of an effective internal communication capacity can enable international companies to monitor as well as control external threats. Effective communication across different cultures leads to fulfillment of the company’s mission and gaining of value for the stakeholders (Rani et al. 2016, 606).

An organizational culture determines the interactions between the organizational internal and external environment. Internal environment include aspects such as organizational culture, structure, operations, and strategy; whereas, the external environment may include the market and the legitimization environment (Dauber, Fink, and Yolles 2012). The organizational culture should put in consideration its internal and external environment.

Culture misunderstanding can potentially lead to limitations in efforts aimed at increasing market share and profits. Therefore, organizational culture needs to be designed in accordance to the operating environment since it influences organizational performance. Besides, organizational culture determines whether an organization achieves its objectives or not (Ahmed, and Shafiq 2014, 20-3). In addition, creation of an organizational culture that put more emphasis on commitment, trust, learning processes, and cooperation is associated with reduction of conflicts within an organization, reduced employee turnover and development of respective relations (Larentis, Antonello, and Slongo 2018).

Recommendations

            Organizations, especially multinational ones should put more emphasis on improvement of their organizational culture. Organizational culture is an important factor for determining, organizational performance, innovation output, financial performance, and market value (Zhao, Teng, & Wu, 2018, 1-2). Improvement of the organizational culture requires alignment of the organizational culture in accordance with lean manufacturing practices and the national culture (Taherimashhadi, and Ribas, 2018). Besides, organizational leaders ought to be aware that organizational culture is a key determinant of employer retention and turnover rate. Thus, employees should too be taken into consideration, less the organization loss experienced employees to competitors (Banaszak-Holl et al. 2015, 462). Globalization of the economy has far reaching imperatives. For example, cross-border acquisitions and mergers is common place in the modern society. As such, cultural implications of mergers or acquisitions need to be taken into considerations and associated problems should be addressed to ensure competiveness and global standing of the organization (Lee et al. 2014).

Organizational leaders need to create organizational cultures that take into the consideration the operational environment, employees, competition, and the market. It should be designed in a way that it can meet emotional needs of the workers. Besides, employs should be encouraged to engage actively among each other and to support one another (Elsbach, and Stigliani 2018, 1-2). Relationship between the management and employees are vital for an organization’s success. Organizational leaders ought to ensure that they have put into place a functional, effective, and productive organizational culture. There needs to be an effective and healthy interaction between organizational leaders, managers, and the employees (Elsbach, and Ileana Stigliani 2017, 1-2).

Conclusion

            National culture in which a given organization operates or does its business is a powerful force that will determine its corporate culture. Samsung in this case, has adopted an organizational culture that reflects culture of the South Korean people and the governmental system. South Korea demonstrates a collectivist national culture that draws its values from the Confusion philosophy. The force of globalization has forced Samsung to change its corporate culture so as to grow its global competitiveness and maintain its performance in the global market. An organizational culture has far reaching implications including reduction of conflicts, improvement of competitive advantage, global market share, and competitiveness. The key identified recommendations in this report include proper alignment of organizational culture with national and lean manufacturing practices with intent of improving organizational performance, competiveness, ability to attract and retain talent, and to ensure sustainability in a competitive global market.