RMIT Vietnam NewsEast/West divide diminishing in search for optimal business practices

East/West divide diminishing in search for optimal business practices

Friday, March 4, 2016 - 09:02
Dr Sean Watts

In this globalised business world some large corporations from eastern and western countries are adopting operating modes from each other’s cultures to gain an advantage, RMIT Vietnam researchers have found.

Lead researcher Dr Sean Watts from the University’s Centre of Commerce and Management says an increasing number of eastern firms are innovatively adopting western management while western companies are likewise innovating eastern styles into their corporate culture.

Using South Korean-based Samsung Electronics and North American Apple Inc as case studies, Dr Watts recently presented the research at the 2016 Third International Conference on Innovation in Economics and Business in Florence, Italy. It will now be published in the Journal of Economics, Business and Management.

According to the RMIT Vietnam team, Samsung has adopted some western ways of operating in significantly shortening its technology approval process, focusing its diversity strategy and combining its seniority-based staff promotion system with merit-based compensation.

For Apple, says Dr Watts, changes have focused on areas of strength in Korea – corporate social responsibility and customer service.

“The lack of co-ordination among Apple’s business units created inefficiencies like duplication of effort; as a result Apple redesigned the organisation, encouraging team-based activities to foster more cohesion in the workplace,” he said.

“After strong Greenpeace criticism of Steve Jobs making environmental and community concerns low priorities, Apple’s new CEO Tim Cook has begun donating to charities, taking on eastern collectivist values in corporate social responsibility.”

Dr Watts backgrounded his team’s findings with previous academic research on typically eastern and western business models.

“In the west, workers usually have an individualistic mind-set and think mainly about the details of their own tasks and responsibilities,” he said.

“But about 70 per cent of the world’s population belongs to a collectivist (eastern) culture where the majority of people focus on the group and a sense of belonging.”

According to Dr Watts, both Samsung and Apple have received wake-up calls on the insufficiency of their management from outside threats: the uncertainty caused by financial crises for Samsung in the 1997 Asian crisis and Apple in the 1989 recession and the 2008-2009 housing bubble crash.

He says characteristics of eastern businesses include respect for power structures, uncertainty avoidance and a consciousness of a long-term consequences of actions.

In contrast, Americans focus on short-term, bottom-line profit, individual career success and decentralisation due to low power distance.

Dr Watts concludes that companies looking to compete globally need to incorporate more than just local management styles.

“But before global managers can begin to think about other cultures, they must become aware of and overcome their own ethnocentrism,” he said.

“Only from this point of view can managers see the flaws in local practices and the potential benefits in foreign ones.

“Although it is often difficult to work with foreigners and to graft other management styles, doing this can result in a competitive advantage.”

  • Members of this research team include Dr Sean Watts, Pham Hong Hoa and Uyen La (RMIT Vietnam) and Giang Le Thi (Institute of Social and Medical Studies, Vietnam).

Story: Sharon Webb