Culture, context and structure: a test on Hong Kong banks - includes appendix

Organization Studies, Wntr, 1994 by Gilbert Y.Y. Wong, Philip H. Birnbaum-More

Introduction

The measurement and explanation of organization structure has been a major concern in organization theory for a long time. One approach explaining variations in structure focuses internally on either structure as a means of improving administrative efficiency or on the organization's size, technology, or dependence as explanations of structure (Taylor 1911; Weber 1946; Bendix 1956; Anderson and Warkov 1961; Pondy 1969; Pugh et al. 1969; Blau 1970). A second approach that began later emphasizes the organization's environment as a explanation of its structure (Crozier 1964; Thompson 1967; Freeman 1973; Meyer and Rowan 1977; Pfeffer and Salancik 1978; Hofstede 1980; Lincoln, Handa, and Olson 1981). A major issue of contention between these two approaches is the role played by societal culture in explaining an organization's structure.

The internally focused view, exemplified by the research programme begun in England by Derek Pugh and his colleagues at the University of Aston, has concentrated primarily on explaining an organization's structure by the context in which it operates such as its technology, size, and dependence. The Aston findings have been replicated in a wide variety of societies (cf. Hickson and McMillan 1981). In addition, the specific relationships between the structural dimensions and the contextual variables of size and technology have received particular attention (Pugh et al. 1969; Aldrich 1972; Marsh and Mannari 1981; Singh 1986). The results of these replications and refinements have supported the basic Aston model (Singh 1986) and have led a growing group of scholars to agree with the earlier view (Hickson et al. 1974) on the emergence of general laws or 'etics' (Segall 1986) on the relationships among structural variables which apply across a range of organizations and societies.

The externally focused view takes a variety of forms in explaining organizational structure (Tolbert 1985; Scott 1987). One form of these approaches is the view that environments affect the structures chosen by organizational decision-makers through their society's cultural expectations. Variously termed institutionalization (Zucker 1977, 1983; Meyer and Rowan 1977; DiMaggio and Powell 1983; Tolbert 1985; Scott 1987) and culture (Crozier 1964; Lincoln, Olson, and Hanada 1978; Lincoln, Hanada, and Olson 1981), this view argues that organizational structures are designed to insure survival through social legitimacy by reflecting the surrounding culture's values and beliefs (Birnbaum-More and Wong 1985). Child (1972, 1981) provided support for this environmental explanation by pointing out that contextual factors explain only small portion of the variance in structure.

Empirical tests of the culturalist argument have focused on differences in the level of structural characteristics (Richardson 1956; McMillan et al. 1973), on the relationships between structural characteristics (Lincoln, Olson, and Hanad 1978; Lammers and Hickson 1979; Hickson and McMillan 1981; Lincoln, Hanada, and McBride 1986), and on the job satisfaction of employees with alternative organizational structures (Lincoln, Hanada, and Olson 1981; Birnbaum-More and Wong 1985). The evidence, so far, shows that the level of structural characteristics are 'emics' because there are absolute differences between organizations from different cultures (Segall 1986). However, the evidence indicates that the patterns of relationships between structural characteristics are consistent regardless of culture. These relational properties are 'etics' since they appear to be culturally universal (Segall 1986). In addition, research findings at the individual level of analysis indicate few cultural effects for employee satisfaction with alternative structures in Hong Kong (Birnbaum-More and Wong 1985) and somewhat varying cultural effects for employe satisfaction with alternative structures of Japanese organizations in Californi (Lincoln, Hanada, and Olson 1981). However, the research at the individual leve is still too preliminary to determine whether the relationship between employee satisfaction and structure is either an emic or etic relationship.

However, all this research has treated culture as equivalent to society and, in many cases, as a 'residual factor', or as equivalent to 'nation', without any further theoretical grounding or multivariate measurement (Roberts 1970; Child 1981). A recent advance in the treatment of culture has been the work by Geert Hofstede on international differences in work-related values (Hofstede 1980). This research effort has theoretically identified and empirically tested four cultural dimensions and has attempted to conceptually link two of these dimensions, power distance and uncertainty avoidance, to structure. However, so far there is no empirical evidence that supports the linkages suggested or that tests the contribution these cultural dimensions make in explaining variance in structure. There is a need to begin to empirically link multivariate characteristics of the social culture, an organization's context, and an organization's structure given the history and research on all three aspects.