Malardalen University

School of Sustainable Development of Society and Technology Spring Term 2012

CULTURAL ADAPTATION OF MULTINATIONALS WHEN GOING GLOBAL (A success story: Unilever in Viet Nam)

Bachelor Thesis in Business Administration

PM 2 4/25/2012

Authors
Nguyen Le Linh Nguyen Thi Kim Chung

Supervisor
Johan Grinbergs

Table of Contents
1 INTRODUCTION ............................................................................................................................. 4 1.1 1.2 1.3 1.4 1.5 2 Preface ........................................................................................................................................ 4 Case preview .............................................................................................................................. 5 Purpose of the study ................................................................................................................... 6 Scope and limitations of the study ............................................................................................. 6 Research question ....................................................................................................................... 6

METHODOLOGY ............................................................................................................................ 6 2.1 2.2 2.3 Type of research ......................................................................................................................... 6 Research approach ...................................................................................................................... 7 Selection criteria ......................................................................................................................... 8 The selection of company and country of destination ........................................................ 8 The selection of interviewees .............................................................................................. 9

2.3.1 2.3.2 2.4

Data collection ............................................................................................................................ 9 Secondary data .................................................................................................................... 9 Primary data ...................................................................................................................... 10

2.4.1 2.4.2 2.5 3

Research materials assessment ................................................................................................. 10 Culture An overview ............................................................................................................. 10 What is national culture?................................................................................................... 10 Cultural orientation ............................................................ Error! Bookmark not defined. Elements of culture ............................................................ Error! Bookmark not defined.

LITERATURE REVIEW ................................................................................................................ 10 3.1

3.1.1 3.1.2 3.1.3 3.2

Corporate culture ...................................................................................................................... 12 What is corporate culture? ................................................................................................ 12 Corporate culture as a source of competitive advantage................................................... 14 Social responsibility .......................................................................................................... 16

3.2.1 3.2.2 3.2.3 3.3 3.4

Cultural adaptation ................................................................................................................... 16 Hofstedes five dimensions of culture ...................................................................................... 16 2

3.4.1 3.4.2 3.4.3 3.4.4 3.4.5 4 5

Power distance .................................................................................................................. 16 Uncertainty avoidance....................................................................................................... 17 Individualism and Collectivism ........................................................................................ 18 Masculinity and Femininity .............................................................................................. 19 Long versus Short term Orientation ............................................................................ 20

CONCEPTUAL FRAMEWORK .................................................................................................... 27 EMPIRICAL FINDINGS ................................................................................................................ 27 5.1 Company background............................................................................................................... 27 Unilever global .................................................................................................................. 27 Unilever Vietnam .............................................................................................................. 27

5.1.1 5.1.2 5.2

Interview responses .................................................................................................................. 27 From a manager ................................................................................................................ 27 From a former manager..................................................................................................... 27 From current employees.................................................................................................... 27 From a potential employee ................................................................................................ 27

5.2.1 5.2.2 5.2.3 5.2.4 5.3 6 7

Secondary data Corporate culture in Vietnam ...................................................................... 27

CASE ANALYSIS .......................................................................................................................... 27 CONCLUSION................................................................................................................................ 27

Ch vng: may need to find sources of information to make it more persuasive. Ch : cch dng t dng cu Ch xanh: References: xem li ng format (ex: thng thiu s trang)

1 INTRODUCTION
1.1 Preface

Nowadays, the trendy process of international economic globalization and liberalization has brought about an almost non-boundary global economy and also made competition become more and more fierce. This process, along with the fact that technology has been changing in a fast and remarkable way during recent years, implies an urgent need for companies not only to develop their own competitive advantage but also to find a new market. More and more multinational companies are trying to expand their business into the highly potential but yet fully explored Asian market in the hope of gaining more market share and increasing profits. As multinational companies, they have the advantage of abundant capital, experience, trust and credit from stakeholders, and especially a strong culture which has been built up and fostered during the establishment of the company, and which is also an intangible asset to the company when operating abroad, given the fact that it cannot be easily copied nor reproduced by any other organizations. However, managing a business across national borders has never been an easy job. In the attempts to go global, these companies have encountered a number of problems, one of which is the misleading assumption about the non-boundary global market. Many managers believe that internationalization has created one global culture, in which what was true for the employees working in their home country also held the same values for those from other countries working worldwide (Andler, 2008). And cross-cultural managers work, therefore, has never been simpler. Those who agree with this argument may cite the case of Mc Donald and Coca Cola as examples. However, universality does not mean that managers have the illusion of simplifying the complex nature of the cross-cultural business. Any oversimplified assumption that there is only one best way to manage the company, no matter where they are operating, is totally naive and will just lead to regrettable consequences. The failure of Disneyland in France in 1990s, despite its previous enormous success in America and Japan, is one of the most obvious examples of the impact of cultural differences on business (Services marketing, case study). However, fortunately, variations across cultures and their impacts on organization are not something too unpredictable and random but rather follow systematic, predictable patterns (Adler, 2008). A deep understanding of the destination countrys culture will lead to a reasonable management 4

strategy and adequate adaptation of business practices to the new culture, but at the same time still maintain companys core cultural values. Though the study of cross-cultural management is of urgent importance today, there has not been much research into this field, compared to the numerous traditional studies of management. Joining in the flow of research on the cultural adaptation process of multinationals, this work employs one typical example of Unilever, a large multinational corporation, coming to Vietnam, a South East Asian country, with the view to learning how the company solved cultural conflicts and made use of cultural similarities to obtain its todays success, from which useful lessons can be drawn out for other multinationals that are currently interested in the Vietnamese market.

1.2 Case preview

Our research revolves around the case of Unilever, which is a very successful British-Dutch multinational consumer goods company, possessing many famous brands such as OMO, Viso, Sunsilk, Clear, P/S, Knorr, etc. Unilever Group has a dual structure with two parent companies, namely Unilever N.V. which is incorporated under the laws of the Netherlands and PLC which is incorporated under the laws of England and Wales (Unilever, 2012, p.2) In 1872, in the Netherlands, Jurgens and Van den Bergh opened their first factories to produce margarine. In the north of England in the mid 1880s, a successful wholesale family grocery business run by William Lever started producing a new type of household soap. In the early 1890s, Lever Bros was found by William Hesketh Lever, and Sunlight Soap was the very first product, which helped to popularize cleanliness and hygiene in Victorian England. From that moment, the company has sought their path to success through economic boom, depression, world wars, changing consumer lifestyles and advances in technology. During the path, Unilever has developed and produced innovative products that contributed to lessen time spending in household work, improve living-condition (Our history, 2012) ( vo phn empirical data) In 1995, Unilever started operation in Vietnam with total investment around USD$120 in 2 companies: Lever Vietnam - specializing in Home and Personal Care products and Unilever Bestfoods & Elida P/S - in Foods, Tea and Tea-based Beverages. Unilever is famous for its strong corporate culture, which has acted as one of its unique competitive advantages in the intensified and saturated global market. When expanding into Vietnam,

Unilever not only managed to remain their core cultural values but also succeeded in adapting and imbedding native values into their Vietnamese subsidiary culture.

1.3 Purpose of the study

The purpose of this study is to describe and analyze the similarities and differences between Unilever corporate culture and Vietnamese business culture, the major cultural issues resulted from these similarities and differences and the way Unilever adapted its culture to the native culture overcame the differences and took advantage of the similarities when dealing with these issues. Some suggestions then will be put forward for other multinationals that are aiming to enter and penetrate into the Vietnamese market.

1.4 Scope and limitations of the study

This study focuses on describing the main issues associated with the differences and similarities between Vietnamese culture at the workplace and Unilever global core values. In order not to dilute or distract the central research work, only the most typical and relevant native business values together with the dominant corporate culture are brought into the analysis. The coverage of this study, therefore, does not consist of the subcultures that exist at lower levels of the organization such as the two English and Dutch Unilever companies or various organizational branches, departments and groups; also the business cultural differences among various geographical regions or various sectors within the country are not taken into consideration.

1.5 Research question

Oriented by such purposes mentioned above, our discussion focuses on finding the answer for this research question: How did Unilever, in its expansion to Vietnamese market, adapt its corporate culture to the prevailing national culture?

2 METHODOLOGY
2.1 Type of research
Management and business research has both an academic and a practical purpose whose relationship depends on different situations, which require different types of research (Fisher, 2007, p.40). When the link between understanding and action is indirect, or improving understanding and knowledge does not reveal the best actions to take in other words (Fisher, 2007, p.47), interpretive 6

research is usually the most relevant one to use. Culture, the main concern of this study, is not something that is apparently visible. How people understand about culture, how culture is displayed and whether an existing culture is appropriate are, in fact, the problem of meanings, interpretations and judgments. As a result, a thorough grasp of what culture really is and how culture emerges does not necessarily imply the best choice of action, which might vary among contexts and peoples points of view. Interpretive approach, for those reasons, is employed for this research topic. In this study, a qualitative research is conducted using the chosen interpretive approach. As mentioned by Sonia Ospina (2004), there are several reasons to use qualitative research, among which are to try to understand any social phenomenon from the perspective of the actors involved, rather than explaining it (unsuccessfully) from the outside, and to understand complex phenomena that are difficult or impossible to approach or to capture quantitatively. Those are also the grounds for qualitative research to be implemented in this work as problems involving culture are naturally qualitative; they are hardly or rarely quantified and expressed by numbers. This study, therefore, focuses mainly on exploring and describing rather than proving cultural aspects of the problems in question. Case study is the basis of this work the subject is brought up through the specific case of one chosen company entering into one chosen country. This enables us to give a holistic account of the subject of our research (Fisher, 2007, p.59). Although case studies might lack representativeness, they do enable generalizations to be made (Fisher, 2007, p.60). Hence a case study is sufficient within the scope and for the purpose of this study.

2.2 Research approach

After the initial steps of choosing the topic and forming the research questions, the research process continues with defining the related concepts and presenting the relevant theories that will be employed later to analyze the empirical data. A conceptual framework is then developed to provide a description of the relationship between the concepts being used (Fisher, 2004, p.120). Although a more deep and thorough research might be conducted using the grounded approach which requires lots of materials being collected before the suitable concepts and frameworks emerge, the structured approach is still the final choice for this study. It means that a structure is set up from the beginning based on preliminary theories, concepts or hypotheses, following which the empirical data is interpreted and analyzed. The reason for choosing this approach is the tight time schedule arranged for the research and the limited amount of empirical data that can be collected (Fisher, 2007, p.123-125). Therefore, though 7

this work may not be able to provide a full picture of Unilevers cultural adaptation process, yet the most typical and remarkable aspects of the process will be brought into the analysis. Finally, a conclusion is drawn out from all those arguments and explanations. The figure below describes our research process.

Choose the topic and form the research questions

Define the related concepts and construct the literature review

Develop a conceptual framework

Collect empirical data

Interpret and analyze the empirical data

Come up with conclusions

2.3 Selection criteria

2.3.1 The selection of company and country of destination Unilever is a large multinational corporation with strong and widely recognized corporate culture, which was first established in England and Holland and currently has its headquarter located in the United Kingdom. It is an undeniable fact that the social values and ethics of those Western countries of origin of the company are considerably different from those of Eastern nations (Yang Liu, 2008), Vietnam included. Its founders who had substantial influence on the companys initial culture and set the scene for the companys later development (Gareth Jones, 2010, p.213-214) as well as its top managers over time that held the power to affect and made changes to corporate culture were also European who had unique attitudes and beliefs compared to the Asian. For these reasons, choosing such a company will give us greater chances to make a more comprehensive comparison between its global core values which were significantly affected by the initial and central culture at its headquarter and the values it tried to adopt when entering a strange foreign Asian market.

2.3.2 The selection of interviewees Culture does not in all cases consciously and purposely developed by the managers in charge in an organization. Rather, many cultural values derive from the personalities and beliefs of all organizational members (Carter McNamara, 2008). Culture not only appears in the strategic thinking of top managers but also shows its face everywhere in the daily operation of a company. For those reasons, people working at different levels of the corporation are chosen for the interviews in order to get a more comprehensive insight into its corporate culture. Firstly, an interview with manager A (name unknown yet) is made to get information about management and leadership style at Unilever as well as the organizational hierarchy which directly affects the corporate culture. Secondly, an interview with a manager that used to work at Unilever is also implemented to find out more about the management strategies as well as her feelings when and after working for the company. Whether the reason for her decision to switch to another company related to Unilever itself is also taken into consideration. Thirdly, three Unilever employees are asked to share their degrees of satisfaction from their work, their relationship with colleagues and subordinates and their involvement in the companys important decisions. Lastly, a student that has attended a tour that the company held to introduce its working environment, through which the way the company shows part of its corporate culture to the outside world is observed, also provides some useful information for this thesis.

2.4 Data collection

In this study, the two research methods employed to collect empirical data include documentary research and interviewing. 2.4.1 Secondary data Documentary research which involves the search and filter of information from different sources such as previous research, newspapers and the World Wide Web has formed the basis firstly to give a general idea about the broad area of cultural adaptation, secondly to narrow down the scope of the research by helping to highlight what kinds of cultural problems are more available to study and more relevant to bring out the core issues of the subject, and thirdly to provide support throughout the

research process. Different journals and articles are also utilized during the research to make the arguments more authentic. 2.4.2 Primary data Through a number of interviews, primary data are collected to provide realistic information of the problems in question. Semi-structured interviews are conducted in the aim of following up the main issues that have already been addressed right from the start, which is consistent with the structured approach, yet still giving space for the respondents to freely express their thinking and knowledge. The interviews are made by either phone or email, depending on the respondents time constraint and willingness. Although phone and email interviews are not as convenient as direct meetings but they can give interviewers easier access to busy people or far-away respondents and are usually enough to find out how people respond to a specific issue (Fisher, 2007, p.169). Face-to-face interviews are impossible for this research because of geographical distance thus complex questions that require detailed or long answers may be restricted (Fisher, 2007, p.169), yet by contacting the respondents for more than once if necessary to follow up the questions, this weakness may hopefully be overcome.

2.5 Research materials assessment

After all the necessary data has been collected, an assessment of the quality of those data is implemented for the purpose of finding out the limitations of data access so as to minimize their influence on the quality of the whole research. (We will complete this part after all the data have been collected)

3 LITERATURE REVIEW
3.1 Culture An overview
3.1.1 What is national culture? For without culture or holiness, which are always the gift of a very few, a man may renounce wealth or any other external thing, but he cannot renounce hatred, envy, jealousy, revenge. Culture is the sanctity of the intellect - William Butler Yeats. Culture has its origin in mid 15th century, derived from the word cult. In Latin, cultura originally meant the tilling of land, or a cultivating agriculture, figuratively care, culture, and honoring. The figurative sense of cultivation through education is first attested c.1500. In 1805, culture was referred to as the intellectual side of civilization and has been understood as collective customs and achievements of a people from 1867 (Douglas Harper, 2012). 10

In English, culture does not only limit its meaning to the cultivation of soil but refers to a more confusing interpretation the training and refining of the mind, manners, taste, etc. or the result of this It is the personality that differentiates a people from others. Every nation possesses a distinguishing culture of their own, in the same way as every person has their personality, irrespective of their races, sexes or social classes (Hofstede, 2001, p. 21) It is not easy to define culture. Anthropologists view culture in different ways and lots of researches have been done with a view to acquiring a complete and sophisticated understanding of culture. Kroeber and Kluckholn, during their study, had identified more than 160 definitions of culture. Sociologists Namenwirth and Weber (1987) defined culture as a system of ideas that provide a design for living. In Clarks review of national character (1990), culture is described as a distinctive, enduring pattern of behavior and/or personality characteristics. According to anthropologists Hall (1990) culture is a system for creating, storing, sending, and processing information. Hofstede, (2001), views culture as the collective programming of the mind which distinguishes the members of one group or category of people from another (p. 9), with the key expression being collective programming. However, among more than 160 different definitions of culture, anthropologists Kroeber and Kluckholn came up with one of the most comprehensive and generally accepted definitions: Culture consists of patterns, explicit and implicit, of and for behavior acquired and transmitted by symbols, constituting the distinctive achievement of human groups, including their embodiment in artifacts; the essential core of culture consists of traditional (i.e., historically derived and selected) ideas and especially their attached values; cultures systems may, on the other hand, be considered as products of action, on the other, as conditioning elements of future actions.(Nancy Adler, 2008, p.18) Despite lots of definitions of culture, in our thesis, we are interested in explaining the concept of culture from Kroever and Kluckholns point of view, as it is the most relevant to our study of Unilever and Vietnamese culture. Culture, in this sense, is not something that neither accidentally comes into being nor easily fades away. These societal norms have laid the foundation for the development and maintenance of a number of rules, morals, customs, etc, which constitute to the establishment of institutions in society with a particular structure and way of functioning, including the family, education systems, politics, and legislation. These institutions, once they have become facts, will reinforce the societal norms and the ecological conditions that led to them (Hofstede, 1984, p. 22).

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They are shared by almost all people in a given society and play a vital role in shaping their behavior, attitudes, way of thinking, as well as influencing ones perception of the world.

3.2 Corporate culture

3.2.1 What is corporate culture? Organizations are made up by people. Therefore, the interactions between people inside an organization to some extent affect organizational performance and its effectiveness in achieving its strategic goals. Those interactions are embodied in and led by organizational culture. To be more specific, it is the shared values and beliefs absorbed in the organization that orient the way people treat their subordinates, superiors, customers, suppliers, shareholders, and each other (S.L. Dolan, S. Garcia & A. Auerbach, 2003, p.30). It is the managerial style that defines the way an organization conducts its business (Dennis R.Capozza & Paul J. Seguin, 1996, p.149). It is the general paradigm that helps participants determine what is in the best interest of the organization and the perception of goal congruence (Alan L. Wilkins & William G. Ouchi, 1983, p.475). All of those place an irreplaceable influence on an organizations ability to build up its sustainable competitive advantages and create values. Although organizational culture by all means has proved to be such an important concept yet defining it has never been an easy problem. In fact, few concepts in organizational theory have as many different and competing definitions as organizational culture (Jay B. Barney, 1986, p.657). Among such great number of definitions brought forward, a common one that is consistent with most of the research is used in this study: Organizational culture is the set of shared values and norms that control organizational members interactions with each other and with people outside the organization. Organizational culture controls the way members make decisions, the way they interpret and manage the organizational environment, what they do with information, and how they behave (Gareth R. Jones, 2010, p.201). As the concern of this work focuses on for-profit organizations, from now on it can be understood as corporate culture when organizational culture is mentioned. Those values that make up organizational culture consist of two contributory factors, namely the desired end states or outcomes that the organization wishes to achieve and the desired modes of behaviors that the organization encourages its employees to adopt (figure ); together they are translated into specific norms, rules and standard operating procedures that harmonize organizational members relationship and unite a group of people to form an organization (Gareth R. Jones, 2010, p.201-202). Although we usually talk about organizational culture in the singular, all firms have multiple cultures usually associated with different functional groupings or geographic locations (John 12

P. Kotter & James L. Heskett, 1992, p.5). It means that an organization normally has not only one dominant culture but also a number of subcultures which are the shared understandings among members of one group/department/geographic operation. As a result, when learning about the culture of a specific organization, we usually mention its dominant culture the core values shared by the majority of the organizational members (Beverly Davenport Sypher, 1990, p.73). Also, organizational culture exists at various levels. In Corporate culture and performance, John Kotter and James Heskett suggested that organizational culture could be thought to have two levels which differ in terms of their visibility and their resistance to change. The first deeper and less visible level is made up of shared values that tend to persist over time even when group membership changes and thus are difficult to change. The second level the more visible one includes group behaviors and actions which are although tough yet still easier to change. A thorough understanding about those two different levels is necessary in building up a strong and appropriate corporate culture that in the best case would create competitive advantages to enhance organizational effectiveness and lead to sustained superior financial performance.

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Figure Terminal and instrumental values in an organizations culture (Gareth Jones, 2010, p.202) 3.2.2 Corporate culture as a source of competitive advantage The seemingly clear relationship between corporate culture, effectiveness and performance has in fact not been evidently demonstrated in so many pieces of research. This is more due to the difficulties in matching a quite intangible concept like corporate culture which cannot be described by figures or numbers with a more obvious factor like organizational performance which can easily be seen through financial statements and quantitative inspections. This definitely does not mean that the impact of corporate culture on long-term economic performance has no factual grounds. Indeed, since the 1980s, after the publication of a Business Week article on corporate cultures which aroused considerable interest on that topic (Yvan Allaire and Mihaela E. Fisirotu, 1984, p.194), businesses have increasingly acknowledged and given mind to the association between corporate culture and financial performance, and also thenceforth improving an organizations success through aligning its culture became a popular focus of work (Lisa Hanaberg, VP & OD Practice Lead, 2009, p.1). In his book on organizational theory, Gareth Jones (2010, p.201) asserted, just as an organizations structure can be used to achieve competitive advantage and promote stakeholder interests, an organizations culture can be used to increase organizational effectiveness Culture affects an organizations performance and competitive position. The topic of culture and effectiveness is now of higher and higher importance in organizational studies for those reasons. 3.2.2.1 Strong culture One of the central arguments that look at organizational performance from a cultural perspective links strong cultures with excellent performance: Firms with strong cultures are pointed out as examples of excellent management (Peters & Waterman, as cited in Jay B. Barney, 1986, p.656). In a strong corporate culture, almost all managers share a set of relatively consistent values and methods of doing business (John P. Kotter & James L. Heskett, 1992, p.15). Either intentionally or unintentionally those shared values will drop down to lower levels of the hierarchy, absorb in every day-to-day activity of the organization and direct the interactions between existing employees. New people entering the organization can also be introduced by their subordinates, their colleagues or acknowledge themselves those rules and norms so as to quickly adopt. Any violation of those norms is likely to be figured out and corrected. In such strong corporate culture, the management style and shared values whose roots have stricken deeply into the entrails of the organization are recognized by both organizational 14

members and outsiders, thus any change in the Board of Directors can hardly result in a change in organizational culture (John P. Kotter & James L. Heskett, 1992, p.15-16). As suggested by John P. Kotter & James L. Heskett (1992, p.16), the logic of how cultural strength relates to performance involves three ideas, the first of which is goal alignment. A strong corporate culture leads all organizational members look into one single direction. An organization, by definition, is a tool people use to coordinate their actions to obtain something they desire or value (Gareth R. Jones, 2010, p.24). Therefore, without a necessarily strong culture to coordinate peoples goals, an organization cannot be formed, not to mention to create values and achieve success. You need a very product-oriented culture, even in a technology company. Lots of companies have tons of great engineers and smart people. But ultimately, there needs to be some gravitational force that pulls it all together commented by Apples CEO Steve Jobs. The second idea has to do with the creation of a needed level of motivation by a corporate culture that is strong enough. Working in such an environment with clearly defined goals where everybody shares the same values and beliefs makes people feel more comfortable. Corporate culture is also the place where intrinsic rewards are fostered. A strong corporate culture puts forward factors such as recognition, responsibility, growth and advancement, which can bring pleasure and satisfaction to employees, thus motivates them to best perform their tasks, and which in turn brings up the feeling of commitment and loyalty to their job (Shameena Silva, 2009). Last but not least, a strong corporate culture can even implicitly create a kind of organizational structure and hierarchy that can effectively substitute the complex and rigid traditional bureaucracy which unintentionally discourages creativity and innovation. That virtual organizational structure built up by corporate culture acts like an invisible hand that helps to manage the interrelated relationship among organizational members and constitute a desired working environment that encourages the expected behaviors and outcomes to be achieved. 3.2.2.2 Strategically appropriate culture Also within John P. Kotter & James L. Hesketts scope of arguments, the extent to which a specific culture fits the current situations of a firm is what really matters. This second perspective asserts that the content of a culture, in terms of which values and behaviors are common, is as important, if not more important, than its strength (John P. Kotter & James L. Heskett, 1992, p.28). Although until recently, the dominance of American theory has more or less create and strengthen an opinion that one size fits all, and that effective US management practices or prominent managing style will be effective and prominent anywhere (Karen L. Newman & Stanley D. Nollen, 1996, p.753), it is still a wide and deep belief that there is no such thing as a good or win culture that can be well 15

applied everywhere to every organization in every financial and social condition. Instead, a culture can only be considered good if it fits its context, which is the culture of the nation or the society where it is operating, the industry or the segment of the industry specified by the firms strategies or the business strategies themselves. A strong yet unreasonable culture cannot bring about excellent

performance. From this second perspective, it is suggested that such excellent performance should only be linked to contextually or strategically appropriate culture. The better the fit, the more effective the operation and the higher the performance (John P. Kotter & James L. Heskett, 1992, p.28). 3.2.2.3 Entrepreneurial culture 3.2.3 Social responsibility

3.3 Cultural adaptation 3.4 Hofstedes five dimensions of culture

These days, the rapidly increasing trend of globalization and liberalization has drawn great attention to the study of multinationals internationalized process in all aspects, among which outstand the adaptations to cultural differences between destination countries national culture and companies global core values. The need for some criteria to help compare those corporate and national cultural values, therefore, has led to a huge wave of research into different elements of culture. Among these theories, Hofstedes five dimensions of culture is one of the most famous and commonly used frameworks. 3.4.1 Power distance The term power distance was originally developed by Mauk Mulder, a Dutch social psychologist who carried out experiments in the 1960s to investigate interpersonal power dynamics. Power is defined as the potential to determine or direct (to a certain extent) the behaviour of another person or other persons more so than the other way round (Mulder, 1977). The concept of power distance is closely related to human inequality and how a society handles it. Inequality and power are fundamental issues in any country; however, it is the difference in national cultures that will determine the extent to which peoples accept the unequal distribution of authority in organizations and institutions. As defined by Hofstede (2001), power distance between a boss and a subordinate is the difference between the extent to which the boss can determine the behaviour of his subordinate and the extent to which the subordinate can determine the behaviour of his boss. In a high power distance country, there is a strong relationship between age and power; people tend to show 16

strong respect to older people; top leaders are usually seniors and less willing to give up their power; however, the power aspect of older also fostered a negative attitude towards older people. Power distance also implies peoples perception of inequality. People in countries with high power distance index view inequality as the basis of societal order and hierarchies as existential: superiors are seen as superior persons. In low power distance society, a reversed pattern is observed. People adopt a favourable attitude towards older people; freedom is valued as more important than equality; inequality is seen as a necessary evil that needs to be minimized; and hierarchy is considered an arrangement of convenience, rather than existential system to exercise power and control people (Hofstede, 2001) Power distance in societies also plays an important role in explaining key differences between organizations and institutions structure and management process, as well as subordinate-superior relationship. In countries which rank high on power distance, such as India, Philippines, Venezuela, the act of bypassing is considered to be insubordination by managers; whereas in countries with low rankings in power distance index, such as Israel and Denmark, employees are expected to bypass their bosses frequently if it help them to get their work done faster and more efficiently (Nasierowski Wojcieck & Mikula Bogusz, 1998, p. 495-509). Hofstede (2001) also suggested that organizations in high-power distance also tend to have a centralized decision structure, with tall organization pyramids, and henceforth, more concentration of authority, compared to the decentralized decision structure and flat organic structure of those in low-power distance society. A survey of event management conducted by Smith and his colleagues in 1994 with about 100 middle managers across fourteen countries around the world showed a heavy reliance on formal rules of middle managers in high power distance countries when it comes to solving everyday problems, whereas, in low power distance countries, managers relied more on their own experiences and on subordinates (Smith et al, 1994) 3.4.2 Uncertainty avoidance In the book A behavioral theory of the firm (1963), Cyert and March came up with the term Uncertainty Avoidance, which referred to an organizational phenomenon and was used as one of the major rational concepts in their theory. They suggested that firms should follow procedures to minimize the need to anticipate correctly uncertain events in distant future and future reactions of other parts of their environment. Borrowing the term from Cyert and March, Hofstede used it to describe the extent to which people in a society feel nervous or threatened by uncertain or unknown, unpredictable situations, and take actions to avoid such ambiguous situations (Hofstede, 1994).

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There must be a clear distinction between uncertainty avoidance and risk avoidance. There is similarity between two concepts, but it does not mean that they equal each other. Uncertainty avoidance refers to an escape from ambiguity rather than from risk. People living in culture with low tolerance to uncertainty prefer a well structured organization characterized by lots of formal rules and regulations, clear relationships and instructions, which provide certainty and predictability to their work, and increasing their security and stability as well. These people are not afraid to take risky actions to reduce the ambiguity. (Hofstede, 2001. P148) At an organizational level, Hofstede found out that the extent of uncertainty avoidance would have a direct effect on how loyal an employee is to his employer, displayed by the average duration of employment; peoples attitudes towards technological solutions; whether innovators feel constrained by formal rules or not; flexible or fixed working hours, precisions and punctuality; belief in generalist and common sense or in specialist and expertise, and many other aspects. 3.4.3 Individualism and Collectivism This dimension describes the relationship between an individual and the collectivism in human society. Individualism exists in a loosely-knit society where individual is expected to take care of himself/herself and his/her immediate family only. People define themselves primarily as separate individuals and make their main commitment to themselves (Nancy Adler, 2008). Collectivism, in contrast, stands for a society where people from birth onwards are integrated into strong, cohesive ingroups, which throughout peoples lifetime continue to protect them in exchange for unquestioning loyalty (Hofstede, 2001). Members in collective cultures tend to share common goals and objectives instead of individual goals that focus on individuals interest. (Hofstede, 2001) Each culture has a different extent of individualism/collectivism. China, for example, is a strongly collective culture. In the article, Psychological homeostasis and jen: Conceptual tools for advancing psychological anthropology (1971), Hsu has argued that Chinese tradition does not have an English equivalent for the concept of personality like in Western culture. In Chinese, the term jen, meaning man, already includes the persons intimate social and cultural environment, which makes that persons existence meaningful. It is based on the individuals transaction with his fellow human beings. In this sense, Chineses conception of jen stands in sharp contrast with Western concept of personality, which is deeply rooted in individualism and emphasizes what goes on in the individuals psyche including his deep core of complexities and anxieties (Hsu, 1971).

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People in individualistic and collective culture are expected to have different kinds of behavior and attitudes in the workplace. In collective culture, employees act in the interest of their in-group, not necessarily themselves; employer-employee relationship is basically moral, like a family link; preferred reward allocation is also based on equality for in-group, equity for out-group (ko hiu lm) whereas in individualistic culture, employees are supposed to act as economic men; the relationship between employer and employer is conceived as nothing more than a business transaction in a labor market, and preferred reward allocation is based on equity for all (Hofstede, 2001). In an experiment to examine the effect of a central cultural value, individualism-collectivism (???), on social loafing in an organizational setting, Early (1989) found out a strong relationship between individualistic/collective belief and the performance of managers from America and China. 48 managerial trainees from each country worked on an in-basket task under conditions of low or high accountability and low or high shared responsibility. The result was that Chinese, coming from a collectivistic culture, performed best in in-groups, anonymously and worst when operating individually, with their names marked on the products of their work, whereas, Americans, from a strong individual culture, performed best when having their work measured individually and quite poor in group conditions, without their names marked on their work. From this study, Early came to the conclusion that individualists performed best when exposed to training focused at individual level, whereas collectivists performed best when exposed to training at group level (Early, 1989, p. 112) 3.4.4 Masculinity and Femininity

Hofstede, (2001), defined Masculinity and Femininity as the two poles of a dimension of national culture Masculinity stands for a society in which social gender roles are clearly distinct: Men are supposed to be assertive, tough, and focused on material success; women are supposed to be modest, tender, and concerned with the quality of life. Femininity stands for a society in which social genders roles overlap: Both men and women are supposed to be modest, tender, and concerned with the quality of life. (Hofstede, 2001) Hofstede (2001) also pointed out the influence of masculinity and femininity on the creation of difference management hero types. In masculine culture, theres a tendency to consider the manager role as particularly heroic, and manager is, expected to be assertive, decisive, aggressive and competitive. In feminine culture, the manager is an employee like any other and is expected to be intuitive, cooperative and accustomed to seeking consensus. Also, resistance against women entering 19

higher jobs tends to be weaker in more feminine culture (Hofstede, 2001). Schaufeli and Van (1995), in their work, A cautionary note about the cross-national and clinical validity of cutoff points for the Maslach Burnout Inventory, attributed the masculine versus feminine culture difference to the job stress levels among employees. In culture with high masculinity index, employees are under much higher stress than those in feminine culture. According to Hofstede (2001), ways of handling conflicts in organizations are also affected by the masculine and feminine dimension. In the United States and other masculine culture, such as Britain and Ireland, conflicts are usually resolved by denying them or fighting until the best man wins, management tries to avoid having to deal with labour unions; whereas in feminine cultures such as Denmark, the Netherlands, and Sweden, people prefer to have conflicts solved through compromise and negotiation. 3.4.5 Long versus Short term Orientation Long term orientation, also referred to as Confucian Dynamism, was recently added to Hofstedes cultural framework, based on his global management survey on students from 23 countries. Long term orientation, is defined as the fostering of virtues oriented towards future rewards, in particular, perseverance and thrift, whereas, short-term orientation stands for a fostering of virtues related to the past and present, in particular, respect for tradition, preservation of face and fulfilling social obligations (Hofstede, 2001, p.359). Business in long term oriented cultures focus on building up strong relationships and market positions, managers have time and resources to make their own contributions. In short term oriented cultures, in contrast, immediate result is a major concern, and managers are constantly judged by it. Furthermore, having a personal network of acquaintances are of extreme importance in short term oriented societies, whereas in long term oriented culture, family relationship and business are quite separated. (Hofstede, 2001)

3.5 Vietnamese culture

3.5.1 Some general straits of Vietnamese culture 3.5.1.1 History Located in South Eastern Asia, Socialist Republic of Vietnam is a developing country with a rich cultural history. With 4,000 years of civilization, the Vietnamese are very proud people who like to recite the myth that they are descendants of the Princess of Mountains - an angel and the King of the Seaa dragon (http://www.geographia.com/vietnam/ and

http://www.vietventures.com/Vietnam/viet_culture.asp). Vietnamese history is characterized by 20

continuous independence wars against the colonization of foreigners: 1,000 years of domination by Chinese, 100 years by French, and 20 years by Americans. http://www.geographia.com/vietnam/) In 1975, Vietnam officially won its independence, the North and the South of Vietnam was united and Vietnamese has been living in freedom under the Communist government since then. http://www.lichsuvietnam.vn/home.php?option=com_content&task=view&id=1005&Itemid=33 3.5.1.2 Religions Vietnamese are strongly influenced by several major religious beliefs (Toan A, 1966-1967). Pham (1994) also observed that It would be almost impossible to separate religion from the way of life of Vietnamese and other people in Asia (p. 213). Buddhism was introduced to Vietnam very early, in the second century AD. It emphasized the concept of life in which suffering is caused by desire and thus desire can be eliminated by correct behaviour. Confucianism is more a way of life than a religion itself. It involves a code of ethics and morals, and emphasizes the hierarchy of the members of the society and the need to worship ancestors. Taoism (originating from Lao-tzu, a 6th BC philosopher) is another religion that also had influence on shaping Vietnamese cultural personality. This philosophy stresses that, when things are permitted to assume their natural course, they move towards perfection and harmony. (Culture shock, Mai Nguyen, 1985). Mai Nguyen (1985) stated that there are three other recently introduced religions, namely Catholicism, Protestantism, and animistic beliefs, but they are followed by a minority of Vietnamese. These religions profoundly shaped Vietnamese perception of life and their beliefs, which are quite different from Western perspective (Henry Hoang, 2008). 3.5.1.3 Family In Vietnamese traditional society, family is considered the fundamental social unit, which is the primary source of cohesion and continuity (Maj Nguyen, 1985). Vuong (1976) explained that Not only do the Vietnamese feel deeply attached to their family, but they also extremely concerned with their family welfare, growth, harmony, pride, prestige, reputation, honour, filial piety, etc (p.17). According to Henry Hoang (2008), family value and bonding is the strongest motivation in a Vietnameses life. Children are expected to be obedient and show respect to elders and their parents, and any acts of disobedience are considered a threat to parents authority (p. 57). He argued that these factors have a strong influence on their socialization, because it is through the family that sound values and strong work ethic are passed down (p. 57). Indeed, Vietnamese people have a proverb: Nhap gia tuy tuc, meaning, when entering a family, follow its practices, which is quite similar to the Western saying: When in Rome, do as the Romans do (Puffer, 2004, p. 205) 21

3.5.1.4 Education Good education has always been considered most important and accordingly given the highest status in Vietnam (Vuong, 1976, p. 61). In the traditional social system, scholars stand at the top of social hierarchy, and are held in highest respect from other people, followed by farmers, artisan, and tradesman (Henry Hoang, 2008, p. 56). He further explained that this emphasis on education not only comes from the familys reputation and desire for stable finances, but also from the Confucian belief that a persons education reflects his status and identity (p.56). 3.5.1.5 Social relations In his study Culture and Management: A study of Vietnamese cultural influences on management style (2008), Dr Henry Hoang observed that Vietnamese people are gentle, friendly and hospitable even though they suffered war and destruction throughout their history (p.57). Establishing right relationships is very important in Vietnamese culture, not only in social life but also at the workplace. This emphasis has its origin from an ancient cult overlaid with Confucianism from a thousand year under Chinese colonization (Working in a Vietnamese voice, Lady Borton). According to Henry Hoang (2008), relationships with Vietnamese are often based on family relations, a shared past as well as friendship built up over time. However, as Michailova and Husted (2003) found out in their work, Knowledge sharing hostility in Russian firms, there still exists a continuing suspicious of foreigners. As they suggested, this mistrust may come from Vietnamese experience of the long and continuous independence war against foreigners for autonomy. Therefore, Vietnamese people only feel comfortable and trust people they have known for a long time or who belong to their small circles, for examples, their neighbourhood, work colleagues, classmates. These closed circles create a deep network of trustable people (Holden at al., 1998, Napier and Thomas, 2004; Peng and Luo, 2000, as cited in Lady Borton, 2006). However, Vietnamese people do trust if foreigner shows that he is honest and sincere about listening and supporting (Working in a Vietnamese voice, Lady Borton), if you are warm, sincere, tolerant, and respectful (Engholm, 1995). Unlike Western people who are direct, Vietnamese people tend to be indirect. In Western communication, the main point comes first and details follow. Vietnamese often use proverbs and parables that tell seemingly irrelevant anecdotes, describing contexts while spiralling so subtly toward the issues at hand, that Westerners may miss the point. This indirectness is a question of tact, not sincerity (Puff, 2004, p. 204)

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3.5.1.6 Concept of time Like most Asian, Vietnamese have an extended concept of time. They are expected to take longer time to make decision or culminate a business deal. (Esmond Smith, Cuong Pham, 1996). This elastic concept of time makes oriental life style much less stressful and people do not have to rush. As a result, oriental people usually arrive late for appointments. (Maj Duong Nguyen,1985) Patience remains the ultimate Confucian virtue in personal life as well as in business (Esmond Smith, Cuong Pham, 1996).

3.6 Vietnamese culture at the workplace

Hofstede analyzed Vietnamese culture as having low individualism, moderate masculinity, low uncertainty avoidance, long term orientation, and high power distance. 3.6.1 High power distance Quang & Vuong (2002); Scott, Bishop, & Chen (2003) found out that there is a strong vertical relationship with high level of conformity, face saving, and social control in Vietnamese culture. Vietnam has been governed by a highly centralized government for a long time and in organization, there is also a vertical hierarchy, (Clarke, 1996) which can affect decision making (Napier, 2006). Decisions that are considered straight forward or more suitable to be made by unit managers, such as whether or not to hold a career fair on campus, is not so mundane in Vietnam (Napier, 2006). According to Nguyen (2011), high power distance promotes hierarchical authority in work settings that are highly structured and Vietnamese employees acknowledge and comply with this clear subordinate-superior relationship. Vietnamese administrative bureaucracy is quite a challenge for not only foreigners but Vietnamese as well (Borton, 2000). When asked about the countrys greatest challenges, the party secretary, Vietnams top leader, directly answered that corruption and bureaucracy (Phieu, 2000). Many bureaucratic layers (doors or gates) still remain. (In Western countries, bypassing maybe considered no problem by superiors...) Westerners usually forget that the behaviours considered essential to working effectively in their home country cannot be applied in Vietnam. In any bureaucracy, including business, it is considered the worst mistake to bypass your managers. Once supervisors find out from someone else something they should have known directly from their subordinates, he will lose face and the negligent subordinate will, in turn, lose out. (Borton, 2000) Like other cultures which are influenced by Confucianism, Vietnamese show high respect for the elderly. Older people are expected to have more experience and wisdom, and in traditional extended families, the word of the father or grandfather is considered law by other members. In business, the 23

oldest members of the of a foreign delegation is treated with great deference, regardless of his position or rank, whereas, young people are not taken seriously when it comes to making important decisions or having business expertise. (Esmond Smith, Cuong Pham, 1996). 3.6.2 Low individualism Vietnamese always consider themselves as a part of a larger collective and strongly emphasize conformity to familial and social norms (Smith, Pham, 2003). Vietnamese people also have an ingroup thinking style and prefer group activity and decision making that will bring benefits to the whole group instead of personal goals. They tend to work together in harmony and cooperate, seeking security and protection by being loyal to the group (Park and Vu, 1994; Scott et al.,2003; Fan & Zigang, 2004) Western culture, on the other hand, place high value on the individual (Borton, 2000). These differences values can cause misunderstandings in business. As put by Smith & Pham, (2003), Praising or singling out an individual for attention or to reward in public, for example, is embarrassing to the individual concerned and will likely be counterproductive. Public rewards are best given to groups, not individuals. To make it clearer, Vu & Napier (2006) gave an example of a farewell statement by an American worker leaving Vietnam, which mentioned Ive been successful here, but only because of the support and efforts of all of you, my Vietnamese colleagues. His intentions, by American culture and standards, were positive, heartfelt and gracious, however, they were interpreted as trying to draw attention to himself, even when acknowledging the help of other people, and was considered as an poor and pompous behavior (p.7). Such singling out of individuals is quite unacceptable in Vietnam as people see individual assertiveness as arrogance (Borton, 2000). Nguyen & Mujtaba (2011) also observed that most Vietnamese people develop an extensive network among friends, relatives, colleagues, and business partners, which is based on very close personal relationships. People are said to have a good relationship only after successfully building trust among them and convincing each other that they all belong to the same in-group (p. 236) 3.6.3 Moderate Uncertainty avoidance 3.6.4 Moderate Masculinity In accord with Marxism ideology, Vietnamese culture is outwardly egalitarian, nevertheless there still exists male-dominant attitudes in business and most official activities. Therefore, Vietnamese women who hold key positions in business are accorded respect due that position, which in daily life, they may not have. Foreign business professionals in Vietnam, however, are accepted and treated with 24

respect, especially if they have strong professional reputations or high status in companies. Otherwise, it is hard for them to be taken seriously. (Smith, Pham, 2003). Vietnamese people experience stress like every people in the world. However, they handle it in a different way, by holding stress and emotional problems to themselves, or within the extended family (Byleen, 1986; The National Heart, Lung and Blood Institute, 2010, as cited in Nguyen & Mujtaba, 2011, p.238). Though they do believe that stress has impact on their health and cause major health problems, admitting stress is considered a sign of weakness and immaturity (Nguyen & Mujtaba, 2011, p.238) (havent linked with the culture at work yet) 3.6.5 Long term orientation Develop a part about the high context culture, related to health problems and how unilever care about it, read the article written by Nguyen & Mujtaba, 2011, p.238)

3.7 Cultural Adaptation

3.7.1 Dealing with the differences: 3.7.1.1 Hiring local staff: (Borton, 2000, Working in a Vietnamese) - Hiring Vietnamese staff members who will act as buffer and guide you through Vietnams intricacies. - Hire Viet kieu, expatriates of Vietnamese ethnic background 3.7.1.2 Building in a local contribution (Borton, 2000, Working in a Vietnamese)

3.7.2 Taking advantages of the similarities

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Vietnamese people are not creative and shy away from taking responsibility to solve problems, at the same time, they can be stubborn- => they look for employees with a desire to learn, previous working experience is almost irrelevant.

High context culture: they never say no, because saying no means a loss of face, which is unbearable in Vietnam (Puffer, 2004. P. 207), they tend to be indirect (Puffer, 2004)

Working in a Vietnamese voice: ten recommendations when working in Vietnam.

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4 CONCEPTUAL FRAMEWORK 5 EMPIRICAL FINDINGS

5.1 Company background
5.1.1 Unilever global 5.1.1.1 History of the company 5.1.1.2 Global core values 5.1.2 Unilever Vietnam 5.1.2.1 Vietnamese business culture 5.1.2.2 Corporate culture in Vietnam similarities and differences

5.2 Interview responses

5.2.1 From a manager 5.2.2 From a former manager 5.2.3 From current employees 5.2.4 From a potential employee

5.3 Secondary data Corporate culture in Vietnam 6 7

CASE ANALYSIS CONCLUSION

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