Samsung’s Organisational Culture Regarding Business Competitiveness and Innovation in the Post-Pandemic Era
Abstract
This paper studies how Samsung, a Korean multinational enterprise (MNE), adjusted its cultures to the local environment and exploited organisational cultures to benefit the workplace innovation in its own enterprises. A case study research method was employed to search archives and journal articles for the specific period of 18 years (2004-2022) to observe the continuum of MNE innovation and their business competitiveness support activity/program. The results exhibit that, in order to embed in Western markets successfully, Samsung even applies American Six Sigma (6σ) method to its Chaebol organisational culture and requests its foreign employees to study Korean. Furthermore, this organisational culture of Samsung differs from individualistic organisational culture (e.g. UK) of traditional European MNEs. In addition, Samsung concentrates on six innovations: Cost innovation, global management innovation, marketing innovation, organisational culture innovation, product innovation, and technology innovation. Samsung provides coaching for employees to have them be innovative thinkers. As a result, authors conclude that Chaebol organisational culture positively affects to the business competitiveness and the innovation in Samsung.
Keywords: Business competitiveness, innovation, organisational culture, Samsung, workplace innovation
Introduction
“Studying culture without experiencing culture shock is like practicing swimming without water” – Hofstede et al. (2010).
European has dominated the world for at least 200 years through changes in culture, tradition, social structure, civilisation, race, and knowledge sharing in their colonised nations. However, during the last few decades, players from Asia, especially Eastern Asia (Japan, South Korea and others), have become key players in world economics. South Korea progressed so fast after World War II (Hsieh, 2005). What factors make South Korea top player today? Will Asia soon dominate the world? In reality, massive numbers of Asian consumer-electronic products (e.g. digital camera, Liquid-Crystal Displays – LCD, mobile phone, notebook computer, phablet, tablet, and more) from top multinational enterprises (MNEs), that include Samsung, has inundated the European markets. A decrease in number of European MNEs since late 90s widened a gap for these Asian MNEs to coming in Europe (Giachetti & Marchi, 2010). In 2014, it only took the first six month for Samsung to sell its 74.5 million mobile phones (Chowdhry, 2014). In 2015, 326 million tablets will be sold globally (Shepherd, 2012). Such internationalisation creates the uneasiness for enterprises (Hutzschenreuter & Voll, 2008), especially those in Europe. These kinds of products also exhibit strong Asian culture. What are the cultural values of Samsung?
Interestingly, there are commonalities among MNEs in Eastern Asia. For instance, Korean employees within these MNEs, during their education, are at least acquainted with The Art of War by Sun Tzu and Romance of Three Kingdoms. Also, Confucianism is their national culture; namely, the core of Confucianism is to obey experienced individuals (Khanna et al., 2011), which cultivates organisational culture in business enterprises (Abe & Fitzgerald, 1995), as in Korea’s Chaebol. In addition, national culture reflects the behavioural patterns and attitudes of a society. It is thus interesting to examine how South Korea deliver their national cultures from their motherlands to the world and how it shapes organisational cultures that pass onto their local and European employees, and even the European-consumer mind. In fact, South Korea is considered as one of the four Asian Tigers. The other two ‘tigers’ are Hong Kong and Singapore (Putthiwanit, 2013). Do these transition processes in organisational cultures also affect the innovation and business competitiveness in companies like Samsung?
Moreover, since a low rate of absenteeism in enterprises does not guarantee the performance of enterprises (Rowley & Tashiro, 2005), does culture jeopardise MNEs who seek to balance the assimilation of old and new employees as traditional enterprises? One strategy for most innovative enterprises is that they truly put for an effort to hire highly qualified employees and train them (Diong & Choo, 2008). Therefore, it is crucial for managers in these MNEs to cope with their long-rooted organisational culture. Simultaneously, there is a research that examines the organisational culture concepts of Chaebol such as Suh and Howard (2009). However, a discrepancy of knowledge remains in term of exploring the organisational culture in consumer electronic MNEs, especially, studies on Chaebol as organisational cultures. As a result, this research will explore the transition process and the embeddedness of MNE organisational cultures and how these organisational cultures affect workplace innovation and business competitiveness in Samsung.
Literature Reviews
National Culture, Organisational Culture, and Embeddedness
MNEs seeking to establish their operation in a foreign country will encounter difficulties, such as cultural barriers (Hutzschenreuter & Voll, 2008), domestic and transnational competition (Jimenéz-Jimenéz et al., 2014), and even unfamiliar economy (Hutzschenreuter & Voll, 2008). Difference in ethnicity totally avoids being monoculture group (Hopkins et al., 2005). According to cultural difference and language uneasiness that can create misunderstanding (Xiao & Boyd, 2010), Asian MNEs like Samsung have difficulties hiring foreign graduate students (Khanna et al., 2011). At the same time, Granovetter (1985) reports that scholars, from various fields (e.g. anthropology, history, political science, and sociology) agree that economic behaviour was formerly embedded in individual societal relationships. However, today such economic behavior has become more independent due to globalization and even uncertainty like Covid-19. This example of embeddedness requires patience and is very demanding for investment in time (Sun et al., 2010). As a result, it is unquestionably important to understand organisational culture in MNEs.
In fact, learning the organisational culture can stabilize the inequality in organisational conduct and comprehension (Hofstede et al., 2002). It is particularly true for Asian organisational culture that is very unique. In other word, Asian managers from these MNEs tend to be collective thinking and hard-working pattern as compared to European managers that seem to be more individualistic thinking and smart-working pattern. Summa summarum, the way Asian MNEs have embedded into the European local market is perhaps moderated by the assimilation of culture, which finally does affect their own organizational business competitiveness and innovation in the end. In order to be embedded in the European context successfully, these MNEs need to be familiar with the local environments by forming local networks such as joint ventures (Sun et al., 2010). For example, South Korean global business model started from large enterprises (Hsieh, 2005). As a result, such development resulted in the profit and success of the enterprises (Adair, 2007; Schumpeter, 2008). Furthermore, Asian context and European context shaped the ways in which the organisational cultures of Asian MNEs progressed in Europe. These Asian MNEs have tried to assimilate with the proposed cultures; namely, they became embedded in a European context. Samsung adjusted its cultures to the local environment and exploited organisational cultures to benefit the workplace innovation in its own enterprises. For that reason, European consumers are in favour of Asian technological products nowadays, even pot-pandemic era.
Europe’s Many Business Structures
Europe itself is a continent of diversity. European countries seem to share many similarities based on superficial views. However, the characteristics of European people are diverse (think about Spanish employees coping with Siesta and Baltic people who work in supermarket every day until late night). This consequently has an influence on the structure of business and even innovation and business competitiveness in European context. The followings are the examples:
Organisational Culture of Samsung Electrics
Chaebol is a Korean word that means “a large business group” or “a conglomerate” (Lee et al., 2005; Lee et al., 2012). In the past, as Korea was a part of Japan (Khanna et al., 2011), Chaebol organisational culture is somehow influenced by Japanese culture. Later on, with additional contacts with occidental world during the Korean War, this “inter-firm linkage” (Ibeh et al., 2004) is also influenced by western world. As a result, South Korea’s Samsung is engaged in a mixture of Japanese and Western management style (Khanna et al., 2011). However, Patterson (2013) claims that, due to their culture, Korean enterprises nowadays still devaluates female employees. Therefore, we can assume that Korea’s Chaebol organisational culture seems to be very masculine. In fact, Samsung (or Samsung Electronics) is a South Korea’s MNE that is the world’s major producer of LCD TV, microwave oven, mobile phones and so on (Datamonitor, 2005; Hitt et al., 2005). Similar to other Eastern Asian MNEs, it is bounded with Confucian belief (Patterson, 2013). The only thing that distinguishes this Korean MNE from other Asian MNEs is that it is shaped by Chaebol organisational culture. Samsung concentrates on five business departments: Digital appliances, digital media, LCD TVs, telecommunication networks, and semiconductors (Datamonitor, 2005). It also provides chemical product, financial service, IT service, mechanical parts, and vessel-building (Khanna et al., 2011).
In addition, Samsung’s first CEO’s father graduated from Japan (Ibid.). However, when compared with top-down paternalist-management style of Sony (Johnson & Ouchi, 1974), Samsung attempts to reach its paragon by encouraging new generation to its managerial board with attractive remuneration (Khanna et al., 2011). Such activity truly encourages innovation in enterprise; that is, this innovation is the confirmation of Samsung’s long-term success (Hitt et al., 2005). Nonetheless, even though Samsung Electronics is considered a highly innovative enterprise, it still has had patent lawsuits ongoing with Apple in the US, which both against each other (Chowdhry, 2014). Patterson (2013) also disparages that the approach of promoting young generation boss makes senior subordinates feel uncomfortable to cooperate.
Organisational Culture Motivated by Business Competitiveness and Innovation in Samsung
Hamel and Prahalad (1993) mention that competitiveness emerges in enterprise when there is a discrepancy in managerial goal and enterprise's available resource. Keter (2012) also adds that business competitiveness is the firm’s capability to gain profit from its business. The word “business competitiveness” is often used interchangeably with the word “competitive advantage” (Putthiwanit, 2013). In fact, MNEs that are capable of encouraging their strong internal cultures can thus increase the uniqueness of their cultures and transfer that uniqueness through their employees. For instance, instead of acting like a South Korean MNE in Brazil, Samsung decides to assimilate itself to become part of the Brazilian culture (Khanna et al., 2011 p. 7).
However, it is also notable that MNEs that fail to embed unfamiliar cultures will totally destroy their own employees’ competitiveness (Hutzschenreuter & Voll, 2008; Sun et al., 2010) and even segregate themselves and their products from the outside world. For example, apart from overemphasizing on domestic market (Brown & Linden, 2009), many Japanese MNEs suffer from producing too complicated products to sell internationally – Galapagos Syndrome (Makino & Roehl, 2010). Being innovative, as concluded by Schumpeter (2008), is an enterprise’s ability to produce product at less cost. Innovation is an extensive form of creativity (Adair, 2007), which can help enterprises to making their product distinctive (Giachetti & Marchi, 2010). It is the interwoven of three amalgams: market, organisation, and technology (Tidd & Bessant, 2013). Innovation needs not to be a new thing; namely, it can be the implementation of the older practice (Adair, 2007; Girotra & Netessine, 2011). In order to promote workplace innovation, it requires both brand-new ideas and how to promulgate them (Adair, 2007) via conversation, prototyping, and voting (Girotra & Netessine, 2011).
Methodology and Results
Hutzschenreuter and Voll (2008) recommended using use case study research to study differences in culture. As a result, case study research was conducted to search archives and journal articles for the specific period of 18 years (2004-2022) to observe the continuum of MNE innovation and their business competitiveness support activity/program. The archival searching of this study was thus longitudinal; and such archival research highly significantly correlated with prolongation period (Judge et al., 2007). Multiple cases were conducted to fully comprehend the phenomenon, build on and address the hypotheses, and frame a causal model (Miles & Huberman, 1994). As a result, the validity of multiple cases herein is based on both the selection criteria and the unit of analysis as follows:
One MNE in the consumer-electric industry was chosen for the multiple case analyses: Samsung Electronics. Not surprisingly, Asian MNEs have to apply a variety of different business and management strategies to penetrate European markets. This is challenging for Asian MNEs with top-down management style, since occidental organisational culture tends to balance the power between managers and subordinates (Johnson & Ouchi, 1974). Based on case study research, Table 1 and 2 clarify the significant timelines and challenges of innovative Samsung in four phases: 1938-2000, 2001-2005, 2006-2015, and 2016-Post-pandemic era.
Discussion and Conclusion
Table 1 and 2 support a report by Rowley and Tashiro (2005) saying that Samsung is one of Sony’s major competitors for Sony. Due to Samsung’s collective culture (Soulsby, 2014), even though Samsung is a rival with American MNE (Apple), it still cooperates with some dimensions e.g. Samsung provides mobile phone memory chip for Apple (Chowdhry, 2014). It also joined European MNEs in fashion industry (Germany’s Adidas, Italy’s Armani, and UK’s Ted Baker) to produce limited editions of its mobile phones in 2007 and 2008 (Giachetti & Marchi, 2010). In order to embed in Western markets successfully, Samsung even applies American Six Sigma (6σ) method to its Chaebol organisational culture and requests its foreign employees to study Korean (Khanna et al., 2011). Thanks to South Korea’s labour law, it nowadays even derestricts the age and the gender of future possible employees (Patterson, 2013). We can conclude that Chaebol organisational culture positively affects to the business competitiveness in Samsung.
Furthermore, this organisational culture of Samsung differs from individualistic organisational culture (e.g. UK) of traditional European MNEs (Soulsby, 2014) – we can think about many lands in Europe want to be independent nowadays, when compared to countries in stable Asia continent. In addition, Samsung concentrates on six innovations: Cost innovation, global management innovation, marketing innovation, organisational culture innovation, product innovation, and technology innovation (Jones & Lee, 2006). Soulsby (2014) also reported that Samsung provides coaching for employees to have them be innovative thinkers. It also stresses about innovation in enterprise (Khanna et al., 2011). Therefore, we can conclude that a Chaebol organisational culture positively affects innovation.
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Putthiwanit, C., & Vēvere, V. (2022). Samsung’s Organisational Culture Regarding Business Competitiveness and Innovation in the Post-Pandemic Era. In E. N. Degirmenci (Ed.), New Frontiers for Management and Strategy in the Post-Pandemic Era, vol 130. European Proceedings of Social and Behavioural Sciences (pp. 121-129). European Publisher. https://doi.org/10.15405/epsbs.2022.12.02.11