Effects of business culture on projects
For historical reasons, nations and regions frequently develop their own characteristics or culture, often autonomously. This may be because they are in some way isolated from their neighbors, or nations may deliberately attempt to differentiate themselves from their neighbors (Lewis, 2000). The development of national characteristics and their associated cultures is also reflected in the way the nations do business.
Over time, organizations from each nation, or region, develop their own working methods, structure and way of operating, which may be based on the traditions and cultures of their originating nation. This business, or organization culture may be influenced internally through process demands, or the need for efficiency (Osigweh, 1998). The business culture, structure and operating methods of organizations will also be influenced by a number of factors, which may be external to the organization such as national, or market, requirements (Hill, 1997). This mixture of influences may result in the business cultures of organizations also being noticeably different from other similar organizations of the same nation, or industry.
Exhibit 1. Working Together
In turn, the business culture of organizations will have an influence in the way projects are managed by the organizations involved. The differences in the work culture of nations and organizations are most noticeable in projects undertaken by participants from more than one nation (Meredith, 1998).
With the continuing moves toward free trade between nations, such as within the European Union, there is a greater incentive for organizations to undertake international projects (Gibbs, 1997). The current trend toward the merging of large international organizations also provides opportunities for different nations to work collaboratively together in the new organizations, within a project environment (Pells, 1999).
Exhibit 2. Sample Dimension Analysis Results
Nations working together on projects initially begin with their own approaches to managing and working. These separate approaches can be found in a number of business areas, including: management style, empowerment, culture and risk perception (Trompenaars, 1997). These can provide significant benefits to international projects.
However, in reality, there can also be distinct differences in the way organizations from the various nations work (Hill, 1997). The differences in the way nations work are often more noticeable when undertaking, long term, international collaborative projects. Sometimes the differences appear to outweigh the benefits of the project. (Meredith, 1998). However, increased knowledge and understanding will to place the issues in perspective, as well as indicating ways of resolving them. A good understanding of the differences and their influence on working methods is necessary for any business involving more than one nation (Harris, 1991). Exhibit 1. illustrates some of the benefits and differences of working together.
Within international projects, there is a need for participants and stakeholders to understand the national characteristics and culture of participants, at an early stage. This will allow them to be taken into account when developing the project. There may also be a need for appropriate mechanisms to be established in order to assess and minimize any difficulties relating to the management approaches of nations. These will also provide additional help and guidance to participants (Jackson).
Culture can be defined in a number of ways, including “The collective programming of the mind which distinguishes the members of one group of category or people from another” (Hofestede, 1994). This programming of the mind can come from many sources. But the most influential of these are from within the nation or region that the individual, or group, was brought up in, or has adopted as their own (Ronen).
Cultural influences can primarily be introduced by the nation, or region itself. Alternatively, the cultural influences can be introduced as a result of participation in the working environment of an organization. When looking at the potential cultural influences on a project, it is appropriate to categorize these influences into two broad groups:
• National Culture—Which can be considered to encompass all characteristics and influences upon the individual or group, whether they come from national, social, work, or religious origins
• Business Culture—Which can be considered to encompass only those characteristics and influences that relate to the work, or business, of the individual or group
The contribution from these types of culture, to the participants, will be influential in defining the way international projects are managed. The participants may place different emphasis on the needs of the project and the way it is managed. Some of these characteristics can be adapted for the success of the project; others will require the project to be managed within their bounds.
It is also necessary to be able to compare the characteristics of the different participants in international projects. This will allow assessments to be made of how similar, or different, the participants are. The assessments will involve identifying the different cultural characteristics, their origins and influence on the working environment. It is also necessary to assess the potential for change of these cultural influences, or how they can be managed to help the success of the project.
An appropriate method of comparison is to select a series of logical extremes, or opposites, of characteristics, such as directive leadership to participate leadership. Once the logical extremes have been selected, the preferences of the project participants can be identified and comparisons made between the different participants. This is a similar approach to that of other authors, such as Hofstede (1994) and Trompenaars (1997) analysis of cultural dimensions. This type of approach allows a number of different individual characteristics to be assessed individually, or in comparable groups. An example of how assessment of cultural dimensions can be used to identify similarities and differences between project participants is shown in Exhibit 2 (Hunt, 2000).
The various perspectives of the participating nations are plotted against a variety of individual dimensions, on an indicative scale. When the perspectives of each nation are compared, the further apart the cell plots are from each other the greater the possibility of differences. Participants with a difference of more than two cell plots are likely to have significant differences in their working approaches. A large difference in the cell plots is likely to result in management problems for the project, increasing the risks to the success of the project.
The National Culture of a nation, or region provides cultural influences on an individual, or group, based on the wider issues of the nation. These may be tangible and very visible, such as geography, or they may be intangible and difficult to define clearly, such as logic. Some cultural characteristics may be infused as a result of living in the environment of the nation, or its neighbors. Other cultural characteristics may result from the thinking and education processes used by the nation (Ronen).
The national characteristics of different nations are often very well described. Details of these can be found in various official publications, such as legal documents, government statutes and statistics. In addition, they are often the subjects of independent publications such as travel guides, business guides (Lewis, 2000).
All of the national culture characteristics, from the different participating nations, will have an impact on an international project, to a greater or lesser extent. As such, the characteristics need to be understood by participants, at all levels. This knowledge is necessary from an early stage of the project. Awareness of the issues relating to national culture on a project can help the success of the project.
Most of the national characteristics can be considered to be generic to each nation, or region, as well as being tangible. That is, they can be quickly identified and associated with the nation or region, such as the language of Russia, or the religions of the Middle East. The national characteristics are also likely to have a direct impact on any project that is undertaken within the locations of nations exhibiting these characteristics. Some national characteristics, such as governance and language, may also have an impact on international projects not located within the nation, but using products, resources, or data from these nations (Harris, 1999). Likewise, projects involving significant resources from individual nations, or regions, will also have to take account of the national characteristics associated with the resources, such as national, or religious holidays.
Other generic characteristics, such as perception of discrimination, or respect for traditions, are less tangible. As a consequence, they may be less easy to identify, or to assess. However, they are also likely to affect a project, in similar ways to that of the more tangible characteristics. The use of assessment tools, such as dimensional analysis, will help to identify the intangible characteristics and providing indicative values for the different participants.
In addition to having a direct effect on the project, national culture aspects may result in an indirect effect on the project, such as national or religious holidays. Therefore, it is also necessary for project managers to be aware of the consequences that external culture related events will have on the project. This will allow them to manage the work of the project appropriately.
The effects of the tangible cultural characteristics of a nation, such as geographical, language or transport infrastructure, are often ingrained within the complete framework of the nations organizations and their business practices. As such, it is probably unlikely that these can be changed during the lifecycle of a project. As a result it will be necessary for international projects to operate within a, possibly ridged, framework identified by the tangible cultural characteristic of the nations involved (Ronen).
It is also unlikely that the intangible cultural characteristics of a nation, such as the legal processes, or level of governance, can be changed significantly during the lifetime of an international project. However, it may be possible for, small, allowances to be negotiated for the project, such as special legal status (Ronen). In addition, it may also be possible for some individual participants, from the different nations, to adapt their own cultural approaches for the purpose of the project. The extent and limits to these allowances, or tolerances will vary depending on the nation, its culture and strategic needs. Details of the extent of the levels of tolerances, in the national culture characteristics, should be known about early in the project, these will provide a, possibly limited, degree of flexibility within which the project can be optimized.
Exhibit 3. Examples of Dimensional analysis for National Culture Perspectives
In general, the national culture characteristics can be considered to be external to the project, however they will form the framework for the project itself, within which it has to operate. Changes to the national culture framework will also have an impact on the project itself, this could be in the form of new legislation, or the influence of a tradition. It is unlikely that the project manager will have any significant control over any of these changes to the national cultural characteristics. Because of the limited control over these cultural influences by the project, they provide an additional level of risk that needs to be taken account of in risk management planning. However, changes in this area are often predictable and appropriate measures can be prepared and implemented to reduce their impact (Harris, 1991).
If an international project wishes, or needs, to operate outside of the national culture boundaries, or frameworks of participants, it will increase the risks to the success of the project. The further the project moves away from the cultural frameworks of the participating nations, the greater the risks and therefore the more difficult it will be to manage the project. This is especially so if the project wishes to operate outside of the national culture framework of the nation in which it is based. In addition to increased risks, the project will also need to make allowances for additional time and costs, in order to ensure successful implementation and operation in the areas outside of the national culture framework.
It is therefore essential that managers, at all levels, who are involved with international projects, are aware of the national cultural characteristics of participants. This awareness will help to ensure the success of the project in a number of ways including:
• Identifying and understanding the different national culture characteristics
• Understanding the effects of national culture on the project
• Assessing the national culture boundaries and level of tolerance available
• Being aware of aspects that can, or cannot, be changed
• Preparing for the impact of external national culture changes.
The process of awareness should begin as early in the project as possible to enable details of the cultural framework to be identified, as well as the extent of any areas of tolerance. Once the national cultural characteristics are known, dimensional analysis can be used to assess and compare values for the different participants. The analysis needed will have to take account of a variety dimensions, or perspectives, in order to examine the many different aspects of the national culture of international project participants. Some examples of types of dimensional analysis that can be used when examining the culture of project participants at national or regional level are illustrated in Exhibit 3.
Completion of dimensional analysis will provide a model of the national characteristics of the nations participating in an international project, which may have a similar format to Exhibit 2. The completed model will provide an indication of the main characteristics that are likely to form the framework within which the project will be expected to operate. During the course of the project, the data and the model may need to be updated as some elements of the characteristics or the national culture framework changes. This may occur when participants from other nations join the project, or before the start of a new project stage.
Assessment of cultural dimensions at a national level provides a number of high-level indicators as to how people from different nations live and work. From this an initial assessment can be made to provide general indications as to how the different nations are likely to interact in a project environment. This will enable an assessment to be made as to whether any special management procedures are needed, to ensure all nations are able to work within the cultural framework available to the project.
Projects are often one of the primary results of trade and other agreements between nations. As such, these projects will require interactions with various organizations from the different nations. The organizations involved may play a prominent role in all aspects of the project, or play a specific role in part of the project.
Assessment of the national characteristics, such as language and traditions, can provide high-level indications as to how well participating nations are likely to work together on international projects. In reality, these characteristics may be too general to provide any more than an indication as to whether there are likely to be significant problems, or identify whether any special management techniques are likely to be required. Therefore, there is a need to understand the characteristics and approaches to work and business from a more detailed, business or organization, related cultural perspectives.
Over time, organizations develop their own unique culture. This business culture will be strongly influenced by the national culture of the organizations originating nation (Lewis, 2000). However, other aspects will also influence the business culture of organizations. These may result directly from the process, or marketing needs, of the organizations. They may also come from less direct sources, such as trading partners, competitors or transactions with other nations (Hill, 1997).
The business culture characteristics can be considered to be external to the management of international projects, but they will have a significant impact on the project itself. This could be in the structure, reporting, or management requirements of the project. They could also affect the working practices of the project, such as decision-making, work group tasking, or resource management. The project manager will have some control over these business cultural characteristics. However, the amount of control may be limited. In addition, the project will be subject to sudden changes, as a result of business decisions made by the stakeholder organizations. Because of the limited control over these cultural influences by the project, they provide an additional level of risk, which needs to be taken account of in risk management planning.
While the cultural characteristics of a nation are often ingrained within the complete framework of the nations organizations and their business practices. The business related cultural characteristics are primarily concerned with the way the nations or organizations trade; as such they are potentially more adaptable to the needs of projects. Business transactions need to be flexible in order to succeed, especially those that result in trade, or projects, with other nations (Harris, 1991). The ability to change may be as a consequence of the strategic need for the product of the projects, or because the methods of the project are seen to be more appropriate or efficient. However, the extent of any flexibility and tolerance allowed for a strategic project should be agreed early.
As a result of the trading needs of the organization, the business characteristics of participants may have some flexibility, allowing some change, within the bounds of an international project. The amount of flexibility available to the project may be limited, requiring complex negotiations with stakeholder organizations. Although, The amount of change allowed, and its impact on the rest of the national organization, may also be strictly controlled (Harris, 1991).
Exhibit 4. Examples of Dimensional analysis for Business Culture Perspectives
In a complex project, it may be necessary for a project to operate outside of the business culture framework of some participants. Operating in this way will increase the risks to the success of the project. The further the project moves away from the business culture frameworks of the participants, the greater the risks. However, with a good understanding of the cultural issues and careful risk management, it may be possible to find an appropriate solution. Although, the project will also need to allow additional time and costs in order to ensure successful implementation and operation in the areas outside of the framework.
The cultural characteristics of the participating nations may have a significant impact on the way a project is managed. Cultural differences may result in difficulty in gaining agreements on management and working methods. The effects of culture may result in the project, or components, being managed in apparently unconventional ways. This may be acceptable as long as the objectives are formally agreed and work is proceeding to fulfill the objectives in an acceptable way.
Most international projects involve an element of remote working for participants. The traditional way of working involved relocation of relevant resources to project specific sites (Meredith, 1998). However, many projects, such as software or e-commerce, do not require the majority of resources to be located in project specific sites. Instead the project teams work on their own site, exchanging data where appropriate using the Internet and e-mail. When managing project teams based in different nations, the teams will usually be required to operate within the business culture of the host nations. It is important to understand, and make appropriate allowances for the different ways of working, managing and communicating in each of the remote environments.
Exhibit 5. Spectra Analysis Framework Summary
Modern technology, such as the Internet, provides fast access to increasing amounts of data. In turn, this provides easy, communal, access to the data repositories of international projects from remote sites. This information may not always be available in the native language of project participants, or the agreed working language. In these cases, special arrangements may be needed to extract the appropriate knowledge and translate it for use within the project, with appropriate allowances for additional time and costs.
Business communications play an increasing part in modern projects, especially when participants are separated by long distances or several time zones (Hill, 1997). Some nations, or regions may not have modern communications systems such as Internet access, while some organizations prefer certain communications tools, protocols, or languages. An understanding is needed of the preferences of project participants, otherwise communications and data transfer may use inappropriate systems, or their significance may be lost.
Modern technology, such as cell phones, and e-mail provide opportunities to communicate very quickly. While these modern communication methods can provide simple and fast methods of transmitting data and instructions, they can also, accidentally, have an impact on the cultural harmony of a project, through inappropriate use. Care should be taken to ensure that usage guidelines take account of cultural differences.
It is therefore essential that project managers, involved with international projects, are aware of the business characteristics of participating nations. This awareness will allow them to utilize the business practices for the benefit of the project, including:
• Understanding the way participants work and conduct their business
• Understanding the additional constraints that may be required by various participants
• Being aware of the potential impact of differences in business characteristics
• Assessing how much the business culture characteristics can be adapted to the project needs
• Assessing how much of the project management needs will have to be adapted to the business culture of the participants.
Details of the business culture of nations and organizations can be more difficult to obtain than data on national cultures. This may be because the data is only available within the organizations, or is produced in the native languages. The use of techniques, such as dimensional analysis, can improve the level of data available on participants, as well as indicate levels of difference and tolerance Exhibit 4, provides examples of different dimensions or perspectives that need to be considered when assessing the business culture of organizations working on projects.
Completion of dimensional analysis will provide a model of the business characteristics of the organizations participating in an international project, which may have a similar format to Exhibit 2. The completed model will provide information relating to the business culture framework of the participants, as well as the areas of tolerance that can be used to optimize the project. During the course of the project, the data and the model may need to be updated as some elements of the characteristics or the business culture changes. This may occur when new contractors, from other organizations, join the project, or before the start of a new project stage.
Many organizations with strong international connections, and trading, already have standard procedures and manuals that deal with intercultural issues. These can include briefing sheets on national and business culture issues, as well as training programs for introduction and extraction of expatriots. They can be a primary source of information, when assessing the potential impact of culture on projects. However, the data provided will need to be updated within the context of each international project. This is particularly important if the project is long, or complex, or the project involves organizations that do not participate in international projects, on a regular basis.
Exhibit 6. Examples of Cultural Perspectives and Projects
Cultural characteristics, whether national or business originated, will have an impact on the way in which any international project is managed.All projects involving different nations will need to work within the cultural frameworks of the participants. This may also be that case if a single nation project uses a significant number of resources from other nations.
Within the boundaries provided by the national and business cultures, a project will generally be free to operate in the most appropriate ways to ensure its success. Once the cultural assessments are completed and understood, there may only be a limited area of tolerance within the combined cultural frameworks in which the project can operate. Attempting to operate outside of this area of tolerance will affect the project harmony and increase risks. Though, the impact of cultural influences may restrict the projects abilities in some way. These issues need to be taken into account early in the project lifecycle, with appropriate allowances made, such as increases in timescales or costs.
The cultural influence of different nations provides a rich mixture of characteristics. All of which have an influence on international projects, to a large or small extent. Some of these provide immutable boundaries around which the project has to be constructed. Others provide a flexible framework for developing and enhancing international projects.
The national and business related characteristics of a nation will be integrated with the ways in which resources of each nation work. These ingrained working methods will be brought by resources to international projects. Resources involved with new projects would expect to utilize the majority of their ways of working. Resources from new partners entering an existing project can be expected to influence the project sufficiently so that the project will adapt to the most significant working methods of the new partners (Lewis, 2000).
With the potential for so many cultural variations introduced by project participants, as indicated in Exhibits 3 and 4, there will be a need to perform a rigorous and detailed analysis of any cultural differences, at an early stage of any international project. Such an assessment will provide comprehensive information relating to the cultural boundaries, levels of tolerance, amount of flexibility and control available to the project. Techniques, such as Spectra Analysis (Hunt, 2000), can be used as a framework to provide the direction and data necessary for cultural assessment. Exhibit 5 provides a summary of the Spectra Analysis framework.
The cultural characteristics of the participating nations may have a significant impact on the way a project is managed. Cultural differences may result in difficulty in gaining agreements on management and working methods. The effects of culture may result in the project, or components, being managed in apparently unconventional ways. This may be acceptable, for the participants, as long as the objectives are agreed and work is proceeding to fulfill the objectives in an acceptable way.
The different types of cultures have a number of characteristics, which can be used to indicate the type of behavior that can be expected from nations, the organizations, or the people involved. These characteristics also need be examined in more detail, from a project management perspective, in order to provide an understanding of the potential impact of cultural issues on international projects. The concept of assessing cultural issues using the extremes of dimensional perspectives can be applied directly to projects and the way they are normally managed. Some examples of where the national and business perspectives will affect the various project management disciplines are shown in Exhibit 6, based on a reduced version of A Guide to the Project Management Body of Knowledge (PMBOK® Guide).
Exhibit 6 indicates that most of the project management disciplines are likely to be affected by the cultural aspects of international participants. While the principle influences will appear to be from within the business culture of the participating organizations, the effects of the national characteristics will also be significant. Exhibit 6 also indicates that many of the national or business cultural characteristics and perspectives will also have an impact on more than one project management discipline area. As such, their potential effects on all elements of the project will need to be understood thoroughly.
Many projects have only a very limited international element, such as a specialist supplier or implementation team. The majority of the work is being undertaken by organizations within the home nation. It is possible to adapt the dimensional analysis approaches, such as Spectra Analysis, to understand the business culture of different organizations in the same nation. Such an approach is particularly useful if the project is complex, or contains a number of participating organizations from different industries, regions, or with significantly different skills.
It is, therefore, necessary for project managers working on international projects to be aware of a number of issues relating to the cultural aspects of the project:
• Awareness of the similarities, and differences between participating nations
• Understand the potential effects of these similarities, or differences on the project
• Understand and prepare for the potential impact of external cultural events
• Accept the different working methods of the nations
• Identify the cultural boundaries in which the project must operate
• Know how much flexibility there is available to change working methods
• Manage the additional risks resulting from operating outside of cultural boundaries
• Understand the ways that resources from different nations would intend to work in international projects
• Understand the extent to which resources are likely to expect their ways of working to be utilized.
Once assessed, the national and business culture characteristics and frameworks, established boundaries and known levels of tolerance should be included within the project initiation documents. This data can be included within the areas concerned with formal agreements, working practices and organization elements. The inclusion of this data will add context to the data within other documents, as well as helping to justify the management elements of the project.
Once the initial assessments are completed, early in the project, a mechanism should be introduced to allow the documents to be updated. It is also likely that new intercultural issues will arise during the course of the project. A mechanism should be provided to allow the new issues to be assessed and resolved, using a dimensional analysis approach. The results of the assessments should be reviewed regularly, at least during the project stage reviews.
With the removal of international trade barriers, there is a greater incentive for nations to trade with each other, often in the form of projects. The contribution from the various types of national and business culture, of the participants, will be influential in defining the way international projects are managed. The participants may place different emphasis on the needs of the project and the way it is managed. Some of these characteristics can be adapted for the success of the project; others will require the project to be managed within their bounds.
It is therefore necessary to be able to understand the characteristics of the different participants in international projects. This will allow assessments to be made of how similar, or different, the participants are. The assessments will involve identifying the different cultural characteristics, their origins and influence on the working environment. It will also be necessary to assess the potential for change of these cultural influences, or how they can be managed to help the success of the project. These assessments should be undertaken as early as possible in the project. The results may influence the decision to proceed with the project.
Assessment of cultural dimensions at a national level provides a number of high-level indicators as to how people from different nations live and work. From this an initial assessment can be made to provide general indications as to how the different nations are likely to interact in a project environment. Characterizing the national characteristics, such as language and traditions, may be too general to provide any more than an indication as to whether there are likely to be significant problems, or identify whether any special management techniques are likely to be required. Therefore, there is a need to understand the characteristics and approaches to work and business from a more detailed, business or organization, related cultural perspectives.
A more detailed and rigorous assessment of the business characteristics will usually be required. This can be undertaken by comparing the participants’ views on logical extremes of business approaches, such as empowerment to direction. This type of dimensional analysis will indicate how similar, or different the participants’ views are. In turn this will allow the cultural framework to be developed, within which the project will be expected to operate. Dimensional analysis will also provide an indication of the amount of tolerance available between the participants’ views. This approach will allow comprehensive models of the cultural characteristics of project partners to be developed.
Most of the project management disciplines are likely to be affected by the cultural aspects of international participants. While the principle influences will appear to be from within the business culture of the participating organizations, the effects of the national characteristics will also be significant. Many of the national, or business, cultural characteristics and perspectives will also have an impact on more than one project management discipline area. As such, their potential effects on all elements of the project will need to be understood thoroughly.
Once the initial assessments are completed, the results should be updated regularly. There should also be a mechanism available to identify and assess any new cultural issues. The results should also be reviewed regularly, such as when a new nation joins the project, or at a project stage review.
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Proceedings of PMI Research Conference 2000