IMPORTANCE OF CULTURAL ASPECTS FOR INTEGRATED SUPPLY CHAIN ​​MANAGEMENT

Initiatives of Supply Chain Management involve, most of the time, profound cultural changes that allow establishing trust between buying and selling companies, remodeling adversarial behaviors in collaborative relationships between the various partners in the chain.

In addition, the integration between business areas and commercial partners, transacting products and services across national borders, requires openness to the “different” in a multicultural approach, often overlooked by the executives involved in these processes. Thus, it is necessary to understand the nature of cultural aspects for successful supply chain integration.

For this, we will briefly review some models to analyze aspects of national culture, which cover peculiar aspects of the formation of a nation, its values, traditions and customs, organizational culture and evaluation and reward metrics, which work as a mechanism reinforcing habits and behaviors considered “appropriate” by a society, since they derive from them.

NATIONAL CULTURE

The influence of culture on the success or failure of geographic expansion initiatives, partnerships, mergers and acquisitions or the adoption of new processes and technologies is widely discussed in academic and business circles. A considerable portion of failures in partnership, merger and acquisition processes is due to a failure to understand the importance of multicultural training for managers, which allows them to accept and deal with diversity.

Some authors argue that the globalization process, while reducing physical and cultural distances, is also encouraging the creation of a multicultural manager, capable of dealing with the differences found across borders and that, therefore, the influence of national culture would be small in integration processes. However, several other authors refute these conclusions with empirical studies that show how cultural differences still play a fundamental role and represent a significant barrier to the success of these initiatives.

Hofstede, based on work begun in the 1960s with more than one hundred and fifteen thousand executives in seventy countries, notes the importance of national culture in labor relations, surpassing even factors considered more relevant such as position, profession, age and gender, and proposes five cultural dimensions to help understand the differences in behavior and attitudes in each country:

• Individualism X Collectivism ð in individualism, social networks are diffusely interconnected and people tend to only take care of themselves and those closest to them. Already in collectivism, social networks are denser and people can clearly identify the group they belong to, as well as those who are not part of it, offering loyalty to the group and expecting protection in return;
• Power Distance ð refers to the degree to which the less favored accept the unequal distribution of power. The greater the power distance, the more hierarchical is a society and the less acceptable it is to overrule a decision taken at a higher “instance”;
• Avoiding uncertainty ð deals with how a society copes with and how much it seeks to avoid uncertainty. The greater the discomfort and anxiety caused by uncertainty, the more ambiguous situations and alternative behaviors will be avoided, seeking stability and the adoption of clear and formalized rules;
• Masculinity X Femininity ð in “masculine” societies, the dominant values ​​emphasize aggressiveness, competitiveness and the accumulation of material goods. In “feminine” societies, people value relationships, concern for others, and quality of life;
• Short-Term X Long-Term ð the short-term orientation prioritizes fulfilling social obligations and obtaining immediate gains, while the long-term orientation is associated with virtue, economy and perseverance.

Despite the numerous criticisms his work has received over time, such as the use of a questionnaire to measure cultural aspects, the use of nations as measurement units for culture, the use of subsidiaries of the same company to extrapolate findings, old data, few and summarized dimensions to address complex aspects and little attention to people's individuality, some authors have used these dimensions to estimate the extent to which certain cultural characteristics can act as barriers to supply chain integration, highlighting power distance, high level of aversion to uncertainty and short-term orientation as the main barriers to the adoption of SCM practices.

Other authors present different cultural dimensions, but it must be remembered that they are all simplifications of extremely complex structures. One should also be aware of the risk of building stereotypes and caricatures based on these generalizations of national culture, which do not recognize individuality as a fundamental driver of attitudes and behaviour.

ORGANIZATIONAL CULTURE

Despite the importance of understanding the peculiarities of the national culture for the success of supply chain integration, the barriers and difficulties resulting from differences between nations are usually more predictable than those arising from differences between organizational cultures, which need to be considered and studied. Despite this, there is little literature available on the impacts of organizational culture on supply chain integration, which has only recently become the object of studies.

Despite the enormous diversity of models and concepts used to define organizational culture, which have been produced in the last thirty years, it is possible to highlight the work of Hofstede, which was used as the basis for more than one thousand and one hundred articles. In his well-known “onion skin” model, Hofstede divides culture into layers, placing symbols, heroes and rituals in the outer layers that are easier to observe, while values ​​are at the center of the culture. All layers are permeated by organizational practices, which characterize the company's culture. Other important authors in the area, such as Schein and Trompenaars, also use layer structure to describe organizational culture.

Figure 1 - Layers of Organizational Culture
Source: Hofsted, 2001

In integrated supply chain management, where collaborative practices must replace old competitive structures, assuming open information and joint decision-making, organizational culture can be an important facilitator or a major challenge in this endeavor. Despite the extreme difficulty of objectively measuring this relationship, two approaches stand out in the literature on the subject: cultural fit e competing values ​​framework.

The term cultural fit (“cultural fit”) has been widely used in the literature, also appearing as “cultural compatibility” and “acculturation”. It deals with “the sharing of values, beliefs and behavior patterns that permeate inter and intra supply chain partner organizations”, emerging as a growing concern for organizations involved in relationships with suppliers and customers.

Studies that analyzed different types of relationships between commercial partners concluded that most of them are very difficult to be managed without an alignment of organizational cultures, adding that the inability to do this alignment results in integration failures, being one of the main barriers for the effective SCM practice. Other studies corroborate this finding and present several evidences that the cultural incongruence between two companies that seek integration results in low productivity, financial losses, low relationship satisfaction and high levels of conflict.

Despite evidence of a positive relationship between cultural fit As a result, a study by Cadden and his colleagues in 2013 points to a dissonant result, based on the comparison of the performance of different supply chains and the degree of congruence between the organizational cultures of the companies that comprise them, since the chain with the best performance was precisely that formed by companies with less alignment between their organizational cultures. The authors of this study assume that this result may indicate that when dealing with a relationship between only two companies, or a merger and acquisition process, the need for cultural alignment is more relevant than in a scenario with multiple participants, where each one maintains its independence, as in the case of a supply chain.

Furthermore, as the organizational culture is composed of multiple aspects, the supply chain that presented the greatest general congruence among its members, and the worst result, may have had a significant misalignment in just a few cultural aspects, causing the so-called cultural clash (“culture shock”), deteriorating overall performance. Therefore, it is suggested the need to analyze not only the congruence of organizational cultures, but above all the compatibility between culture profiles.

Based on the analysis of the characteristics of each organizational culture, the study suggests that companies that value collective and long-term gains (collaborative) tend to find it easier to adopt integrated supply chain management mechanisms and take ownership of their results than those oriented to short-term individual gains (adversative), as shown in Figure 2.

Figure 2 - Combination of organizational culture and performance profile
Source: Cadden et al., 2013

Another study analyzes how the different types of organizational culture are related to the adoption, promotion and reinforcement of integration initiatives in the supply chain, intra and inter companies. For this, the different organizational culture profiles of the model were used. competitive value network.

In this model, organizational effectiveness criteria can be classified according to two dimensions of value. The first dimension is related to the company's focus, which can be internal or external, and the second dimension is a continuous spectrum, with flexibility at one end and stability and control at the other. The conjunction of these two dimensions results in a matrix with four quadrants, each characterized by an organizational culture profile:

• Clan (internal orientation with flexibility) ð characterized by cohesion and morals as means for the development of people and the organization;
• Autocratic (external orientation with flexibility) ð aims to grow and prosper with flexibility and agility;
• Market (external orientation and stability) ð Through planning and setting goals, this type of organizational culture aims to achieve productivity and efficiency;
• Hierarchical (internal orientation with stability) ð Companies with this type of culture seek stability and control through effective information management and communication.

It was examined whether a given organizational culture profile positively or negatively influences integration with supply chain partners and whether this actually results in better performance. Their analyzes offer evidence that the organizational culture and the organization's performance are directly related to the adopted integration practices. They also conclude that the types of organizational culture proposed by the CVF are directly related to the adoption of internal and external integration practices.

The Clan culture type is not directly related to the company's performance, while the Autocratic culture is positively related to performance and the organizational cultures of the Hierarchical and Market types are negatively related. With regard to integration practices as mediators between organizational culture and performance, companies with a high score in the characteristics of the Autocratic culture presented the most positive results in the levels of internal and external integration, contrary to predominantly Hierarchical cultures, whose levels of integration were impacted negatively.

Thus, there seems to be enough evidence that organizational culture plays a relevant role in the success, or failure, of SCM initiatives, making the incongruity between the values ​​and beliefs of business partners and the inability to deal with existing differences to be considered an important barrier to SCM.

PERFORMANCE INDICATORS

Going down one more level in the analysis of how issues related to certain patterns of behavior can be obstacles to the integration of the supply chain, we can take the performance indicators and reward mechanisms, always listed as barriers to the SCM, as a reflection of the culture organizational and national, reinforcing them, which may partly explain the great difficulty in modifying them in the short term.

There is abundant literature on the problems faced to effectively measure the performance of SCM practices. For many authors, although performance measures play an important role in determining objectives, evaluating results, behaviors and defining future actions, they have not received enough attention from executives and researchers.

There seems to be a need to develop a new system of performance measures for the Supply Chain Management, since traditional measures present application problems in this new management paradigm. The main problems pointed out in the performance indicators applied to the SCM are:

• Inability to deal with complexity ð there is enormous difficulty in developing measurement mechanisms to assess the performance of the supply chain, considering that it can present enormous complexity, resulting from the use of different IT systems, geographical dispersion of companies, different cultures , environments in constant transformation, which require adaptive metrics;
• Use of internal and isolated metrics ð traditional performance measurement systems were designed within the “resource-based” management paradigm and not the “relational view”, which makes it difficult to assess the supply chain as a whole and leads to inconsistencies in the analysis of the results;
• Predominance of financial indicators ð despite the fact that managers have perceived the inadequacy of exclusively using financial indicators to evaluate the results of supply chain integration, since they encourage actions that lead to short-term gains and are unable to assess the value created for end customers, there is still a strong bias in the use of cost indicators;
• Lack of connection with the chain strategy ð First, the strategy of each member of the supply chain can be considerably different, which already generates an enormous challenge to define the indicators that serve the purposes of the different strategies. In addition, the indicators used to measure the chain's performance often conflict with the company's strategy, leading to the failure of the initiative;
• Excess of indicators ð in an attempt to correct some of the limitations presented above, an enormous number of indicators is created, which makes it difficult to identify the critical ones among the huge majority that are unnecessary.

The difficulty of measuring performance and, therefore, ascertaining benefits is an important barrier to supply chain integration, as managers need to justify decisions and investments. It is also important to remember that inappropriate measures lead to inappropriate behavior, reinforcing some of the aspects discussed in cultural barriers.

CONCLUSION

There seems to be enough evidence that behavioral aspects, shaped by national and organizational culture, and reinforced by performance indicators, play an important role in the success of integration initiatives in the supply chain. Chart 1 summarizes the main problems associated with the cultural aspects for which the executives of supply chain leaders must be attentive.

Table 1 – Summary Table

BIBLIOGRAPHIC REFERENCES

BRAUNSCHEIDEL, M.; SURESH, NC; BOISNIER, AD Investigating the impact of organizational culture on supply chain integration. Human Resource Management, v. 49, no. 5, p. 883–911, 2010.

CADDEN, T.; HUMPHREEYS, P.; MCHUGH, M. The influence of organizational culture on strategic supply chain relationship success. Journal of General Management, v. 36, no. 2, p. 37–65, 2010.

                      ; MARSHALL, D.; CAO, G. Opposites attract: organizational culture and supply chain performance. Supply Chain Management: An International Journal, v. 18, no. 1, p. 86–103, 2013.

CHEN, IJ; PAULRAJ, A. Towards a theory of supply chain management: the constructs and measurements. Journal of Operations Management, v. 22, no. 2, p. 119–150, Apr 2004.

FAWCETT, SE; MAGNAN, GM; MCCARTER, MW Benefits, barriers, and bridges to effective Supply Chain Management. Supply Chain Management: An International Journal, v. 13, no. 1, p. 35-48, 2008.

HOFSTEDE, G. Culture's Consequences: comparing values, behaviors, institutions, and organizations across nations. 2nd edition, Thousand Oaks, CA: SAGE Publications, 2001.

                            The usefulness of the organizational culture concept. Journal of Management Studies, v. 23, no. 3, pages 253-258, 1986.