Thomas G. Ayers Chair in Energy Resource Management; Professor of Management and Organizations
In a globalizing economy, corporations and industries increasingly need to manage across cultural as well as geographic boundaries in communicating with their stakeholders. Do companies from the same country use similar cultural styles when they talk about business? What about companies that operate in the same industry but are located in different countries? To see similarities and differences in the way companies communicate with stakeholders, it is important to consider the overall package of cultural concepts at the companies’ disposal. Klaus Weber, Assistant Professor of Management and Organizations at the Kellogg School of Management, provides a step-by-step process for simplifying the information involved in analyzing comprehensive sets of cultural concepts.
Weber’s work extends the notion of a “cultural toolkit” developed by Ann Swidler (1986) and helps to address questions of corporate culture in complex environments. Put simply, Swidler pointed out that culture supplies people and firms with a large reservoir of resources to talk about themselves and to navigate their environments. Weber provides one way of measuring the influence of culture by examining how pharmaceutical companies in the United States and Germany portrayed themselves over twenty-one years. He particularly focused on corporations’ cultural toolkits as expressed in annual reports, though he noted that toolkit analysis could be generalized to other aspects of culture, such as behaviors, material symbols, and images.
Having once worked in the pharmaceutical industry himself, Weber was particularly drawn to the challenges posed by the companies’ triple roles as commercial enterprises, performers of cutting-edge research, and promoters of health. “They often try to appeal to several different audiences at the same time,” he explained. “This makes them particularly interesting because they need to tap into diverse cultural concepts to do so. It is easy to see that they want to portray themselves as more than one thing.” Thus, Weber’s objective in this research was to assess the comprehensive repertoires, or cultural toolkits, that these companies use in their annual reports, and to test if their industry and national environments influence them.
Published in the journal Poetics, the research relied on a dataset of annual reports from ninety-four pharmaceutical companies in the United States and Germany between 1980 and 2001, resulting in 943 data points at the level of the firms (541 U.S., 402 German). To discern cultural ideas in each firm’s language, Weber used several systematic techniques to create a dictionary of cultural concepts that appeared in the reports. He found six broad groupings or “clusters” of sixty-three observed cultural elements (the overall toolkit). For example, the “action style” cluster contained twelve attributes of competent management: rational, committed, careful, decisive, etc. Weber then coded the presence of these elements in each report through textual analysis. To visualize comparisons between firms, he assigned an “emphasis score” to each cultural element based on the number of times the element was used, standardized by the total number of occurrences of all elements. Figures 1 and 2 show the average profiles of U.S. and German firms in 1980 and 2001 for two clusters, “action style” and “means of action” (corporate strategic actions). The graphs provide three types of information:
Figure 1: Action Style
Figure 2: Means of Action
To evaluate the overall cultural similarity among firms, Weber suggested additional techniques to simplify the data, such as multidimensional scaling. This technique revealed trends in how firms differed over time. In 1980 German and U.S. firms clearly used distinctive sets of cultural concepts in their communications, which suggested the home country was a key cultural influence. By 2000, however, such concepts were no longer so distinctive. Much of the convergence occurred in the early 1990s.
This pattern suggests that pharmaceutical companies do indeed talk quite differently about what it means to run a company, but that differences due to nationality have been diminishing since the 1980s. Weber explains this finding as the outcome of two distinct processes. First, in a generational dynamic, “More recently created companies and younger executives appeal to quite similar cultural ideas from the outset. They differentiate themselves more by virtue of their position in the industry, and less based on nationality.” Second, the fact that the companies’ shareholders and customers are becoming increasingly similar erodes the importance of location for determining what cultural style prevails. “These companies are talking to increasingly similar audiences. They are owned by similar investors and compete more with foreign companies, which influences the way they want to portray themselves.”
Overall, Weber’s research demonstrates that corporate culture is not just a matter of national differences or differences in executives’ deeply held values. Companies use cultural ideas pragmatically to influence their specific environment. Companies differ almost as much within countries as they differ between. The lesson for management teams is to develop a versatile cultural toolkit in order to most effectively portray their company to a more diverse public. Weber adds, “The language and cultural concepts used in these annual reports is important not so much because it provides a window into what the managers actually think. There is clearly ‘impression management’ going on. But that impression making is no less critical, because today the companies are under constant scrutiny by stakeholders and the public. Questionable and tarnished images and reputations are costly and hard to repair. And so I prefer to think of cultural toolkits as communication devices to influence and manage that public sphere. Being good at using the right cultural concepts gives companies legitimacy, strategic flexibility, and is ultimately linked to economic performance.” This research is therefore especially relevant for people trying to understand stakeholder management and corporate communications in a global environment, and for expanding the techniques for studying the culture of markets and organizations.
Swidler, Ann (1986). “Culture in Action.” American Sociological Review, 51(2): 273-286.
Weber, Klaus (2005). “A Toolkit for Analyzing Corporate Cultural Toolkits.” Poetics, 33(3-4): 227-252.