PART II: Empirical study
6. Methodology
6.1. Sample
The EFQM model (Chapter 4.2. – section EFQM model) aims at optimizing a company’s processes with the help of all employees under good leadership (Dahlgaard-Park, 2015).
This means that it is the responsibility of the management of a company to guide employees in order to receive remarkable results. It is an interrelated dependency since without staff leaders a company could not improve their processes and vice versa.
Likewise, Fisher (2001) analyzed the use of codes and identified the importance of managers and their role as mediators when it comes to the implementation and interpretation of COCs. For this reason, managers have been interviewed for this thesis
as they act as facilitators and their understanding might affect the perception of their employees.
As literature reveals, COCs are perceived differently when expatriates introduce them to the subsidiary since these people are familiar with the headquarters’ as well as the subsidiary’s culture. Therefore, the COC is more readily accepted by the subsidiary (Barmeyer & Davoine, 2011a). This is one of the reasons why employees who had an expatriate contract and thus, worked at the headquarters and at a subsidiary have been interviewed for this thesis.
It has been found that COCs are established collectively across various areas within an organization (Coughlan, 2005). This is why the current study is divided into two separate interview groups. These two groups will be explained in the following two paragraphs.
The first target group consists of managers who have lived and worked at headquarters as well as in a subsidiary. These managers take an active part in the COC transfer process. Furthermore, they act as key figures of practice transfer in MNEs (Barmeyer
& Davoine, 2011a; Geppert & Williams, 2006) and thus, are the ideal target group for this study.
The second group includes managers located in Austria. These managers were part of the COC development process at headquarters. The implementation process can influence the embeddedness of the COC within the organization (Nijhof et al., 2003).
Therefore, managers who have developed and implemented the COC are interviewed.
These managers provide a deeper insight into the implementation process. Therefore, potential challenges can be analyzed more deeply.
In total, eight managers from the Austrian based MNE PALFINGER AG have been interviewed for this thesis. An Austrian based MNE with subsidiaries abroad has been selected because of the lack of literature dealing with COCs in Austrian MNEs and because culture and country-specific factors might influence the implementation of a COC (Yu, 2015). Although several studies on the effectiveness and challenges of COC on a country level have been published (Esbenshade, 2004; Hoang & Jones, 2012; Kaufman et al., 2004; Lund-Thomsen, 2008; Mather, 2004; Prieto-Carrón, 2006; Rodríguez-Garavito, 2005), they mainly focus on developing countries in Latin America, Africa or Southeast Asia, which apparently results in a lack of studies regarding Austrian based
MNEs. To address this lack of studies, an Austrian MNE, in this case PALFINGER AG, is selected. Analyzing the company’s processes regarding the transfer of its COC provides a good opportunity to fill this research gap.
In the following section, the analyzed MNE will be introduced. Afterwards, the interviewed managers and their countries of employment will be outlined.
PALFINGER AG
The company was founded in 1932 and is one of the leading international manufacturers of hydraulic lifting systems. It is well known for its loader crane (Palfinger AG, not dated,a).
The product portfolio includes various products such as hooklifts, passenger lifts, marine cranes, and tail lifts (Palfinger AG, not dated,b). In 2017, the company generated a revenue of approximately 1,471.1 million euros and accounted for more than 10,200 employees on a global scale (Palfinger AG, 2018b). The company’s headquarters is based in Bergheim, Austria. It has 39 production sites in more than 20 countries and sells its products in more than 130 countries across five continents (Palfinger AG, not dated,a).
Since 2013 the PALFINGER AG has published integrated annual reports that present financial data, such as economic and legal information, and non-financial data, such as the results of sustainable management (Palfinger AG, 2018b). This makes PALFINGER the first publicly listed Austrian company that publishes integrated annual reports. Prior 2013 a separate sustainability report had been published biannually (Palfinger AG, 2014).
The annual reports are based on International Financial Reporting Standards (IFRS) and the GRI standards. Additionally, the company is committed to the OECD Guidelines for Multinational Enterprises, the UNGC, and the United Nations’ Sustainable Development Goals (Palfinger AG, 2018b).
Eight managers have been interviewed for this thesis. Five of them have worked at the headquarters and have lived and worked abroad in Canada, China, Brazil, Russia and the USA. Some of them had multiple contracts and had already worked in different countries abroad. These five managers are all male and aged between 32 and 53. They have been working with PALFINGER for at least 9 years and have spent at least 2 years abroad in a PALFINGER subsidiary. Their positions abroad ranged from Finance Manager, Project
Manager and PMI Manager to Managing Director, Vice President for Operations and Director of Quality and Service. Except for one German manager, the others have an Austrian nationality. They all had a leadership position during their time abroad, which means that they were most likely confronted with COC topics and thus, form the ideal target group for the empirical study of this thesis. The departments at headquarters are Corporate Controlling, Corporate Cost Improvement and Corporate Welding Technology and Corporate Human Resource (HR). Their current position at headquarters is not taken into account. It is important that they either are now working or have worked at the Austrian headquarters as this is crucial for the comparison of COC challenges between headquarters and subsidiaries.
The remaining three managers were part of the COC development project. They represent the view of the headquarters and work at different departments. Their positions are Head of Corporate Counsels, Head of Global Sourcing and Supplier Management and Head of Sustainability Management. Two managers are male and one is female. They are aged between 40 and 57, and all of them have an Austrian nationality. These managers have been working for the company for at least 15 years and have been in their current position for a minimum of 10 years. Interestingly, one manager used to be an expatriate in Germany for four years. Although this fact is no mandatory criterion for this target group, it is worth mentioning as it might influence the discussion.
In summary, the sample consists of two groups: the expatriates, and the COC project team at headquarters. Based on this division, the viewpoints of headquarters and subsidiaries can be analyzed separately, and potential similarities, differences and potential challenges can be outlined.
Table 3 Summary of the sample
Expatriates HQ
Number of participants
Female (0) Male (5)
Female (1) Male (2) Min./Max. age of
participants
32/53
Average age: 46
40/57
Average age: 47 Min./Max. of years at
PALFINGER
9/24
Average employment: 15
15/35
Average employment: 22 Nationality Austrian (4)
German (1)
Austrian (3)
Departments at HQ (and years)
▪ Corporate Controlling (3)
▪ Corporate Controlling (8)
▪ Corporate Cost Improvement (2)
▪ Corporate Welding Technology (5)
▪ Corporate HR (3)
▪ Head of corporate counsels (15)
▪ Head of global sourcing and supplier management (10)
▪ Head of sustainability management (13)
Position, country and years of Expatriate
▪ Finance manager, Brazil (3,5)
▪ Project manager, Russia (3)
▪ Managing director, Brazil (since 1 year)
▪ Vice president for operations, Canada (3)
▪ PMI Manager, Russia (6)
▪ Director of Quality and
Service, China (since 3 years)
▪ Managing Director for North America, USA (8,5)
▪ Managing Director, Germany (4)
Literature indicates that countries tend to accept standardized guidelines, such as a COC, when having a strong tendency towards the three dimensions power distance, uncertainty avoidance and femininity (Brinkmann & Ims, 2003). Brinkmann and Ims (2003) link this finding to Hofstede’s (1994) study but do not further elaborate on this statement.
Nevertheless, these three dimensions can be linked accordingly. Cultures with a high degree in power distance are more likely to accept strict hierarchies as well as unevenly distributed power. Countries revealing a high score in uncertainty avoidance tend to control the future and want to diminish uncertainty by using rules and clear guidelines.
Feminine societies take care of others and favor harmony (Hofstede, 1994). When combining these three dimensions, COCs can be implemented more easily, since people accept strict hierarchies (power distance) and therefore, follow the instructions of the supervisors. Additionally, they favor and accept rules (uncertainty avoidance), such as the COC, while preserving the harmony in the group (femininity). This argument will be compared to the findings of the empirical study.
Therefore, the countries that are included in the qualitative study will be analyzed briefly.
They are outlined based on Hofstede’s dimensions. Since mainly power distance, uncertainty avoidance and femininity seem to influence the cultural behavior regarding the acceptance of a COC, only these three dimensions will be outlined for each country.
Figure 3 Hofstede's Dimensions - Canada
Source: (Hofstede Insights, n. d.b)
Figure 4 Hofstede's Dimensions - China
Source: (Hofstede Insights, n. d.c)
Figure 5 Hofstede's Dimensions – Brazil
Source: (Hofstede Insights, n. d.a)
Figure 6 Hofstede's Dimensions – Russia
Source: (Hofstede Insights, n. d.d)
Figure 7 Hofstede's Dimensions – USA
Source: (Hofstede Insights, n. d.e)
According to literature and the figures above, Russia seems to accommodate the implementation of a standardized COC best, followed by Brazil. These two feminine countries (BRA 49; RUS 36) reveal a strong uncertainty avoidance (BRA 76; RUS 95) and a high number in power distance (BRA 69; RUS 93). Canadians and US-Americans are more likely to refuse a COC, assuming that the opposite score in the three mentioned dimensions result in a rejection of standardized guidelines. Canada and the USA score low on the dimension power distance (CAN 39; USA 40) and uncertainty avoidance (CAN 48; USA 46). Furthermore, these two countries are masculine (CAN 52; USA 62). China, does not reveal a similar pattern. Although it is high in power distance (80), it reveals a low number in uncertainty avoidance (30). Furthermore, it is considered a masculine country.
The next chapter will outline the details of the approach taken for the empirical part of this study.