1National and Organisational Culture:

Their Use in Information Systems Design

Dr Ernest JordanDept. of Information SystemsCity University of Hong Kong

Tat Chee AvenueKowloon, Hong Kong

(currently at Macquarie Graduate School of Management)

Email: EJordan@work.gsm.mq.edu.au

Abstract

Traditionally the information systems (IS) designer has followed simple concepts of

organisational functioning based overwhelmingly on ideas of management control.

Data from operational activity will be processed to become information for

management to use in planning, decision making and supervision. While this

viewpoint fits some organisations it is not appropriate to all. Organisational culture

and national culture, may be readily overlooked by the IS designer. In this paper,

the major dimensions of the impact of culture on an organisation's information

systems are identified and illustrated by examples. The significance to the IS

designer is pointed out.

21. CULTURE AND INFORMATION

Inside working organisations, as in all areas of human activity, the behaviour of

people is affected by the values and attitudes that they hold. The collective patterns

of behaviour are important parts of the culture of the work-group or nation, which

form a backdrop against which values and attitudes are in turn developed. This

cycle is expressed succinctly in Fig. 1, taken from Adler (1986).

Fig. 1 The Influence of Culture on Behaviour (Adler, 1986:9)

CULTURE

VALUES

ATTITUDES

BEHAVIOUR

Data only becomes information when it is interpreted by a person, and this

interpretation of necessity takes place against the backdrop of the individual's

culture (Tricker, 1988). In decision-making information is a prerequisite (Simon,

1960) and the decision-making process is deeply affected by culture (Adler, 1986).

Thus the meaning of information and effectiveness of an information system can

vary substantially in different cultures. National cultures have long been associated

with differences in the organising and operating of businesses and, more recently,

cultures specific to organisations have been studied.

3In a wider sense, Ouchi (1981) signalled the importance of national values as

they impact upon corporate culture. He established a clear link from Japanese

national culture to the corporate cultures of major organisations and then to the

outstanding success of Japanese business. His interest was the possibility of

transferring or creating Japanese-like corporate values (and hence culture) in

American industry in order to generate similar successes. He also reported that

some American organisations already had cultures much like Japanese

organisations and, he argued, this was significant in their success. We now

examine alternative theoretical frameworks for culture that can be used to examine

information in an organisational setting.

2. THE TRANSACTION COSTS PERSPECTIVE

From the viewpoint of Williamson (1975), organisations come into their very

existence because of information. The uncertainty of the marketplace,

characterised by information about transactions, drives individuals into forming or

joining organisations, while the continuing uncertainty in the environment of the

organisation leads it to changes in its strategy and structure. This view reduces all

business activity to transactions between individuals and groups, with information as

the controlling resource. While such a simple and powerful mechanism is attractive

to some information technologists, giving primacy to information and economic

activity, it is too simplistic to deal with the real social, psychological and political

settings of most organisations. It is an example of what Bolman and Deal (1991)

term the "Structural Frame" of organisations and does not immediately link to the

other frames the human resource, political and cultural.

Williamson's ideas were extended by Boisot (1987). Boisot's aim is to

incorporate a cultural perspective into transactional costs approach. He looks at

4information in organisations through two attributes of the information, its

"codification" and "diffusion":

codification the degree of formal representation,

diffusion the degree of spread throughout the population,

and the ways that these two dimensions affect information transactions. This builds

on Williamson by realising that the effect of internalising the transaction within the

organisation is to reduce its diffusion. Thus the diffused information in the

marketplace becomes undiffused in the bureaucracy.

Dichotomising organisational forms based upon the two dimensions of

codification and diffusion leads to the categories shown in Fig. 2. Codified

information is the commonplace in formal business settings and so gives rise to the

major structural forms. If information is centralised (i.e. undiffused) a bureaucracy is

the form, while if it is widely distributed a market is in effect. Bureaucracies

correspond closely to Williamson's description of hierarchies. The additional

dimension of codification in particular the absence of codification produces fiefs

and clans. A fief is controlled by an individual in whose mind most of the real

("soft") information resides while a clan has diffused but uncodified information, such

as in a group of like-minded professionals.

5 Fig. 2 Organisation forms with Information Codification and Diffusion

(Boisot, 1987)

Bureaucracy

Fief

Market

Clan

DIFFUSEDUNDIFFUSED

CODIFIED

UNCODIFIED

(hierarchy)

INFORMATION INFORMATION

INFORMATION

INFORMATION

Although Boisot's model is interesting it adds little towards the solution of the

present problem. Formal information systems are all essentially codified at similar

levels and most organisations keep most of their information to themselves, that is,

the information is not diffused. These levels of codification and diffusion will vary

from one system to another, however in different departments of organisations or in

different organisations, most such variations are of negligible proportion. Clearly, if

a company is to develop or participate in an electronic marketplace it will change the

boundary of the proprietary information, but such a boundary will continue to exist.

A further criticism concerns the attributes themselves they are not widely

known in the literature. A more common concern is "standardisation," which is

simply a form of codification. So while Boisot considers an organisation with

codified and undiffused information to be classified as a bureaucracy, for Mintzberg

(1979) the nature of the codification is critical. Standardisation of inputs, processes

and outputs are used to distinguish coordination mechanisms and hence different

organisational structures. As Boisot and Child (1988) points out, the transactional

spectrum of Williamson (markets and hierarchies) becomes the norm for most

established, advanced industry and commerce. Thus the significance of the

6"uncodified information" is seen to be small. We will draw upon the ideas of Boisot

later in this paper, in an attempt to integrate the alternative approaches.

3. HOFSTEDE'S DIMENSIONS

Hofstede's (1980) massive study of national culture has since been replicated and

used extensively. Its authority is enhanced by its predictive ability and its synthesis

of previous partial results. Hofstede used a collection of 117,000 questionnaires

from 88,000 respondents in 66 countries, all employees of the same multinational

corporation, which enabled employees in different countries to be matched. Four

dimensions of national culture were found and index scores developed for each of

40 countries (Hofstede, 1980:85).

power distance the degree of inequality of power between a person

at a higher level and a person at a lower level, (being subservient the

boss),

uncertainty avoidance the extent to which future possibilities are

defended against or accepted (not facing the future or trying to

organise it),

individualism the relative importance of individual goals compared

with group or collective goals (looking after oneself),

masculinity the extent to which the goals of men dominate those of

women (assertion - nurturance).

Power distance and individualism are strongly negatively correlated and

represented only a single factor in a confirmatory factor analysis, however Hofstede

argues that they are conceptually different and were independently developed as

indices with reference to extensive literature bases. Uncertainty avoidance also

shows weaker correlations, positive with power distance and negative with

7individualism. Thus these dimensions are not orthogonal but nevertheless refer to

four "universal problems of mankind" (Hofstede, 1980:313).

Uncertainty avoidance is the domain of information systems, planning

systems, decision support systems and control systems. It is noteworthy that the

significant developments in these domains have come from countries that Hofstede

found to have low levels of uncertainty avoidance. In these countries, the USA, UK,

the Netherlands and Denmark, the future is accepted as having much uncertainty

with which one must live. In countries with much higher scores unfavourable

outcomes must be controlled against.

The second of Hofstede's dimensions that is critical to the IS designer is

power distance, which allows for varying relationships between superiors and

subordinates in organisations. If the boss is powerful and cannot be contradicted

then a formal, accurate management information system may be seen as

unacceptable, being "insubordinate" and possibly threatening. When uncertainty

avoidance is taken together with the power distance dimension, Hofstede shows

(1980:319) that levels of these establish four organisational types, as shown in Fig.

3.

8Fig. 3 Uncertainty avoidance, power distance and organisational forms

(from Hofstede, 1980)

Bureaucracy

Full bureaucracy

Implicitly-structured

Personnel bureaucracy

High uncertainty avoidance

Low

High

Workflow

Power distance

Power distance

Low uncertainty avoidance

Non-bureaucracy

These organisational types correspond to those found in the Aston studies

(Pugh and Hickson, 1989:13) through the association of dimensions:

Aston dimension Dimension associated by Hofstede

Structuring of activities Uncertainty avoidance

Concentration of authority Power distance

Thus for each of the four combinations (high and low values on both scales)

there is a preferred organisational form that varies with culture.

Furthermore, Hofstede specifies an underlying "implicit model" that describes

the nature of interactions taking place between people in each of the quadrants, that

is, the types of transactions. The names for the various implicit models correspond

closely to Boisot's four forms. We can then see some form of association between

Hofstede's uncertainty avoidance and power distance and Boisot's codification and

diffusion of information. Superimposing Boisot's model on Hofstede's, and also

incorporating the implicit models, yields a composite framework, shown in Fig. 4,

that links information and structure to culture.

9Fig. 4 Power Distance and Uncertainty Avoidance Impact on Organisational Types

(Hofstede, 1980:319)

Full bureaucracy Personnel bureaucracy

Low

High

Workflow bureaucracy

Power distance

Power distance

Implicitly-structurednon-bureaucracy

HOFSTEDEHigh uncertainty avoidanceLow uncertainty avoidance

HOFSTEDE

BOISOT

BOISOT

Undiffused information Diffused information

CodifiedInformation

InformationUncodified

IM: well-oiled machineB: bureaucracy

IM: pyramidB: fief

B: marketIM: market

IM: familyB: clan

KeyIM - implicit modelB - Boisot's form

The figure has been presented so that it is directly comparable with Boisot's

information codification and diffusion model (Fig. 2) with Boisot's labels added as

well as the "implicit model" field. This shows power distance and uncertainty

avoidance as empirically-established variables that explain more effectively the

variation found by Boisot. The information codification and diffusion dimensions

augment the power distance and uncertainty avoidance ones, establishing

configurations of culture, information and organisation that are self-reinforcing.

Hofstede goes further, to dichotomise national cultures on the basis of

uncertainty avoidance and power distance. Thus, for example, Anglophone

countries, Scandinavia and the Netherlands have low uncertainty avoidance and low

power distance whereas Mediterranean countries score high on both. These are

presented in Fig. 5 along with Boisot's categorisation. This is not intended to say

that, for example, all Finnish organisations will be bureaucracies, rather that, under

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given circumstances, a Finnish organisation is more likely to be structured as a

bureaucracy.

Fig. 5 Association of Power Distance and Uncertainty Avoidance with National

Culture (Hofstede, 1980:319)

Low

HighPower distance

Power distance

HOFSTEDEHigh uncertainty avoidanceLow uncertainty avoidance

HOFSTEDE

B: bureaucracy

B: fief

B: market

B: clan

Key

B - Boisot's form

German-speaking,Finland, Israel

English-speaking, Scandinavia, Netherlands

Latin, Mediterranean,Islamic, Japan, some

other Asian

Southeast Asian(esp. HK, Singapore)

Hofstede (1980:316) produces a scatter diagram of uncertainty avoidance

against power distance, which shows the distribution of the national cultures. This

was used in his categorisation of countries that was shown above. This material is

widely quoted in the literature and is redrawn in Fig. 6 below. It was drawn in

Hofstede's original with four quadrants based upon apparently arbitrary divisions.

The dividing values for Hofstede's quadrants are neither the mean values nor the

medians. They were, however, values that placed the Netherlands, Hofstede's own

country, as nearest to the "norm." Using either of the usual criteria the bivariate

mean or median this central position would be accorded to Pakistan. Perhaps a

subtle cultural influence is at work. A more serious problem is that the groupings of

countries devised by Hofstede are based on language and ethnicity rather than

cluster analysis. Adler remarks that organisations scoring high in both the power

distance and uncertainty avoidance dimensions will stress the vertical lines of

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communication, while those low in both dimensions will have less hierarchy and

"everyone talks with everyone" (Adler, 1986:41).

Fig. 6 National Power Distance and Uncertainty Avoidance Values

(Hofstede, 1980)

Uncertainty avoidance

Power distance

0

10

20

30

40

50

60

70

80

90

100

0 20 40 60 80 100 120

S.Africa

Thailand

TaiwanPak.

NZ

Italy

GBSweden Norway

FranceBelgium

Spain

Argentina

Germany

Portugal

USA

AUSNL

SingaporeYugoslavia

Greece

Philippines

Mexico

Israel

Ireland

Iran

India

HK

Denmark

Austria

Further analysis of Hofstede's indices on all four dimensions for the forty

countries shows that the country nearest the global mean is Iran, which supports the

suggestion that the "Islamic" group should be removed from the lower left quadrant

of Fig. 5. If this means that Iran is the country where the four conflicts (superior /

subordinate, male / female, individual / group and risk taking / risk averse) are most

in balance, many Anglophones and Europeans would be perturbed this is quite

contrary to received media reports.

On the other hand, viewing the data from the centre, where Iran's neighbours

are Brazil and Turkey, shows that the extreme positions are held by Denmark (low

masculinity, uncertainty avoidance and power distance but with high individuality),

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Singapore (low individuality and uncertainty avoidance but high power distance) and

Venezuela (low individuality but high on power distance, masculinity and uncertainty

avoidance). Of all forty countries those pairs with closest neighbours are USA /

Australia, Taiwan / Pakistan, and Switzerland / Germany. The countries with no

close neighbours (in these four dimensions) are Japan (the most isolated), Israel

and Austria. It is possible that Austria is only isolated because its formerly

communist geographical neighbours, Czechoslovakia and Hungary, were not part of

the study.

Before looking at some further limitations of Hofstede's work, it is worth

considering the relevance of these points to the IS designer. High levels of

uncertainty avoidance can raise some organisational activities to the level of a ritual

that is carried out for its own sake, rather than for the results that are achieved. For

example, excessive reliance on planning and control systems, stronger belief in

accounting figures than in the grass-roots "gut-feel" for the organisation's

achievements, and excessive use of formalised reports and memos. A management

information system may attain an unwarranted status, with its reports being believed

too much. The IS designer may introduce some scepticism in interaction with users,

but may also have to look for ways to do it in the formal reports such as by

incorporating contradictory data or results obtained using alternative formulas. On

the other hand, a low level of uncertainty avoidance, with its attached fatalism, may

lead managers to have no interest in information systems. "Why bother to print out

these things, it won't change anything." The ability to control or plan in the

organisation may be seriously doubted. IS designers may not find themselves with

this problem, as they may well not be employed in such organisations. However,

outside consultants should well recognise that this is not fertile ground for their

services.

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A high level of power-distance will mean that management information may

well be precisely that, information only available to management. Access to

information comes with the increased power of the manager. Pressure may well be

put upon the information providers to generate only the information that is

acceptable and subordinates may readily agree. Independent control and audit may

be curtailed. The Singapore government's rejection of "information" in The

Economist (1993) shows large power distance at work. The IS designer should

realise that, particularly in such settings, designing a system is above all a political

act and should then act accordingly. If power-distance is low the environment is

friendly, cooperative and egalitarian. Although there is then a danger of doing

nothing, it is in this situation that information systems can be readily developed.

However, it will not be constructive to use methodologies that are authoritative or

controlling (see Kendall and Kendall, 1993).

There are two significant cautions to be applied to any interpretation or use of

Hofstede's work. Firstly the values expressed are particularly those of the middle

class standardisation of the country samples was effected through the marketing

and service functions of a single organisation's personnel, with an emphasis on

managerial, sales, technical and administrative staff (Hofstede, 1980:73). Although

this limitation may not be critical to the IS designer who is facing precisely these

sorts of people as clients. The second caution concerns its significance. While the

differences between countries were highly significant statistically the

standardisation procedures removed many confounding sources of variation the

amount of variation between individuals explained by country is only 4.2%

(Hofstede, 1980:71); gender, age and occupation are more significant. The very

large sample size leads readily to statistically significant results. So, if IS designers

are going to be concerned about cultural impacts then they should take more

concern over gender, age and occupation.

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Wilkins and Ouchi (1983) expand on this second concern, by examining the

conditions under which cultural issues assume greater significance, in particular

organisational culture. Taking a transaction cost approach they point out that both

the market and bureaucracy settings are dominant; they are the most efficient

arrangements under a range of conditions. The clan, the organisational form where

the group culture is most important, is only the most efficient form when the

environment in which the organisation is located is both complex and dynamic.

Decisions that are good for the organisation as a whole can then be made by

following the cultural norms; the goals held by the members are congruent. The

following circumstances are seen as necessary conditions for cultural values to be

dominant:

long history and stable membership (such as an army regiment,

without conscripts),

absence of institutional alternatives (only hiring raw recruits, for

example), and

full interaction among members (the culture can only spread to those

people who participate in it).

In addition there must be slack resources to allow for the inefficiencies of

devoting time to the passing on the culture, such as an army unit would have in

peacetime. These are thus seen as necessary conditions for the development of

strong organisational culture as an important part of the efficient functioning of the

organisation. The army at peace is thus able to develop a strong culture that

becomes the most effective manner in which it is to operate when the environment is

both complex and dynamic that is, at war. Wilkins and Ouchi further suggest that

the clan unit may only be applicable in part of an organisation.

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4. INFORMATION REJE CTION

An alternative approach to those of Hofstede and Boisot is from Thompson and

Wildavsky (1986). They recognise the mythology of the age, that we are in the

"information era" in an "information society," however they note paradoxically that

the most significant behaviour of people with respect to information is rejection.

They describe four fundamentally distinct types of information rejection, which they

then associate with four strategies for forming organisations. The four types of

information rejection are seen to be mutually exclusive and exhaustive. They are

shown in Table 1 below.

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Table 1 Information rejection types (Thompson & Wildavsky, 1986)

Information

rejection

type

Example Characterisation

Risk

absorption

"What you don't know

won't hurt you" (popular)

Fatalism; acceptance of a

world in which life is like

lottery

Networking "When I feel like reading a

book I write one"

(Benjamin Disraeli,

overburdened by data)

There is so much data that

it is all rejected in favour of

informal networking based

on personal relationships

Paradigm

protection

"These preposterous

theories of Prof. Ohm"

(the scientific

establishments reaction to

the first attempt to publish

Ohm' Law)

A powerful hierarchy

whose structure is

threatened closes its ranks

to reject information that

questions its foundation

Expulsion "If it was good enough for

Moses it's good enough

for me" (fundamentalist

song rejecting Darwin's

theory of evolution)

Not hierarchical; a sect-

like group closes ranks to

protect its vulnerable

members from the

predatory outsiders

Thompson and Wildavsky then draw parallels with the transaction costs

approach and the two fundamental organisational forms of Williamson, markets and

hierarchies, and Ouchi's clans. This now starts to fall into the same problems as the

Boisot approach, lacking sufficient models to describe current organisational

17

realities. We develop a richer approach by following Thompson and Wildavsky but

associating their categories of information rejection and the four dimensions of

culture found by Hofstede (1980). This is demonstrated in Table 2, below.

Table 2 Information Rejection and Culture (adapted from Thompson and

Wildavsky, 1986 and Hofstede, 1980)

Information

rejection type

Culture Hofstede category

Risk absorption Fatalism (clan) Low uncertainty avoidance

Networking Markets Low masculinity

Paradigm protectionHierarchies Low individuality

Expulsion Sects Low power distance

The full descriptions of the four cultural types proposed by Thompson and

Wildavsky are particularly precise characterisations of the (relatively extreme in

Hofstede's dimensions) national cultures in the countries indicated in Table 3,

shown as "corresponding countries."

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Table 3 Information Rejection and Culture

Information rejection

type

Corresponding

countries

Opposite

countries

Risk absorption Singapore

Hong Kong

Greece

Portugal

Networking Sweden

Denmark

Japan

Paradigm protection Pakistan

Taiwan

USA

Australia

Expulsion Israel

Austria

Philippines

Mexico

Each culture identified by Thompson and Wildavsky represents a low level of

one of the dimensions of Hofstede. The limitation of Thompson and Wildavsky's

work is now made apparent by noticing the "opposite" countries, those with high

values on these dimensions. Among these there are also some strong cultures.

This shows that the multi-dimensionality cannot be ignored; a reduction to four

distinct alternatives is patently inadequate. There does remain, however, the very

significant finding that low levels on each of the Hofstede indices can be associated

with characteristic types of information rejection a most valuable warning for IS

designers.

5. CONCLUSIONS

The nature and role of information is central to the study of organisations, and, just

as emphatically, the culture has a critical impact on the selection, analysis and

design of information systems. The first step for the IS designer, before any

19

systems investigations are commenced, has to be a study of the organisation's

culture, and in the case of transnational and multinational systems, the national

cultures involved. These will give warnings of modes of information handling,

supervision and control that will be intimately concerned in any information system

to be introduced. We suggest that such an investigation could start with the

questionnaire of Hofstede (1980) and then use some of the above alternative

analyses.

National culture

Hofstede's dimensions of power distance and uncertainty avoidance may be of great

significance to the IS designer, especially if the values are extreme, that is, very

high or very low. Such extreme values can lead to systematic rejection of

information that conforms to recognisable types. Other extreme values may lead to

over-reliance on information to the detriment of the organisation. By being aware of

the environment the IS designer may be able to foresee some of the dangers.

These are most acute for an designer who is not a national of the country where

development is taking place. The dangers can be summarised briefly as:

If uncertainty avoidance is strong then an MIS is wanted to try to

reduce the uncertainty even if that is impossible; systems may become

rituals,

If uncertainty avoidance is weak, fatalism leads to scepticism about

MIS and resistance from users,

If power distance is large then the boss disagrees with the MIS and

the boss is right,

If power distance is small, authoritative approaches will be risky.

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Organisational culture

Organisational culture is most valuable in a complex dynamic environment, such as

in what Mintzberg (1979) terms an adhocracy. In this situation information may

become part of the team; networking is critical and a formal management

information system is not important. Organisational culture may be a hindrance in

other environments the above attitudes will prevail although they are not

necessarily beneficial.

System development and change processes

Lederer and Nath (1990) have gone so far as to say that the traditional lifecycle

model used for systems development is inadequate because the fundamental

process is one of organisational change (rather than systems development). The

form that organisational change takes depends very strongly upon the culture in the

organisation. Kendall and Kendall (1993) consider the suitability of various system

development methodologies to the style of leadership that is prevalent in the

organisation. An investigation of culture will assist in an clear understanding of the

leadership characteristics in the organisation.

As a consequence of their direct impact on the working environment of

people, information systems are implicitly associated with organisational change, as

Keen (1981) pointed out. Current developments in group decision making support

technology will have significant organisational impacts, in the same way that end

user computing has had already. The influence of organisational and national

culture on the manner of organisational change and the ability of the organisation to

change readily, is of paramount concern, but unfortunately one that appears to be

little researched.

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