Why Culture Matters in Operations ManagementPublished: May 12, 2010 in Knowledge@Emory
When do-it-yourself retail giant The Home Depot decided to open a call center in India, the idea made perfect sense from an operations perspective. There were plenty of Indians with strong English skills who could staff the phone bank and respond to customer questions. Plus, workers in India could field calls at a fraction of the cost, notes Richard Metters, associate professor of information systems & operations management (OM) at Emory University’s Goizueta School of Business. But after just five months, The Home Depot shut the call center down.
What went wrong? The short answer is that cultural differences made it difficult for Indian workers to live up to The Home Depot’s slogan at the time, “You Can Do It. We Can Help.” Whereas the typical home in the U.S. is wood-framed with sheetrock walls, Indian call center workers lived in homes made of poured cement and brick. So workers were largely unfamiliar with the thousands of Home Depot products sold in the U.S., Metters says. More importantly, Indian workers just didn’t embrace the do-it-yourself concept—their responses to the idea, in fact, ranged from amusement and disdain to outright revulsion. As a result, callers seeking help in using their Home Depot products often were told by workers, “hire someone for the job.” Metters, along with Elliot Bendoly, a Caldwell Research fellow and associate professor of information systems & operations management at Goizueta, and colleagues from two other universities, expound on this case and others in their paper "The Way That Can Be Told of Is Not an Unvarying Way: Cultural impacts on Operations Management in Asia." The article was published in the May issue of the Journal of Operations Management.
The story is just one example of how culture counts in operations management, particularly when Western companies set up shop in Asia, Metters adds. Whether it’s scheduling shift workers, running a quality management program, or designing the physical layout of factories, corporations have repeatedly stumbled on situations where working with the local culture requires flexibility in operations management that can seem out-of-step with Western practices.
“The main point of this article is that time and place matter in OM. That there are operational decisions that are appropriate for some instances but not others due to cultural issues, and that there are different operational challenges in different parts of the world,” write the researchers.
The Goizueta researchers and their coauthors from the Chinese University of Hong Kong and the Kellstadt Graduate School of Business go on to acknowledge that “the audience for this article is not predisposed to view this argument positively. Our aim here is the reverse of most academic articles.”
As a general rule, business school researchers set out to document general principles that can be applied to operations regardless of context. The idea is that by eliminating cultural noise, academics can help identify the underlying business rules that explain why some firms succeed and others fail. In this paper, the researchers go in a different direction by showing a series of examples where culture, in its many different shapes and sizes, confounds a traditional approach to operations management for Western firms operating in Asia. The examples are especially important for American business executives, Metters says, because many in the U.S. approach operations management from a “universalist” perspective—a belief that objective truths can be clearly defined and applied everywhere.
“Many business leaders who have grown up in this culture inherently believe that certain operations are universal, and therefore cultural context can be ignored,” he says. “Sometimes they’re right. But sometimes they’re wrong.”
The paper begins with a chilling example. In the middle of an average workday, a Malaysian factory worker started sobbing, laughing, and then shrieking. Suddenly, she started flailing at the machine where she was working and violently fought off attempts by the foreman and technicians to pull her away. Then the same things started happening with other workers. In a matter of minutes, 100 or more workers were screaming and beating on their machines. Managers soon learned that workers believed the factory was haunted by an evil spirit, and their outbursts were part of a feverish struggle against becoming possessed themselves. In the end, the factory shut down for three days and a spirit-healer was hired to slaughter a goat on the premises. The American director of the factory wondered how he would explain to corporate headquarters why the operation lost 8,000 hours of production.
The story of the possessed factory was reported in a 1987 book entitled Spirits of Resistance and Capitalist Discipline: Factory Women in Malaysia. Written by Aihwa Ong as part of a series on the anthropology of work, the book’s story remains relevant for business readers more than 20 years later, say Metters and colleagues. That’s because it illustrates the critical role cultural context can play in operational policy. Managers could have responded by telling workers that the factory was not, in fact, possessed by spirits, and that those who didn’t keep working at their jobs would be fired. But such an approach would have proven ineffective—workers wouldn’t have returned to the factory and the firing of such employees would be viewed as unfair by most in the local community, the Goizueta authors write. Instead, managers adopted a more “culturally aware” approach, in which a local shaman came to the factory every six months or so to walk around and pray. Managers took pictures of the shaman in the factory and hung them around the workplace, a gesture that, according to Ong, seemed to make workers feel more secure.
The operational problem involved [in the Malaysian factory] was compliance—actually performing tasks that are supposed to be performed or agreed to be performed,” the authors write. “The issue of compliance is one of the most frequently encountered difficulties Westerners face in dealing with Asian cultures. It typically presents itself when a Westerner believes that an Asian counterpart has assented to perform a task when no such assent actually took place.”
In airline operations, the lack of candor between subordinates and superiors can have dangerous ramifications. Metters and colleagues note that the airplane “loss rate” per million departures between 1988 and 1998 was 0.3 percent for United Airlines and most other U.S. carriers. But it was 4.8 for Korean Air. The primary reason for the difference? Subordinates would not contradict the Korean Air captains, even when they believed a captain’s actions were dangerous. While the Korean Air example was publicized in journalist Malcolm Gladwell’s widely read book from 2008, Outliers: The Story of Success, it illustrates an academic concept called the Power Distance Index (PDI). The PDI measures the tolerance for inequality between hierarchical levels, according to theGoizueta authors, and a high PDI can be reflected in the assent of subordinates to tasks they either know will be detrimental or they have no intention of actually accomplishing. Both conditions lead to operational compliance problems. To illustrate the problem, Metters and his colleagues looked at 45 airlines with more than one million flights between 1970 and 2007 based in countries with known PDI scores. Over the nearly three decades examined, the average fatal flight incident rate was much lower at airlines where the home-country PDI score was lower.
Given the experience of Korean Air, among others, an industry and worldwide standard training program helping cockpit members appropriately challenge a captain’s actions was initiated, the authors write. “However,” they add, “these attitudes die hard.”
In lower-risk operations such as casinos, making accommodations for the local culture likely is the wiser path. At U.S. casinos, revenue management systems track the play of customers through loyalty cards that give rewards such as free rooms and meals to players who gamble more. But in Macau—a region that has become something like the Las Vegas of China—such revenue management systems don’t work very well. Metters says he stumbled upon the example while leading MBA students on a tour of the Venetian, the world’s largest casino hotel. An executive with the Macau casino explained that while many Chinese love to gamble, the pastime is concerned shameful. So carrying a customer loyalty card would be akin to carrying a card that indicates frequent use of prostitutes.
Another example is scheduling shift workers. Many firms find it more profitable to run three shifts and produce work 24 hours a day, rather than limiting operations to just day and evening shifts. Running continuously allows fixed machinery costs to be spread over more volume, and in a call center context, overnight operations help meet demand from Western customers, the Goizueta authors note. But operations during the so-called third shift are often precluded by culture, especially in cases where the work is largely assigned to Asian women. Since many societies have a low regard for women staying out at night, a night shift can be socially difficult.
Western companies often try to engage workers in a total quality management process where front-line staff help alert managers to how manufacturing systems could be improved. But such processes can be complicated by culture. In some Asian factories where most workers are young women and managers are foreign men, the feedback envisioned by TQM is “untenable,” the authors write. In some cases, young female workers in factories expect to work for just a short time so they have money prior to leaving the job for marriage. Such workers aren’t typically invested in long-term quality improvement.
Academics have long acknowledged the role culture plays in shaping consumer behavior, Metters says. Marketing professionals, he points out, are conditioned to think about subsets of markets and how messages might appeal to different groups. But the influence of culture on manufacturing and the workplace hasn’t been studied as much. Metters says one motivation for writing the paper was to document observations from his professional travels since 2003 in China, Japan, and India—trips that revealed, for example, that silence is strictly enforced in many Chinese and Korean factories both by signs as well as by plant designs that position workers at odd angles to one another.
Managers who form their attitudes through U.S. culture are more likely to believe that programs and methods that work well in one place can be easily exported, the authors write. While that can be a powerful perspective in many cases, it’s not without limitations.
“Some OM practices are altered or precluded by culture, while others are more effective in some cultures than others,” they write. “By embracing cultural differences and exploring the operational consequences scholars can further the field of OM. The typical OM scholarly work regarding culture is set up to answer the question ‘does culture matter?’ Here, we suggest a different research approach may yield results: An approach that determines how and why culture matters.”