Impact of Long-Term Orientation on Organizational System in the USA
HOW DOES A LONG
TERM ORIENTATION EFFECTS ON THE MANAGERIAL DECISION IN TERMS OF COUNTRY LIKE USA
The prime focus of this paper is to have a look on the influence and the effect of the long-term orientation in the process of decision making in the organizations in the USA. Generally, in various organizations in the USA, the country depends on the short-term orientation in order to take decision. However, this paper revolves around the long-term orientation and the relating factor relating to it. At the same time, this paper discusses the impact of the long-term orientation on the organizational system in the USA and the country as a whole.
Importance of the issue
The process of decision-making is of a cardinal importance in order to take vital and crucial decision in the organizations from the managerial perspectives. In many family business in the USA, the implications of the Long term orientation plays an important role in affecting the actions and the decisions that comes into picture after a certain period (Ward, 2016). Five dimensions are included in the LTO such as proactiveness, innovativeness, competitive aggressiveness of the issue, risk taking and autonomy that affects the impact of LTO on the business organizations in the USA.
In other words, the LTO is considered as the inclination towards making the LTO as the core factor and the main driving force behind every actions and decisions. Therefore, in order to maintain the long-term sustainability in the competitive market, the business organizations need to have consistency in maintaining the LTO (Adam Cobb, 2016). Therefore, the business organizations can pave the way for its sustenance in the future through properly implementing the LTO in the decision making process.
In Hofstede six-dimensional cultural model, long-term orientation is included as the fifth dimension. This model exclusively shows valuable work function of an organization, which can be used by the respective organization to achieve long-term sustainability (Beugelsdijk, Kostova & Roth, 2017).The orientation of the host country significantly influences thinking level along with decision-making capability of the respective organization. Long-term orientation is deeply rooted in the cross-cultural diversity of an organization. Business organizations of USA use suitable leadership approach to operate in American Environment. The number of immigrants in the USA is greater than that of any country, indicating that cross-cultural diversity is an essential element of work culture in America.
The leadership in business organizations in America is developed in such a way that it offers space for people of every background to speak forward. In other words, American work culture supports cultural diversity. Almost all organizations in America support cross-cultural activities inside their organizations. For example, Amazon Inc. recruits thousands of people of different background in America. Google LLC also supports diversity and it is reflected in their work culture. There is no discrimination around in workplace by renowned American multinational companies like Google LLC, Amazon and Microsoft. Although the leadership of Microsoft is autocratic, culture-based discrimination has not been an issue. Therefore, it can be inferred that the long-term orientation of these companies are strategically aligned so that they can work as catalysts for the growth of their organization.
Cultural theory of Hofstede shows that cultural diversity can help to take a suitable decision. It is also identified in the Hofstede's model that implementation of national culture with workplace diverse culture can produce better results for the respective organization's business. Long-term orientation in Hofstede's model is described as “Pragmatic vs. Normative”. Countries supports long-term orientation for business is generally pragmatic and modest in nature (Adams et al. 2016). It is found that people of these countries value principles, truth and consistency, which again reflect in their workplace. Nationalism is often found as a prime factor in attitudes in the people of these countries. A few features of long-term orientations are described below.
People follow this philosophy can easily distinguish between true and false. In order to differentiate, these people always try to find process to come up with true and false statement. People follow this philosophy believe that education is a primary need of society therefore possess positive values towards education and thrift. Modesty is a great virtue, and one can find modesty among people who chose long-term orientation. Business organizations thrive to achieve long-term sustainability by following business ethics and obligations in a strict manner (Triandis, 2018).
Influence of the country, where business operates influences society display (pragmatic or normative) heavily (Goodrich & De Mooij, 2014).American culture does allow immigrants from other countries to contribute in their country. As a result, a hybrid culture has been developed throughout this country. As society is multicultural, it is obvious that workplace will also reflect cultural diversity. Leaders of American leading business organizations and multinational companies support diversity in the workplace. Study has found that work culture of organizations is boosted by mixture and allegation of culture, because of which productivity of employees at workplace increases in a considerable manner.
“Pragmatic” outlook is more favorable in America than that of “Normative” look. Managers of leading multinational companies give heavy emphasis on action and personal interest simultaneously to make an effective decision within their respective field (Fligstein & Calder, 2015).The Hofstede model shows that individual culture has individual unique feature, which can be separately used to improve specific areas of work culture. However, if all of them are summed up, unique features of every culture can be used in a collective manner. The dimension long-term orientation in Hofstede's model helps to understand the method by which various culture are linked up with each other (interlinking) to enhance the decision making process of leaders of organizations.
Leaders of an organization generally take decisions so that business of their organization generates a greater amount of revenue than it previously used to. Thus, shareholders of organizations are considered important while taking any decision. Opinions of various shareholders are different and therefore a mutual agreement needs to be established among shareholders (Wiengarten et al. 2015). This establishment is generally done by leaders and therefore leaders need to be pragmatic in nature. The decision of leader needs to be in line with shareholders, otherwise decision would be rejected. For example, one can take business decision of MasterCard, where employees of several ground work together. On top of this diversity, the rules, regulations of banking industry differ from country to country. However, a centralized control has to be established with subsidiaries despite different rules and regulations. Thus, again, long-term or pragmatic approach of leadership is supported by these organizations.
The long-term orientation does not only allow leaders to take decisions in line with shareholders. The cultural preference allows managers to understand different beliefs of people as well as their functional activities. These diverse functional activities work as a backbone of any organization. In America, a country of free people, primary workforce comes from diverse backgrounds and hence mix culture like mixed economy has formed backbone of this country’s economy (Ward, 2016). The decision making process of an organization borne a vital role for the leaders who would take decisions to take their organizations into new height. That is why this is highly essential for the leaders of the companies while taking their decisions. The long-term orientation keeps value of cultural value in optimum levels that traditional factor that affect people in the workplace are automatically managed.
In modern era, a decision needs to be taken by leaders’ instantaneously because of the amount of competition that a company has to go through. Instantaneous decision is a difficult task and requires opinions of different shareholders. Leaders, then within limited time have to compose these opinions and come up with effective decisions. This is true in completive market like America where in Silicon Valley several IT companies are compete. For example, oracle sells cloud-based ERP, so does Microsoft (Azure). Hence, a mutual competition arises between these two giants and leaders of one company have to take decision to defeat other in stiff competition. This is where, diversity is utilized and therefore it can be inferred that long-term orientation is a primary thing, which affect managerial decisions in USA (Luxton, Reid & Mavondo, 2015).
In order to maintain the working functions balanced with the organizational goal the LTO plays a vital role. In this context, the Hofstede model has been taken into consideration according to which the business organizations in the USA have been given a score of 26. As per the Hofstede model, the present and the upcoming challenges can be confronted by the business organizations through making a bridge between the present and the past. The model took four dimensions in the business organizations such as power distance, individual collectivism, masculinity- femininity and individualism-collectivism. The model evidently shows how in the country USA, the normative society scores low from the perspective of the cultural dimension in the end (Luxton, Reid & Mavondo, 2015).
Thus, through the model it can be seen that the low score of the country contributes to the tradition that is well managed and time honored and these play vital roles in analyzing the change in the society. Thus, the aesthetic factor gets affected by the system and therefore tells upon the decision making process in the business organization. Therefore, the decision that is made by the management largely depends upon the proper perception of the culture and the people of the country.
On the part of the American business, they are very pragmatic with their actions and the decision making process. Therefore, more often they are seen to have depended on the short-term orientation. In terms of the short term orientation the financial statements are considered that takes the balance sheet and the profit and loss account into consideration on a quarterly basis since this helps in gathering more information in a short period and helps in moving towards the decision making process in a shorter period (Mazaheri et al. 2014). As per the Hofstede model, it can be said that the country USA did not link the past with the present and thus used to take decision based on the present performance and activities. Therefore, the model guides to take the cultural aspect of the country and incorporate that in making decision in the business organizations.
At the same time, the USA depends upon the tradition that is time honored by avoiding the past factors in dealing with various situations. Therefore, in order to bring work efficiency in the workplace in concluding to the proper decision making in the business, the managers need to go through various developmental activities within the business organizations (Triandis, 2018). Thus, the long-term orientation helps in making appropriate decision on the part of the managers by properly dealing with the situations.
It was seen throughout the years in the USA that in order to make the business organizations sustainable in the market from the economic and cultural aspects, the managers did not consider the past. Rather, they considered the present activity of the firm since they prefer pragmatism to tradition. The LTO takes the culture of the people and the present situation of the country in order to have numerous working functions in the organization and maintain its value in the market.
Thus, through maintaining the effectively in the in the working within the business that are involved in the advancement in the decision-making, the managers in the USA used to decipher the decision relating to the operation (Fligstein & Calder, 2015). Thus, the managers used to provide skilled and effective decision making in the organizations. It is also seen that most effective decision of in the American business organizations are taken keeping both the firm and the employees in mind taking the cultural aspects into consideration. Therefore, through the Hofstede model it can be said that rather than taking both the employees and the organization in to consideration, the managers could have taken only the organizational aspects in the decision-making.
In a developed country like the USA, maintaining the short-term orientation in the decision making process could be a challenging task since it solely depends on the financial statement that comprises the balance sheet and the profit and loss statement. Therefore, it is recommended to have a detailed look on the present situation and the performance of the activity through proper planning and developing strategies. It is also recommended to have a look over the past rather than only focusing on the present and bridging between two. At the same time, they have to foresee the future in order to make the long-term sustainability of the organization in the market.
From the above analysis, it can be said that a country like USA prefers the short-term orientation in the decision making process in the organization since they love to live in the moment. Thus, many aspects are left unnoticed and untouched that have a greater impact on the decision-making. Therefore, implementing the long-term orientation would help the managers not only considering the tradition, at the same time that would also help make a suitable strategy for the future based on the past in a retrospective way. Thus, the paper concludes that the selection of long-term orientation over the short-term orientation would help the managers in holding back the tradition as well as forecasting the future and thus making a proper decision making that would contribute to the gain of competitive advantage of the business organization.