L EADERSHIP AND O RGANIZATIONAL C ULTURE

To understand the role of leadership within change initiatives, such as going from a linear to a circular business model strategy, we will now outline the notion of leadership and organizational culture. These elements are particularly relevant as there is a constant interplay between culture and leadership (Bass & Avolio, 1994), leaders will represent the organizational culture and act accordingly (Watson, 2006), and leaders are essential to successfully implement change (Waddell

& Sohal, 1998).

Defining Leadership

Bass (1990) stated that there are about as many definitions of leadership as those who have endeavored to define it. However, for the purpose of our research question, leadership pertains to the people who are employed in a position of leadership. Furthermore, among the myriad of definitions, we consider it relevant to link our definition of leadership with the theoretical

foundation of transformational leadership. Transformational leadership is defined by the fact that it transforms both the values and priorities of the employees while motivating them to perform better (Yuki, 1998 in Kark et al., 2003). Characteristics that are mainly linked to transformational leadership comprise “idealized influence, inspirational motivation, intellectual stimulation and individualized consideration” (Bass & Avolio, 1994, p. 542), also known as “the four I’s”. These characteristics are shown by behavioral traits, such as taking on the responsibility for the progress of the strategic goal and their employees, acknowledging the unique contributions the different employees are making, setting a personal example, and fostering education for their employees (Bass & Avolio, 1994; Kark et al., 2003). Accordingly, transformational leadership has a positive influence on organizational learning, innovation, and performance (García-Morales et al., 2012).

Additionally, transformational leaders try to foster a culture of both growth and creative change aligned with the vision and foster empowerment towards the employees to enable this vision and culture (Bass & Avolio, 1994). Therefore, we consider it relevant also to outline the notion of organizational culture relevant to this thesis.

Defining Organizational Culture

Organizational culture is typically related to the values, ideologies, and beliefs that are predominant within an organization (Linnenluecke & Griffiths, 2010). Schein (2004) defines culture within a group, such as an organization, as

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“[A] pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid, and therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems” (p. 17)

Thus, culture is formed based on an accumulated pattern that emerges within a group of understandings and behaviors. This definition can be related to the concept of negotiated order within an organizational process, where the interplay of people with divergent interests and reactions produces a pattern of activities and dynamics (Watson, 2006). Once established, this culture, or negotiated order, will be passed on to new entrants in the organization, thus passed down through ‘generations’, who will learn to adapt to the culture, although they themselves will contribute to the negotiated order, thus rendering it ever-changing (Schein, 2004; Watson, 2006).

Extending on his definition of group culture, Schein (2004) presents three levels of culture;

artifacts, espoused values and beliefs, and basic assumptions. The artifacts of a culture are described as the visible and audible representations of culture, such as the language, shared stories, observable rituals, etc., whereas the espoused values and beliefs move a bit deeper, while still being at a conscious level, including ideals, goals, and rationalizations. Finally, the basic assumptions are what is taken for granted by the organizational members; they are unconscious cognitive patterns that shape how the group members interpret and behave in a given situation.

Thus, the basic assumptions of an organization shape the conscious levels of culture and, being the most ‘inner’ level of culture, it is referred to as the cultural DNA of an organization (Schein, 2004).

Organizational Image and Identity

Extending the view on organizational identity, Gioia and colleagues (2013) suggest that organizational identity functions as a culture generative. An essential aspect of what shapes organizational culture then becomes the organizational identity, describing the internal

sensemaking of an organization of ‘who we are’, ‘what we do’, and what the key competencies of the organization are (Albert & Whetten, 1985; Kenny et al., 2016).

Among scholars, there are competing views on whether the notion of organizational identity is a constant or evolving phenomenon. The conventional approach to organizational identity assumes that identity is a stable phenomenon, defined by constant attributes of an organization, i.e., the organization fundamentally remains the same (e.g., Albert & Whetten, 1985). Conversely, the ever-changing approach assumes that identity is a mental construct that is constantly shaped by

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the everyday dynamics within the organization and that within this process of a shifting shared identity, the organization can hold more than one identity at once (e.g., Gioia et al., 2013). This latter view is tied to the concept of continuous change and can be exemplified by Gioia and colleagues' (2013) study, where they posit that if left unchecked, an identity-gap might emerge between the identity and the organizational image, which can be unfavorable to the company. The concept of organizational image describes an organization’s reputation among its external

stakeholders, indicating their perception of what the company is, what they do, and what their key competencies are (Gioia et al., 2013). Accordingly, this organizational image should ideally align with the organizational identity to avoid such an identity-gap.

Cultural Dimensions

In addition to the national context shaping the approach to CSR, the national context also has an essential role when it comes to the organizational culture. An organizational culture is made up of the individuals within the organization, and while they may not all originate from the same areas, due to the globalized workforce, their national cultural background is likely to shape the

negotiated order and, hence, the organizational culture (Brennen, 2009). Thus, to understand organizational culture, and the leader’s role within this culture, it is imperative to understand how the national cultural context might shape the organizational culture.

To that end, organizational cross-culture scholars have offered numerous frameworks, consisting of different sets of cultural dimensions to allow for cultures to be compared and analyzed (Nardon

& Steers, 2009). One example of a seminal dimensional framework is Hofstede (2001, 2011) and Hofstede and colleagues (2010). Hofstede analyzes national culture from a positivist approach, developing six cultural dimensions and assigning each country a number from 1-100 for each dimension to signify the correspondence with the measured factor (Hofstede, 2011). Hofstede's (2011) six dimensions comprise power distance, individualism v. collectivism, masculinity v.

femininity, uncertainty avoidance v. ambiguity, long-term orientation v. short-term orientation, and indulgence v. restraint. Countries that score high on the power distance dimension are considered more hierarchical, understood as the expectance and willingness to accept an unequal distribution of power. A high score within the individualism v. collectivism dimension denotes that a country is considered individualistic, characterized by a high level of independence rather than interdependence among the societal members. Masculinity v. femininity describes dominant societal characteristics; masculine societies are considered to be assertive and to value material

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possessions, demonstrated by a high score, whereas feminine societies are considered caring and valuing quality of life. Within the uncertainty avoidance v. ambiguity, a high score denotes a country considered to value uncertainty avoidance, and therefore, people shy away from the unknown. The long-term orientation v. short-term orientation dimension measures the importance placed on traditions and the past rather than the long-term future, where a high score denotes a long-term oriented society. Lastly, a high score in the indulgence v. restraint dimension describes an indulgent society, where people are likely to realize their impulses, as opposed to being restrained and controlling desires (Hofstede, 2011; Hofstede et al., 2010).

While Hofstede’s dimensions allow for a shorthand for breaking down cultural analysis and comparisons and is one of the most applied studies within cross-cultural management (Nardon &

Steers, 2009), his work can also be criticized for disregarding differing subcultures. Furthermore, some scholars argue that his positivist conclusions, drawn entirely from a sample only comprising employees from a single MNC, cannot be representative of a national culture as a whole (e.g., Courtright et al., 2011). However, these dimensions should be seen in the light of the intended purpose of the dimensions; to provide basic points of departure for cross-cultural management (Nardon & Steers, 2009). The dimensions cannot give definitive well-rounded templates of what an organizational culture within a national context will undoubtedly look like, but they can provide indicative elements of what might impact the culture. Therefore, upon reviewing six different seminal cultural dimension frameworks, Nardon and Steers (2009) posit that valuable insights can be drawn from them all, and that the common themes can be gathered in an integrated framework of five themes, which they concede is reminiscent of Hofstede’s dimensions.

Distribution of power and authority in society indicates whether a society is hierarchical or egalitarian. Centrality of individuals or groups as the basis of social relationships denotes whether the societal structures are primarily individualistic or group oriented. People’s

relationship with their environment conveys to what extent people try to master the nature around them, as opposed to living in harmony with it. Use of time denotes whether or not people consider time to be a precise concept and approach each task or role sequentially. Finally, mechanisms of personal and social control indicates how people handle uncertainty.

Although the original cultural dimensions laying the grounds for these themes do not necessarily agree on the basis of each of the themes, these themes provide a framework for how to approach a comparison between cultures (Nardon & Steers, 2009). Aspects, such as the national cultural context, might shape the views on the role of leadership and are thus relevant to consider

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regarding how the leadership can approach the change management of the business model strategy.

As the focus of the research question revolves around the role of leadership, we will only examine the cultural influences relevant using Hofstede's (2011) dimensions of power distance,

individualism, and masculinity. In addition, we will apply Nardon and Steers' (2009) dimensions of power and authority, as well as their theme centrality of individuals, providing indications for the expected hierarchy within an organization and the expected level of employee inclusion.

Although the remaining dimensions do give indications for how people are likely to act within the organizational setting, we consider these aspects to generally be more indicative regarding the choice of policies for the organization. Hence, we will not consider these dimensions.

Leaders’ Effect on Organizational Culture

While the negotiated order of organizational culture affects the operational context of the leadership, and thus leadership cannot be understood without taking this into account, the organizational culture can likewise not be understood without considering how the leaders shape the culture (Schein, 2009). Similar to the organizational identity being defined by the internal sensemaking of an organization of who they are and what they do, the organizational commitment is defined by the “employees’ emotional attachment to, identification with, and involvement in their organization” (Hassan et al., 2013, p. 135). Therefore, organizational commitment refers to the employees’ devotion to the goals of an organization, which can be related to the notion of organizational identity and what the organization does. This commitment is affected by whether there is a shared sense of values and social exchange among the employees and the leadership of the organization (Hassan et al., 2013). Accordingly, this renders the leaderships’ effect on the negotiated order, as well as its approach to defining organizational processes, instrumental to the organizational culture (Schein, 2009; Watson, 2006).