GodfatherManagement?TheRoleof
LeadersinChangingOrganizational
CultureinTransitionEconomies:
AHungarian-RomanianComparison
balázs heidrich
BudapestBusinessSchool, Hungary.
mónika-anetta alt
Babes-BolyaiUniversityofCluj-Napoca,Romania
Theobjective ofthearticle istoexaminethedegree towhich na-
tionalculture and/orthebusinesssector areinfluencingfactors in
organization culture change.Furthermore, thispaper aimstode-
termine whether thestrengthsofthesefactors differintwona-
tionalcultures. Thesubsequenthypothesiswastested onasam-
pleofmainlyNorthern-Hungarian andTransylvanian Romanian
organizations toestablishwhetherthere wasabasisforconduct-
ingfurtherresearch. Ifourhypothesisiscorrect, significantcul-
ture changeisunderwayintheregion.
Thestudyanalyzes whether cultural changestookplace differ-
ently inproduction,service andpublicorganizations inthedif-
ferent transitioneconomies.
Key words: organizational culture change,production andservice
companies, paternalist leader
Introduction
Following the social-economic changes in the post-communist sys-
tem, many studies have been written to capture the changing cul-
tureofHungarianorganizations.Thesestudieseitherdemonstrated
the current situation as a snapshot (Branyiczky 1989; Máriás 1989;
HofmeisterandBauer1995;Simon andDavies1995;Jarjabka2002),
or focused on the challenges of collaboration in organizations with
different cultural backgrounds (Child and Markóczy 1993; Meschi
and Roger 1994; Poór 1995; Gaál, Szabó and Lukács 1996; Primecz
and Soós 2000). Other authors have defined the characteristics of
subculturesofHungarianorganizations(Bokor2000).Detailedstud-
ieshavealsobeenundertakentotracethechangeprocessofstrate-
gic consciousness and the methods of strategic planning (Balaton
1994;2003).
management 4 (4): 309–327
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BalázsHeidrichandMónika-AnettaAlt
The most recent and internationally comparative empirical stud-
ies were carried out in the framework of the globeproject (Brod-
beck, Felix and Frese 2000) which provides a firm ground for fur-
ther examination of Eastern-European and more specifically Hun-
garian cultural characteristics (Bakacsi and Takács 1997; Bakacsi
1999;Bakacsietal.2002;Karácsonyi2006;Toarniczky2006).
Thisstudyintendstocapturethechangeprocessoforganizational
culture. An empirical model and a related questionnaire served as
the basisfor thisempirical study. The surveywasfirstcarriedout in
Hungary,specificallyintheNorthern-Hungarianregion,whichused
to be the centre for heavy industry in the communist era. It was as-
sumedthatthefeaturesofculturalchangewouldbemoreevidentin
suchsocial-economicenvironmentalsituations.Thesurveywasthen
extended to regions with a similar background in the neighbouring
countries(Romania,Slovakia,Ukraine).Fromamongstthese,there-
sults of the Romanian survey were validated for statistical compari-
sonwiththeHungarianone.
In this paper the model and its theoretical framework is intro-
duced,followedbyaprimaryanalysisofthefindingsoftheHungar-
ian survey and a comparison with the Romanian results. The final
part considers the results of the secondary analysis in terms of the
typicalphenomenaofculturalchangesinthegivensamples.
the research model
Basedonthetheoreticalanalysesofthepossiblereasonsforchange
in organizational culture (Sathe 1985), the role of leadership in the
change process (Schein 1992; Nahavandi and Malekzadeh 1993),
the types of cultural changes and cultural leaders (Trice and Beyer
1993), and empirical experience of change in Hungarian organiza-
tionalculture(Heidrich1999)amodelwasconstructedtosynthesize
the possible factors influencing cultural change. It is not the inten-
tion of this study to differentiate between the intensity of these fac-
torsinthechangeprocess.Thefactorsthatinfluenceculturechange
canbeseeninfigure1.
leadership
The role of the leader has an influence in creating and changing
corporate culture. This is achieved by defining behavioural norms
and decision making methods as well as through decisions which
affecttheorganisation’svaluesystem.
Studies examining the role of the leader assert that the leader
has a significant impact on the shaping of corporate culture. Schein
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Godfather Management?
Organizationculturechange
Leadership
Organization
members
Organization
characteristics
National
culture
Strategyand
structure
Featuresof
culture
figure1 Factorsinfluencingculturechange
(1985) and Nahavandi and Malekzadeh (1993) observed a ‘cultural
creator’ role of the leader, when founding an organization. The cri-
teria put forward by Schein (1985) that measure whether the leader
hadadefiniteimpactonthecultureareasfollows:Iftheleader’svi-
sions are shared unanimously and; If the leader’s impact is still felt
aftertheorganization’ssizehadincreased.
Nahavandi and Malekzadeh (1993) indicate the means by which
a leader may have an impact upon shaping culture as follows: as a
role model; through the use of the reward system; the selection and
recruitmentprocess;structureandstrategyand;thephysicalsetting.
Culture changes established by the leader very often outlast the
person. However, successstoriesareneededin ordertovalidatethe
culture. These success stories are built into the value system of the
organization and act as something to lean on in times of crisis and
problems.
Some cultural analysts use the term culture change to refer to
planned,moreencompassingchangesratherthanthosewhicharise
spontaneously within cultures or as a part of conscious efforts to
keepanexistingculturevital.Culturechangeinvolvesbreakingwith
thepastand,throughthis,culturalcontinuityisnoticeablydisrupted
(Schein1992).
organizational characteristics
Due to the major role of the ownership structure, size of the orga-
nization, the given branch of industry and the shared values in the
transition of the organization culture, the companies in this study
have been surveyed according to three aspects:
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BalázsHeidrichandMónika-AnettaAlt
•
organizationsize(numberofemployees);
•
sectorofeconomy(production or serviceoriented);
•
nationalculture(HungarianandRomanian);
strategy and structure
The interdependence of strategy,structureand culture confirms the
strategy of any organization as a determinant factor in any culture
change (Mintzberg 1989). The cultural change process is very often
a side issue of the overall strategic change program. Either way it is
certainthat,justasinthecaseofstructure,culturecannotbetreated
separately from strategy at any given time. Thus it can be said that
itisunrealistictoexpectorganizationmemberstofollowanewmis-
sion and goals alongside old values and beliefs. The organization’s
strategy should fit the defined culture so as to avoid the envisaged
dream becoming a strategic nightmare. The best way is, therefore,
to manage these two factors simultaneously and not in a sequential
way(Szintay2001).
The relation between structures and cultures is also well estab-
lished. It is not the objective of this study to deal with the cultures
createdbythedifferentstructuralformsnortoconsiderculturesthat
rejectcertainstructures.
The change of organization structure immediately initiates chan-
ges in culture. New departments are born, old ones die, and sub-
sequently new groups of people emerge. Within the new structure,
organizationmembershavetofindnewwaysofcommunicationand
interactionwithcolleagues.Thisleadstoculturechange.
features of strong cultures
Thetermschangeandcultureareoftenatoddswithoneanother:the
basic elements of many cultures are all against change in any way,
shapeorform.Theirstrengthisinthestabilityofsharedvaluesand
assumptions about organizational behaviour. And these strengths
canbecomethebiggestconstraintstoanychange.Itcanbesaidthat
the stronger a culture, the more difficult it is to introduce change.
AccordingtoNahavandiandMalekzadeh(1993)therearethreeele-
ments that indicate the strengthof a culture: The first element is all
the shared beliefs, values and assumptions the organization shares.
Thenumberofthesewilldeterminehowthickthecultureis.Forex-
ample,thehigherthenumberofsharedassumptions,thethickerthe
culture. Likewise, in thin cultures, few assumptions and values are
held; the second element is the proportion of organizational mem-
bers who share these basic assumptions. The more people agree
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Godfather Management?
with and share the various assumptions, the stronger it is; the third
elementistheclearorderofthesesharedvaluesandassumptions.If
assumptionsareclearlyordered,itbecomesevidenttothemembers
which are central to the culture of the organization and which are
not. The central ones are hard to change, whereas charge is much
easierinthecaseoftheminor assumptions.
Some other factors also have an impact on the strength of a cul-
ture.Organizationswithahomogeneousandstablemembershipthat
haslongtenurearemorelikelytohaveastrongculture.Thenum-
ber of employees and the geographic dispersion of the company
also play a significant role. Thus, a smaller organization with fewer
employees is more likely to have a stronger homogeneous culture.
Handy (1993) also shares this belief when he points out that the
power type of culture is typical for small enterprises managed and
ledby thefounder.
national cultural background
National culture can have opposing influences on the organization.
This two-fold impact is seen in the implementation of organization
change and development programs. Whilst well-defined objectives
and activityplansof top managementworkfromtop-to-bottom, na-
tional culture works in the opposite direction, from bottom-up. Na-
tional culture appears to be one of the obstacles to organization
changeinHungaryandRomania(Heidrich1999).
Hypotheses
Basedonthisresearchmodelandpreviousempiricalstudiesthefol-
lowing hypotheseswereformed:
h1 Thecultureofproductionandserviceorganisationsdiffersignif-
icantly.Characteristicsofleadershipandinternalorganisational
features based on human relations are different. Applied tech-
nologyhasamajorimpactontheprocedures.Theclosedsystem
ofproductioncompaniesleadstotheassumptionofgreatercon-
formity,thanserviceorganizations,wherethemyriadsofhuman
interactionsresultinamoreopensystem.
h2 Organisational size significantly influences the culture. Its im-
pact is not of the same strength along the different dimensions
of the model. Dimensions could exist, which are not (or hardly)
size-dependent. (Organisational size has been measured by the
numberofemployeesinthisstudy).
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BalázsHeidrichandMónika-AnettaAlt
h3 Economicand social environmenthave an impact on theculture
oforganisations.Differenteconomicandsocialdevelopmentre-
sultsindifferentculturalcharacteristics.
TheEconomicEnvironmentalFactorsinHungary
In order to consider the third hypothesis adequately, a comparative
study has to be undertaken of the different environmental factors
affectingHungaryandRomania.
Thereseemtobetwoextremeviewsinthecomparativeeconomics
literature on the process of economic restructuring in transition
economies:Theoneiswherethecollapseoftheprivatesector,which
is not adapting to the new market and social environment, is com-
bined with a slowly emerging private sector (Blanchard, Comman-
der,andCricelli1995).Theotheroneiswherethemainforcebehind
transition is the rapid growth of the private sector. The former case
appears to apply to Romania and the latter for Hungary (Bilsen and
Konings1998,430).Companiesintheformersystemworkedinquite
asafeway.Alltheconditionsofoperationweresetbythestate.This
seemed logical since the state had full ownership of every business
unit.Thismeantthatthepolicyofthecompanieswasverymuchde-
terminedbythegovernment.Centralplanningwasthedrivingforce
of any company. The strategic branches were pre-determined and
nobusinesswaspermittedtomakeindependent strategicdecisions.
The sales and supply opportunities were also all influenced by the
government. This especially applied to any export activities which
werehandled by state-owned export-import companies which were
setupforeverybranchofindustry.
The success of companies was not measured by profit or perfor-
mance. The managers of companies were appraised by their rela-
tionship with the government and the ministriesof the given sector.
This relationship was of course very much based on political ideol-
ogy. This resulted in advantages in terms of access to central finan-
cial and other resources (Bakacsi 1989; Máriás et al. 1981; Balaton
1994)Thedownsideofthiswasthatthosecompaniesmakingaprofit
would not get access to the central resources which were primarily
reallocated to those firms with huge losses, as the state automati-
callyhelpedthosecompaniesinfinancialtrouble. Adesireforsecu-
rity andanunwillingness totakeriskswerethe normsasa resultof
statepolicy.Infact,theguaranteedsurvivalledtothe‘moralhazard’
of Hungarian companies (Kornai 1993a). This, of course, was not a
goodincentive,andorganizationsbegantoaimforlossesratherthan
profits.
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With the changes in society and the economy, the comeconmar-
kets collapsed. The comeconwas the international level of central
planning for the former communist countries, where economic pol-
icy was set. All trade transactions and collaborations were arranged
five years in advance. This safe and secure way of doing business
cametoanend.
Changes in the environment forced companies to become more
market-driven and profit-oriented, both of which were alien con-
cepts. The main problem with this was that there were hardly any
existing examples of countries making a change from bureaucratic
socialism to a market economy. This resulted in a deep crisis for all
the companies in Central-Eastern Europe called ‘transformational
decline’(Kornai1993b;Balaton1994).
Simon and Davies (1995) summarized the characteristics of the
radicalchanges,whichdemonstratedthediscontinuitywiththepast:
•
amultipartysystem,anewparliamentarysystemandfreeelec-
tions;
•
a new and gradually developing banking and financial system
withstockandcommodityexchanges;
•
thedissolution ofthe comecon;
•
new educational laws starting with the abolition of compulsory
teachingofRussianinschools;
•
newcompany,accountancy,taxation, labour andproperty laws;
•
thebeginningoftheprivatizationoftheentirelystate-controlled
industries;
•
theprivatizationofcouncilflatsandanewsystemoflocalcoun-
cilswhichwererenamed‘localauthorities.’
TheEconomicEnvironmentalFactorsinRomania
In the 1980s, most Communist bloc countries became open to re-
form. In Romania the situation was a little different as Romanian
leader Nicolae Ceausescu took a harder line, adopting an increas-
ingly closed and repressive attitude. Despite this difference, there
were some similarities with other countries in that Romania’s econ-
omywasplannedandhighlycentralizedwithlargestate-ownedcor-
porationsandcooperativesplayingcentrestage.TheeconomyinRo-
mania was based on heavy industry. According to the Canadian In-
ternational Development Agency (2005) this was ‘a sector that was
difficult toreformandcausedextensiveenvironmentaldamage.’
Despite this reluctance to change, 1989 marked the fall of the
Ceausescu regime and thus the end of the Communist era as well.
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BalázsHeidrichandMónika-AnettaAlt
Since this time, Romanian and other transition countries have un-
dertaken massive reforms of their economic systems, transforming
institutions, processes, attitudes, and fundamental concepts of indi-
vidualandorganizationalbehaviour.
According to research undertaken by Scarlat and Scarlat (2007)
therewerethreestagesinthetransitionofRomania:
1.1990–1997
2.1998–2001
3.2002–2005
Inthefirstperiod(1990–1997),Romaniasoughttoabandontheso-
cialist model. This stage of transition came at great cost: Romania’s
standard of living declined dramatically; public services suffered;
unemployment and inflation increased simultaneously and Roma-
nia’scurrencywasdevalued.
Several other improvements occurred in the economy during the
second stage when growth policies were adopted. Certain austerity
measures were undertaken in fiscal policy as well as a number of
structuralreforms.
The third interval marks the end of the transition period. In ef-
fect, a transition period ends for a country when the euwrites in
the Country Report that the economic system of the country has
achieveda‘functionalmarketeconomy’status.InthecaseofRoma-
nia,theEuropean Commissionwroteinitsreportin2003:‘Romania
can be considered as a functional market economy once the good
progress made has continued decisively.’ According to Bilek (2003),
the second condition referred to in the Report appears to indicate
that the Romanian economy cannot be considered a fully function-
ingmarketeconomyineveryrespect.
From an economic point of view: the economic transition is over
when the country’s yearlygdpreachesthe pre-transition maximum
level. The Romanian economy achieved this in the year 2002–2003,
accordingtotheWorldBank(seeUnitedNationsCommonDatabase
athttp://unstats.un.org/unsd/cdb).
Aftertheendofthetransitionperiod,Romaniastrivedtoalleviate
poverty and to meet euintegration requirements. Romania became
aneumemberon1January2007.However,itfacesanumberofchal-
lenges,whichtheWorldBanklistsasfollows:
•
Acceleratingstructuralreforms.
•
Reformingpublic institutions andimprovinggovernance.
•
Reformingthelegislativeprocessandthejudiciary.
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Godfather Management?
•
Reformingthepensionsystem.
•
Developingruralareasandreducingpoverty.
•
Reformingtheenergysector.
MethodologyandDiscussion
Inordertotestthesehypotheses,ananalysiswasrequiredoftheor-
ganizational culture of the North Hungarian region to be compared
withRomaniancompaniesfromTransylvanianregion.Bothregions’
economies used to be based on heavy industry. This study is based
on primary information sources which were collected by sampling
436 firms. The Hungarian sample contains 100 companies and the
data was collected between 2001 and 2003. The sample for Roma-
niacontains336companiesandthedatawerecollectedin2004.The
researchquestionnairewasconstructedwithintheframeofcompre-
hensive otka-research based on the section examining the organi-
zation culture (Szintay 2006). The questionnaire was divided into 6
questiongroupswithatotalof40statements.Thesequestiongroups
areasfollows:
1.Personality of the leader (ki): culture-forming and shaping role
oftheleader,representationoftheemployees,representationof
theinterestsofthegroup, sourcesofleadershipcredibility.
2.Employees (kii): typical behavioural norms, motivations, crite-
ria of individual success, transfer of norms and scores, clan vs.
competitive(market)organizationalculture.
3.Strategy and (organization) culture (kiii): strategic conscious-
ness, application and acceptance of strategic methods, evalua-
tionofthesocialandmarketenvironment,acceptanceofchange.
4.Structureandco-ordination(kiv): organization adaptability, me-
thodsofdecision-making,technologyandstandardization,rules
andproceduresasculturalelements,informationandpower.
5.Organization climate (kv): informal relationships, out-of-work
relationships,leveloftrust,levelofmutualloyalty(organization
vs.members),ceremoniesandrituals.
6.Nationalculture(kvi):universalismvs.particularism,monochro-
nic vs. polychronic cultures, feminine vs. masculine scores, in-
dividualisticvs.collectivesociety,performancevs.ascription.
InthelatterquestiongroupthedimensionsofTrompenaars(1993),
Hall and Hall (1989) and Hofstede (1995) were applied which were
most related to the original research model regarding work val-
ues. However other dimensions (i.e. uncertainty avoidance, power
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BalázsHeidrichandMónika-AnettaAlt
table1 ThestructureoftheRomaniansample
Small Medium Big N.a. Total
Production 52 76 71 — 199
S e r v i c e9 43 5711 3 7
Total 146 111 78 1 336
table2 ThestructureoftheHungariansample
Small Medium Big N.a. Total
Production 3 11 32 — 46
Service 5 13 24 — 42
Publicservice — — 13 — 12
Total 8 24 68 — 100
distance, specific vs. diffuse) were measured in previous question
groupsasrelatedconcerns.
The Likert scale was used with seven grades: 1 means total dis-
agreement and 7 total agreement. The last question of each set of
questions was an open question. The ‘expert opinion-method’ was
usedin thecourseof theresearch,whereonly onerespondent from
each and every organisation filled out the questionnaire, so only an
overall picture of the sectors of economy can be examined rather
thanindividual companies.
limitations
The sample used is not representative for the entire Romanian and
Hungarian economy. Only companies from one geographic region
have been sampled. Furthermore, the sample does not reflect the
structureoftheeconomyintermsofthemainsectors.Itshouldalso
be noted that the questionnaire was filled out by managers and the
subordinates’ point ofviewwasnot takenintoconsideration.
The data from the Hungarian sample were collected one year be-
fore the Romanian one. In this way the comparative analysis will
further heighten the differences in economic development between
the twocountries.
Findings:TheHungarian-RomanianComparison
h1 The cultures of production and service organisations differ sig-
nificantly. Characteristics of leadership and internal organisa-
tional features based on human relations are different. Applied
technology has a major impact on the procedures. The closed
system of production companies leads to the assumption of
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Godfather Management?
greater conformity than service organizations, where the myri-
ads ofhumaninteractionsresultinamoreopensystem.
h1hypotheses were strongly validated in the Hungarian sample
alongallquestiongroups.Serviceandalsopublicservicecompanies
proved to be more focused on human relations with a more demo-
craticstyleleadershipthanintheproductionsector.Howeverh1hy-
potheseswerenotreinforcedintheRomaniansample.
h2 Organisational size significantly influences the culture. Its im-
pact is not of the same strength along the different dimensions
of the model. Dimensions could exist, which are not (or hardly)
size-dependent (organisational size has been measured by the
numberofemployeesinthisstudy).
h2hypotheses were validated in both the Hungarian and the Ro-
manian sample. smes proved to be more family-like places to work
at, with a friendlier organizational climate. In the Hungarian sam-
ple production smes were the most preferred organisations to work
atandlargepublicservicecompanies.Theculturaldifferencebased
onsizewaslessevident,howeverstillpresentintheRomaniansam-
ple.
h3 Economicand social environmenthave an impact on theculture
oforganisations.Differenteconomicandsocialdevelopmentre-
sultsindifferentculturalcharacteristics.
Considering the total of the results, it is shown that Romanian or-
ganisations are at a different stage of cultural change than Hungar-
ian ones. In conclusion a transitional state of organization culture
appearstoexistin Romanian organizations.While in Hungarianor-
ganizations family type organizations are less frequent, in the Ro-
manian sample contrasting valuessuchasfriendlinessandcompe-
tition gohand in hand. Atserviceandespeciallyproduction compa-
nies,theheritageofthecommunistpastseemstobepresenttosome
degree. The collective mind and caring-organization contrasts here
withtheespousedvaluesofthecompetitivecompany.Alongitudinal
survey in 5–10yearsmight prove competitive values to have greater
dominance, withthefadingoffamilyvalues.
Key Findings
the paternalist leader
ThepaternalisttypeleaderisevenmoreappealinginRomanian or-
ganizations than in the Hungarian ones. This type does not operate
inpartnershipwiththefollowersbutratherasafatherwithhischil-
dren.Therefore,ontherelationshiplevel,loyaltyishighandmutual.
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BalázsHeidrichandMónika-AnettaAlt
table3 ki–leadership
Romania Hungary
Services Production Services Production Publicserv.
q (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
ki1 5.88 1.10 5.93 1.14 4.81 1.85 4.48 1.80 5.25 1.29
ki2 4.98 1.60 4.63 1.75 4.81 1.55 4.95 1.61 5.17 1.70
ki3 5.45 1.21 5.52 1.25 5.17 1.50 4.75 1.67 5.58 1.56
ki4 5.58 1.20 6.06 0.98 5.52 1.15 4.93 1.40 5.92 0.90
ki5 5.31 1.59 5.62 1.37 4.17 1.87 4.27 1.81 5.25 2.18
ki6 5.01 1.70 5.51 1.54 4.17 1.87 4.50 1.75 3.58 2.15
ki 5.37 0.35 5.55 0.5 4.77 0.54 4.65 0.27 5.13 0.81
notes q–question, (1)average,(2)standarddeviation.
table4 kii–employees
Romania Hungary
Services Production Services Production Publicserv.
q (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
kii1 4.20 1.66 4.21 1.61 4.60 1.61 4.30 1.70 4.33 1.97
kii2 5.81 1.21 5.87 1.13 5.83 1.45 5.84 1.49 5.92 1.16
kii3 4.85 1.53 4.68 1.49 4.21 1.47 4.00 1.62 3.92 1.83
kii4 6.06 0.89 6.13 0.93 5.00 1.50 4.82 1.32 4.92 1.68
kii5 5.51 1.46 5.56 1.30 4.81 1.70 4.33 1.97 5.33 1.37
kii6 5.37 1.45 5.31 1.45 4.19 1.73 3.47 1.78 4.00 1.60
kii7 5.02 1.57 5.02 1.53 4.02 1.65 3.73 1.50 3.33 2.06
kii 5.26 0.68 5.25 0.73 4.67 0.62 4.36 0.79 4.54 0.9
notes q–question, (1)average,(2)standarddeviation.
The paternalist leader proved to be industry independent. Another
characteristic of the paternalist leader is that (s)he is not managing
theorganizationbasedonthetransparentorganizationalnorms,but
there is a continuous ‘personal game’ with each and every follower
within the mutual circle of loyalty. This game is operated within the
frameworkofthe‘psychologicalcontract,’basedonmutualexpecta-
tions.
ThePaternalistleaderasoneofthemostacceptedtypeshasbeen
identified and validated by the Hungarian sample as well. This type
seemstohavesurvivedinpost-communistcountries.Whiletheself-
interesteddictatortypeisstronglyrejected,thepaternalisttypewith
a more relation-oriented style remained as a desired one. This type
of leader was analysed in detail by Pellegrini and Scandura (2008)
andcanbeseeninfigure2.
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Godfather Management?
table5 kv–organizational climate
Romania Hungary
Services Production Services Production Publicserv.
q (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
kv1 4.83 1.51 4.67 1.44 4.30 1.61 3.93 1.77 4.25 1.66
kv2 3.92 1.71 3.61 1.79 4.68 1.86 4.30 2.31 5.00 2.04
kv3 5.37 1.37 4.92 1.47 4.57 1.42 3.95 1.92 4.42 1.56
kv4 5.22 1.56 5.42 1.36 5.14 1.61 4.84 1.67 5.75 1.36
kv5 5.12 1.32 5.03 1.35 4.54 1.45 4.20 1.66 4.92 1.08
kv6 3.26 1.65 3.59 1.74 3.32 1.83 3.61 1.63 3.33 1.67
kv 4.62 0.84 4.54 0.77 4.42 0.61 4.14 0.42 4.61 0,82
notes q–question, (1)average,(2)standarddeviation.
table6 kvi–nationalculture
Romania Hungary
Services Production Services Production Publicserv.
kvi1 3.66 1.53 4.17 1.48 3.93 1.57 3.60 1.68 4.75 1.96
kvi2 3.55 1.75 3.87 1.73 4.40 1.95 4.87 1.42 4.33 1.97
kvi3 4.48 1.63 4.47 1.64 4.40 1.34 3.64 1.60 3.42 2.50
kvi4 4.66 1.90 4.80 1.84 5.10 1.59 5.33 1.64 5.17 1.95
kvi5 4.12 1.62 4.37 1.57 3.83 1.54 3.78 1.43 4.08 2.11
kvi6 4.35 1.68 4.23 1.82 4.00 1.55 3.80 1.59 3.42 1.38
kvi7 4.00 2.04 4.04 1.93 4.95 1.78 4.93 1.53 6.25 0.87
kvi 4.12 0.45 4.28 0.31 4.37 0.5 4.28 0.73 4.49 1.01
notes q–question, (1)average,(2)standarddeviation.
Interestingly,thePaternalistleadertypeisindependentofthesize
of the organization and there is no significant difference between
smes and large organizations. However the appearance was more
commoninsmallerorganizationsintheprimaryanalysis.
The analysis by sector has not shown significant difference be-
tween production and service companies, but the paternalist leader
waslesscommoninservicecompanies.
Paternalist
leader
ki1
kiv4
0.80
0.80
Thegood boss hasstrongpersonality; he
isstrong-mindedbutfair. Hetakescareof
andprotectstheemployeesloyaltohim.
Co-ordination andcontrolareinsured
throughpersonalguiding,information
andco-operativeneedsof theboss.
figure2 Paternalistleaderandco-ordination
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BalázsHeidrichandMónika-AnettaAlt
additional features of paternalist leaders in smes
A typical phenomenon was identified as an obstacle to organiza-
tional changeandtogrowthinsmes:
•
Very often the leader of the company is the owner as well.
Therefore whatever decision is made, it is about private prop-
erty.Trustbecomesadecisivefactorintermsofwhomtoinvolve
in managerial decisions and thereby sharing information about
the company. To do so the leaders would need to employ man-
agers trusted on both a human and business level. In this way
direct,dailycontrol,whichwastakenforgrantedwhenthecom-
panyusedtobesmaller,would notbeneeded.
•
Success is an obstacle to organization change. The paradox sit-
uation is that a company facing a growth problem usually has
a successful past. Based on financial and economic success,
the owner-manager’s beliefs about the suitable leadership style
are enforced. However these beliefs and ideas are rarely self-
conscious.Thereforefailureingrowth doesnotoccurasaman-
agerialproblem,whereleadershipstyleor,evenmore,theleader
needstobechangedorreplaced.
•
Itwouldtakeahighlevelofself-reflectionandhumilityforakey
player of a success story to take a step back and let somebody
else manage the business, thereby admitting that his/her skills
arenotenoughforalargersizeorganization.Thereisnotmuch
chanceofthis,sinceoftentheseowner-managersare‘hands-on’
men.
family-type vs. competitive organizations
Competition is motivated both by task-based performance and by
informal,relationship-power.Interestinglyenoughrespondentsalso
perceived their organizations as big families. A positive correlation
could be found in the questions regarding family features of the or-
ganizations,wheretrustandinformalrelationswerepresent.
Withregardtocompetition,nosignificantdifferencecouldbedis-
tinguished based on size; however competitiveness increases with
the size of the organizations. Competitiveness is not dependent on
sectors.
National culture and organization culture seem to be related, in
terms of the masculine features of the society. Competitiveness as a
typicalmasculinevalueprovedtoberelatedtoorganizationcompet-
itiveness.
The seemingly contrasting value, family type, seemed to apply to
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Family-type
organization
kii5
kii6
kv1
kv3
0.61
0.76
0.77
0.72
Inorganizations olderemployeesshare
theirexperiencewiththeyoungerones
abouthowtogetalonginthefirm.
Theorganization isveryfriendly place
likeabigfamily. Everybodyhelpsand
supportstheother.
Theatmosphereof theorganization is
friendly;peoplespendmuchtimeon
informalandsocial relationships.
Trustandfriendshiphavegreatvalue
here.
figure3 Factoranalysis of questionsregardingfamily-typecultures
smaller organizations: the larger organizations are, the less friendly
the cultures appear to be. Sector however is not an influential fac-
tor for the friendliness of organizations. In the Hungarian sample
serviceorganizations in generaland smallproduction organizations
proved tobesignificantlyfriendlierplacesinwhichtowork.
The informal development of organization culture is linked with
friendly organizations, just like trust in the organizations which the
Hungariansamplewaslacking.Thereforeitseemsthatculturalfea-
turesofafriendlyorganizationarenotnecessarilyderivedfromcon-
sciousmanagementeffortsintheRomaniansample.
Conclusions
•
On the basis of the findings the following could be claimed: In
the Hungarian sample significant differences appear between
the organization cultures of production and service companies.
This relevant variance has appeared sharply in the entire 6
question groups. However this phenomenon did not register in
theRomaniansample.
•
Comparing the culture of Hungarian production and service
companies we can say that in the production sector the role
of the leader is less caring, the level of informal relationships
is lower, and the organizational climate is not so friendly (lack
of readiness to help and lack of a climate of intimacy). Leaders
and employees hold information back as a means of retaining
power. In both countries the characteristic type of leader can
be defined for the whole of the sample as paternalist. This is
especiallysignificantatproduction smes.
There are significant differences between the public and the pro-
duction/service sectors in the Hungarian sample. This raises the
question of whether a real cultural change has taken place in these
number 4 · winter 2009
323

BalázsHeidrichandMónika-AnettaAlt
companies since the change of the economic and political system
or not. On the one hand, we can find here the most positive re-
sults in several question groups (the culture-forming role of the top
leader, organizational climate, etc.); on the other hand, there is the
monopoly or quasi-monopoly market situation of the organizations.
Although they consider the market and social environment suitable
for their work, some of the methods of strategic planning are com-
pletely lacking in practice. These companies find the changes tak-
ing place in their environment the least predictable. This passive
strategic behaviour of these now private companies assumes con-
stant faith in the ‘omnipotence of the state’; interestingly, this type
of culture appeared in the Romanian sample at production and ser-
vice organizations as well. In that sample public service organiza-
tions were not involved. Therefore this culture type seemsto be the
heritageof thecommunist pastandcould beconsideredasatransi-
tionalculture.Oldvaluesofthepasthavenotfadedawaycompletely,
butnewonesofthemarketeconomyareemerging.Thisexplainsthe
simultaneouspresenceofseeminglyverycontrastingvalues,suchas
friendlinessandcompetition.
Summary
The objective of the study was to identify cultural characteristics of
service and production companies of two transition countries: Hun-
gary(theNorthernregion)andRomania(theTransylvanianregion).
Six dimensions were used for comparison. Significant differences
could be traced between the two samples based on cultural back-
ground. The sector of business was a more significant factor in the
Hungariansample.Serviceorganizationstendtohaveasignificantly
different organizational culture than production ones, although this
difference was less evident in the Romanian sample. The size of the
organization appeared asan influentialfactor inboth samples.
Acknowledgments
Theresearchhasbeenapartoftheresearchstudy‘AComplexStudy
of the Factors Influencing the Efficiency of Strategic Control in the
MirrorofGlobalizationandRegionalism,’whichhasbeencarriedout
attheInstituteofManagementSciencesattheUniversityofMiskolc,
supportedby otka. Theresearch wascarried outin2001–2003.
The authors would like to thank László Berényi and László Molnár
attheUniversityofMiskolcfortheirhelp.
TheRomaniansurveytookplacein2004–2005,basedontheHungar-
ian questionnaire with the support of the Faculty of Economics and
Business Administration, Babes-Bolyai University of Cluj-Napoca.
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Godfather Management?
TheauthorswishtothankcolleaguesfromtheBabes-BolyaiUniver-
sity,Prof.Dumitru MatisandProf.MáriaVinczefortheirsupport.
TheauthorswouldwishtothankNickChandler(BudapestBusiness
School)forhisintenseassistanceinformulatingtheEnglishversion
ofthepaper.
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