Friedrich-Alexander-Universität Erlangen-Nürnberg Betriebswirtschaftliches Institut

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1 Friedrich-Alexander-Universität Erlangen-Nürnberg Betriebswirtschaftliches Institut Lehrstuhl für Betriebswirtschaftslehre, insbesondere Internationales Management Prof. Dr. Dirk Holtbrügge Cultural Convergence through Web-Based Management Techniques? The Case of Corporate Web Site Recruiting Jonas F. Puck Alexander T. Mohr Dirk Holtbrügge Working Paper 2/2004 Dipl.-Kfm, Jonas F. Puck, Lehrstuhl für Internationales Management, Universität Erlangen- Nürnberg, Lange Gasse 20, Nürnberg, Tel.: (0911) , Dr. Alexander T Mohr, Lecturer in International Management, Bradford University School of Management, Emm Lane, Bradford BD9 4JL, UK, a.t.mohr@bradford.ac.uk Prof. Dr. Dirk Holtbrügge, Lehrstuhl für Internationales Management, Universität Erlangen-Nürnberg, Lange Gasse 20, Nürnberg, Tel.: (0911) , internationales.management@wiso.uni-erlangen.de, 1

2 Cultural Convergence through Web-Based Management Techniques? The Case of Corporate Web Site Recruiting Jonas F Puck, Alexander T Mohr and Dirk Holtbrügge Abstract. This paper empirically analyses the influence of national culture on the intensity to which companies in different countries make use of corporate web site recruiting. Based on Hofstede s 4-Dimensions model of culture four hypotheses are developed and tested against data from 420 companies in 14 countries. The results indicate that cultural effects are relevant even though a management technique is provided on the World Wide Web. Particularly, individualism has a strong influence on the use of corporate web site recruiting in different countries. Thus, the results lend support for the divergence approach in international management research. Keywords: Internet; Culture; Hofstede; Corporate Web Site Recruiting 2

3 Cultural Convergence through Web-Based Management Techniques? The Case of Corporate Web Site Recruiting Introduction With the phenomenon of globalization having become a dominant force in today s economy, the debate about convergence and divergence in the study of international management has increased over the last years. The convergence approach proposes that managers across different countries embrace similar attitudes and behaviors (McGaughey and DeCieri 1999; Rowley and Bae 2002). Globalization is seen as leading to a more convergent use of management practices (Ralston et al. 1993, 1997). In addition, the deregulation of economic activity and the global spread of advanced communication technologies, in particular the internet, are regarded as factors that reduce the impact of differences across cultures on organizational practices (Ohmae 1990). Furthermore, a number of studies show that multinational companies have been very effective in diffusing standardized practices across borders (see, for example, Kirkman and Shapiro 1997; Negandhi 1987). By contrast, the divergence view proposes that the variations in management practices across national boarders are deeply rooted in cultural differences, and individuals maintain culture-based values despite growing economic and social similarities between countries (McGaughey and DeCieri 1999; Bhagat et al. 2002). The continuing existence of cultural differences between managers across countries has also led many commentators to question the possibility of transplanting management techniques and technologies from one cultural context into another (Baldry 1994; Hofstede 1991; Hofstede 2001a; Kedia and Bhagat 1988). 3

4 Recent studies have put a strong focus on human resource management within the convergence and divergence debate, since it is seen as deeply grounded within the surrounding national culture (see, for example, Laurent 1986 or Teagarden and Glinow 1997). Furthermore, understanding the relations between contextual variables and the use of human resource techniques is of high importance for human resource professionals, because knowledge about this relationship allows them to develop and adopt appropriate practices for each country. Empirical research has tested the contextual influences on different fields of human resource management, for example, compensation practices (Schuler and Rogovsky 1998), flexible employment practices (Mroczkowski and Hanaoka 1997; Raghuram et al. 2001), selection methods (Clark 1993; Ryan et al. 1999), staff-related management practices (Liberman and Torbiörn 2000), the motivational level of managers (Mathur et al. 2001) or performance appraisal (Snape et al. 1998). Luthans et al. (1993), for example, found evidence for differences between human resource management techniques used by managers from the United States and those preferred by Russian managers. Similarly, Newman and Nollen (1996) found support for cultural influences on managers propensity to introduce merit-based reward systems. All these studies show that the use of human resource management techniques varies across cultures, providing support for the existence of contextual influences. In this study, the impact of culture on the use of one specific HRM instrument is analyzed: corporate web site recruiting. As mentioned above, the strong growth of the internet may lead to a convergence of organizational practices, although the question as to how services provided over the internet (like corporate web site recruiting) are affected by contextual variables is controversially discussed. Agre 4

5 (1998), for example, sees an influence of the culture on the extent to which firms use knowledge management software on the internet, while Graham (2001) and Soderberg and Holden (2002) suggest that the internet is helping to overcome cultural barriers between countries and see a convergence effect of the internet. Surprisingly, extant literature is short of studies examining this topic, especially with regard to corporate web site recruiting, even though it has become a widely used human resource management practice: 91% of all companies in the Fortune Global 500 use corporate web site recruiting (ilogos Research 2002). Therefore, the aim of this study is to test the influence of national culture on the intensity with which firms from different countries use corporate web site recruiting. Particularly, we will analyze whether the intensity of the use of this HRM instrument may be explained by cultural differences. The remaining part of this paper will be organized as follows. The study starts with a short introduction into corporate web site recruiting. Afterwards, Hofstede s model of national culture is used to develop hypotheses about possible cultural influences on this HRM instrument. Then the measures, the empirical basis and the methodology of the study are explained. The corporate recruiting web sites of 420 companies from 14 countries were analyzed in order to test the hypotheses. Finally, the results of the study are discussed and implications for both management practice further research are indicated. Corporate Web Site Recruiting: Foundations of a new HRM instrument The use of technology in personnel recruiting has increased tremendously within the last years. In particular, the World Wide Web (www) has gained importance for HR managers (see, for example, Bussler and Davis 2001; Piturro 2000). Different ways 5

6 of electronic recruiting have been developed, i.e. job boards, career networks, newsgroups or corporate web site recruiting (Pearce and Tuten 2001). The latter is regarded as the most important method, since it allows the presentation of a company within its corporate identity, as well as an easy integration of (incoming) applicant data with the companies IT network (Brice and Waung 2002; Finn 2000). For those reasons, the use of a firm s web site is viewed as more authentic than other ways of electronic recruiting (Gale 2001). Web site recruiting can also be expected to be relatively cheaper, as companies with high levels of traffic on their homepage can reap scale effects. In this study, recruiting is understood as the combination of personnel pooling and personnel selection, with the objective of obtaining (personnel pooling) and selecting (personnel selection) an adequate number of applicants with the necessary qualifications (Holtbrügge 2004, p. 93ff.). It is open to discussion whether the definition of recruiting should include induction and other successive activities (like mentoring), or exclude the process of selection. For the purpose of this article, all induction and introductory activities have been excluded. This, however, does not imply that these post-selection activities are less important or cannot be assisted electronically. Four aims of personnel pooling can be distinguished: information, acquisition, selection and action. The objective of information is to fulfill the applicants information needs. As compared to newspaper advertising, homepages enable companies to provide far more information to potential applicants, due to the interactive and multimedia capabilities of the internet (Murphy 1999). In particular, the 6

7 ability to connect job advertisements with multimedia company presentations allows for meeting the individual applicant s information needs more efficiently (Capelli 2001). At the same time, however, many users complain about problems in finding the specific information they are looking for (see, for example Charles 2000; Feldmann and Klaas 2002; Martinez 2000; Zall 2000). The objective of acquisition, the creation of interest, is not as important in the case of corporate web site recruiting because of the selective use of the internet: a user visiting a company s homepage already has a general interest in the company and its services and/or job opportunities. In the case of corporate web site recruiting, a more important role is played by the selection function since electronic recruiting makes it easier for an applicant to apply for a job. Numerous applications can be sent within a very short period of time. Since a large volume of (potentially unsuitable) job applicants may excess the information-processing capabilities, companies attempt to improve and assist the self-selection of applicants (Hays 1999). Some companies try to achieve this by offering culture-fit tests on their homepage, which candidates can use to test whether they fit into the corporate culture. The process of selection in personnel pooling can easily be distinguished from true personnel selection, since in the process of pooling no data about the applicant is transmitted to the company. The objective of action, i.e. getting qualified people to apply, can only be reached if the personnel homepage is easy to use, e.g. by a direct link from the company s homepage to the webpage where job offers are located. The same applies to the process of applying itself. Two different methods of applying via internet can be distinguished: the application via and the application via standardized forms. The first method allows room for the individuality of an application, whereas the second one aims to reap the benefits of standardized processing of applications. 7

8 Depending on the quantity of applications and their quality, companies have to find their own best way. In case of a large amount of applications as mentioned above the second method may be more suitable. As to the process of personnel selection, the conventional wisdom is that corporate web site recruiting will not take over the complete selection process, because neither the company nor the job applicant can generate sufficient valid information (Mooney 2002). Nevertheless, web-enabled pre-screening is going to play an important role in the future, and so called online games are already used by various companies. In these games the player, i.e. the job applicant, has to carry out a number of different tasks on-line; the company then evaluates the suitability of the candidate for a given position. Similarly, chats are used in the pre-screening process, but their use is not very common. Other pre-screening methods are either not used on the internet or their use is very uncommon, even though online assessment-centers are seen as a possible development in the future (Kotlyar and Ades 2002). Theory and Hypotheses: The influence of culture on the intensity of corporate web site recruiting In order to examine the effects of cultural differences, the framework developed by Hofstede (1998; 2001a; 2001b) was used. He identified four dimensions along which different cultures vary: power distance, individualism-collectivism, masculinityfemininity and uncertainty avoidance 1. The claim that differences in national culture can be represented in terms of these four dimensions has been subject to criticism, not least because Hofstede s data was confined to one company, his questions 1 Hofstede presented a fifth dimension after collecting additional data in Asia: Long term orientation. Anyhow, since scores for this dimension weren't evaluated for all cultures within our sample, this dimensions was not used in our study. 8

9 focused exclusively on work values and his research framework has been considered to be biased by Western standards (see, for example, Erez and Early 1993 for a summary). It is not the intention of this study to enter into the debate about the validity of Hofstede s model. His study continues to be the largest empirical study connecting cultural orientation with observable institutional differences between countries within a single framework. In addition, the framework has successfully been used in similar studies before (see, for example, Snape et al. 1998; Ryan et al. 1999; Newman and Nollen 1996). Thus, Hofstede s model will be applied in this study. In the following, each of the four dimensions is examined for its influence on the intensity of corporate web site recruiting used by HR departments. Power distance describes the extent to which inequalities in the distribution of power are expected and accepted by the members of a culture (Hofstede 1991). Power distance influences the degree of centralization, participation, leadership style and use of status symbols. Most important for this study is the impact of power distance on the organizational decision process. Hofstede (2001a) proposes that managers in companies from countries with low power distance have a more participative and independent attitude towards work. In countries with high power distance managers are more likely to show and use their power. Since the internet allows a company to better present itself, its employees and its way of business within its corporate identity than in the print media, companies from cultures with a high degree of power distance can be expected to use corporate web site recruiting more intensely than companies from cultures with a lower degree of power distance. Thus, the following hypothesis is proposed: 9

10 Hypothesis 1: The higher the index of power distance in a culture, the more intense is the use of corporate web site recruiting in that culture (cp.). Individualism-collectivism describes the degree to which individuals identify with groups and are integrated into the community. In individualistic societies ties between individuals are loose. In collective societies, people are born into and remain, with great loyalty, in strong and cohesive groups throughout their lives (Hofstede 1991; Early 1994). In companies, individualism is manifested in high levels of autonomy of employees, an employee-employer-relationship that is predominantly based on the employment-contract, and in work conditions that provide employees with sufficient personal time. Collectivism (or low individualism), on the other hand, is manifested in work unit solidarity, group responsibility for results, moralistic/family-like relationships with employers, and the priority of relationships over tasks. Furthermore, collective societies are characterized by putting the group interest above the interest of the individual (Hofstede 2001a). The internet, not only when used for recruiting purposes, is often described as anonymous (see, for example, Allen 1999). It might be argued that companies from collectivist societies are reluctant to pool and pre-select jobapplicants from the internet. The fact that individuals find their way into the group through the anonymous internet contradicts the central ideas of a group, and might even be viewed as a threat to it. Additionally, Kedia and Bhagat (1988: 565) propose that out of a technology-transfer perspective "organizations located in individualistic cultures are more successful than organizations located in collectivistic cultures in their propensity to absorb and diffuse imported technology". Thus, the following hypothesis is formulated: 10

11 Hypothesis 2: The higher the degree of individualism in a culture, the more intense is the use of corporate web site recruiting by companies in that culture (cp.). Masculinity and femininity describe the extent to which a society emphasizes assertive and competitive as opposed to nurturing values. In feminine societies managers strive for consensus; equality, solidarity and quality of life are emphasized, and conflicts are solved by negotiation and compromise. In masculine societies managers are expected to be assertive and decisive, emphasis is laid on performance and competition among colleagues (Hofstede 1991; 2001a). Characteristics of the internet, such as speed and anonymity, are probably more attractive to masculine than to feminine countries. Furthermore, the fact that only hard facts count within the selection process of corporate web site recruiting seems to be linked with the attribute of decisiveness that Hofstede (1998) used to describe masculine societies, since selection criteria are definite and identical for all applicants. In addition, Kedia/Bhagat (1988) argue that masculine countries are generally more effective in importing new technologies than feminine countries and support this argument with the successful technological diffusion in the highly masculine countries Japan, Singapore, Hong Kong and Taiwan. Thus, the following hypothesis is proposed: Hypothesis 3: The higher the degree of masculinity in a culture, the more intensely do companies use corporate web site recruiting in that culture (cp.). 11

12 Uncertainty avoidance is defined as the extent to which the members of a culture feel threatened by uncertain or unknown and ambiguous situations. This feeling of threat results in a greater need of individuals for predictability and for (written or unwritten) rules. In companies, uncertainty avoidance manifests itself in an increased clarity of reporting relationships, procedures and systems in order to reduce employees feelings of anxiety stemming from unknown situations. Emphasis is placed on punctuality and precision. Individuals from societies with a low degree of uncertainty avoidance are more tolerant towards other cultures and opinions, and try to keep the number of rules to a minimum: People in such societies will tend to accept every day as it comes. They will take risks rather easily. They will not work hard. They will be relatively tolerant of behavior and opinions different from their own because they do not feel threatened of them (Hofstede 1983: 51). The efficiency of corporate web site recruiting as a new form of personnel pooling and selection has rarely been empirically tested. Therefore, its use is combined with a high insecurity about the risks and benefits of this method. As a consequence, companies from cultures with high uncertainty avoidance will not be pioneers in the application of corporate web site recruiting. Thus, analogous to the results of Ryan et al. (1999), the following impact of uncertainty avoidance on the use of corporate web site recruiting is expected: Hypothesis 4: The lower the degree for uncertainty avoidance in a culture, the more intense is the use of corporate web site recruiting by companies in that culture (cp.). 12

13 Control variables A series of control variables were included as they were expected to be crucial factors when analyzing variances in the use of corporate web site recruiting across countries: internet access, unemployment rate and market capitalization. Internet access. The extent to which people of a country have access to the internet obviously puts a ceiling on the intensity of use of the internet by companies for recruiting purposes in the respective country. For example, there is a higher user rate of the internet in the United States than in Europe, and corporate web site recruiting is therefore more important in the US (ilogos Research 2002). The unemployment rate was included as a second control variable. The more people are unemployed, the bigger the pool from which applicants can be selected. This reduces the necessity to put a high effort on the pooling function, both in print media and on the internet. Therefore, it can be expected that the unemployment rate of a country is negatively related to use of web recruiting by firms in that country. Finally, it can be assumed that the intensity of corporate web site recruiting is also influenced by the size of a firm. Larger firms have greater financial and personnel resources and might therefore be more likely to use web recruiting activities. For the purpose of this study, we decided to use the market capitalization as a measure of firm size as this data was easily available and accessible. Figure 1 summarizes the predicted influences. Beyond these three control variables others (such as HRM strategy or employee image) may be expected to influence the use of corporate web site recruiting. For these variables, however, no secondary data are available. Since this study is based 13

14 on an online research design (see below) we restricted the set of control variables to those explained above where data are easily accessible. Figure 1: Cultural and Control Variables and Proposed Influences Cultural Influences Uncertainty Avoidance - Power Distance + Masculinity + Individualism + Control Variables Internet Usage Unemployment Rate Market Capitalization Intensity of Corporate Web Site Recruiting Methodology The sample consists of the 30 largest publicly listed companies - measured by their market capitalization - in each of the following 14 countries: Canada, Czech Republic, Finland, Germany, Hong Kong, Hungary, Italy, Norway, Peoples Republic of China, Poland, Sweden, Taiwan, United Kingdom and the United States of America. Thus, in total the sample comprises 420 companies from 14 different countries and three continents. These countries were selected because they show significant differences along Hofstede s cultural dimensions, and therefore allow for a detailed study of cultural influences (contrast approach). Second criteria for the selection of these countries were the language skills of the authors. Since detailed analyses of corporate web sites were necessary, only those countries could be included where the corporate languages of companies are understood by the authors. Data were collected in autumn A standardized procedure was developed with reference to the above discussed possibilities of corporate web site 14

15 recruiting to collect the relevant data to measure the intensity of corporate web site recruiting. The preliminary version of the data collection method was then discussed with three HR-professionals of multinational corporations that were responsible for their companies website recruiting. The comments of the professionals led to a weighted input of the different functions of corporate web site recruiting on the measure of the intensity of corporate web site recruiting. I.e., the HR-professionals emphasized the major role of the information function but put less value on the selection function in personnel pooling and the personnel selection, especially since software solutions for the latter were still in the evaluation-phase. Overall, their comments led to the following research design: First of all, the market capitalization (MARKCAP) and the home country of each company were noted. Then the company s home-country homepage was visited. If a link to a personnel homepage was found, we followed this link. In the case that more than one personnel homepage existed, the page of the company s head office was chosen. By visiting the personnel homepage the quality and quantity of information in personnel pooling was measured with five dichotomous variables. Are there any specific job offers (INFORM01)? Is there a newsletter about jobs available (INFORM02)? Are the multimedia possibilities of the internet used (INFORM03)? Is information about career opportunities available (INFORM04)? Has a Chat been installed giving the visitor the possibility to talk with HRM managers of the company (INFORM05)? The selection function in personnel pooling was measured with the variable SELECT, with 0 indicating No Self Selection Tests and 1 indicating Self Selection Tests Available. The emphasis that companies placed on the action function was measured with two dichotomous variables. ACTION01 measured 15

16 whether there was a direct link from the company s homepage to the corporate personnel page. ACTION02 measured if it was possible to apply online. To test the intensity of personnel selection one dichotomous variable (PERSEL) was used, with 0 for No selection methods and 1 for selection methods used. Finally, in order to measure the overall intensity of corporate web site recruiting, the values of the dichotomous INFORM, ACTION, SELECT and PERSEL variables were added up into one composite variable (WRPOWER). As nine dichotomous variables were combined, the scale for WRPOWER is 0 for non-existent, and 9 for a very high intensity, to which firms make use of corporate web site recruiting. Results Descriptive Statistics As mentioned above, the data of 420 companies from 14 countries was collected and evaluated. The data gathered was analyzed using the SPSS 11.5 statistical package. The following Table 1 reveals the values of the four dimensions as suggested by Hofstede s model, as well as the internet user rate and the standardized unemployment rate for those countries. Furthermore, the table shows the means and standard deviations for the dependent variable (WRPOWER) for each country included in our survey. The descriptive statistics regarding the intensity of web site recruiting in Table 1 show that the use of corporate web site recruiting varies markedly between the countries included in this study. Overall, 56% of all companies use corporate web site recruiting, but with varying intensity across countries: For instance, companies from 16

17 the United States in the sample show a mean WRPOWER of 3,93 (SD: 1,86), while the mean WRPOWER in Hungary is only 0,36 (SD: 1,13). 17

18 Table 1: Hofstede s Dimensions of Culture, Internet User Rate, Unemployment Rate and Means of WRPOWER PD IND MAS UA UNEMRATE NETUSE WRPOWER Mean (SD) Canada % 9.1% 2.50 (3.71) Czech Republic % 8.76% 1.14 (2.28) Finland % 43.86% 2.32 (2.45) Germany % 21.68% 3.77 (2.11) Hong Kong % 40.53% 2.58 (2.51) Hungary % 6.43% 0.36 (1.13) Italy % 20.11% 1.47 (3.15) Norway % 52.40% 1.39 (2.54) Poland % 7.25% 0.61 (1.43) PR China % 5.27% 2.05 (2.54) Sweden % 50.70% 2.13 (3.59) Taiwan % 38.50% 2.61 (1.81) United Kingdom % 32.63% 2.40 (3.08) United States % 53.23% 3.93 (1.86) Means (SD) % (3.77) 30.67% (17.69) 2.03 (1.91) Notes 1 Weighted means and standard deviations of all cases Sources: Hofstede (2001), OECD (2002), CIA (2002) 18

19 Testing of Hypotheses Multiple regression analyses were applied to test the influence of culture on the intensity of corporate web site recruiting. To check for multicollinearity, Table 2 provides the means, standard deviations and bivariate Pearson correlations for the variables used. As can be seen in Table 2, all independent variables are significantly correlated with WRPOWER. Although there are significant inter-variable correlations among the independent variables, none of the coefficients exceeds.40. Due to these low levels of inter-variable correlation multicollinearity does not appear to be a serious problem. Similarly, the results of using each variable as dependent variable within the regression analyses suggested low levels of multicollinearity. We computed three distinct models to allow for an interpretation of differences in explanatory power of cultural and control variables: the first model included only the cultural factors, the second only the control variables, and a third model combined the cultural factors and control variables to explain variances in WRPOWER. The Durbin- Watson-Test on autocorrelation delivered acceptable results for all three regression models (1,75 for Model 1, 1,81 for Model 2 and 1,85 for Model 3). 19

20 Table 2: Means, Standard Deviation and Correlations Mean SD WRPOWER PD ** IND ** -.342** MAS *.312** UA ** ** NETUSE ** -.284**.195*.233*.248* UNEMRATE **.225*.213* -.213** -.243* -.209** MARKCAP ** **.236* -.234* -.218**.204** * Level of significance.05; ** Level of Significance.01 in two tailed Tests (Pearson s correlations), n=440 20

21 Regression analysis The first model was computed without the control variables. The results of Model 1 imply that cultural factors can explain 21.8% of the variance in the intensity to which companies in our sample use their web site as a recruiting tool. Table 3: Regressions on WRPOWER Independent Variables Model 1 Model 2 Model 3 PD -.705*** -.560*** IND.767***.859*** MAS.434***.162*** UA -.286** -.167** Control Variables Internet Usage.219***.493*** Unemployment Rate -.117* -.146* Market Capitalization.136**.170*** R² Adjusted R² Change in Adjusted R F *** *** *** Durbin-Watson Notes * Level of significance.05; **.01;***.001, n=420 Change in Adjusted R 2 compared to Model 1 Standardised Coefficients shown It was predicted in hypothesis 1 that the level of power distance will positively influence the intensity of corporate web site recruiting. Contrary to hypothesis 1, correlation analysis delivers a negative correlation coefficient of r=-.211 on a high level of significance (p.01). This negative correlation between PD and WRPOWER is also supported by the results of the regression analyses in model 1 and 3 (see table 3). As a consequence, Hypothesis 1 has to be refuted. Hypothesis 2 suggested a positive influence of the degree of individualism (IND) on the intensity of corporate web site recruiting (WRPOWER). The correlation results in Table 2 lend support for hypothesis 2 (r=.237; p.01). The regression analyses (models 1 and 3) show a similar result: the coefficient for individualism is positively 21