The Theoretical Framework

The Theoretical Framework

Introduction

In this chapter the Multicultural model will be presented. This model is selected, because cultural diversity can lead to a competitive advantage.Multicultural is defined by Cox and Blake (1991) as: “Where members of non-traditional backgrounds can contribute and achieve to their fullest potential”. Furthermore, the psychological contract will be explained. The psychological contract illuminates the relationship between superiors and subordinates in the workplace.

Cox and Blake’s Multicultural Model

According to Cox and Blake (1991), cultural diversity contributes to competitive advantage if it is managed well. Cultural diversity is defined by Cox and Blake (1991) as “people from different gender, nationality, and racioethnic groups”.Cox and Blake (1991) distinguish organizations into three characteristics: monolithic, plural and multicultural. An organization which is monolithic is characterized as “homogeneous membership with a culture dominated by one cultural group”. In a plural organization membership is characterized as follows: “obstensively diverse membership but still culturally monolithic and without valuing and using differences to benefit the organization”. In a multicultural organization membership is defined as “members of non-traditional backgrounds who can contribute and achieve to their fullest potential” (Cox & Blake, 1991). In order to gain competitive advantage six elements are needed to be given attention to. If these six areas are managed effectively this can create competitive advantage.

These six areas include:

1. Cost: job satisfaction levels are lower for minorities. This results in higher turnover and absenteeism among females and racioethnic minorities than for white male. A study showed that for example investing in day care, will lower the turnover and absenteeism rates among females;
2. Resource acquisition: as females and racioethnic minorities increase in the representation in the labour pool, it is important for a company to know how to attract and retain certain employees. An important factor concerning resource acquisition is the reputation of a company;
3. Marketing: cultural differences influence consumer behaviour. Consumers from a minority culture tend to buy products of companies who values diversity. However, having diversity is not sufficient for producing the benefits;
4. Creativity: a study showed that heterogeneous teams create more creativity and innovation than homogeneous teams as long as the team members had similar ability levels;
5. Problem-solving: research has shown that diverse groups are providing a broader and richer base of experience when it comes to problem solving. In case of decision quality, it is best when a team is balanced, which means neither excessively diverse nor excessively homogeneous;
6. Organizational flexibility: managing diversity enhances organizational flexibility. Due to minorities have a higher tolerance for ambiguity, females and racioethnic minorities are able to perform better ambiguous tasks. Also, diversity may enhance organizational flexibility, because it broadens policies and procedures and make them less standardized so the organization becomes more fluid and adaptable.

The Psychological Contract

The psychological contract is defined by Rousseau (1995) as “the individual beliefs, shaped by the organization, regarding terms of an exchanged agreement between individuals and their organization”.

The psychological contract is about the relationship of the employer or organization and the employee and is different from a sales contract as the psychological contract is unwritten. Their relationship consists of written and unwritten agreements where mutual understanding and expectations play a vital role. According to Armstrong (2006), the psychological contract is implicit and dynamic as it develops over time as the employment conditions changes on the one hand and on the other hand employees re-evaluate their expectations. The psychological contract has influence on the willingness to be committed and engaged with the organization. According to Armstrong (2006), written policies are important for organizations to have, but if the culture is not supportive, the value of the written policies will be reduced. Therefore, it is important for organizations to pay attention to an enhanced psychological contract as it can increase the commitment, engagement and motivation of the employee, which influences the work performance.Sims (1994) explains the relevanceof the psychological contract as: “a balanced psychological contract is necessary for a continuing, harmonious relationship between the employee and the organizations. However, the violation of the psychological contract can signal to the participants that the parties no longer share a common set of values or goals”.Order Now