Influence of cultural dimension on organizational structure: AirAsia vs Ryanair

Author: Iloka Benneth
Published: 31 January 2019

In recent cross-cultural organizational theory, it is widely acknowledged that the way companies behave is culturally contingent. As an example, it was hypothesized by Jung et al. (1995) that the transformational form of leadership is more eminent and effective in collectivistic society as against their individualistic counterparts (Ardichvili and Kuchinke, 2000). On the same note, companies from high uncertainty culture do places their employees on clear operational procedures, which creates an attitude of tolerating innovation and ambiguity (Lazic, 1995). Also, the more masculine cultures does seem to create companies that are more tolerate of directive and strong leaders than those from feminine culture, where the companies feature more of structures based on considerate and consultative leaders (Lengyel, 1996).

From the cultural dimensions, there are similarities to prove that home culture might have strongly influenced the organizational structures (Veiga et al., 1995) of AirAsia and RyanAir. For the case of AirAsia, the company’s structure has since its inception been based on the traditional power hierarchy in which the most senior executives are in charge of decision making with information flowing in one direction from top down (Hofstede, 1993), and this is a representation of the high level of power distance in Malaysian culture. The link between national culture and organizational structure of RyanAir is mostly featured in the company’s business process and objectives. It also employs a functional organizational system with clear and independent processes, reflecting the high level of individualism featured in the Irish culture (Hofstede, 1994). For instance, employees of RyanAir pay for their parking sports, bring their own pen, and provide necessary independent supports for themselves to function in the company. There is a higher degree of freedom, control and accountability in the company. In any case, there is still hierarchy in structure and information flow is also top down in RyanAir.

Although the two companies somewhat have the same management features, they are also different in terms of certain structures. This is as documented in the table 1 below. See appendix (1) for cultural measure of Ireland –vs- Malaysia.

Cultural dimension	AirAsia	RyanAir
Power distance	There is clear visible power distance with the top executives normally make decisions and subordinated mandated to follow exactly.	Decisions are normally based on consultations and the executives are more accessible than in japan.
Individualism	Employees seek collective goals and focus on company’s performance.	Employees value performance and appraisals won due to such.
Masculinity	Centralized management system where information pass from top down.	Functional management system where information flows across the company.
Uncertainty avoidance	There are defined and clear operation process in the company as a result of high level of uncertainty avoidance.	High level of uncertainty avoidance means that fundamental processes are barely innovated.
Long term orientation	The company is focused on direct business process as against long-term relationship, a clear reflection of the Malaysian culture.	This is the same as Malaysia’s AirAsia as both countries have the same level of long-term orientation.
Indulgence	There is a high level of work-life balance due to high indulgence of the Malaysian culture.	This is the same with AirAsia as Ireland is a highly indulgent country like Malaysia.

Trompenaars' four diversity cultures: AirAsia vs RyanAir

Based on the above analysis, AirAsia is more of a guided missile and family, which makes its organizational structure centralized/hierarchical with employees regard leader highly and everybody working for joint objectives; while RyanAir is more of an incubator and Eiffel tower oriented, making it more of a decentralized/egalitarian company with leaders being easily accessible, and employees value more of individualistic outcome. See appendix (2) for further details.

References

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