When the national culture is not supportive: How company culture can make Egypt’s IT firms competitive

The IT outsourcing operating field is characterized by “differentiated environments, uncertainty, complexity and considerable reciprocal interdependence,” Youssef says (Photo courtesy of Ministry of Communications and Information Technology)

Egypt’s IT sector is the number-one Egyptian sector in terms of year-on-year growth, Minister of Communications and Information Technology Yasser El Kady told Oxford Business Group (OBG) in its Egypt 2018 report, citing a growth rate of 12.5 percent. The minister emphasized that the ministry has a strategic plan in place to make Egypt consistently competitive on the regional and global technology scenes.

With plans on the governmental level being seemingly optimistic, professor of management  and international business at the American University in Cairo (AUC) Samir Youssef takes a look at how IT companies can develop their internal culture in a way that provides them with a competitive advantage, despite the national culture not being necessarily supportive.

Egypt’s national culture is generally hierarchical and collectivist

“While the national culture may not be conducive to create this competitive advantage for the country as a whole, leadership of the company supported by a clear strategy and work system can overcome this deficiency,” he states.

Youssef looks at data from a local IT company, referring to company documents and top management interviews. “A company that exists in a stable culture but belongs to a dynamic industry, such as IT outsourcing, needs to promote the proper set of values that fits the needs of customers and technology and eventually give the company a competitive advantage,” Youssef explains.

Egypt’s national culture is generally hierarchical and collectivist, placing high importance on having relationships, as Egyptians also tend to avoid uncertainty. More on that can be found in our previous breakdown of Hofstede’s cultural framework on the Egyptian national culture. Youssef deduces from that framework that “no wonder, Egypt’s exports mostly are in commodities, textiles, cement, ceramics and basic industries,” as those are stable and based on efficiency and predictability.

In the IT sector, this remains relevant as it is one where a close cooperative relationship is needed between the service provider and the client. The IT outsourcing operating field is characterized by “differentiated environments, uncertainty, complexity and considerable reciprocal interdependence.” This does not necessarily fit into the national culture seen today.

The development of the IT sector highly depends on a national strategy

“Cultural characteristics that are consistent with values required by the IT sector include individualism, small power distance, weak uncertainty avoidance, long-term orientation, inner-directed, autonomy,” the paper states.

The development of the IT sector highly depends on a national strategy, namely to develop infrastructure and human resources, so hindrances in the strategy can cause a lag in the development of the sector. Consequently, businesses need to be very smart in the way they create their company culture on the micro level in order to be able to develop their human resources.

The paper is based on the argument that there is a possibility that an enabling company culture can overcome an unsupportive national culture. The company being examined is an IT outsourcing company, founded by a few entrepreneurs that did not view the government’s efforts to develop the IT infrastructure as adequate. Today, the company serves clients in the Gulf region, Europe and the US.

The company values the founders put in place were innovation, integrity, quality and agility. So while staying true to being innovative and transparent, as well as ensuring the quality of their work, employees were also encouraged to be flexible and fast in reacting to environmental changes. The latter includes changing customer needs and demands, as this is the most unpredictable part of the project process. Hence, the value of quality is defined as efficiency and customer satisfaction.

Top management needs to exhibit entrepreneurial orientation

“The company leverages its low cost software developers by doing the coding and development in Egypt while doing the initial marketing, testing and follow-up at the clients’ site,” Youssef explains. “This requires constant communication and adaptation on a horizontal rather than a hierarchical level.” Accordingly, the internal company culture comes to a crossroads with the national culture, which is hierarchical.

The matrix that the company depends on is one in which each department needs to improve its internal work system, while working closely with other departments in order to carry out assigned responsibilities. This level of internal cooperation makes the company very dynamic, as opposed to other companies in the sector, who more often than not follow a hierarchical system.

Over the years, “as the enterprise expanded, decentralization has been adopted to assure flexibility and responsiveness.” At the individual level, the values of autonomy – namely responsibility and self-initiative – and teamwork were encouraged by creating a flexible work hour system and company-wide key performance indicators through a balanced scorecard system as control mechanisms. Additionally, self-development, career path design and an open door policy became key pillars of the company culture at an individual level.

Youssef concludes that “top management needs to exhibit entrepreneurial orientation. At the project level the values of coordination, cooperation, and integration seem to be important. At the individual level, the values of autonomy and teamwork appear most relevant.”

    Knowledge Partners

    CONTACT US

    School of Business
    American University in Cairo
    AUC Avenue – P.O. Box 74
    New Cairo 11835
    Egypt
    Email: BusinessForward@aucegypt.edu

    Copyrights © 2017 The American University in Cairo School of Business • All Rights Reserved

    Copyrights © 2017 The American University in Cairo School of Business • All Rights Reserved