Nokia Corporation: Culture-Embedding Mechanisms Analysis

This essay analyzes the corporate failure of Nokia, a multinational telecommunications company, by examining its organizational culture through the lens of Schein's six culture-embedding mechanisms: attention, reaction to crisis, resource allocation, role modeling, rewards, and selection/dismissal. The essay highlights how Nokia's leadership, particularly their resistance to change, unethical decision-making, and failure to adapt to evolving market trends, contributed to the company's decline. The analysis covers the period before and after Nokia's partnership with Microsoft, emphasizing the impact of differing cultural dimensions and the lack of employee training. The essay explores the ethical implications of these decisions, focusing on the impact on employees and stakeholders. The conclusion provides recommendations for improving organizational culture, including fostering innovation, addressing leadership biases, and promoting cultural sensitivity. The essay emphasizes the importance of ethical leadership and its role in organizational success, referencing the importance of employee feedback and cultural adaptability to avoid corporate failure.

Running head: SIX CULTURE-EMBEDDING MECHANISMS
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Executive summary
The aim of this paper is to discuss the importance of ethics in the relation to culture of corporate
environment. In this paper, the issues of organizational culture have been pointed out so that the
question of ethics is answered and how the unethical behaviors on the part of the management
leading to the failure of international company will be analyzed. In this respect, some important
ethical theories that connect the culture of the organization will be analyzed. The ethical theories
will be connecting the Schein’s (1985) six culture-embedding mechanisms. This particular model
is related to the organizational culture which decides the way employees interact with one
another and behave with the people outside the company (Schein, 1985). According to this
models, the ethical decision making of the leaders relate to the successful operation of the
company by gaining support from the stakeholders.
Introduction about company:
Nokia Corporation is a multinational telecommunication, consumer electronics and
information technology company based on Finland. This company was founded in 1865 and is a
public limited company listed in the New York Stock exchange and Helsinki Stock Exchange. It
has operated in various industries over more than 150 years but came into the telecommunication
industry large scale telecommunication infrastructure and technology development. This
company is a major contributor in the mobile telephony industry having association with the
development of GSM service, 3G and the LTE standards (Fuchs, 2020). The issues with this
highly popular company are related to the problems with the management decisions and
unacceptable organizational culture. It was the strategic decisions that caused Nokia’s failure in
the competitive world of business. The company did not follow the customers’ trends and

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demand for innovativeness in the technological business of the mobile phone manufacturing. Its
failure it react to the changing competitive climate created by the competitors like Apple and
Samsung had led the market share decreasing rapidly. The new programing and adapting of
exclusive multimedia features did not compel the management to response quickly. Therefore
the company lost the battle in the initial stage. However, this ignorance on the part of the
management caged after a long period of time. Then it had partnered with the software company
Microsoft but did not allow the change in the organizational culture which led the employees
remain indifferent in the need. The Microsoft Corporation is a US based company where the
organizational culture is completely different from that of the Finnish one like Nokia. This led to
problem with every single operation of the company starting from product development, product
differentiation, innovation method, allocation of resources and mainly communication.
Main content:
According to Schein’s six culture-embedding mechanisms, there are some factors which
directly contribute to the development of corporate culture. The mechanisms include attention,
reaction to crisis, resource allocation, role modelling, rewards and selection and dismissal. These
mechanisms along with the employee awareness and trainings enforce to develop code of ethics
of the company and resulted into employee behavior. The attention refers to the process of
paying attention or communicating clear signals to employees about the important values.
Reaction to crisis creates new values, norms and working process to reveal essential underlying
assumptions so that the solution for the crisis can be found. The resource allocation are
associated with the process through which the resource will be allocated when necessary. Role
modelling is the process of observing the leaders for finding out the valuable measures in the
organization (Vuori & Huy, 2016). The allocation of rewards deals with the experience of the

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employees from experience on the base of which they get promotions and appraisals from the
company. Based on the values, style and assumptions the company select and dismiss the
employees so that the ethical codes are supported by all the people associated with the company.
In the case of Nokia, it had developed a great empire in the mobile phone industry of the
world but the orthodox mentality of the leaders expected that the employees will be fulfilling all
the demands of the leaders. The changes in the market were ignored initially though the
employees pointed out the need for changing product development and variation process. The
unethical decision making was two fold in the case of Nokia. Before the partnership of the
company with the software giant Microsoft, the process of reaction to the crisis and resource
allocation were unethical.
In any corporate organizational culture, the decision making has a vital part to serve. In
this case, the employees were not allowed in the process of decision making but the leaders were
expecting to communicate information on their behalf. The vertical communication were present
but that was from the top bottom one (Lamberg et al., 2019). The bottom up communication
which includes the feedback system of the employees towards their understanding and values
were neglected all the time. The second fold of the organizational culture issue was taking place
after the partnership with Microsoft. As the cultural dimension of Hofstede, the national culture
of the US had a great impact in developing organizational culture of Microsoft and so also of
Nokia. Now the employees from Microsoft when are working together with that of Nokia,
finding issues with dominative mentality of the higher level management and difference in point
of view in solving problems. The employees were not given any type of trainings to develop
themselves and adapt with the new culture they are introduced with (Patyal & Koilakuntla,
2016). The organizational culture therefore went toxic to bring any positive air for motivation.

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These are the reasons why none of the employees could effectively contribute their skills in the
successful operation of the company.
The role modelling in which the leaders are to play a supportive and ideal role by
working simultaneously with the other managers of the partner company, they eventually show
their ego clash (Aula & Heinonen, 2016). The reaction to the crisis when Nokia was falling in
terms of share and revenue, the leaders of the company did not allow the management of
Microsoft to engage in the problem but subordinated them demonstrating undesirable behavior.
This led the employee follow the same behavior and values for which the partnership between
these two companies could not make any difference for maintaining a strong ethical culture.
Resource allocation is another factor that led Nokia to play unethically with the
employees. There are several issues of biasness reported in the company where the employees
felt disheartened and demotivated (Rezaei, Allameh & Ansari, 2018). Allocating, managing and
acquiring of resources are one of the moan responsibilities of the leaders of the company. There
are relative importance of the objectives from the part of the companies to allocate the resources
which part needs them the most. In the case of Nokia, investment of the resources by the leaders
among the employees within the company as well as the expatriates who were transferred to the
offices from Microsoft faced several issues of uncertain behavior regarding resource allocation.
Here prioritization of the work did not matter but the selection process on the basis of their
background was seen more. These are the factors that led the growth off some barrier for the
employees of the own company as well as that of the partner company. All of the employees feel
demotivated due to these changes in the external as well as the internal environment and they
could not contribute their skills for the survival of the company.

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Recommendations and conclusion:
Therefore, it can be concluded that unethical operation of the companies can lead to
complete failure that took place in the case of Nokia where the leadership played an inflexible
outlook about the changes in the industry. They did not pay heed to the contribution of the
employees in the decision making process, lied to mid-level managers several time and did not
accept the diversified culture while partnering with the software giant Microsoft Corporation. In
order to solve these issues, the company can take some very important stapes as followed.
First, the organizational culture is how the company is setting its values, norms and
priorities. This is reflected into the ability and actions of the employees. The company like
Nokia, as operating in the technology industry needs to acknowledge the innovation system
every day and motivate the employees accordingly. So that the employees can make the
organizational culture more adaptable to smooth the operation.
Secondly, the leadership has shown biasness in the selection and resource allocation
process which is never supported in an international company like Nokia. This need to be
overcome as early as possible because this hampers the motivation and morality of the
employees. In this regard the feedback of the employees are essential based on which there will
be changes in the company policies.
Finally, the leaders need to train the employees to work in the diverse situation in terms
of culture. The issues they faced during the time of partnership with Microsoft must not be
repeated in the future. The leaders need to take active steps to arrange for trainings about cultural
difference affecting the organizational culture.

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References:
Aula, P., & Heinonen, J. (2016). Extended culture. In The Reputable Firm (pp. 99-119).
Springer, Cham.
Fuchs, S. (2020). Nokia dismisses 10,000 employees. Retrieved 15 January 2020, from
https://www.wsws.org/en/articles/2012/06/noki-j23.html
Lamberg, J. A., Lubinaitė, S., Ojala, J., & Tikkanen, H. (2019). The curse of agility: The Nokia
Corporation and the loss of market dominance in mobile phones, 2003–2013. Business
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Patyal, V. S., & Koilakuntla, M. (2016). Relationship between organisational culture, quality
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Rezaei, A., Allameh, S. M., & Ansari, R. (2018). Effect of organisational culture and
organisational learning on organisational innovation: an empirical
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Schein, E. H. (1985). Defining organizational culture. Classics of organization theory, 3(1), 490-
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Vuori, T. O., & Huy, Q. N. (2016). Distributed attention and shared emotions in the innovation
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