CHAPTER 2 CULTURE AND MULTINATIONAL MANAGEMENT

What Is Culture?
Culture is the pervasive and shared
transmitted by symbols, stories and rituals often taken-for-granted

beliefs, norms, values, and symbols that guide everyday life

Levels of Culture

NATIONAL CULTURE

NATIONAL CULTURE
BUSINESS CULTURE

NATIONAL CULTURE BUSINESS CULTURE

ORGANIZATION CULTURE

OCCUPATIONAL CULTURE

NATIONAL CULTURE BUSINESS CULTURE

ORGANIZATION CULTURE

OCCUPATIONAL CULTURE

MULTINATIONAL MANAGEMENT

Caveats and Cautions

Stereotyping Ethnocentrism Cultural relativism

Two Diagnostic Models to Aid the Multinational Manager

Hofstedes Model of National Culture 7d Cultural Dimensions Model

Hofstedes Model of National Culture

Issues of equality - power distance What is different and dangerous uncertainty avoidance

Hofstedes Model of National Culture, continued

The individual and the group in society collectivism/individualism Gender roles - masculinity Confucian values - long term orientation

POWER DISTANCE
Inequality is good Everyone has a place People should depend on a leader The powerful are entitled to privileges The powerful should not hide their power

Exhibit 2.2 Management Implications Of Power Distance

MANAGEMENT PROCESSES Human Resources Management Management Selection Training Evaluations/Promotion

LOW POWER DISTANCE

HIGH POWER DISTANCE

Educational achievement For autonomy Performance Small wage difference between management and worker Participative; theory Y People like work; extrinsic and intrinsic rewards Decentralized; flat pyramids; Small proportion of supervisors Varied

Social class; elite education For conformity/obedience Compliance; trustworthiness Large wage differences between management and workers Authoritarian; close supervision Assume people dislike work; Coercion Tall pyramids; large proportion of supervisors Crafted to support the power elite or government

Remuneration Leadership Styles

Motivational Assumptions Decision Making/Organizational Design Strategy Issues

Uncertainty Avoidance
Avoid conflict Low tolerance of deviant people and ideas Respect for laws and rules Experts and authorities are usually correct Consensus is important

Exhibit 2.3 Management Implications of Uncertainty Avoidance

MANAGEMENT PROCESSES Human Resource Management Management Selection Training Evaluation/Promotion

HIGH UNCERTAINTY AVOIDANCE Seniority; expected loyalty

LOW UNCERTAINTY AVOIDANCE Past job performance; education Training to adapt Objective individual performance data; job switching for promotions Based on performance Nondirective; personoriented; flexible People self motivated; competitive Smaller organizations; flat hierarchy; less formalized with fewer written rules/standardized procedures Risk taking

Specialized Seniority; expertise; loyalty

Remuneration Leadership Styles Motivational Assumptions Decision Making/Organizational Design

Based on seniority or expertise Task oriented People seek security; avoid competition Larger organization; tall hierarchy; formalized; many standardized procedures

Strategy Issues

Risk adverse

Individualism
People are responsible for themselves Individual achievement is ideal People are not emotionally dependent on organizations or groups

Collectivism
Self identity based on group membership A belief that group decision making is best A belief that groups protect you in exchange for loyalty

Exhibit 2.4 Management Implications of Individualism

MANAGEMENT PROCESSES Human Resources Management Management Selection Training Evaluation/Promotion Remuneration

LOW INDIVIDUALISM

HIGH INDIVIDUALISM

Group membership; school or university Focus on company based skills Slow with group; seniority Based on group membership/organizational paternalism Appeals to duty and commitment Moral involvement Group; slow; preference for larger organizations

Universalistic based on individual traits General skills for individual achievement Based on individual performance Extrinsic rewards (money, promotion) based on market value Individual rewards and punishments based on performance Calculative; Individual cost/benefit Individual responsibility; preference for smaller organizations

Leadership Styles

Motivational Assumptions Decision Making/Organizational Design

Masculinity
Clear definitions of gender roles Men are assertive and dominant Support for Machismo Men should be decisive Work is priority Growth, success, and money are important

Exhibit 2.5 Management Implications Of Masculinity

MANAGEMENT PROCESSES Human Resources Management Management Selection

LOW MASCULINITY

HIGH MASCULINITY

Independent of gender, school ties less important; androgyny Job-Oriented Job performance with less gender role assignments Less salary differences between levels; more time off More theory Y; Emphasis on quality of life, time off, vacations; work not central

Jobs gender identified; school performance and ties important Career oriented Continues gender tracking

Training Evaluation/Promotion

Remuneration

More salary preferred to less hours More theory X; Emphasis on performance and growth; excelling to be best; work central to life; job recognition important

Leadership Styles Motivational Assumptions

Decision Making/Organizational

Intuitive/group; smaller Decisive/individual; larger organizations organization preferred

Long Term (Confucian) Orientation

Belief in substantial savings Willingness to invest Acceptance of slow results Persistence to achieve goals Sensitivity to social relationships Pragmatic adaptation

Exhibit 2.6 Management Implications Of Long Term Orientation

MANAGEMENT PROCESSES Human Resources Management Management Selection

SHORT TERM ORIENTATION

LONG TERM ORIENTATION

Objective skill assessment for immediate use to company Limited to immediate company needs Fast; based on skill contributions Pay; promotions

Fit of personal and background characteristics Investment in long term employment skills Slow; develop skills and loyalty Security

Training Evaluation/Promotion Remuneration Leadership Styles Motivational Assumptions

Use incentives for economic Build social obligations advancement Immediate rewards necessary Subordinate immediate gratification for long term individual and company goals Synthesis to reach consensus; design for social relationships Long term profits and growth; Incrementalism

Decision Making/Organizational Design Strategy Issues

Logical analyses of problems; design for logic of company situation Fast; measurable payback

Hofstedes Dimensions By Countries Exhibit 2.4

Anglo cultures (US, GB, Australia) high on individualism and masculinity, low on power distance and uncertainty avoidance

 Latin European high uncertainty avoidance Nordic low masculinity Far Eastern high power distance, low individualism

The 7d Model of Culture Cultural Dimensions and Critical Questions

Relationships with People: universalism vs. particularlism Do we consider rules or relationships more important?

The 7d model, continued

individualism vs. communitarianism Do we act mostly as individuals or as groups? specific vs. diffuse How extensively are we involved with the lives of other people?

The 7d model, continued

emotional vs. neutral Are we free to express our emotions or are we restrained? achievement vs. ascription Do we achieve status through accomplishment or is it part of our situation in life (e.g., gender, age, social class)?

The 7d model, continued

Perspective on Time: sequential vs. snchronic Do we do tasks in sequence or several tasks at once? Relationship with the Environment: internal vs. external control Do we control the environment or does it control us?

Exhibit 2.9 Universalism versus Particularism: Differences and Managerial Implications

Universalism
USA UK Cze ch Re p. Nige ria

Particularism
M e xico South Kore a

Differences: Focus on Rule s Contracts difficult to bre ak Trustworthy pe ople honor the ir word Be lie f in is only one re ality "De als" are obligations Focus on Re lationships Contracts e asy to modify Trustworthy pe ople adapt to e ach othe r's ne e ds base d on trust Re ality is re lativ e to e ach pe rson's situation "De als" are fle xible to the situation and the pe rson

Management Implications: Use proce dure s applie d to all Formalize busine ss practice s Announce change s publicly Tre at all case s similarly Use informal ne tworks to cre ate unde rstanding M ake change s subtly and priv ate ly Tre at e ach case base d on its unique circumstance s

Exhibit 2.10 Individualism versus Collectivism: Differences and Managerial Implications

Individualism
Cze ch Re p. UK Nige ria Differences: Focus on "me " or "I" Indiv idual achie v e me nt and re sponsibility Indiv idual de cision making

Collectivism
Egypt Japan

Focus on "we " Group achie v e me nt and re sponsibility De cision making by groups

Management Implications: Use indiv idual ince ntiv e s such a pay for pe rformance Plan for turnov e r Prov ide for indiv idual initiativ e Focus on group morale and cohe siv e ne ss Expe ct low turnov e r Se t group goals

Exhibit 2.11 Neutral versus Affective: Differences and Managerial Implications

Neutral
Swe de n Cze ch Re p. UK Norway

Affective
M e xico China

Differences: Do not re v e al thought or fe e lings Control ov e r e motions admire d Physical contact and e xpre ssiv e ge sture s av oide d Fe e lings and thoughts re v e al v e rbally and nonv e rbally Emotional e xpre ssion uninhibite d Animate d e xpre ssion and ge sturing admire d Touching is common

Management Implications: Act unde r control to show status Ke e p dialogue to the point Av oid appe aring de tache d, which sugge sts distance Expe ct strong commitme nt to positions Tole rate e motional outbursts

Exhibit 2.12 Specific versus Diffuse: Differences and Managerial Implications

Specific
Swe de n Cze ch Re p. UK Norway M e xico

Diffuse
China

Differences: Dire ct in re lationships Blunt and pre cise in communication Principle d moral re asoning Indire ct and subtle in re lationships Ambiguous or e v asiv e in communication Situation-base d moral de cision making

Managerial Implications: Use of obje ctiv e s and standards Se parate priv ate and busine ss liv e s Giv e cle ar and pre cise dire ctions Atte mpt continuous improv e me nt M ix priv ate and busine ss liv e s Use ambiguous dire ctions to giv e e mploye e s latitude

Exhibit 2.13 Achievement versus Ascription: Differences and Managerial Implications

Achievement
Norway Ire land Austria Japan Differences: Use title only whe n re le v ant Supe riors e arn re spe ct through job pe rformance M ixture of age and ge nde r in manage me nt Hong Kong

Ascription
Arge ntina

Use of title s common and e xpe cte d Re spe ct for supe rior shows commitme nt to organization Background and age main qualification for manage me nt

Managerial Implications: Emphasize re wards and re spe ct base d on skills and accomplishme nts Se nior le v e l manage rs de fe r to te chnical and functional spe cialists Emphasize se niority Use pe rsonal powe r of supe rior for re wards Emphasize the chain of command

Exhibit 2.14 Time Horizon: Differences and Managerial Implications

Past/Present
Hong Kong Israel Russia Differences: Past Communication references history and origins of country, business, and family Respect for past glory and elders History provides a context for present actions Present Enjoy the moment Planning seldom results in execution Immediate impact most important Korea

Future
Hong Kong

Future Communication refers to potential achievements Planning important Potential for future advantage emphasized

Managerial Implications:

Past and Present Emphasize and be sensitive to history and tradition Avoid strict deadlines for completion of tasks

Future M otivate by emphasis on opportunities Set specific deadlines

Exhibit 2.15 Internal versus External Control: Differences and Managerial Implications

Internal Control
Poland Brazil Gre e ce Differences: Dominate the e nv ironme nt Show conv ictions Focus on se lf or own group

External Control
Ethiopia China

Emphasis on compromise Harmony and adjustme nt is good Adaptation to cycle s

Managerial Implications: Emphasize authority Dominate subordinate s Emphasize patie nce Build and maintain re lationships with subordinate s, e quals and supe riors Emphasize win- win re lationships

Conclusions
Culture has a variety of levels that affect multinationals Models provide starting point to understand culture Learning another culture is a never ending process