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									  CHAPTER 2
   CULTURE
    AND
MULTINATIONAL
 MANAGEMENT
         What Is Culture?

• Culture is the pervasive and shared
 beliefs, norms, values, and symbols
 that guide everyday life
  – transmitted by symbols, stories
    and rituals
  – often taken-for-granted
Levels of Culture
NATIONAL
CULTURE
NATIONAL
CULTURE


BUSINESS
CULTURE
         NATIONAL
         CULTURE


         BUSINESS
         CULTURE



ORGANIZATION   OCCUPATIONAL
  CULTURE        CULTURE
         NATIONAL
         CULTURE


         BUSINESS
         CULTURE



ORGANIZATION   OCCUPATIONAL
  CULTURE        CULTURE



      MULTINATIONAL
       MANAGEMENT
     Caveats and Cautions

• Stereotyping
• Ethnocentrism
• Cultural relativism
Two Diagnostic Models to Aid
 the Multinational Manager


• Hofstede’s Model of National
  Culture
• 7d Cultural Dimensions Model
  Hofstede’s Model of National
             Culture

• Issues of equality - “power
  distance”
• What is different and dangerous -
  “uncertainty avoidance”
  Hofstede’s 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                  LOW POWER DISTANCE            HIGH POWER DISTANCE
PROCESSES
Human Resources
Management
    Management Selection    Educational achievement       Social class; elite
                                                          education
    Training                For autonomy                  For conformity/obedience
    Evaluations/Promotion   Performance                   Compliance;
                                                          trustworthiness
                            Small wage difference         Large wage differences
    Remuneration            between management and        between management and
                            worker                        workers
Leadership Styles           Participative; theory Y       Authoritarian; close
                                                          supervision
                            People like work; extrinsic   Assume people dislike
Motivational Assumptions    and intrinsic rewards         work; Coercion
Decision                    Decentralized; flat           Tall pyramids; large
Making/Organizational       pyramids; Small proportion    proportion of supervisors
Design                      of supervisors
                                                          Crafted to support the
Strategy Issues             Varied                        power elite or government
      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               HIGH UNCERTAINTY                LOW UNCERTAINTY
       PROCESSES                  AVOIDANCE                       AVOIDANCE
Human Resource
Management                 Seniority; expected loyalty     Past job performance;
                                                           education
    Management Selection
    Training               Specialized                     Training to adapt
    Evaluation/Promotion   Seniority; expertise; loyalty   Objective individual
                                                           performance data; job
                                                           switching for promotions
    Remuneration           Based on seniority or           Based on performance
                           expertise
Leadership Styles          Task oriented                   Nondirective; person-
                                                           oriented; flexible
Motivational Assumptions   People seek security; avoid     People self motivated;
                           competition                     competitive
Decision                   Larger organization; tall       Smaller organizations; flat
Making/Organizational      hierarchy; formalized; many     hierarchy; less formalized
Design                     standardized procedures         with fewer written
                                                           rules/standardized
                                                           procedures
Strategy Issues            Risk adverse                    Risk taking
          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              LOW INDIVIDUALISM           HIGH INDIVIDUALISM
       PROCESSES
Human Resources
Management
   Management Selection    Group membership; school     Universalistic based on
                           or university                individual traits
   Training                Focus on company based       General skills for
                           skills                       individual achievement
   Evaluation/Promotion    Slow with group; seniority   Based on individual
                                                        performance
   Remuneration            Based on group               Extrinsic rewards (money,
                           membership/organizational    promotion) based on
                           paternalism                  market value
Leadership Styles          Appeals to duty and          Individual rewards and
                           commitment                   punishments based on
                                                        performance
Motivational Assumptions   Moral involvement            Calculative; Individual
                                                        cost/benefit
Decision                   Group; slow; preference      Individual responsibility;
Making/Organizational      for larger organizations     preference for smaller
Design                                                  organizations
                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             LOW MASCULINITY                  HIGH MASCULINITY
       PROCESSES
Human Resources
Management
   Management Selection    Independent of gender,       Jobs gender identified; school
                           school ties less             performance and ties important
                           important; androgyny
   Training                Job-Oriented                 Career oriented
   Evaluation/Promotion    Job performance with         Continues gender tracking
                           less gender role
                           assignments
   Remuneration            Less salary differences      More salary preferred to less
                           between levels; more         hours
                           time off
Leadership Styles          More theory Y;               More theory X;
Motivational Assumptions   Emphasis on quality of       Emphasis on performance and
                           life, time off, vacations;   growth; excelling to be best;
                           work not central             work central to life; job
                                                        recognition important
Decision                   Intuitive/group; smaller Decisive/individual; larger
Making/Organizational      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                 SHORT TERM                   LONG TERM ORIENTATION
PROCESSES                  ORIENTATION
Human Resources
Management
    Management Selection   Objective skill assessment   Fit of personal and
                           for immediate use to         background characteristics
                           company
    Training               Limited to immediate         Investment in long term
                           company needs                employment skills
    Evaluation/Promotion   Fast; based on skill         Slow; develop skills and
                           contributions                loyalty
    Remuneration           Pay; promotions              Security
Leadership Styles          Use incentives for economic Build social obligations
                           advancement
Motivational Assumptions   Immediate rewards            Subordinate immediate
                           necessary                    gratification for long term
                                                        individual and company
                                                        goals
Decision                   Logical analyses of          Synthesis to reach
Making/Organizational      problems; design for logic   consensus; design for
Design                     of company situation         social relationships
Strategy Issues            Fast; measurable payback     Long term profits and
                                                        growth; Incrementalism
Hofstede’s 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                                         Particularism
                      Cze ch                                   South
 USA         UK                    Nige ria      M e xico
                       Re p.                                   Kore a

                            Differences:

Focus on Rule s                           Focus on Re lationships
Contracts difficult to bre ak             Contracts e asy to modify
Trustworthy pe ople honor                 Trustworthy pe ople adapt
the ir word                               to e ach othe r's ne e ds
Be lie f in is only one re ality          base d on trust
"De als" are obligations                  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                  Use informal ne tworks to
all                                           cre ate unde rstanding
Formalize busine ss                           M ake change s subtly and
practice s                                    priv ate ly
Announce change s                             Tre at e ach case base d on
publicly                                      its unique circumstance s
Tre at all case s similarly
Exhibit 2.10 Individualism versus
  Collectivism: Differences and
     Managerial Implications
Individualism                                     Collectivism
   Cze ch
                  UK             Nige ria      Egypt        Japan
    Re p.

                              Differences:

Focus on "me " or "I"                   Focus on "we "
Indiv idual achie v e me nt             Group achie v e me nt and
and re sponsibility                     re sponsibility
Indiv idual de cision                   De cision making by
making                                  groups




                   Management Implications:

Use indiv idual ince ntiv e s               Focus on group morale
such a pay for                              and cohe siv e ne ss
pe rformance                                Expe ct low turnov e r
Plan for turnov e r                         Se t group goals
Prov ide for indiv idual
initiativ e
Exhibit 2.11 Neutral versus
Affective: Differences and
  Managerial Implications
 Neutral                                        Affective
             Cze ch
  Swe de n             UK      Norway        M e xico    China
              Re p.

                         Differences:

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




                  Management Implications:

Act unde r control to show              Av oid appe aring
status                                  de tache d, which sugge sts
Ke e p dialogue to the point            distance
                                        Expe ct strong
                                        commitme nt to positions
                                        Tole rate e motional
                                        outbursts
Exhibit 2.12 Specific versus
 Diffuse: Differences and
  Managerial Implications
 Specific                                                Diffuse
              Cze ch
  Swe de n             UK      Norway         M e xico      China
               Re p.

                            Differences:

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




                    Managerial Implications:

Use of obje ctiv e s and                Atte mpt continuous
standards                               improv e me nt
Se parate priv ate and                  M ix priv ate and busine ss
busine ss liv e s                       liv e s
Giv e cle ar and pre cise               Use ambiguous dire ctions
dire ctions                             to giv e e mploye e s latitude
Exhibit 2.13 Achievement versus
  Ascription: Differences and
    Managerial Implications
Achievement                                    Ascription
                                        Hong
    Norway    Ire land Austria Japan              Arge ntina
                                        Kong

                         Differences:

Use title only whe n                Use of title s common and
re le v ant                         e xpe cte d
Supe riors e arn re spe ct          Re spe ct for supe rior
through job pe rformance            shows commitme nt to
M ixture of age and ge nde r        organization
in manage me nt                     Background and age main
                                    qualification for
                                    manage me nt




                   Managerial Implications:

Emphasize re wards and              Emphasize se niority
re spe ct base d on skills          Use pe rsonal powe r of
and accomplishme nts                supe rior for re wards
Se nior le v e l manage rs          Emphasize the chain of
de fe r to te chnical and           command
functional spe cialists
Exhibit 2.14 Time Horizon:
Differences and Managerial
        Implications
         Past/Present                                        Future
             Hong                                               Hong
                      Israel            Russia     Korea
             Kong                                               Kong

                                  Differences:
 Past                         Present                      Future

Communication                 Enjoy the moment             Communication refers to
references history and        Planning seldom results      potential achievements
origins of country,           in execution                 Planning important
business, and family          Immediate impact most        Potential for future
Respect for past glory and    important                    advantage emphasized
elders
History provides a context
for present actions


                             Managerial Implications:


         Past and Present                        Future

        Emphasize and be                      M otivate by emphasis on
        sensitive to history and              opportunities
        tradition                             Set specific deadlines
        Avoid strict deadlines for
        completion of tasks
  Exhibit 2.15 Internal versus
External Control: Differences and
     Managerial Implications
Internal Control                          External Control
    Poland    Brazil          Gre e ce   Ethiopia   China

                         Differences:

Dominate the e nv ironme nt         Emphasis on compromise
Show conv ictions                   Harmony and adjustme nt
Focus on se lf or own               is good
group                               Adaptation to cycle s




                   Managerial Implications:


Emphasize authority                 Emphasize patie nce
Dominate subordinate s              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

								
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