Chapter Copyright© 2004 Thomson Learning All rights reserved 2 Culture and Multinational...

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Chapter

2Culture and Multinational ManagementCulture and Multinational Management

Learning Objectives

• Define culture and understand the basic components of culture

• Identify instances of cultural stereotyping and ethnocentrism

• Understand how various levels of culture influence multinational operations

• Define culture and understand the basic components of culture

• Identify instances of cultural stereotyping and ethnocentrism

• Understand how various levels of culture influence multinational operations

Learning Objectives

• Understand the Hofstede and 7d models • Appreciate the complex differences among cultures

and use these differences for building better organizations

• Understand the Hofstede and 7d models • Appreciate the complex differences among cultures

and use these differences for building better organizations

What is Culture?

• Pervasive and shared beliefs, norms, values, and symbols that guide everyday life.

• Cultural norms: both prescribe and proscribe behaviors• What we should do and what we cannot do.

• Cultural values: what is good/beautiful/holy, and what are legitimate goals for life.

• Pervasive and shared beliefs, norms, values, and symbols that guide everyday life.

• Cultural norms: both prescribe and proscribe behaviors• What we should do and what we cannot do.

• Cultural values: what is good/beautiful/holy, and what are legitimate goals for life.

What is Culture? (cont.)

• Cultural beliefs: represent our understandings about what is true.

• Cultural symbols, stories, and rituals: communicate the norms, values, and beliefs of a society or a group to its members.

• Culture is pervasive in society• Affects all aspects of life• Not all aspects are observable

• Cultural beliefs: represent our understandings about what is true.

• Cultural symbols, stories, and rituals: communicate the norms, values, and beliefs of a society or a group to its members.

• Culture is pervasive in society• Affects all aspects of life• Not all aspects are observable

Culture: Front Stage & Back Stage

• Front stage of culture: easily observable aspect of culture• e.g., Japanese executive bows or North American

robust handshake.• Back stage of culture: only insiders or members of the

culture understand other aspects of culture• e.g., Japanese saying “it’s difficult” and twisting

head to one side really means it’s impossible.

• Front stage of culture: easily observable aspect of culture• e.g., Japanese executive bows or North American

robust handshake.• Back stage of culture: only insiders or members of the

culture understand other aspects of culture• e.g., Japanese saying “it’s difficult” and twisting

head to one side really means it’s impossible.

First & Second Levels of Culture

1. National culture: the dominant culture within the political boundaries of the nation-state.

2. Business culture: norms, values, and beliefs that pertain to business in a culture.1. Tells people the correct, acceptable ways to

conduct business in a society.

1. National culture: the dominant culture within the political boundaries of the nation-state.

2. Business culture: norms, values, and beliefs that pertain to business in a culture.1. Tells people the correct, acceptable ways to

conduct business in a society.

Third Levels of Culture (cont.)

3. Occupational and organizational culture3.Occupational culture: the norms, values, beliefs,

and expected ways of behaving for people in the same occupational group.

4.Organizational culture: the set of important understandings that members of an organization share.

3. Occupational and organizational culture3.Occupational culture: the norms, values, beliefs,

and expected ways of behaving for people in the same occupational group.

4.Organizational culture: the set of important understandings that members of an organization share.

Fourth Levels of Culture (Cabrera)

4. Community and personal cultures• Community culture: the norms, values, beliefs, and

expected ways of behaving for people in the same group, neighborhood, or immediate community.

• Personal culture: the set of important understandings that an individual uses or believes in.

4. Community and personal cultures• Community culture: the norms, values, beliefs, and

expected ways of behaving for people in the same group, neighborhood, or immediate community.

• Personal culture: the set of important understandings that an individual uses or believes in.

Cultural Differences and Basic Values

• Two diagnostic models to aid the multinational manager:1. Hofstede model of national culture2. 7d culture model

Hofstede’s Model of National Culture

• Five dimensions of basic values• Power distance• Uncertainty avoidance • Individualism • Masculinity • Long-term orientation

Hofstede’s Model Applied to Organizations and Management

• Management practices considered in the discussion of Hofstede’s model include:1.Human resources management

• Management selection• Training• Evaluation and promotion• Remuneration

• Management practices considered in the discussion of Hofstede’s model include:1.Human resources management

• Management selection• Training• Evaluation and promotion• Remuneration

Hofstede’s Model Applied to Organizations and Management (cont.)

2.Leadership styles3.Motivational assumptions4.Decision making and organizational design5.Strategy

POWER DISTANCENEXTNEXT

Power Distance

• Power distance concerns how cultures deal with inequality and focuses on• Norms that tell superiors (e.g., bosses) how much

they can determine the behavior of their subordinates

• Values and beliefs that superiors and subordinates are different kinds of people

• Power distance concerns how cultures deal with inequality and focuses on• Norms that tell superiors (e.g., bosses) how much

they can determine the behavior of their subordinates

• Values and beliefs that superiors and subordinates are different kinds of people

Power Distance (cont.)

• High power distance countries have norms, values, and beliefs such as• Inequality is fundamentally good• Everyone has a place: some are high, some are low• Most people should be dependent on a leader• The powerful are entitled to privileges• The powerful should not hide their power

Exhibit 2.2: Managerial Implications for Power Distance

UNCERTAINTY AVOIDANCE (RISK TOLERANCE)

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Uncertainty Avoidance

• Norms, values, and beliefs regarding tolerance for ambiguity• Conflict should be avoided• Deviant people and ideas should not be tolerated• Laws are very important and should be followed• Experts and authorities are usually correct• Consensus is important

Exhibit 2.3: Managerial Implications of Uncertainty Avoidance

INDIVIDUALISM VS. COLLECTIVISM (FOCUS)

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Individualism/Collectivism

• Focus is on the relationship between the individual and the group

• Countries high on individualism have norms, values, and beliefs such as• People are responsible for themselves.• Individual achievement is ideal.• People need not be emotionally dependent on

organizations or groups.

• Focus is on the relationship between the individual and the group

• Countries high on individualism have norms, values, and beliefs such as• People are responsible for themselves.• Individual achievement is ideal.• People need not be emotionally dependent on

organizations or groups.

Individualism/Collectivism

• Collectivist countries have norms, values, and beliefs such as• One’s identity is based on group membership.• Group decision making is best.• Groups protect individuals in exchange for their

loyalty to the group.

• Collectivist countries have norms, values, and beliefs such as• One’s identity is based on group membership.• Group decision making is best.• Groups protect individuals in exchange for their

loyalty to the group.

Exhibit 2.4: Managerial Implications of Individualism/Collectivism

MASCULINITY VS FEMININITY (FORCE)

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Masculinity

• Tendency of a culture to support traditional masculine orientation

• High masculinity countries have beliefs such as• Gender roles should be clearly distinguished.• Men are assertive and dominant.• Machismo/exaggerated maleness in men is good.• Men should be decisive.• Work takes priority over other duties.• Advancement, success, and money are important.

• Tendency of a culture to support traditional masculine orientation

• High masculinity countries have beliefs such as• Gender roles should be clearly distinguished.• Men are assertive and dominant.• Machismo/exaggerated maleness in men is good.• Men should be decisive.• Work takes priority over other duties.• Advancement, success, and money are important.

Exhibit 2.5: Managerial Implications of Masculinity

TIME ORIENTATIONNEXTNEXT

Long-Term 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: Managerial Implications of Long-term Orientation

Exhibit 2.7 Hofstede’s Classification of Countries by Clusters

MODEL OF CULTURAL DIMENSIONS

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7d Cultural Dimensions Model

• Builds on traditional anthropological approaches to understanding culture

• Culture exists because people need to solve basic problems of survival

• Challenges include• How people relate to others• How people relate to time• How people relate to their environment

• Builds on traditional anthropological approaches to understanding culture

• Culture exists because people need to solve basic problems of survival

• Challenges include• How people relate to others• How people relate to time• How people relate to their environment

7d Cultural Dimensions Model(cont.)

• Dimensions that deal with relationships include:• Universalism vs. Particularism• Collectivism vs. Individualism• Neutral vs. Affective• Diffuse vs. Specific• Achievement vs. Ascription

7d Cultural Dimension Model(cont.)

• Dimensions dealing with how a culture manages time and how it deals with nature• Sequential vs. Synchronic • Internal vs. External control

Exhibit 2.8: The 7d Model of Culture

Universalism vs. Particularism

• Pertain to how people treat each other based on rules or personal relationships

• Universalistic • Right way is based on abstract principles such as

rules, law, religion• Particularistic

• Each judgment represents unique situation that can be dealt with based on relationships

• Pertain to how people treat each other based on rules or personal relationships

• Universalistic • Right way is based on abstract principles such as

rules, law, religion• Particularistic

• Each judgment represents unique situation that can be dealt with based on relationships

Exhibit 2.9: Managerial Implications for Universalism vs Particularism

Individualism vs. Collectivism

• Similar distinctions to Hofstede’s view• Collectivist societies

• People defined by group memberships such as family

• Responsibility, achievement, and rewards are group-based

• Individualist societies• People trained to be independent• Assume individual responsibility for success or

failure

• Similar distinctions to Hofstede’s view• Collectivist societies

• People defined by group memberships such as family

• Responsibility, achievement, and rewards are group-based

• Individualist societies• People trained to be independent• Assume individual responsibility for success or

failure

Exhibit 2.10: Managerial Implications of Individualism/Collectivism

EMOTIONAL EXPRESSIONNEXTNEXT

Neutral vs. Affective

• Concerns acceptability of expressing emotions• Neutral

• Interactions are objective and detached• Focus is on tasks rather than relationships

• Affective• Emotions are appropriate in all situations

• Concerns acceptability of expressing emotions• Neutral

• Interactions are objective and detached• Focus is on tasks rather than relationships

• Affective• Emotions are appropriate in all situations

Exhibit 2.11: Managerial Implications of Neutral vs. Affective

COMPARTMENTALIZATIONNEXTNEXT

Specific vs. Diffuse

• Extent to which an individual’s life is involved in work• Specific

• Business segregated from other parts of life• Contracts often delineate relationships

• Diffuse• Business relationships encompassing/involving• Private and segregated space is small

• Extent to which an individual’s life is involved in work• Specific

• Business segregated from other parts of life• Contracts often delineate relationships

• Diffuse• Business relationships encompassing/involving• Private and segregated space is small

Exhibit 2.12: Managerial Implications of Specific vs. Diffuse

BASIS OF STATUSNEXTNEXT

Achievement vs. Ascription

• Manner in which society gives status• Achievement

• People earn status based on performance and accomplishments

• Ascription• Characteristics or associations define status• E.g., status based on schools or universities

• Manner in which society gives status• Achievement

• People earn status based on performance and accomplishments

• Ascription• Characteristics or associations define status• E.g., status based on schools or universities

Exhibit 2.13: Managerial Implications of Achievement vs. Ascription

TIME ORIENTATIONNEXTNEXT

Time Orientation

• How cultures deal with the past, present, and future• Future-oriented societies, such as the U.S.,

consider organizational change as necessary and beneficial

• Past-oriented societies assume that life is predetermined based on traditions or will of God

• How cultures deal with the past, present, and future• Future-oriented societies, such as the U.S.,

consider organizational change as necessary and beneficial

• Past-oriented societies assume that life is predetermined based on traditions or will of God

Exhibit 2.14: Managerial Implications of Time Horizon

SOURCE OF CONTROLNEXTNEXT

Internal vs. External Control

• Concerned with beliefs regarding control of one’s fate• Best reflected with how people interact with the

environment• Does nature dominate us or do we dominate

nature?• In societies where people believe nature dominates

them, managers are more fatalistic.

• Concerned with beliefs regarding control of one’s fate• Best reflected with how people interact with the

environment• Does nature dominate us or do we dominate

nature?• In societies where people believe nature dominates

them, managers are more fatalistic.

Exhibit 2.15: Managerial Implications of Internal vs. External Control

SURVEY RESULTSNEXTNEXT

Exhibit 2.16: 7d Percentile Rankings for Selected Countries

LEVELS OF TRUSTNEXTNEXT

Propensity to Trust

• Growing concern with the development of trusting relationships with partners

• Differences among cultures in terms of how and when people trust each other

• Logic presupposes that individualism should be related to low trust

• Individualistic cultures have higher trust relative to collectivist societies

• Growing concern with the development of trusting relationships with partners

• Differences among cultures in terms of how and when people trust each other

• Logic presupposes that individualism should be related to low trust

• Individualistic cultures have higher trust relative to collectivist societies

Exhibit 2.17: Levels of General Trust in People

Caveats and Cautions

• Stereotyping: assumes that all people within one culture behave, believe, feel, and act the same.

• Ethnocentrism: occurs when people from one culture believe that theirs are the only correct norms, values, and beliefs.

• Cultural relativism: all cultures, no matter how different, are correct and moral for the people of those cultures.

• Stereotyping: assumes that all people within one culture behave, believe, feel, and act the same.

• Ethnocentrism: occurs when people from one culture believe that theirs are the only correct norms, values, and beliefs.

• Cultural relativism: all cultures, no matter how different, are correct and moral for the people of those cultures.

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