Chapter © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or...

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© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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, GLOBE, and 7d models. • Appreciate the complex differences among cultures

and use these differences for building better organizations.

• Recognize the complexity of understanding new cultures and the dangers of stereotyping and cultural paradoxes.

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

and use these differences for building better organizations.

• Recognize the complexity of understanding new cultures and the dangers of stereotyping and cultural paradoxes.


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.

• Culture is shared: similarity in values, beliefs, norms.

• 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.

• Culture is shared: similarity in values, beliefs, norms.


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.


Three 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 all aspects of doing business in a culture.

– 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 all aspects of doing business in a culture.

– Tells people the correct, acceptable ways to conduct business in a society.


Three Levels of Culture (cont.)

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

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

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

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

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

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


Exhibit 2.1: Three Levels of Culture


Cultural Differences and Basic Values

• Three diagnostic models to aid the multinational manager:• Hofstede model of national culture• Global Leadership and Organizational Behavior

Effectiveness (GLOBE) project• 7d culture model

• Three diagnostic models to aid the multinational manager:• Hofstede model of national culture• Global Leadership and Organizational Behavior

Effectiveness (GLOBE) project• 7d culture model


Hofstede’s Model of National Culture

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

• Five dimensions of basic cultural 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

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

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


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 fundamentally 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 fundamentally 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.

• 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

• 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.

• 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/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

• 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


Long-Term (Confucian) Orientation

• Orientation towards time that values patience.• Managers are selected based on the fit of their

personal and educational characteristics.• A prospective employee’s particular skills have less

importance in the hiring decision.• Training and socialization for a long-term

commitment to the organization compensate for any initial weaknesses in work-related skills.

• Orientation towards time that values patience.• Managers are selected based on the fit of their

personal and educational characteristics.• A prospective employee’s particular skills have less

importance in the hiring decision.• Training and socialization for a long-term

commitment to the organization compensate for any initial weaknesses in work-related skills.


Long-Term (Confucian) Orientation

• Eastern cultures rank highest on long-term orientation.• Value synthesis in organizational decisions.• Belief in substantial savings.• Willingness to invest.• Acceptance of slow results.• Persistence to achieve goals.• Sensitivity to social relationships.• Pragmatic adaptation.

• Eastern cultures rank highest on long-term orientation.• Value synthesis in organizational decisions.• Belief in substantial savings.• Willingness to invest.• Acceptance of slow results.• Persistence to achieve goals.• Sensitivity to social relationships.• Pragmatic adaptation.


Short-term Orientation

• Western cultures, which tend to have short-term orientations, value logical analysis in their approach to organizational decisions.

• Designed and managed purposefully to respond to immediate pressures from the environment.

• Often use quick layoffs of “excess” employees to adjust to shrinking demand for products.

• Western cultures, which tend to have short-term orientations, value logical analysis in their approach to organizational decisions.

• Designed and managed purposefully to respond to immediate pressures from the environment.

• Often use quick layoffs of “excess” employees to adjust to shrinking demand for products.


Long-Term Orientation vs. Short-Term Orientation

• The difference is apparent in the goals companies set in strategic decision making.

• Managers in countries (short-term) want immediate financial returns, and fast, measurable success (e.g., U.S.).

• Managers in countries (long-term) prioritize growth and long-term paybacks.

• Long time horizons allow managers to experiment, seek success by developing “game plans” as they go along.

• The difference is apparent in the goals companies set in strategic decision making.

• Managers in countries (short-term) want immediate financial returns, and fast, measurable success (e.g., U.S.).

• Managers in countries (long-term) prioritize growth and long-term paybacks.

• Long time horizons allow managers to experiment, seek success by developing “game plans” as they go along.


Exhibit 2.6: Managerial Implications of Long-term (Confucian) Orientation


GLOBE National Culture Framework

• GLOBE (Global Leadership and Organizational Behavior Studies) involves 170 researchers who collected data from 17,000 managers in 62 countries

• Seven dimensions of GLOBE are similar to Hofstede• Unique dimensions

• Performance orientation • Humane orientation

• GLOBE (Global Leadership and Organizational Behavior Studies) involves 170 researchers who collected data from 17,000 managers in 62 countries

• Seven dimensions of GLOBE are similar to Hofstede• Unique dimensions

• Performance orientation • Humane orientation


Performance Orientation

• Performance Orientation – refers to the degree to which the society encourages societal members to innovate, to improve their performance, and to strive for excellence• E.g., the United States and Singapore have high

scores while Russia and Greece have low scores on the dimension.

• Performance Orientation – refers to the degree to which the society encourages societal members to innovate, to improve their performance, and to strive for excellence• E.g., the United States and Singapore have high

scores while Russia and Greece have low scores on the dimension.


Exhibit 2.8: Management Implication of Performance Orientation


Humane Orientation

• Humane Orientation – an indication of the extent to which individuals are expected to be fair, altruistic, caring, and generous• Need for belongingness and affiliation is emphasized more

than material possessions, self-fulfillment, and pleasure.• Less humane-oriented societies are more likely to value

self-interest and self-gratification.• E.g., Malaysia and Egypt score highly while France and

Germany have low scores.

• Humane Orientation – an indication of the extent to which individuals are expected to be fair, altruistic, caring, and generous• Need for belongingness and affiliation is emphasized more

than material possessions, self-fulfillment, and pleasure.• Less humane-oriented societies are more likely to value

self-interest and self-gratification.• E.g., Malaysia and Egypt score highly while France and

Germany have low scores.


Exhibit 2.9: Management Implications of Humane Orientation


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

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

• 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:

• Past, Present, Future, or Mixture • Control of vs. Accommodation with Nature

• Dimensions dealing with how a culture manages time and how it deals with nature:

• Past, Present, Future, or Mixture • Control of vs. Accommodation with Nature


Exhibit 2.11: Summary of 7d Model and Issues


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 a unique situation, with exceptions for rules based on relationships or circumstances.

• 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 a unique situation, with exceptions for rules based on relationships or circumstances.


Exhibit 2.12: Managerial Implications of Universalism/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 2.13: Managerial Implications of Individualism/Collectivism


Neutral vs. Affective

• Concerns acceptability of expressing emotions• Neutral -

• Interactions are objective and detached• Focus is on tasks rather than emotional nature of

interaction• Affective -

• Emotions are appropriate in all situations• Prefer to find immediate outlet for emotions

• Concerns acceptability of expressing emotions• Neutral -

• Interactions are objective and detached• Focus is on tasks rather than emotional nature of

interaction• Affective -

• Emotions are appropriate in all situations• Prefer to find immediate outlet for emotions


Exhibit 2.14: Managerial Implications of Neutral vs. Affective


Specific vs. Diffuse

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

• Specific -• Business segregated from other parts of life• Contracts often prescribe and delineate relationships

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

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

• Specific -• Business segregated from other parts of life• Contracts often prescribe and delineate relationships

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


Exhibit 2.15: Managerial Implications of Specific vs. Diffuse


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 2.16: Managerial Implications of Achievement vs. Ascription


Time Orientation

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

consider organizational change as necessary and beneficial.Believe a static organization is a dying organization.

• Past-oriented societies assume that life is predetermined based on traditions or will of God.Revere stability and are suspicious of change.

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

consider organizational change as necessary and beneficial.Believe a static organization is a dying organization.

• Past-oriented societies assume that life is predetermined based on traditions or will of God.Revere stability and are suspicious of change.


Exhibit 2.17: Managerial Implications of Time Horizon


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 dominate nature, managers

are more proactive and believe situations can be changed.

• 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 dominate nature, managers

are more proactive and believe situations can be changed.


Exhibit 2.18: Managerial Implications of Internal vs. External


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 Intelligence: ability to interact effectively in multiple cultures

• 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 Intelligence: ability to interact effectively in multiple cultures

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


Conclusion

• Chapter provides understanding of various ways to understand national cultures

• Sensitize to complex and subtle influences of culture on multinational management

• Variety of cultural levels affect multinational managers• Astute managers realize that understanding cultures is

a never-ending learning process.

• Chapter provides understanding of various ways to understand national cultures

• Sensitize to complex and subtle influences of culture on multinational management

• Variety of cultural levels affect multinational managers• Astute managers realize that understanding cultures is

a never-ending learning process.

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