The Role of Culture in International Management

OverviewOpening profile a summary of the WorldCultures and its effects in organizationsCultural variables and dimensionsCase Study: The Gold Watch

A Summary of the WorldIf we could shrink the Earths population to a village of 100 people, retaining existing ratios:

There would be 57 Asians, 21 Europeans, 14 from North, Central and South America, and 8 Africans51 would be female, 49 would be male70 would be non-white, 30 white70 would be non-Christian, 30 Christian80 would live in substandard housing70 would be unable to read50 would suffer from malnutritionOnly one would have a college educationNo one would own a computer

Understanding global cultures

A shift in the worlds economy (globalization)New technology and info systemsTourismMigrationChanging demographicsIncreased global concerns

Opening profilePowerful, interdependent factors such as:

politicaleconomic legaltechnological, and cultural influence management strategy, functions, and processes.

Cultural SavvyA critical skill for managing people and processes in other countries is cultural savvy that is, a working knowledge of the cultural variables affecting management decisions;Managers have often seriously underestimated the significance of cultural factors; Many blunders made in international operations can be attributed to a lack of cultural sensitivity. Cultural sensitivity, or cultural empathy, is an awareness and an honest caring about another individuals culture.

Cultural awarenessCultural awareness enables managers to develop appropriate policies and determine how to: plan, organize, lead, and control in a specific international setting.

It also leads to effective interaction in a workforce of increasing cultural diversity, both in own and in other countries.

Cultural sensitivityLack of cultural sensitivity costs businesses money and opportunities;

For instance, American managers knowledge of other cultures lags far behind their understanding of other organizational processes;

Up to 40 percent of expatriate managers leave their assignments early because of poor performance or poor adjustment to the local environment (Black and Mendenhall);

About half of those who do remain are considered only marginally effective;

Cross-cultural differences are the cause of failed negotiations and interactions, resulting in losses to U.S. firms of over $2 billion a year for failed expatriate assignments alone.

CultureThe culture of a society comprises:

the shared valuesunderstandingsassumptions, and goals

that are learned from earlier generations, imposed by present members of a society, and passed on to succeeding generations.

This shared outlook results, in large part, in:

common attitudescodes of conduct, and expectations

that subconsciously guide and control certain norms of behavior. .

CultureIn Geert Hofstedes view, culture is the collective programming of the mind which distinguishes the members of one category of people from another.

Culture is the system of shared beliefs, values, attitudes, customs and behaviors + artifacts that distinguish the society and the members of a society used/use to cope with their world and with one another.

The Cultural Orientation of The Society reflects the complex interaction of values, attitude and behaviors.

How do Cultures varyPeoples qualities as individuals

Relationship to nature and world

Relationship to other people

Their primary type of activities

The Characteristics of CultureCulture is learned

Culture is transmitted from generation to generation

Culture is based on symbols

Culture is dynamic

Culture is integrated

Culture is ethnocentric

How Cultures shapes our perceptions and world views?Belief (conviction)

Value (evaluation about)

Attitude (tendency to think in a certain way)

Environmental Variables Affecting Management FunctionsNational Variables Sociocultural Variables

1. Economic System 4. Physical System 1. Religion2. Legal System 5.Technological2. Education3. Political System know-how3. Language

Cultural VariablesAttitudes

1.Values1.Work4.Individualism2.Norms 2.Time5.Change3.Beliefs 3.Materialism

Individual and Group Employee Job Behavior1.Motivation3.Commitment 2.Productivity 4. Ethics

ConvergenceEffects of culture are more evident at the individual level of personal behavior than at the organizational level, as a result of convergence.

Convergence describes the phenomenon of the shifting of individual management styles to become more similar to one another. Management functions, such as planning and organizing, are affected in different ways by an individual managers cultural beliefs, such as those concerning morality, causality, and the meaning of time (Redding and Martyn-Johns).

First step to cultural sensitivityAn international manager should understand her or his own culture, avoiding attitudes such as:

Parochialism occurs when a Frenchman, for example, expects those from or in another country to automatically fell into patterns of behavior common in France;

Ethnocentrism - tendency to regard our own group, culture, etc as better than others;

Prejudice unjustified negative attitude toward a person based on their membership in a particular group;

Stereotypes set of beliefs about a group that are universally applied to all members of that group.

CULTURAL VARIABLES AND DIMENSIONSCONTINGENCY MANAGEMENT

Requires managers to adapt to local environment and people and to manage accordingly

Managers should never assume that they can successfully transplant their countrys styles, practices, expectations, and processes.

CULTURAL PROFILEA manager can anticipate the possible effects of an unfamiliar culture developing a cultural profile for each country or region with which he or she does or is considering doing business.First, he or she needs some familiarity with the cultural variables universal to most cultures.Next, from these universal variables, one can identify the specific differences found in each country or people.

Cultural VariablesHarris and Moran identified 8 categories that form the subsystems in any society:

Kinship;5. Religion;Education;6. Associations;Economy;7. Health;Politics;8.Recreation.

KinshipA kinship system is the system adopted by a given society to guide family relationships.Whereas in the US or Europe this system primarily consists of the nuclear family (which is increasingly represented by single-parent families), in many other part of the world the kinship system consists of an extended family with many members, spanning several generations (typical in many Eastern nations).This extended, closely knit family, may influence corporate activities in cases where family loyalty is given primary consideration such as when contracts are awarded or employees are hired (and a family member is always selected over a more suitable candidate from outside family).In these family-oriented societies, such practices are pervasive and are taken for granted.

EducationThe formal or informal education of workers in a foreign firm affects:

the expectations placed on these workers in the workplace;managers choice about recruitment and staffing practices, training programs, and leadership styles.

EconomyThe means of production and distribution in a society have a powerful influence on such organizational processes as sourcing, distribution, incentives and repatriation.

Drastic differences between capitalist and socialist systems have less effect on MNCs than in the past.

PoliticsThe system of government in a society, whether democratic, communist or dictatorial, imposes varying constraints on an organization and its freedom to do business

It is the managers job: to understand the political system and how it affects organizational processes, to negotiate positions within that system, and to manage effectively the mutual concerns of the host country and guest company.

ReligionWorld Views deal with cultures orientation towards a number of philosophical issues, such God, humanity, nature and Universe.

World Views is shaped by Religion.

Types of Religions

MonotheismChristianity 32%PolytheismIslam 21, 7%Non-literate religionHinduism 13,3%AtheismBuddhism 5,7

Religion - ChristianityRoman CatholicEastern OrthodoxProtestantsIndigenous Christianity

Christians believe in:The coming Kingdom of GodSalvationEthical System

Religion - Islam Self- surrender to the Word of God , is the religion with the youngest and fastest growing

A feeling of absolute trust and dependency on God

The fear of Gods punishment on Earth, in the same way as strong belief in Gods love prevailing the Universe

Deep respect for tradition and past

The ideea of INSHALLAH, that is, God willing, prevails

In a long-standing tradition, based on Quran and the sayings of Muhammad, Arabs consult with the senior members of ruling families or community regarding business decision

Religion - IslamFive Pillars of Islam

There are no Gods, but one God (Allah) and Muhammad is the prophet of Allah (Shahada)

Prayer (Salat or Namaz);

Charity (Zakat)

Fasting observed during Ramadan (Saum or Ruzeh)

Pilgrimage to Holy Mecca (haj)

Religion - JudaismGod is oneHumans are freeHumans are the pinnacle of creationNo human will ever be divineJews are chosen people in terms of serving GodHuman must be obedient to God given commandments (Torah) and have personal responsibility

Religion - ConfucianismJEN, love for mankindRespect for the pastRespect for educationSociety is run by virtue (high morality), not by lawResponsibility of governmentSystem of hierarchyEmphasis on social harmony and obligationFamily institution is strongly supportedWork is a moral virtue

Religion -HinduismThe oldest religion

Believes in the existence of more than one God

They find divine in everything

Their ideas of reality are different

Religion - Buddhism

Buddhas 4 truths:

Existence is suffering

Suffering arises from a desire

Desire can be suppressed (by morality and techniques of mental discipline)

Buddhism doesnt encourage austerities, but teaches to control mind

Associations

Whether associations are based on:

religious socialprofessional or trade affiliations,

managers should be familiar with them and the role they may play in business interactions.

HealthThe system of health care in a country affects employee productivity, expectations, and attitudes toward physical fitness and its role in the workplace.

These expectations will influence managerial decisions regarding:

health care benefits, insurance, physical facilities, sick days, etc.

Recreation

Workers attitude towards recreation can affect their work behavior and their perception of the role of work in their lives.

Hofstedes dimensions of cultural variability Power-Distance (hierarchical vs. egalitarian)

Uncertainty Avoidance (comfort with ambiguity and change vs. desire for regimentation and consistency)

Masculinity-Femininity

(assertiveness and materialism vs. quality of life)

Individualism-Collectivism

(I vs. we)

Power-Distance This dimension describes the manner in which individuals in a culture relate to authority at work in some cultures, individuals who hold power have very distant relationships with those they have power over (high power-distance); in other cultures, those that have power have significantly closer relationships with their subordinates (low power-distance). Some countries that would be considered high power-distance are Latin America, South Asia, and some Arab countries. Some countries that would be considered low power-distance are the United States, New Zealand, Australia, and Nordic and Germanic cultures.

Uncertainty Avoidance

This dimension measures a cultures comfort level with ambiguous or risky situations. Cultures which rank low in uncertainty avoidance are much more comfortable with unpredictability and the unknown. High uncertainty avoidance cultures are likely to have more rigid and complex rules that help to diminish uncertainty and decrease anxiety. The countries that rank the lowest on the uncertainty avoidance dimension include Jamaica, Hong Kong, Singapore, and some Nordic countries. The countries that rank the highest in uncertainty avoidance include Japan, Portugal and Greece.

Masculinity-Femininity

This dimensions relates primarily to the expected gender roles within a culture. Self-assertion and task orientation are considered masculine traitsNurturing, quality-of-life and relationship orientation are considered feminine characteristics. The countries that rate highest in the masculine dimension include Japan, Switzerland and Italy. The countries that rate the highest in femininity include Sweden, Norway, and the Netherlands.

Individualism-Collectivism

This dimension measures the extent to which individuals in a culture work for their own benefit or for the benefit of the larger groups they are a part of such as their families, their companies, or their nationCountries that rate high in individualism include the United States, Australia and Great Britain.Individually oriented countries tend to have task-oriented workers who desire individual reward and appraisal. Collectivist oriented countries tend to have workers who are motivated by a desire to advance their group; and they seek rewards for the group as a whole. Countries that rate higher in collectivism include Japan, Saudi Arabia, Venezuela and Peru.

Hostedes Cultural Dimensions and Impacts on Motivation