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Agenda
The Role of Culture in International Management Why and how does culture affect the way people act? Why does it matter to global companies and managers? Understanding our own cultural tendencies
International news report Return Test 1
The Role of Culture in Organizations – Different Types of Cultures
International news report
National culture and its Effect on the Individual and Corporate Culture The Role of Culture in International
Management Why and how does culture affect the way
people act? Why does it matter to global companies and
managers?
Socio-Economic ContextSocio-Economic Context
Legal ContextLegal Context CultureCulture
•
Political ContextPolitical Context•Stability•Local & regional political tensions
•Corruption•Political & governmental influence on operations
•Cultural values & assumptions
•Local laws•Regulations concerning expatriates, marketing
•Labor relations rules•Rules regarding employee contracts
• Size• Composition• Educational level• Geographical distribution• Class divisions• Income levels
•E.g. Labor Market
Forces Influencing Global Organizations
Management of Business Operations
Firm•Characteristics•Strategy
Societal culture Individual values
Behavior in organizations
National variables(laws, government,
economy, technology)
Societal variables(language, ethnic origin,
religion)
Professional culture
Corporate culture
Cultural/National Variables and Organizational Behavior
Socio-economic environment the combination of external social and economic
conditions that influence the operation and performance of an organization. The socioeconomic environment is part of the overall business environment. E.g. technological trends/levels; literacy levels;
satisfaction with quality of life; educational system; importance of work; societal stratification; income levels or changes in income distribution; history and its influence; infrastructure; importance of different groups (e.g., family, work group); religious traditions, etc.
Culture (“National”) A system of values, beliefs, assumptions
and norms, shared among a group of people.
Provides two functions: Software for interaction - e.g. decision criteria (e.g.,
speed or minimizing risk?); ways of social interaction (maintaining harmony; respecting elders; getting all the good ideas out).
Identity for people within the culture – who we feel we are as people!
Three Levels of Mental Programming
Culture
Human Nature
Personality
Universal (true of all people)
Biological
Specific to groups (neither)
Learned
Specific to individuals
(idiosyncratic)
Inherited and learned
Source: People Skills for Global Business, Cultural Intelligence, D. Thomas and K. Inkson
Four Dimensions of Culture (one framework): Individualism Power Distance Uncertainty Avoidance Gender Role Differentiation/materialism
http://www.geert-hofstede.com/
Six Cultural Orientations: Questions That Every Culture Must Answer
Environment: What is our basic relationship with the world around us? Harmony, Mastery, Subjugation
Relationships: To whom and for whom do we naturally have responsibility? Collective, Hierarchical, Individual
Activity: What is our basic or natural approach to activity? Being, Doing, Thinking
Human Nature: What is the basic nature of humans? Good, Evil, Mixed or Neutral
Time: How do we think about time? Past, Present, Future; Monochronic, Polychronic
Space: How do we think about and use space? Public, Private, Mixed
The first three have the
biggest impact on business interactions.
Based on Kluckhohn & Strodtbeck (1961), Variations in Value Orientations
Cultural Orientations – Relations Among People Collective
Members of a group look after each other. Promote the welfare of whole group. Look to others as a way of judging their actions and think about how their activities relate to the consequences for their work group. E.g. Japan.
Individualistic People are responsible mainly for themselves. People are self-focused,
and look to themselves to judge their actions, are introspective and think about their personal goals and actions. E.g. USA.
Hierarchy Those at the top of the hierarchy have both responsibility for and
authority over those below (hierarchy can be of either group or individual). People from a low-hierarchy culture do not believe that is acceptable for one person to order another about, and they expect to have input concerning company policies that are important to them. A person from a high hierarchy society will not question an order from a superior even if the order is unexpected and places a heavy burden on the employee. E.g., India.
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D & AU USA FR LatAm J Scan PRC
How Important is Responsibility to the Group vs. Responsibility to Oneself Individually
Collective more important than individual
Individual and collective about the same
Indi
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How Acceptable/Desirable is Hierarchy as a Way to Determine Responsibility and Authority?
Prefer very strong hierarchy
Totally against hierarchy
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Neu
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Str
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hier
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An example of how culture can affect management practices: Finland versus USWhere are they different on cultural dimensions?
http://www.geert-hofstede.com/
Power distance : Finns prefer flatter organizations and smaller wage differentials
Uncertainty avoidance : Finns higher, so have more formal written rules and procedures. Emphasize HR policies for stability and security.
Gender role/materialism: role of leader in Finland is to safeguard employee’s well-being, social responsibility.
Individualism : Finns favor teams, group level bonuses.
But not a drastic difference between the two countries!
Major components that influence culture: Language, ethnicity, and religion
Other ways to look at cultural differences Complexity: Amount of implicit information
(high context, low context) Heterogeneity: Variations in language,
ethnicity and religion (no dominant culture, more difficult to adjust to).
Some other dimensions along which cultures differ…. Work and material gain (is work a good
thing or not?) Informality Joking and Fun Attitude toward time (scarce resource) Time perspective
(monochronic/polychronic) Age and gender (e.g., venerate youth;
women as equals)
Cultural Intelligence starts with understanding your own cultural ‘self’Cultural values are central tendencies, not
absolutes.Cultures can be ‘loose’ or ‘tight’ in any
particular group/nation (heterogeneous).We are of course affected by other values
and traits, such as religious, regional or our personality types.
In addition to national culture, our behavior can be shaped by organizational culture.
Remember, Individuals Within Cultures Vary Greatly from Each Other!
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Standardized Score
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Taiw an USA
Taiwan N = 426USA N = 503
Cultural Paradox – different dimensions are sometimes ‘in conflict’.
Cultural Shock – the anxiety and psychological stress a person experiences before adapting and adjusting to a new cultural environment. Caused by lack of knowledge, limited prior experience, and personal rigidity. Honeymoon stage Crisis stage Recovery stage Adjustment stage
Corporate Culture The belief about how to manage internally
and how to compete externally Organizationally shared:
Values Beliefs Assumptions Understandings
Simplified Definition “The way things work around here”.
Basis for relevant corporatenorms and behaviors patterns.
Incubator
(Fulfillment Oriented)
Country: Sweden Business: Small
Guided Missile
(Project Oriented) Country: U.S., U.K. Business: Large
Family
(Power Oriented) Country: France, Spain Business: Small
Eiffel Tower
(Role Oriented) Country: Germany Business: Large
Personal/Informal Task/Formal
Egalitarian/Decentralized
Hierarchical/Centralized
Types of Corporate Culture
Cultural Typology of the Organization
Categories of Business Organizations: Monolithic, Plural, and Multicultural
Factors for examining organizations: Acculturation Structural Organization Informal Organization Cultural Bias: prejudice and
discrimination Organizational identification Inter-group Conflict
Cultural Typology of the Organization
MONOLITHIC ORGANIZATION Firms at early stage of
internationalization One dominant culture group
(homogenous) Lack of structural integration Lack informal integration Discrimination against minorities To survive one must adopt the
existing cultural norms No room for inter-group conflict
Cultural Typology of the Organization
Plural Organization Includes workforce from the host
country Partial structural integration The home personnel are still dominant The top managers are still ethnocentric
Multicultural Organization Culturally heterogeneous; recognize the
value of cultural heterogeneity Full structural and informal integration
http://www.forbes.com/2010/08/27/global-corporate-culture-multinational-leadership-managing-mitsloan.html
Benefits of Multiculturalism Reduced costs: Lower absenteeism & turnover Resource acquisition: Well qualified pool of mgrs Marketing advantage: Multicultural personnel help
MNC adopt cultural perspectives in multiple mkts Creativity is encouraged when there is less
emphasis on conformity Better problem solving Organizational flexibility: bilinguals have higher
level of divergent thinking & cognitive flexibility
Would you describe PSU as monolithic, plural or multicultural?