M A N A G I N G

C U LT U R A L

DIFFERENCESS E V E N T H E D I T I O N

Managing Cultural Differences: Global Leadership Strategies for the 21st Century, Seventh Edition

Robert T. Moran, Ph.D., Philip R. Harris, Ph.D., Sarah V. Moran, M.A.

Managing Cultural Diversity in Technical ProfessionsLionel Laroche, Ph.D.

Uniting North American Business—NAFTA Best PracticesJeffrey D. Abbot and Robert T. Moran, Ph.D.

Eurodiversity: A Business Guide to Managing DifferencesGeorge Simons, D.M.

Global Strategic Planning: Cultural Perspectives for Profit and Non-Profit OrganizationsMarios I. Katsioulodes, Ph.D.

Competing Globally: Mastering Cross-Cultural Management and NegotiationsFarid Elashmawi, Ph.D.

Succeeding in Business in Eastern and Central Europe—A Guide to Cultures, Markets, and Practices

Woodrow H. Sears, Ed.D. and Audrone Tamulionyte-Lentz, M.S.

Intercultural Services: A Worldwide Buyer’s Guide and SourcebookGary M. Wederspahn, M.A.

S e v e n t h E d i t i o n

G l o b a l L e a d e r s h i p S t r a t e g i e s f o r t h e 2 1 s t C e n t u r y

R o b e r t T . M o r a n , P h . D .

P h i l i p R . H a r r i s , P h . D .

S a r a h V . M o r a n , M . A .

M A N A G I N G

C U L T U R A L

DIFFERENCES

M A N A G I N G

C U L T U R A L

DIFFERENCES

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To my children Elizabeth, Sarah, Molly, Rebecca and Benedict. Learners

and teachers, receivers and givers, all multilingual citizens in

our global world.

Robert T. Moran

In honor of Dr. Dorothy Lipp Harris, my late wife and elegant professor

who supported me in writing this text for a quarter century and taught with

it in graduate school. And to her sister, Jeanne Lipp Conover, who first

introduced me into the concept of culture when I was a Fulbright professor

in Japan, 1962 . . . Plus in appreciation to two cosmopolitans who inspire

me to continue writing in my 80s – my present wife, Janet Belport Harris

and my stepson, Jason Winter Belport.

Philip R. Harris

To my parents, whose global humanitarian lives have influenced me pro-

foundly, and to every person who has crossed my path whose diversity of

backgrounds, ethnicities, cultures, and world views have opened my eyes

and mind. You have all taught me that through respect and developing a

deep understanding of what makes each of us unique, that humankind,

in all our wonderful diversity, can find ways to harmoniously live

and work together.

Sarah V. Moran

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CONTENTS

Foreword by Lewis B. Campbell, Chairman, President and CEO,Textron Inc., xi

Prologue, xiii

Acknowledgments, xv

Unit 1

Cultural Impacts on Global Management

1 GLOBAL LEADERS AND CULTURE . . . . . . . 2Learning Objectives 2, Culture and Its Characteristics 6, Systems Approach to Culture 11, Key Cultural Terminology 13, Global Leaders as Influencers 22, Cultural Understanding and Sensitivity 24, Cross-Cultural Learning 25, Global Transformations 26, Key Concepts for Global Leadership 29, Global Organizations 30, Conclusions 36, References 38

2 GLOBAL LEADERS AND COMMUNICATIONS . . . . . . . . . . . . . . . . . . . 40Learning Objectives 40, Cultural Differences as Communication Resources 43, Global Communication 46, Cultural Factors in Communication 48, CommunicationKeys—Low/High Context and Listening 49, Attribution 56, Variables in the Communication Process 60, International Body Language 62, Guidelines for English and Foreign Languages 64, Technology andIntercultural Communication 68, Handling Two Swords at the Same Time—A Global Shift 70, Conclusions 71References 73

vii

3 GLOBAL LEADERSHIP IN NEGOTIATIONS . . . . . . . . . . . . . . . . . . . . . . 75Learning Objectives 76, Conflict Resolution and Negotiations 76, Negotiating Across Cultures 80, Assumptions and Negotiating 83, Example of “CulturalBaggage” 85, Framework for International BusinessNegotiations 86, The Price of Failed Negotiations 96,Conclusions 98, References 99

4 GLOBAL LEADERS AND THE CHANGING KNOWLEDGE CULTURE . . . . . . . . . . . . . . . 101Learning Objectives 101, Changes in Life Spaces 102,Leadership in a Knowledge Culture 119, Leadership inChanging Organizational Culture 126, Managing theKnowledge Culture 137, Conclusions 139, References 140

5 GLOBAL LEADERS LEARN FROM OTHERMANAGEMENT SYSTEMS . . . . . . . . . . . . . . 143Learning Objectives 143, Global Study of Management 145, Challenges in International Management 150, StrategicCollaborations and Mergers 152, Conclusions 157, References 158

6 WOMEN AS LEADERS IN GLOBAL BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . 159Learning Objectives 160, Current Status of Global Women Managers 161, Global Cultural Stereotypes About Women Leaders 164, Stereotypes Can Invariably Lead to Organizational Barriers Hindering the Advancement of Women 165, Women and Overseas, Expatriate Assignments 168, Balancing Work and Family 170, Company Initiatives to Break the Glass Ceiling 171, Selected Woman Managers’ Views 172, The Future of Women in Leadership Positions 174, Conclusions 176, References 177

7 MANAGING DIVERSITY IN THE GLOBALWORK CULTURE . . . . . . . . . . . . . . . . . . . . . . 180Learning Objectives 180, Defining Cultural Diversity 181, People on the Move 183, Globalization and Diversity 185, A Macrosystemic Perspective on Organizational Diversity 189, A Microsystems Perspective 192, Empowering Workers 195, Conclusions 198, References 200

viii

8 EFFECTIVE PERFORMANCE IN THE GLOBAL MARKETPLACE . . . . . . . . . . . . . . . 202Learning Objectives 202, Global Human Performance 208, Ethical Behavior in the Global Workplace 213, Culture,Management, and Technology Transfer 215, Conclusions 224, References 224

9 LEADERSHIP IN CREATING CULTURALSYNERGY . . . . . . . . . . . . . . . . . . . . . . . . . . . 227Learning Objectives 227, Understanding Synergy’s Implications 228, Cross-Cultural Conflict and Cultural Synergy 231, Synergy in Organizational Culture 236, Synergy in Global Organizations 239, Synergistic TeamManagement 243, Synergy Among Professionals 251,Transitioning into the Knowledge Culture 255, Conclusions 257, References 258

10 MANAGING TRANSITIONS ANDRELOCATIONS IN THE GLOBAL WORKPLACE . . . . . . . . . . . . . . . . . . . . . . . . . 260Learning Objectives 260, Saga of My Brazilian Adventure 261, This Was My Arrival in Brazil 263, Coping With Transitional Challenges 265, Relocation Challenges 271,Fostering Acculturation 280, Business Etiquette and Protocol Abroad 298, Conclusions 301, References 302

Unit 2

Regional Culture Specifics

11 DOING BUSINESS WITH MIDDLE EASTERNERS . . . . . . . . . . . . . . . . . . . . . . . . 306Learning Objectives 306, Middle East Overview 308,Characteristics of Arab Culture 316, Cultural Aspects of Egypt and Saudi Arabia 319, Saudi Arabia 325, CulturalCapsules of Other Middle East Countries 334, Middle East Business Customs and Protocol 337, Synergy: Middle East Hope 344, Conclusions 345, References 346

12 DOING BUSINESS WITH LATIN AMERICANS . . . . . . . . . . . . . . . . . . . . . . . . . 349Learning Objectives 351, Latin American Overview 351, Mexico 354, Central American States 364, South American Cultural Development 366, Brazil 369, Argentina 383,

ix

Latin American Cultural Themes 388, Challenges for Pan American Cooperation 393, Conclusions 395, References 396, Useful Internet Web Sites 397

13 DOING BUSINESS WITH ASIANS ANDAUSTRALIANS . . . . . . . . . . . . . . . . . . . . . . . 398Learning Objectives 398, Central and South Asian Countries 401, Australia 403, New Zealand 409, China 410, Hong Kong 422, India 423, Indonesia 434, Japan 440, Malaysia 451, Pakistan 457, The Philippines 460, Singapore 468, South Korea 470, Taiwan 479, Thailand 483, Vietnam 486, Conclusions 492, References 493

14 DOING BUSINESS WITH EUROPEANS . . . . 497Learning Objectives 497, Internet Web Sites 492, European Diversity and Synergy 500, Western Europe 512, Great Britain 512, Ireland 519, France 523, Spain 535, Other Western European Cultures 539, Germany 542, Poland 550, Other Central European Cultures 552, Southeastern Europe 559, Italy 561, East Europe/Eurasia 577, Russia 582, Turkey 590, Conclusions 595, References 598,Useful Internet Web Site, 600

15 DOING BUSINESS WITH AFRICANS . . . . . . 601Learning Objectives 601, Insights into Pan Africa 606, Cultural Characteristics of Africans 612, Cultural Specifics by Geographic Regions 618, North Africa 618, Morocco 620, East Africa 622, Kenya 628, West Central Africa 632, Nigeria 635, Southern Africa 642, South Africa 644, Prospects for Pan African Synergy 654, Conclusions 657,References 658, Other Resources 660

16 DOING BUSINESS WITH NORTH AMERICANS . . . . . . . . . . . . . . . . . . . . . . . . . 661Learning Objectives 661, Pan American Management Perspectives 665, Northern America’s Indigenous People 667, Profile of Canada 675, The United States of America 680, Conclusions 694, References 695, UsefulInternet Web Site, 696

EPILOGUE, 698INDEX, 699ABOUT THE AUTHORS, 707

x

FOREWORD

Eighty years ago when the business world was in its post-industrialadolescence—and when Textron was founded as the world’s first con-glomerate—you could make some basic assumptions about people youwould encounter throughout your workday. Most companies wereregionally focused then, from suppliers to customers to employees. Andthat meant limited exposure to other ideas and approaches to problemsolving. It meant you knew all the rules of engagement.

Today it’s another story entirely. Textron has corporate offices in far-off places like China and Poland. We have manufacturing facilities inareas as varied as Pueblo, Mexico and Huddersfield, United Kingdom.Our Leadership Program puts recent college graduates in six-monthrotations around the world. Our employees cover the spectrum of cul-tures and backgrounds—age, color, creed, faith.

Engagement on this global scale means working with variablesimpossible to predict, account for, and control.

Diversity, as the authors of this book point out, is a testament to howhumans have dealt with and adjusted to universal problems for mil-lennia, such as climate, geography, ongoing quests for food and shelter.Sometimes evidence of this is clear just by looking at one another. Forinstance, Scandinavians developed, physically, to live in the bright sun-light of a frozen north, and you can see this in pale blue eyes perfectfor filtering light reflected off snow.

Sometimes our ancestral adaptation is more difficult to spot, as inthe rigid traditional structure of Hindu society in India. For centuries,people there pursued lines of work based not on capability, but on hisor her place in a strict, complicated caste system.

The good news is that walls such as this have come down all aroundthe world, and businesses are reaping the rewards of talents the worldover without restrictions of time zone or language. Right now I imaginethere’s someone in Vancouver on the phone with an airline bookingagent in Mumbai making a reservation to travel to Venezuela for a new

xi

supply chain opportunity. When she arrives, she’ll stay in touch withthe corporate office via Blackberry while conducting meetings in fluentSpanish with the aid of a dictionary on her laptop.

There is no precedent for this. There are no examples to follow. Busi-nesses of all sizes are grappling with how to maximize the oppor-tunities—and minimize the challenges—of cultural differences. We’rerealizing that diversity can be a potent and differentiating competitiveedge. And we’re beginning to ask all the right questions in search ofthe right answers.

This conversation has begun in earnest because the world is openingits mind. We aren’t just thinking outside the box, we’re picking it upto see what’s underneath, then tearing it apart and building somethingnew altogether! And it’s all happening because we’ve realized that busi-ness can no longer be held back by traditional solutions. Imagine theproblems you can tackle when you assemble a team with a Westernapproach to problem solving—one that’s time-bound, linear, andfocuses on an end result—and join it with an Eastern approach toproblem solving—one that seeks harmony, honors process, and valuesteam relationships more than concrete solutions. Six Sigma is oneexample of this kind of adaptation, and the results have been tremen-dous for Western-based companies like Textron.

The book you’re holding is a valuable guidebook for this new land-scape. The authors approach a far-reaching, complicated subject in atruly inspiring way. It’s filled with communication tools, fundamentalconcepts, and a map for the road ahead.

Ours is a connected world, one that allows companies to tackle thetraditional problems of business—staffing, sourcing, attracting newcustomers, and innovating new solutions—in a truly revolutionary way.Authors Moran, Harris, and Moran understand that the challenge isn’tsimply attracting and recruiting a diverse, talented workforce aroundthe globe, but retaining it. And that anyone who views globalizationas a quick solution and follows it in blind pursuit of cheap labor isgoing to follow it right over a cliff. Opening our minds to the powerof diversity and the possibility of the global workplace opens us to thetransformational change required to succeed and grow.

I have nothing but enthusiasm for the road ahead. It’s one we mustall walk together with conviction and attention as we harness the powerof cultural difference.

Lewis B. CampbellChairman, President and CEOTextron Inc.

xii

PROLOGUE

We are pleased and honored to present to readers of all cultures, the7th edition of Managing Cultural Differences. In our complex and trou-bled global world, we hope some of the ideas, if utilized, will make apositive difference in the personal and professional worlds of all whoexplore their meaning and value.

When first published in 1979, our book recognized the importanceof culture, and its impact on human behavior and performance in abusiness context. Only in this 21st Century are we beginning to realizethat we create the worlds in which we live, but on the basis of ourunique cultural codes! Our message has never been more relevant. Intoday’s world, the human family struggles with two contrary forces –globalization and diversity, versus increasing racism, ethnic hatreds,and immigrant bashing. May those who seriously read this volumelearn how to encourage the former and curb the latter.

Culture is not just a tool for coping, but a means for creating aware-ness and learning. It underpins all human activities, and explains muchof our behavior. Our favorite analogy is to compare this concept to abeautiful jewel – hold it to the light, turn it around, and reveal its mul-tiple dimensions. With each new writing of this text, we plumb culture’sdepths for meaning, and discover more applications – from national,to organizational, to team and work culture.

Numerous trends underscore the importance of effective interculturalrelations to improve the quality of our lives, particularly with referenceto job performance and productivity. We are grateful to more than amillion readers, as well as university and college professors whoseadoptions of this text worldwide in many institutions of higher educa-tion, confirming the validity of our message. Further our thanks to themany HRD consultants and trainers who have shared our thoughtswith managers and other personnel in global corporations.

The material covered has been extensively updated – more maps forgeographic areas and more profiles of countries within a region. The

xiii

number of pages has increased, from the opening chapter on the“Global Leaders and Culture,” to the “Epilogue,” both of which sum-marize the book’s themes and projects ahead. The expanded 7th editionis still organized within two units, “Cultural Impacts on Global Man-agement,” consisting of ten chapters; and “Regional Cultural Specifics”with lengthened coverage in the final six chapters. The United Nationsrecognizes 226 nations in the world; obviously, we could not treat alltheir unique cultures in this text. Instead, we choose a representativesample to provide culture specifics in terms of six major regions – NorthAmerica, Latin America, Asia, Europe, the Middle East, and Africa.

Just as organizations are being “re-invented and re-engineered,” sotoo is this publication. Yet, in our content, especially in the manyexhibits, we still seek a balance of theory and practice, as well asbetween research findings and models. Perhaps this may partiallyexplain why Managing Cultural Differences has been so popular andlasted so long. Although this work has always been written for bothpractitioners and students, we recognize that many of our readers areinstructors in various departments of universities and colleges, or incorporate human resource development (HRD).

We welcome your continued evaluation as to how Managing Cul-tural Differences, both as a book and as a series, can better serve yourneeds.

Robert T. Moran, Ph.D.Scottsdale, Arizona, U.S.A.

Philip R. Harris, Ph.D.LaJolla, California, U.S.A.

Sarah V. Moran, M.A.Montreal, Quebec, Canada

xiv

ACKNOWLEDGMENTS

The seventh edition would not have been possible without the talentand commitment of many people whom we wish to acknowledge.

Karen Maloney, our editor at Elsevier/Butterworth Heinemann isalways engaging and personal to speak with and gentle, yet clear in her requests and expectations of authors. Dennis McGonagle, also ofElsevier gets answers to all questions and responds quickly to requests.Jay Donahue is a project manager/leader at Elsevier and used his bestskills in bringing our materials forward. We thank the Elsevier team.

We especially thank Lewis B. Campbell, Chairman, President andCEO of Textron Inc. for writing the Foreword. His words were fewbut they brilliantly integrated trends in our global world with conceptsin our book. Thanks Lewis.

Over the years many individuals have allowed us to use portions oftheir research. We wish to thank Nancy Baldwin, Maria Brightbill,Wayne Conway, Joseph Douress, Terry Finnegan, Ralph Krueger,Richard Lewis, Carl Nelson and Corrine Pfund, Laurel Cool, MaryMitchell, Mary Pietanza, Jeni Chavez, Cecile C. Ramirez de Arellano,Jie Zhang Yuanlim, Kim Sung-do, B.W. Lee, Yoon Park, RebekhabHenry, Regina Sy-Facunda, Raj Kohli, William Everett, FerandoGarcia-Pretel, Eduardo Magailanes, Sato Masatoshi, Barbara Good-man, Karin Romano, Ardnt Luebbers, Larissa Koursova, ByungKi An,John Bechtold, Biswajiit Mukherjie, Eric-Jan Van der Byl, Kristen Kelly,Elizabeth Moran de Longeaux, Sebastien de Longeaux and MollyHanley.

We thank Jamie Gelbtuch for checking the demographics. We areconfident of their accuracy. Molly Moran Hyland prepared the index.A good index helps readers find interesting topics quickly.

In the seventh edition, graduates of Thunderbird, Chris Menn andMaryellen Toffle wrote the excellent sections on Brazil and Italy basedon their years of living and working in these countries. These sectionsare among the best “culture specific” profiles in the book.

xv

We also acknowledge and thank the many professors and other usersof the text and Instructor’s Guide who gave us feedback about ourwork. We have incorporated many of these suggestions in the seventhedition. We especially thank the professors who use the text and theInstructor’s Guide and who allowed us to interview them about changesand improvements.

Many feature articles in two outstanding international magazines,namely, The Economist of London and the National Geographic ofWashington, D.C. have been most helpful.

Finally, Judith E. Soccorsy, always in good cheer, skillfully assistedfrom beginning to end. Thank you.

Robert T. Moran, Philip R. Harris, Sarah V. Moran

xvi

UNIT 1

CULTURAL IMPACTS ONGLOBAL MANAGEMENT

“A global manager is set apart by more than a worn suitcaseand a dog-eared passport.”

Harvard Business Review, August 2003

“We don’t look so much at what and where people have studied,but rather at their drive, initiative, cultural sensitivity. . . .”

Stephen Green, Group CEO, HSBC Harvard Business Review, August 2003

The world is

flat.

2

1GLOBAL LEADERSAND CULTUREVérité en-deça des Pyrénées, erreur au delà. (There are truths on this

side of the Pyrenees that are falsehoods on the other.)1

In 1492 Christopher Columbus set sail for India, going west . . . hecalled the people he met “Indians” and came home and reported to hisking and queen. “The world is round.” I set off for India 512 years later. . . I went east . . . I came home and reported only to my wife and onlyin a whisper: “The world is flat.”2

The real voyage of discovery consists not in seeking new landscapesbut in having new eyes.—Marcel Proust, French novelist, 1871–1922

More people will graduate in the United States in 2006 with sportsexercise degrees than electrical engineering degrees. So, if we want to bethe massage capital of the world, we’re well on our way.3

LEARNING OBJECTIVES

In the twenty-first century, leaders in business, government and theprofessions cope with the phenomenon of globalization. It promptsthem to cross borders more frequently and to communicate withpersons from other cultures either in person or electionally.

This chapter provides a rationale and an imperative for all individ-uals working “globally” to understand and respect their counterpartsand to develop the skills required to work effectively in today’s complexworld. Ways to analyze and understand other cultures are presented,along with how to use the suggested strategies. Seeing global issuesthrough “multiple lens” or “by hearing with new ears” is also important.

Why does the world appear flat to some, round to others, and whatare the advantages or disadvantages of either? Thomas Friedman writesabout his insights during an interview with Nandan Nilekani, CEO ofInfosys Technologies Limited.

“Outsourcing is just one dimension of a much more fundamental thinghappening today in the world,” Nilekani explained. “What happenedover the last (few) years is that there was a massive investment in tech-nology, especially in the bubble era, when hundreds of millions of dollarswere invested in putting broadband connectivity around the world,undersea cables, all those things.” At the same time, he added, comput-ers became cheaper and dispersed all over the world, and there was anexplosion of software-e-mail, search engines like Google, and proprietarysoftware that can chop up any piece of work and send one part toBoston, one part to Bangalore, and one part to Beijing, making it easyfor anyone to do remote development. When all of these things suddenlycame together around 2000, added Nilekani, they created a platformwhere intellectual work, intellectual capital, could be delivered from any-where. It could be disaggregated, delivered, distributed, produced andput back together again—and this gave a whole new degree of freedomto the way we do work, especially work of an intellectual nature . . . Andwhat you are seeing in Bangalore today is really the culmination of allthese things coming together.4

The point is the playing field in the global marketplace is beingleveled for some and thus “flat.” That is an advantage for many and adisadvantage for others. In either view, cultural competing is a require-ment. Culture does count.

The authors of this book have worked for global organizations formany years. In the 1960s and early 1970s, we had to convince manybusiness and government leaders that “culture counts.” From theindustrialized world, the perspective often voiced was “we tell themwhat to do and if they want to work with us, they do it.” This is rarelythe situation today.

We no longer have to convince anyone with any global experiencethat culture counts. And when organizations, nongovernmental orga-nizations (NGOs), and political organizations ignore, dismiss, or min-imize culture, the costs are often significant. This chapter will presentproven frameworks, models, and paradigms relevant to working skillfully in today’s global business and geopolitical world. We believemanaging cultural differences skillfully for all individuals, organizations,nongovernmental organizations (NGOs), and governments from allcountries is a human and business imperative. Understanding the envi-ronment is a fundamental requirement for maintaining a competitiveadvantage. To successfully adapt to changes in the environment is arequirement for survival. Culture impacts relationships and businessoperations. Schein states it profoundly:

Culture does

count.

G L O B A L L E A D E R S A N D C U LT U R E 3

Consider any complex, potentially volatile issue—Arab relations, theproblems between Serbs, Croats, and Bosnians, corporate decisionmaking, getting control of the U.S. deficit, or health-care costs,labor/management relations, and so on. At the root of the issue, we arelikely to find communication failures and cultural misunderstandingsthat prevent the parties from framing the problem in a common way,and thus make it impossible to deal with the problem constructively.5

McNamara et al. cite a dialogue about the Vietnam War betweenColonel Herbert Schandler and Colonel Quach Hai Luong that illus-trates dramatically the importance of culture in perception.6 The dia-logue took place in Hanoi in 1998, when military historians from theUnited States and Vietnam came together to try to understand thelessons of the Vietnam War to be carried forward to the twenty-firstcentury.

Colonel Quach Hai Luong: I want to ask you: What do you think theAmerican objectives were in Vietnam?

Colonel Herbert Schandler: Our objectives in Vietnam, as stated byour various presidents, were the following. First, to establish an inde-pendent, noncommunist South Vietnam whose people had the ability tochoose their own leaders and form of government. A second objectivewas to convince North Vietnam—not to defeat or crush or obliterateNorth Vietnam—but to convince North Vietnam not to impose its willon the South by means of military force. We had no burning desire evento harm North Vietnam in any way. We just wanted to demonstrate toyou that you could not win militarily in the South.

Colonel Quach Hai Luong: But Colonel Schandler, if I may say so, thiswas a critical difference between your understanding of the situation andour understanding of it. Let me put it this way: your fundamentalassumption is that Vietnam was two distinct—two rightfully indepen-dent—countries. On that basis, your objectives and strategies follow. Wedid not make that distinction. We saw only one country. All our strate-gies were based on this basic premise: that Vietnam is one country, unfor-tunately and artificially divided in two. Our war was for the purpose ofprotecting our independence and maintaining our national unity.

Now imagine, how different the outcomes of the Vietnam War mighthave been if at the beginning of this conflict the military leaders andnegotiators of their respective countries had used sophisticatedproblem-solving skills and dug deeper to understand the cultural meanings and implications of their actions and behind their publicstatements about the war. The same might be said of present conflictsin Afghanistan and Iraq.

Also supporting the notion that “culture” is important is AlanGreenspan, former chairman of the United States Federal Reserve.Greenspan stated that he originally believed that capitalism was “humannature.”7 After the collapse of the Soviet economy, however, he con-

At the root of

the issue, we are

likely to find

communication

failures and

cultural

misunderstandings.

4 M A N A G I N G C U LT U R A L D I F F E R E N C E S

cluded that “it was not human nature at all, but culture.” Culture isfinding it’s place of significance in the experience of global individuals.

Cultures have always been distinct, mostly separate and independent.Over the past 100 years, and especially during the last 25, cultures andnations have remained unique but have become increasingly more inter-connected in complex and nonobvious ways. This book covers manytopics, but the threads of culture, differences, and leadership runthroughout.

“In the early 1990s I happened to come across early 1960s economicdata on Ghana and South Korea, and I was astonished to see how similartheir economies were at that time. These two countries had roughly com-parable levels of per capita gross national product (GNP); similar divi-sions of their economy among primary products, manufacturing, andservices; and overwhelmingly primary product exports, with SouthKorea producing a few manufactured goods. They were also receivingcomparable levels of economic aid. Thirty years later, South Korea hadbecome an industrial giant with the fourteenth largest economy in theworld. No such changes had occurred in Ghana, whose per capita GNPwas now about one-fifteenth that of South Korea’s. How could thisextraordinary difference in development be explained? Undoubtedly,many factors played a role, but it seemed to me that culture had to bea large part of the explanation. South Koreans value thrift, investment,hard work, education, organization, and discipline. Ghanaians had dif-ferent values.8 In short, culture counts.”

Diamond’s9 statement that, “We all know that history has proceededvery differently for peoples from different parts of the globe,” is onewe can all agree with. The specific data that humans all came fromAfrica is not disputed. Diamond questions why did different peopledevelop in different ways. His answer, “History followed differentcourses for different peoples because of differences in peoples’ envi-ronments, not because of biological differences among peoples themselves.”10

Change is also a part of our daily lives and impacts all. If culturecounts managing cultural differences or skillfully leading in a globalworld becomes of paramount importance. Most of the following eventstook place after the year 2000 and share aspects of culture, differences,conflict, consequences, and leadership.

■ SARS (Severe Acute Respiratory Syndrome) which sometimes canlead to the death of an infected person migrates from China throughHong Kong to Taipei, Singapore, Canada, and other countries.

■ EU has expanded to 25 countries with many more countries desir-ing inclusion.

■ Hong Kong is returned to the People’s Republic of China.■ Good Friday Peace Accords signed in Northern Ireland.■ North Korea restarts its nuclear program.

Cultures have

always been

distinct.

G L O B A L L E A D E R S A N D C U LT U R E 5

■ The World Trade Center and the Pentagon are attacked by terrorists.

■ A coalition of nations undertakes a “War on Terror” in Afghanistanagainst the Taliban regime and the al-Qaeda terrorism network.

■ AIDS continues to ravage many countries, including Africa, and isspreading to India, China, Russia, and many other countries.

■ Saddam Hussein, the United States invades Iraq. Onsay and UdayHussain, his sons, are killed by U.S. troops.

■ The Darfur crisis begins in the Sudan with Arabs and black Muslimsfighting.

■ The H5N1 strain of bird flu emerges in Southeast Asia.■ Bombs are set off in railway stations in Madrid, killing 202 and injur-

ing more than 1400.■ Terrorist seize a grammar school in Breslan, Russia.■ Afghanistan holds a democratic presidential election.■ The Indian Ocean tsunami kills more than 275,000.■ London terrorist bombings kill 52 and injure approximately 700.■ Hurricane Katrina, a Category 5 hurricane, causes catastrophic

damage in Louisiana, Mississippi, and Alabama.■ The Prophet Muhammad cartoon controversy sparks riots.■ An earthquake in Pakistan kills more than 81,000 people and leaves

approximately 3 million homeless.■ Hamas wins 76 of 132 seats in the Palestinian legislative elections.■ Nuclear technology continues to proliferate.

CULTURE AND ITS CHARACTERISTICS

Culture is a distinctly human means of adapting to circumstancesand transmitting this coping skill and knowledge to subsequent gener-ations. Culture gives people a sense of who they are, of belonging, ofhow they should behave, and of what they should be doing. Cultureimpacts behavior, morale, and productivity at work, and includesvalues and patterns that influence company attitudes and actions.Culture is dynamic. Cultures change . . . but slowly.

Culture is often considered the driving force behind human behav-ior everywhere. The concept has become the context to explain poli-tics, economics, progress and failures. In that regard Huntington11 haswritten:

It is my hypothesis that the fundamental source of human conflict inthis new world will not be primarily ideological or primarily economic.The great divisions among humankind and the dominating source of con-flict will be culture.

Culture and cultural identities . . . are shaping the patterns of cohesion,disintegration, and conflict in the post-cold war world. Global politics isbeing reconfigured along cultural lines . . . peoples and countries with

Culture is often

considered the

driving force

behind human

behavior

everywhere.

6 M A N A G I N G C U LT U R A L D I F F E R E N C E S

similar culture are coming together. Peoples and countries with differentcultures are coming apart.

Prior to entering a new market, forming a partnership or buying acompany, organizations spend time and money on “due diligence.” Theaccuracy and sophistication of the financial market, product, and otheraspects of this business endeavor are essential in the decision making,and are often a key determinant of eventual success. What is forgottenor minimized in both the business and politics is “cultural due dili-gence.” The following models or frameworks on cultural analysis mightbe important in any due diligence exercise that has a cultural compo-nent. Chomsky12 demonstrates his ability to master an incrediblewealth of factual knowledge, and his skills exemplify political due dili-gence. Lewis13 demonstrates the importance of cultural due diligencefor business.

The following ten categories are a means for understanding either amacroculture or a microculture and can be useful for studying anygroup of people, whether they live in the rural South of the UnitedStates, India, the bustling city of Hong Kong, Banglore, Arusha in Tanzania or Bagdad in Iraq.

Sense of Self and Space. The comfort one has with self can beexpressed differently by culture. Self-identity and appreciation can bemanifested by humble bearing in one culture and by macho behaviorin another. Independence and creativity are countered in other culturesby group cooperation and conformity. Americans have a sense of spacethat requires more distance between individuals, while Latins and Vietnamese will stand closer together. Some cultures are very structuredand formal, while others are more flexible and informal.

Communication and Language. The communication system, verbaland nonverbal, distinguishes one group from another. Apart from themultitude of “foreign” languages, some nations have fifteen or moremajor spoken languages (within one language group there are dialects,accents, slang, jargon, and other such variations). Furthermore, themeanings given to gestures, for example, often differ by culture. So,while body language may be universal, its manifestation differs by local-ity. Subcultures, such as the military, have terminology and signals thatcut across national boundaries (such as a salute or the rank system).

Dress and Appearance. This includes the outward garments andadornments, or lack thereof, as well as body decorations that tend tobe culturally distinctive. We are aware of the Japanese kimono, theAfrican headdress, the Englishman’s bowler and umbrella, the Polyne-sian sarong, and the Native American headband. Some tribes smeartheir faces for battle, while some women use cosmetics to manifestbeauty. Many subcultures wear distinctive clothing: the formal look ofbusiness, the jeans worn by youth throughout the world, and uniformsthat segregate everyone from students to police.

G L O B A L L E A D E R S A N D C U LT U R E 7

Food and Feeding Habits. The manner in which food is selected, pre-pared, presented, and eaten often differs by culture. One man’s pet isanother person’s delicacy. Americans love beef, yet it is forbidden toHindus, while the forbidden food in Muslim and Jewish culture is nor-mally pork, eaten extensively by the Chinese and others. Many restau-rants cater to diverse diets and offer “national” dishes to meet varyingcultural tastes. Feeding habits also differ, ranging from hands and chopsticks to full sets of cutlery. Even when cultures use a utensil such as afork, one can distinguish a European from an American by which handholds the implement.

Time and Time Consciousness. Sense of time differs by culture: some are exact and others are relative. Generally, Germans are preciseabout the clock, while many Latins are more casual. In some cultures,promptness is determined by age or status. Thus, in some countries,subordinates are expected on time at staff meetings, but the boss is thelast to arrive. Yet, there are people in some other cultures who do notbother with hours or minutes, but manage their days by sunrise andsunset.

Time, in the sense of seasons of the year, varies by culture. Someareas of the world think in terms of winter, spring, summer, and fall;but for others the more meaningful designations may be rainy or dryseasons. In the United States, for example, the East and Midwest may be very conscious of the four seasons, while those in the West orSouthwest tend to ignore such designations—Californians are moreconcerned with rainy months and mudslides or dry months and forestfires.

Many industries operate on round-the-clock schedules. This is theconcern of chronobiologists who specialize in research on the body’sinternal clock by analysis of body temperature, chemical compositionof blood serum and urine, sleepiness, and peak periods of feeling good.Drastic changes in time, such as can be brought on by shift work, canundermine both performance and personal life, leading to serious acci-dents on the job.

Relationships. Cultures fix human and organizational relationshipsby age, gender, status, and degree of kindred, as well as by wealth,power, and wisdom. The family unit is the most common expressionof this characteristic, and the arrangement may go from small to large—in a Hindu household, the joint family includes under one roof, mother,father, children, parents, uncles, aunts, and cousins. In fact, one’s physical location in such houses may also be determined, with maleson one side of the house, females on the other. There are some placeswhere the accepted marriage relationship is monogamy, while in other cultures it may be polygamy or polyandry (one wife, several husbands).

In some cultures, the authoritarian figure in the family is the head male, and this fixed relationship is then extended from home to

8 M A N A G I N G C U LT U R A L D I F F E R E N C E S

community, explaining why some societies prefer to have a dictatorhead up the national family. Relationships between and among peoplevary by category—in some cultures, the elderly are honored, whereasin others they are ignored; in some cultures, women must wear veilsand appear deferential, while in others the female is considered theequal, if not the superior of the male.

The military subculture has a classic determination of relationshipsby rank or protocol, such as the relationship between officers andenlisted personnel. Even when off duty, on base the recreational facilities are segregated for officers, noncommissioned, and enlisted personnel. The formalization of relationships is evident in some reli-gious subcultures with titles such as reverend, guru, pastor, rabbi, orbishop.

Values and Norms. The need systems of cultures vary, as do the pri-orities they attach to certain behavior in the group. Those operating ona survival level value the gathering of food, adequate covering, andshelter, while those with high security needs value material things,money, job titles, as well as law and order. Many countries are in the midst of a values revolution. In some Pacific Island cultures, thegreater one’s status becomes, the more one is expected to give away orshare.

In any event, from its value system, a culture sets norms of behav-ior for that society. These acceptable standards for membership mayrange from work ethic or pleasure to absolute obedience or permis-siveness for children; from rigid submission of the wife to her husbandto a more equal relationship. Because conventions are learned, somecultures demand honesty with members of one’s own group but accepta more relaxed standard with strangers. Some of these conventions are expressed in gift-giving; rituals for birth, death, and marriage;guidelines for privacy; a show of respect or deference; expression ofgood manners, and so on. The globalization process and telecommu-nications are leading to the development of some shared values thatcross borders and express planetary concerns, such as protection of theenvironment.7

Beliefs and Attitudes. Possibly the most difficult classification isascertaining the major belief themes of a people and how this and otherfactors influence their attitudes toward themselves, others, and whathappens in their world. People in all cultures seem to have a concernfor the supernatural that is evident in their religions and religious practices. In the history of human development, there has been an evolution in our spiritual sense so that today many individuals use termslike cosmic consciousness to indicate their belief in the transcendentalpowers. Between these two extremes in the spiritual continuum, reli-gious traditions in various cultures consciously or unconsciously influ-ence our attitudes toward life, death, and the hereafter. Western cultureseems to be largely influenced by the Judeo-Christian-Islamic traditions,

From its value

system, a culture

sets norms of

behavior for that

society.

G L O B A L L E A D E R S A N D C U LT U R E 9

while Eastern or Asian cultures have been dominated by Buddhism,Confucianism, Taoism, and Hinduism. Religion, to a degree, expressesthe philosophy of a people about important facets of life—it is influ-enced by culture and vice versa.

Mental Process and Learning. Some cultures emphasize one aspectof brain development over another so that one may observe strikingdifferences in the way people think and learn. Anthropologist EdwardHall maintains that the mind is internalized culture, and the mentalprocess involves how people organize and process information. Life ina particular locale defines the rewards and punishment for learning ornot learning certain information or in a certain way, and this is con-firmed and reinforced by the culture. For example, Germans stresslogic, while logic for a Hopi Indian is based on preserving the integrityof their social system and all the relationships connected with it. Somecultures favor abstract thinking and conceptualization, while othersprefer rote memory and learning. What seems to be universal is thateach culture has a reasoning process, but then each manifests theprocess in its own distinctive way.

Work Habits and Practices. Another dimension of a group’s cultureis its attitude toward work—the dominant types of work, the divisionof work, and the work habits or practices, such as promotions or incentives. Work has been defined as exertion or effort directed toproduce or accomplish something. Some cultures espouse a work ethicin which all members are expected to engage in a desirable and worth-while activity. In other societies this is broadly defined to include cul-tural pursuits in music and the arts or sports. For some cultures, theworthiness of the activity is narrowly measured in terms of income pro-duced, or the worth of the individual is assessed in terms of job status.In Japan, the cultural loyalty to family is transferred to the organiza-tion that employs the person and the quality of one’s performance—it is expressed in work group participation, communication, and consensus.

Another way of observing a culture is to note the manner and methodof offering praise for accomplishments, which can include testimonialdinners, pay increases, commendations, and medals.

These ten general classifications are a basic model for assessing a par-ticular culture. It does not include every aspect of culture, nor is it theonly way to analyze culture. This approach enables one to examine apeople systemically. The categories are a beginning means of culturalunderstanding as one travels and visits different cultures. Likewise, themodel can be used to study the microcultures within a majority nationalculture. All aspects of culture are interrelated, and to change one partis to change the whole. There is a danger in trying to compartmental-ize a complex concept like culture, while trying to retain a sense of itswhole. Culture is a complex system of interrelated parts that must beunderstood holistically.

Culture is a

complex system

of interrelated

parts that must

be understood

holistically.

10 M A N A G I N G C U LT U R A L D I F F E R E N C E S

SYSTEMS APPROACH TO CULTURE

There are many different anthropological approaches to culturalanalysis, and many prefer to use a coordinated systems approach as analternative to understanding other cultures. A system, in this sense,refers to an ordered assemblage or combination of correlated parts thatform a unitary whole.14

Kinship System—the family relationships and the way a peoplereproduce, train, and socialize their children. The typical North Amer-ican family is a nuclear and rather independent unit. In many coun-tries, there may be an extended family that consists of severalgenerations held together through the male line (patrilineal) or throughthe female line (matrilineal). Such families have a powerful influenceon child rearing, and often on nation building. Family influences andloyalties can affect job performance or business negotiations.

Educational System—how young or new members of a society areprovided with information, knowledge, skills, and values. Educationalsystems may be formal and informal within any culture. How peoplelearn varies by culture.

Economic System—the manner in which the society produces anddistributes its goods and services. The Japanese economic system is insome ways an extension of the family and is group-oriented. Untilrecently, the world was divided into capitalistic or socialistic economicblocks, and economies were labeled First World (advanced free enter-prise systems); Second World (socialist or communistic societies basedon centralized planning and control; and Third World (developingnations moving from the agricultural to industrial or post-industrialstages). These categories are now outdated. Today, economies aremixed—some supposed Third World economies have high technologysectors, as in India and China; and Second World, formerly in the European Eastern Bloc, are in transition to free market systems, suchas in Poland or Lithuania. Another trend beyond national economiesis toward regional economic cooperatives or association that cut acrossnational and ideological boundaries, such as is happening with NAFTAand the European Union. Macroeconomics is the study of such systems.

Political System—the dominant means of governance for maintain-ing order and exercising power or authority. Some cultures are tribalwhere chiefs rule, others have a ruling royal family with an operatingking, while some prefer democracy.

Religious System—the means for providing meaning and motivationbeyond the material aspects of life, that is, the spiritual side of a cultureor its approach to the supernatural. This transcending system may lifta people to great heights of accomplishment, as is witnessed in the pyra-mids of Egypt and the Renaissance of Europe. It is possible to projectthe history and future of India, for instance, in terms of the impact of

How people

learn varies by

culture.

G L O B A L L E A D E R S A N D C U LT U R E 11

its belief in reincarnation, which is enshrined in its major religion.Diverse national cultures can be somewhat unified under a shared reli-gious belief in Islam or Christianity, for example. In some countries,Islam is becoming the basis for governance, legal, and political systems.In others, religion dominates legal and political systems, such asJudaism in Israel or Roman Catholicism in the Republic of Ireland. Theinfluence of religion is culturally weakening in some states, as withRoman Catholicism in France and Lutheranism in Sweden. Religioncan also be a source of divisiveness and conflict in society, for example,Northern Ireland; the former Yugoslavia (especially Bosnia andKosovo); and Africa (including Algeria and Rwanda). Unfortunately,history demonstrates that in the name of religion, zealots and extrem-ists may engage in culturally repressive behavior, such as religious persecutions, ethnic cleansing, terrorism of nonbelievers, and even“holy” wars.

Association System—the network of social groupings that peopleform, whether in person or electronically. These may range from fra-ternal and secret societies to professional/trade associations. Some cul-tures are very group oriented and create formal and informalassociations for every conceivable type of activity (e.g., the culture inthe United States). In some countries, families organize into clans,finding it difficult to work together for the common national good, asin Afghanistan and Iraq. Other societies are individualistic and avoidsuch organizing, such as in France.

Health System—the way a culture prevents and cures disease orillness, or cares for victims of disasters or accidents. The concepts ofhealth and wholeness, well-being, and medical problems differ byculture. Some countries have witch doctors, spiritual remedies, andherb medications. Others, like India, have fewer government-sponsoredsocial services, while Britain has a system of socialized medicine. TheUnited States is in the midst of a major transition in its health-care anddelivery system, and there is increasing emphasis on universal cover-age, prevention and wellness health models, and alternative holisticmedical treatments. Medical practitioners can be culturally biased. Forexample, Western medicine tended to ignore folk medicine, especiallyin Asia and Africa. Fortunately, in this century modern health-careworkers are more open and are even practicing cross-cultural medicine.If the method or cure relieves pain and suffering without causing harm,they are willing to try and even adopt it.

Recreational System—the ways in which a people socialize or usetheir leisure time. What may be considered play in one culture may beviewed as work in another and vice versa. In some cultures “sport” hasconsiderable political implications, in others it is solely for enjoyment,while in still others it is big business. Some cultures cherish the creativeand performing arts, providing financial support for artists and musi-cians. Certain types of entertainment, such as a form of folk dancing,

The concepts of

health and

wholeness,

well-being,

and medical

problems differ

by culture.

12 M A N A G I N G C U LT U R A L D I F F E R E N C E S

seem to cut across cultures. Global communications are forcefullyimpacting the media and entertainment industries. Music, sports, films,and special cultural or athletic events can be quickly broadcast world-wide. As a result, the youth subculture has similar tastes that go beyondnational differences. The mass media and Internet become forums forelectronic commerce and exchange in terms of leisure and recreation.

KEY CULTURAL TERMINOLOGY

The specialists who make a formal study of culture use terms thatmay be helpful to those trying to comprehend the significance of thisphenomena in business or international life.

Patterns and Themes

Some cultural anthropologists search for a single integrated patternto describe a particular culture. Thus, the Pueblo Indians may be des-ignated as “Apollonian”—people who stick to the “middle of the road”and avoid excess or conflict in their valuing of existence. To pinpointa consistent pattern of thought and action in a culture is difficult, soother scholars prefer to seek a summative theme. This is a position,declared or implied, that simulates activity and controls behavior; it isusually tacitly approved or openly promoted in the society. One cannote that in most Asian cultures there is a “fatalism” theme, while inthe American business subculture the theme is profits or the “bottomline.”

Explicit and Implicit

Some aspects of culture are overt, while others are covert. Anthro-pologists remind us that each different way of life makes assumptionsabout the ends or purposes of human existence, about what to expectfrom each other, and about what constitutes fulfillment or frustration.Some of this is explicit in folklore and may also be manifest in law, regulations, customs, or traditions. Other aspects are implicit in theculture, and one must infer such tacit premises by observing consistenttrends in word and deed. The distinction between public and hiddenculture points up how much of our daily activity is governed by pat-terns and themes, the origin or meaning of which we are only dimlyaware, if not totally unaware. Such culturally governed behavior facil-itates the routine of daily living so that one may perform in a societymany actions without thinking about them. This cultural conditioningprovides the freedom to devote conscious thinking to new and creativepursuits. It is startling to realize that some of our behavior is not

Some aspects of

culture are overt,

while others are

covert.

G L O B A L L E A D E R S A N D C U LT U R E 13

entirely free or consciously willed by us. At times this can be a nationalproblem, such as when a society finally realizes that implicit in itsculture is a form of racism, which requires both legislation and educa-tion to rectify. Most cultures tend to discriminate against certain groupsand believers, and this too may be covert. Thus, there is a global move-ment to rectify such bias toward women, gays, and ethnic or racialminorities, as well as any outsider or foreigner.

Micro- or Subcultures

Within a larger society, group, or nation sharing a common major-ity or macroculture, there may be subgroupings of people possessingcharacteristic traits that distinguish them from the others. These sub-cultures may be described in group classification by age, class, gender,race, or some other entity that differentiates this micro- from themacroculture. Youth, or more specifically teenagers, share certain cul-tural traits, as do other ethnic groups. There are many microcultures,such as white- or blue-collar workers, police or the military, college stu-dents or the drug culture. Within a particular religious culture, theremay be many sects or subcultures. As with any profession or vocationalfield that also has unique cultures, there are differing specialties andfocus that are subcultures of the main group. Academia has a generalculture and many subdivisions by discipline of study or specialization.The application of this concept is endless.

Universals and Diversity

The paradox of culture is the commonalties that exist in the midstof its diffusion or even confusion. There are generalizations that maybe made about all cultures that are referred to as universals: age-grading, body adornments, calendar, courtship, divisions of labor, education, ethics, food taboos, incest and inheritance rules, language,marriage, mourning, mythology, numerals, penal sanctions, propertyrights, supernatural beliefs, status differentiation, toolmaking andtrade, visiting, weaning, etc. Thus, certain activities occur across cul-tures, but their manifestation may be unique in a particular society. Andthat brings us to the opposite concept of cultural diversity. Some formof sports or humor or music may be common to all peoples, but theway in which it is accomplished is distinctive in various cultural groupings.

Rational/Irrational/Nonrational Behavior

There are many definitions of culture. Consider it as historicallycreated designs for living that may be rational, irrational, and non-rational. Rational behavior in a culture is based on what that group

Most cultures

tend to

discriminate

against certain

groups and

believers.

14 M A N A G I N G C U LT U R A L D I F F E R E N C E S

considers reasonable for achieving its goals. Irrational behavior devi-ates from the accepted norms of a society and may result from an indi-vidual’s deep frustration in trying to satisfy needs; it would appear tobe done without reason and possibly largely as an emotional response.Nonrational behavior is neither based on reason, nor against reason-able expectations—it is dictated by one’s own culture or subculture. Agreat deal of behavior is of this type, and we are unaware of why wedo it, why we believe what we do, or that we may be biased or preju-diced from the perspective of those outside our cultural group. Howoften and when to take a bath frequently is a cultural dictate, just aswhat food constitutes breakfast. What is rational in one culture maybe irrational in another, and vice versa.

Tradition

This is a very important aspect of culture that may be expressed inunwritten customs, taboos, and sanctions. Tradition can program apeople as to what are proper behavior and procedures relative to food,dress, and to certain types of people, what to value, avoid, or de-emphasize. As the song on the subject of “tradition” from the musicalFiddler on the Roof extols:

Because of our traditions, we keep our sanity. . . . Tradition tells ushow to sleep, how to work, how to wear clothes . . . How did it getstarted? I don’t know—it’s a tradition. . . . Because of our traditions,everyone knows who he is and what God expects of him!15

Traditions provide a people with a “mind-set” and have a powerfulinfluence on their moral system for evaluating what is right or wrong,good or bad, desirable or not. Traditions express a particular culture,giving its members a sense of belonging and uniqueness. But whetherone is talking of a tribal or national culture, a military or religious sub-culture, traditions should be reexamined regularly for their relevanceand validity. Mass global communications stimulate acquisition of newvalues and behavior patterns that may more rapidly undermine ancient,local, or religious traditions, especially among women and youngpeople worldwide.

The following struck the authors’ imagination when a manager fora high tech company brought it to our attention namely, tradition andsuperstition express themselves when numbering floors in a hotel. Weadded some observations of our own as well (see Exhibit 1.1).

Some of these cultural variables have been researched and a “cul-tural profile” developed by Schmitz16 for many countries. There are tenconcepts in the model.

1. Environment. Social environments can be categorized accordingto whether they view and relate to people, objects, and issues

Traditions

provide a people

with a “mind-

set.”

G L O B A L L E A D E R S A N D C U LT U R E 15

A present

orientation is

indicated by

placing a focus

on short-term

and quick

results.

16 M A N A G I N G C U LT U R A L D I F F E R E N C E S

from the orientation of control (change environment), harmony(build balance), or constraint (external forces set parameters).

2. Time. A past orientation is indicated by placing a high value onpreestablished processes and procedures. A present orientationis indicated by placing a focus on short-term and quick results.A future orientation is indicated by placing a focus on long-termresults.

3. Action. Social environments can be distinguished by theirapproach to actions and interactions. An emphasis on relation-ships, reflection, and analysis indicates a being orientation. Afocus on task and action indicates a doing orientation.

4. Communication. An emphasis on implicit communication andreliance on nonverbal cues indicates high-context orientation. Alow-context orientation is indicated by a strong value on explicitcommunication.

5. Space. Cultures can be categorized according to the distinctionsthey make between public and private spaces.

EXHIBIT 1.1COUNTING ELEVATOR FLOORS

It is quite normal in the United States to see the 13th floor absentin the selection of floors on the elevator directory panel. This is due,of course, to our cultural bias regarding the number 13 being“unlucky.” By omitting it in the numbering sequence of the hotelfloors, one avoids the anxiety of a superstitious customer. After enter-ing the Hai-Li Hotel elevator in China and punching in my floorselection, I quickly noticed that not only was number 13 absent, but14 was as well. As one rose to the higher floors in the hotel, onepassed from floor number 12 to floor number 15. I mentioned thisto my friends, and they assured me that the Chinese culture had anaversion to an unlucky number as well, only it was number 14. Soour culturally astute hotel had decided to delete both numbers, thusshowing their sensitivity (and respect) to both cultures, whileshowing favor to neither. Similarly in some countries, the custom isto designate the entrance floor as the “ground” floor, while the nextfloor becomes labeled the “first” floor, as the numbering continuesupward. This is confusing to foreigners from countries where theentrance area from the street is known as the “first floor”; theproblem worsens when more floors are being built underground, andas you enter, the visitor may find him or herself on the second oreven third floor. Even basements are being built downward in levels1, 2, 3, etc., and may be given exotic names after fruit or flowers.All this shakes up the staid, but makes the world more interesting.

6. Power. Social environments can be categorized by the way theystructure power relationships. A hierarchy orientation is indi-cated by a high degree of acceptability of differential power rela-tionships and social stratification. An equality orientation isindicated by little tolerance for differential power relationshipsand the minimizing of social stratification.

7. Individualism. An emphasis on independence and a focus on theindividual indicate an individualistic orientation. An emphasison affiliation and subordination of individual interest to that ofa group, company, or organization indicates a collectivistic orientation.

8. Competitiveness. An emphasis on personal achievements, indi-vidual assertiveness, and success indicate a competitive orienta-tion. Valuing quality of life, interdependence, and relationshipsindicates a cooperative orientation.

9. Structure. Environments that value adherence to rules, regula-tions, and procedures are considered order oriented and preferpredictability and minimization of risk. Environments that valueimprovisation exhibit a flexibility orientation and tend to rewardrisk taking, tolerate ambiguity, and value innovation.

10. Thinking. Cultures can expect, reinforce, and reward either adeductive approach (an emphasis on theory, principles, concepts,and abstract logic) or an inductive approach (emphasis on data,experience, and experimentation). They may also either empha-size a linear approach (analysis and segmentation of issues) or asystemic approach (synthesis, holism, and the “big picture”).

Of course, it is important to keep in mind these constructs are notrigid and material diversity illustrates this. Though of the conceptsalong a continuum, where extremes are unlikely and placement is rel-ative, it is this which leads us to Hofstede’s research.

Hofstede’s Early Research

To create opportunities for collaboration, global leaders must learnnot only the customs, courtesies, and business protocols of their coun-terparts from other countries, but they must also understand thenational character, management philosophies, and mind-sets of thepeople. Dr. Geert Hofstede, a European research consultant, has helpedidentify important dimensions of national character. He firmly believesthat “culture counts” and has identified four dimensions of nationalculture:

1. Power distance—indicates “the extent to which a society acceptsthat power in institutions and organizations is distributedunequally.”

He firmly

believes that

“culture counts”

and has

identified four

dimensions of

national culture.

G L O B A L L E A D E R S A N D C U LT U R E 17

2. Uncertainty avoidance—indicates “the extent to which a societyfeels threatened by uncertain or ambiguous situations.”

3. Individualism—refers to a “loosely knit social framework in asociety in which people are supposed to take care of themselvesand of their immediate families only.” Collectivism, the oppo-site, occurs when there is a “tight social framework in whichpeople distinguish between in-groups and out-groups; theyexpect their in-group (relatives, clan, organizations) to look afterthem, and in exchange for that owe absolute loyalty to it.”

4. Masculinity—with its opposite pole, femininity, expresses “theextent to which the dominant values in society are assertiveness,money and material things, not caring for others, quality of life,and people.”

A significant dimension related to leadership in Hofstede’s originalstudy of 40 countries is the power distance dimension. He assigned anindex value to each country on the basis of mean ratings of employeeson a number of key questions.

Exhibit 1.2 shows the positions of the 40 countries on the power dis-tance and uncertainty avoidance scales, and Exhibit 1.3 shows thecountries’ positions on the power distance and individualism scales.

The United States ranked fifteenth on power distance, ninth onuncertainty avoidance (both of these are below the average), fortiethon individualism (the most individualist country in the sample), andtwenty-eighth on masculinity (above average).

In Hofstede’s study the United States ranked fifteenth out of 40 onthe power distance dimension. If this had been higher, then the theo-ries of leadership taught in the United States might have been expectedto be more Machiavellian. We might also ask how U.S. leaders areselected. Most are selected on the basis of competence, and it is theposition of the person that provides his or her authority in the UnitedStates, which is, theoretically at least, an egalitarian society. In France,which has a higher power distance index score, there is little concernwith participative management but great concern with who has thepower.

Even today, French industry and the managers who run it are amixture of the old and the new. France is still, in some ways, a countryof family empires with many paternalistic traditions. There is also aremnant of a feudalistic heritage that is deeply rooted within the Frenchspirit, which could account for the very conservative and autocraticnature of their business methodology. Hofstede has shown that in coun-tries with lower power distance scores than the United States, such asSweden and Germany, there is considerable acceptance of leadershipstyles and management models that are even more participative thanpresently exist. Industrial democracy and codetermination is a style thatdoes not find much sympathy in the United States.

18 M A N A G I N G C U LT U R A L D I F F E R E N C E S

G L O B A L L E A D E R S A N D C U LT U R E 19

EXHIBIT 1.2POSITIONS OF 40 COUNTRIES ON THE POWER

DISTANCE AND UNCERTAINTY AVOIDANCE SCALES

+ • • • • • + • • • • • + • • • • • + • • • • • + • • • • • +

+ • • • • • + • • • • • + • • • • • + • • • • • + • • • • • +

••

••

••

••

••

••

••

••

••

••

••

••

••

••

••

••

••

••

••

••

Power Distance Index

Un

cert

ain

ty A

void

ance

Ind

ex

11 28 44 61 77 94

11 28 44 61 77 94

(4) Small Power Distance/ Weak Uncertainty Avoidance

(1) Large Power Distance/Weak Uncertainty Avoidance

(3) Small Power Distance/ Strong Uncertainty Avoidance

(2) Large Power Distance/Strong Uncertainty Avoidance

• DEN

• CAN

• AUL

• VEN

• MEX

• YUG

• COL

FRA

• TAI

• ITA

• NET

• AUT

SWI

USA •

NOR •

FIN • •

PAK •

SWE•

•SIN

•GER

•PER

•BEL

•IRA

IRE•

GBR•

ISR•

THA•

BRA•

ARG•

SPA•

JAP•

POR•

GRE•

CHL•

TUR• •

HOK•

IND•

PHI•NZL•

SAF•

811131619212427293235374043454851535659616467697275778083858891939699

101104107109112

ARG ArgentinaAUL AustraliaAUT AustriaBEL BelgiumBRA BrazilCAN CanadaCHL ChileCOL ColombiaDEN DenmarkFIN FinlandFRA FranceGBR Great BritainGER Germany (West)

GRE GreeceHOK Hong KongIND IndiaIRA IranIRE IrelandISR IsraelITA ItalyJAP JapanMEX MexicoNET NetherlandsNOR NorwayNZL New ZealandPAK Pakistan

PER PeruPHI PhilippinesPOR PortugalSAF South AfricaSIN SingaporeSPA SpainSWE SwedenSWI SwitzerlandTAI TaiwanTHA ThailandTUR TurkeyUSA United StatesVEN VenezuelaYUG Yugoslavia

20 M A N A G I N G C U LT U R A L D I F F E R E N C E S

Hofstede has demonstrated that in Germany there is high uncertaintyavoidance and, therefore, industrial democracy is brought about first by legislation. In Sweden, where uncertainty avoidance is low,industrial democracy was started with local experiments. Hofstede17,18

continues:

The crucial fact about leadership in any culture is that it is a comple-ment to subordinateship. The Power Distance Index scores . . . are in fact

EXHIBIT 1.3POSITIONS OF 40 COUNTRIES ON THE POWER

DISTANCE AND INDIVIDUALISM SCALES

+ • • • • • + • • • • • + • • • • • + • • • • • + • • • • • +

+ • • • • • + • • • • • + • • • • • + • • • • • + • • • • • +

11 28 44 61 77 94

11 28 44 61 77 94

••

••

••

••

••

••

••

••

••

••

••

••

••

••

••

••

••

••

••

••

Power Distance Index

Ind

ivid

ual

ism

Ind

ex

(4) Small Power Distance/ Collectivist

(1) Large Power Distance/ Collectivist

(2) Large Power Distance/ Individualist

(3) Small Power Distance/ Individualist

• PAK• COL

• SIN

MEX •

IRE •FRA •

AUL •

NET •

BEL •

PHI •

POR •

• PER

• CHL• HOK

• TUR

• IRA

• GER• SWI

• SWE

• DEN

• NZL

• SAF

• BRA

• YUG

• GRE

THA•

•VEN

•JAP

ISR

•SPA

IND•

ARG•

FIN•

NOR•

ITA•

GBR• USA

•

CAN•

AUT• •

•TAI

12141618202224262830323436384042444648505355575961636567697173757779818385878991

based on the values of people as subordinates, not on the values of supe-riors. Whatever a naive literature on leadership may try to make usbelieve, a leader cannot choose his style at will; what is feasible dependsto a large extent on the cultural conditioning of his/her subordinates. Itherefore show . . . a description of the type of subordinateship that,other things being equal, a leader can expect to meet in societies at threedifferent levels of Power Distance, and to which his/her leadership hasto respond. The middle level represents what most likely is found in theU.S. environment.

Where does this leave us as global managers? Perhaps we pick andchoose, and adopt what is appropriate in the home culture. The matteris brought into focus as we examine a specific management system. Theunderlying assumptions regarding leadership in the United States areclearly seen in the practice of management by objectives. This assumesthat a subordinate is independent enough to negotiate meaningfullywith a superior (not too high of a power distance), that both the supe-rior and the subordinate are willing to take risks (a low uncer-tainty avoidance), and that performance is important to both (highmasculinity).

Hofstede continues to demonstrate the importance of cross-culturalresearch as management by objectives (MBO) is applied to Germany.

Let us now take the case of Germany. This is also a below-averagePower Distance country, so the dialogue element in MBO should presentno problem. However, Germany scores considerably higher on Uncer-tainty Avoidance; consequently, the tendency towards accepting risk andambiguity will not be present to the same extent. The idea of replacingthe arbitrary authority of the boss by the impersonal authority of mutu-ally agreed-upon objectives, however, fits the low Power Distance, highUncertainty Avoidance cultural cluster very well. The objectives becomethe subordinates’ “superego.”

The consequences of Hofstede’s conclusions are significant. Leader-ship, decision making, teamwork, organization, motivation, and in facteverything managers do is learned. Management functions are learned,and they are based on assumptions about one’s place in the world.Managers from other business systems are not “underdeveloped”American managers.

Bond’s Confucian Cultural Patterns

Another researcher, Michael H. Bond, believes that the taxonomiesdeveloped by Western scholars have a Western bias.19 In his research,he found four dimensions of cultural patterns: integration, human-heartedness, interpersonal harmony, and group solidarity. The integra-tion dimension refers in a broad sense to the continuum of social

Managers from

other business

systems are not

“underdeveloped”

American

managers.

G L O B A L L E A D E R S A N D C U LT U R E 21

stability. If a person scores high on this dimension, he or she will displayand value the behaviors of tolerance, noncompetitiveness, interpersonalharmony, and group solidarity. Human-heartedness refers to the valuesof gentleness and compassion. People who score high on this dimen-sion value patience, courtesy, and kindness toward others. Moral dis-cipline refers to the essence of restraint and moderation in one’s regulardaily activities. If one scores high on this dimension, the behaviorsvalued are following the middle way, regarding personal desires as neg-ative. The Confucian work dynamic refers to an individual’s attitudeand orientation toward work and life. According to Bond, the behav-iors that are exhibited along this continuum are consistent with theteachings of Confucius.

Kong Fu Zen, renamed Confucius by Jesuit missionaries, was aChinese civil servant who lived during the Warring States Period about2500 years ago. He sought to determine ways in which Chinese societycould move away from fighting among themselves so that through dis-cipline, human relationships, ethics, politics, and business average them-selves harmoniously. He was well known for his wisdom and wit andwas regularly surrounded by followers who recorded his teachings. Con-fucianism is a set of practical principles and ethical rules for daily life.

Confucius taught that people should be educated, skilled, hard-working, thrifty, modest, patient, and unrelenting in all things. Humannature is assumed to be inherently good, and it is the responsibility ofthe individual to train his or her character in these standards of behavior.

Exhibit 1.4 represents a framework for understanding cultural dif-ferences along several dimensions and will be valuable for any personworking in the global world.

Many other researchers including Fons Trompenaars and CharlesHampden-Turner have studied culture and written persuasively onculture’s impact on global business in the twenty-first century.

GLOBAL LEADERS AS INFLUENCERS

A challenge global leaders experience today is how to influenceacross cultures and functions the individuals with whom they work andtheir global partners. Aware of the cultural influences on the personal-ities, motivations, and values of their counterparts, skillful leaders areable to influence others, whether it is by giving orders and directionsto individuals under their authority or by “influencing with authority.”Leaders know what they want to accomplish but how to achieve it andwho are the key people they need to influence to succeed is a routineunknown.

According to Cohen and Bradford20 the following points are key insuccessfully influencing others.

Human-

heartedness

refers to the

values of

gentleness and

compassion.

22 M A N A G I N G C U LT U R A L D I F F E R E N C E S

There are eight

sources of

power.

G L O B A L L E A D E R S A N D C U LT U R E 23

■ Assume any individual, even an adversary, can be an ally.■ Be clear what you want.■ Understand the “cultures” of all those to be influenced.■ Identify your own and others currencies.■ Build the relationships and develop partners.■ Use formal and informal influencing skills.

Exhibit 1.5 shows a model of influence without authority.All leaders have some power, which is the ability to influence others,

inside or outside of an organization or enterprise whether it is a busi-ness, government agency or a nation, to do what you want them to dowhen you want them to do it. The total power of any individual is acombination of formal power or power associated with position plusinformal power, which is personal and a function of one’s skills, exper-tise and credibility.

Verma21 states there are eight sources of power.

■ Legitimate power—derives from position or status■ Persuasive—derives from personal skills and ability in winning others

cooperation■ Contact/network—derives from who we know and our connections■ Information—derives from the information we have and knowledge

of how organizations work■ Expertise—derives from knowledge■ Referent—derives from our reputation in an organization

EXHIBIT 1.4CONTINUUM OF CULTURAL VARIABLES

Group Individual

Collectivity

CULTURE

Egalitarian Hierarchical

Time

Monochronic Polychronic

Predictability Uncertainty

StructurePower

Low Context High Context

Communication

“Ethnocentric”

is defined as

“Belief in the

inherent

superiority of

one’s own group

and culture. . .”

24 M A N A G I N G C U LT U R A L D I F F E R E N C E S

CULTURAL UNDERSTANDING ANDSENSITIVITY

The global leader, sensitive to cultural differences, appreciates apeople’s distinctiveness and effectively communicates with individualsfrom different cultures. A global leader does not impose his/her owncultural attitudes and approaches. Thus, by respecting the cultural dif-ferences of others, we will not be labeled as “ethnocentric,” defined inThe Random House Dictionary as:

Belief in the inherent superiority of one’s own group and culture; itmay be accompanied by a feeling of contempt for those considered asforeign; it views and measures alien cultures and groups in terms of one’sown culture.

Through cross-cultural experiences, we become more broad-mindedand tolerant of cultural “uniqueness.” When this is coupled with someformal study of the concept of culture, we not only gain new insightsfor improving our human relations, but we become aware of the impactof our native culture. Cultural understanding may minimize the impactof culture shock and maximize intercultural experiences, as well asincrease professional development and organizational effectiveness.

EXHIBIT 1.5COHEN-BRADFORD MODEL OF INFLUENCE

WITHOUT AUTHORITY

Assume all arepotential allies

Clarify yourgoals andpriorities

Diagnose theworld of theother person

Dealing withrelationships

Influencethrough give

and take

Identify relevantcurrencies, theirs,

yours

■ Coercive—derives from our ability to punish■ Reward—derives from our ability to reward

Cultural sensitivity should teach us that culture and behavior are rela-tive and that we should be more tentative, and less absolute, in humaninteraction.

The first step in managing cultural differences effectively is increas-ing one’s general cultural awareness. We must understand the conceptof culture and its characteristics before we can fully benefit from thestudy of cultural specifics and a foreign language.

Further, we should appreciate the impact of our specific culturalbackground on our own mind-set and behavior, as well as those of col-leagues and customers with whom we interact in the workplace.22 Thistakes on special significance within a more diverse business environ-ment, often the result of increasing migration from less developed tomore developed economies.

CROSS-CULTURAL LEARNING

To increase effectiveness across cultures, training must be the focusof the job, while education thought of with reference to the individual,and development reserved for organizational concerns. Whether one isconcerned with intercultural training, education, or development, allemployees should learn about the influence of culture and be effectivecross-cultural communicators if they are to work with minorities withintheir own society or with foreigners encountered at home or abroad.For example, there has been a significant increase in foreign investmentsin the United States—millions of Americans now work within theborders of their own country for foreign employers. All along the U.S.-Mexican border, twin plants have emerged that provide for a flow ofgoods and services between the two countries.

A new reality of the global marketplace is the Information Highwayand its impact on jobs and cross-cultural communications. Manyskilled workers in advanced economies are watching their positionsmigrate overseas, where college educated nationals are doing high technology tasks for less pay. The Internet has changed how globalbusiness is and will be conducted for many decades.

Not considering computer language, most international exchangestake place with individuals using English as a second language. Whilea few corporate representatives will travel abroad, the main commu-nication will occur by means of satellites on the Internet throughmodems connected to laptop or personal computers. Offshore opera-tions done electronically in developing countries are stimulated bygrowing software applications that turn skilled tasks into routine work.Cross-cultural sensitivity is essential when participating in teleconfer-ences or video conferences. Electronic media also require appropriateetiquette and protocols to create cultural synergy.

The first step in

managing

cultural

differences

effectively is

increasing one’s

general cultural

awareness.

G L O B A L L E A D E R S A N D C U LT U R E 25

GLOBAL TRANSFORMATIONS

To stay competitive globally more and more corporations are increas-ing their investments and activities in foreign countries. U.S. engineerscan work on a project during the day, and then send it electronicallyto Asia or elsewhere for additional work while they sleep. Such trendsrepresent an enormous challenge for cross-cultural competence. C-BaySystems in Annapolis, Maryland, for instance, transmits U.S. physi-cians’ dictations about patients to their subsidiary operations in Indiawhere they are transcribed into English, sent back to headquarters bycomputer, then the completed version is sent on to the medical officefrom which the communication originated.

Another example of “going global” is seen in personalized service firmssuch as law and accounting. These professions are increasingly engagingin cross-border activities, hiring local practitioners who comprehendtheir own unique culture, language, and legal or accounting systems. Theneed for international expertise and capital is one reason for this trend.Companies of professionals are forming alliances with their foreign coun-terparts such as the Alliance of European Lawyers. To be successful, theacquisition process then requires an integration of national, organiza-tional, and professional cultures. Under these circumstances, culturebecomes a critical factor ensuring business success, particularly with thetwenty-first century trend toward economies of scale favoring large, mul-tidisciplinary