CHAPTER 2

CULTURE

AND

MULTINATIONAL MANAGEMENT

What Is Culture?What Is Culture?

•Culture is the pervasive and shared beliefs, norms, values, and symbols that guide everyday life –transmitted by symbols, stories and rituals

–often taken-for-granted

Levels of CultureLevels of Culture

NATIONALCULTURE

NATIONALCULTURE

BUSINESSCULTURE

NATIONALCULTURE

BUSINESSCULTURE

ORGANIZATIONCULTURE

OCCUPATIONALCULTURE

NATIONALCULTURE

BUSINESSCULTURE

ORGANIZATIONCULTURE

OCCUPATIONALCULTURE

MULTINATIONALMANAGEMENT

Caveats and CautionsCaveats and Cautions

•Stereotyping•Ethnocentrism•Cultural relativism

Two Diagnostic Models to Two Diagnostic Models to Aid the Multinational Aid the Multinational

ManagerManager

•Hofstede’s Model of National Culture

•7d Cultural Dimensions Model

Hofstede’s Model of National Hofstede’s Model of National CultureCulture

• Issues of equality - “power distance”

•What is different and dangerous - “uncertainty avoidance”

Hofstede’s Model of National Hofstede’s Model of National Culture, continuedCulture, continued

•The individual and the group in society - “collectivism/individualism”

•Gender roles - “masculinity”•Confucian values - “long term

orientation”

POWER DISTANCEPOWER DISTANCE

• Inequality is good• Everyone has a place• People should depend on a leader• The powerful are entitled to

privileges• The powerful should not hide their

power

Exhibit 2.2Exhibit 2.2Management Management

Implications Of Power Implications Of Power DistanceDistance

MANAGEMENT PROCESSES

LOW POWER DISTANCE HIGH POWER DISTANCE

Human Resources Management

Management Selection Educational achievement Social class; elite education

Training For autonomy For conformity/obedience

Evaluations/Promotion Performance Compliance; trustworthiness

Remuneration

Small wage difference between management and worker

Large wage differences between management and workers

Leadership Styles Participative; theory Y Authoritarian; close supervision

Motivational Assumptions

People like work; extrinsic and intrinsic rewards

Assume people dislike work; Coercion

Decision Making/Organizational Design

Decentralized; flat pyramids; Small proportion of supervisors

Tall pyramids; large proportion of supervisors

Strategy Issues

Varied

Crafted to support the power elite or government

UncertaintyUncertainty Avoidance Avoidance• Avoid conflict• Low tolerance of deviant people

and ideas• Respect for laws and rules• Experts and authorities are

usually correct• Consensus is important

Exhibit 2.3 Exhibit 2.3 Management Implications Management Implications of Uncertainty Avoidanceof Uncertainty Avoidance

MANAGEMENT PROCESSES

HIGH UNCERTAINTY AVOIDANCE

LOW UNCERTAINTY AVOIDANCE

Human Resource Management

Seniority; expected loyalty

Past job performance; education

Management Selection

Training Specialized Training to adapt

Evaluation/Promotion Seniority; expertise; loyalty Objective individual performance data; job switching for promotions

Remuneration Based on seniority or expertise

Based on performance

Leadership Styles Task oriented Nondirective; person-oriented; flexible

Motivational Assumptions People seek security; avoid competition

People self motivated; competitive

Decision Making/Organizational Design

Larger organization; tall hierarchy; formalized; many standardized procedures

Smaller organizations; flat hierarchy; less formalized with fewer written rules/standardized procedures

Strategy Issues Risk adverse Risk taking

IndividualismIndividualism

• People are responsible for themselves

• Individual achievement is ideal• People are not emotionally

dependent on organizations or groups

CollectivismCollectivism

•Self identity based on group membership

•A belief that group decision making is best

•A belief that groups protect you in exchange for loyalty

Exhibit 2.4 Exhibit 2.4 Management Implications Management Implications

of Individualismof Individualism

MANAGEMENT PROCESSES

LOW INDIVIDUALISM HIGH INDIVIDUALISM

Human Resources Management

Management Selection Group membership; school or university

Universalistic based on individual traits

Training Focus on company based skills

General skills for individual achievement

Evaluation/Promotion Slow with group; seniority Based on individual performance

Remuneration Based on group membership/organizational paternalism

Extrinsic rewards (money, promotion) based on market value

Leadership Styles Appeals to duty and commitment

Individual rewards and punishments based on performance

Motivational Assumptions Moral involvement Calculative; Individual cost/benefit

Decision Making/Organizational Design

Group; slow; preference for larger organizations

Individual responsibility; preference for smaller organizations

MasculinityMasculinity

• Clear definitions of gender roles• Men are assertive and dominant• Support for Machismo • Men should be decisive• Work is priority• Growth, success, and money are

important

Exhibit 2.5 Exhibit 2.5 Management Implications Management Implications

Of MasculinityOf Masculinity

MANAGEMENT PROCESSES

LOW MASCULINITY HIGH MASCULINITY

Human Resources Management

Management Selection Independent of gender, school ties less important; androgyny

Jobs gender identified; school performance and ties important

Training Job-Oriented Career oriented

Evaluation/Promotion Job performance with less gender role assignments

Continues gender tracking

Remuneration Less salary differences between levels; more time off

More salary preferred to less hours

Leadership Styles More theory Y; More theory X;

Motivational Assumptions Emphasis on quality of life, time off, vacations; work not central

Emphasis on performance and growth; excelling to be best; work central to life; job recognition important

Decision Making/Organizational Design

Intuitive/group; smaller organizations

Decisive/individual; larger organization preferred

Long Term (Confucian) Long Term (Confucian) OrientationOrientation

• Belief in substantial savings• Willingness to invest• Acceptance of slow results• Persistence to achieve goals• Sensitivity to social

relationships• Pragmatic adaptation

Exhibit 2.6 Exhibit 2.6 Management Implications Management Implications Of Long Term OrientationOf Long Term Orientation

MANAGEMENT PROCESSES

SHORT TERM ORIENTATION

LONG TERM ORIENTATION

Human Resources Management

Management Selection Objective skill assessment for immediate use to company

Fit of personal and background characteristics

Training Limited to immediate company needs

Investment in long term employment skills

Evaluation/Promotion Fast; based on skill contributions

Slow; develop skills and loyalty

Remuneration Pay; promotions Security

Leadership Styles Use incentives for economic advancement

Build social obligations

Motivational Assumptions Immediate rewards necessary

Subordinate immediate gratification for long term individual and company goals

Decision Making/Organizational Design

Logical analyses of problems; design for logic of company situation

Synthesis to reach consensus; design for social relationships

Strategy Issues Fast; measurable payback Long term profits and growth; Incrementalism

Hofstede’s Dimensions By Hofstede’s Dimensions By Countries Countries Exhibit 2.4Exhibit 2.4

•Anglo cultures (US, GB, Australia)–high on individualism and masculinity, low on power distance and uncertainty avoidance

•Latin European–high uncertainty avoidance

•Nordic – low masculinity

•Far Eastern–high power distance, low individualism

The 7d Model of Culture The 7d Model of Culture Cultural Dimensions and Cultural Dimensions and

Critical QuestionsCritical Questions

•Relationships with People:–universalism vs. particularlism•Do we consider rules or relationships more important?

– individualism vs. communitarianism•Do we act mostly as individuals or as groups?

– specific vs. diffuse•How extensively are we involved with the lives of other people?

The 7d model, continuedThe 7d model, continued

– emotional vs. neutral•Are we free to express our emotions or are we restrained?

– achievement vs. ascription•Do we achieve status through accomplishment or is it part of our situation in life (e.g., gender, age, social class)?

The 7d model, continuedThe 7d model, continued

• Perspective on Time:– sequential vs. snchronic

•Do we do tasks in sequence or several tasks at once?

• Relationship with the Environment:– internal vs. external control

•Do we control the environment or does it control us?

The 7d model, continuedThe 7d model, continued

Exhibit 2.9 Universalism Exhibit 2.9 Universalism versus Particularism: versus Particularism:

Differences and Managerial Differences and Managerial ImplicationsImplications

Universalism Particularism

Focus on RulesContracts difficult to breakTrustworthy people honortheir wordBelief in is only one reality"Deals" are obligations

Focus on RelationshipsContracts easy to modifyTrustworthy people adaptto each other's needsbased on trustReality is relative to eachperson's situation"Deals" are flexible to thesituation and the person

USA UKCzechRep.

Nigeria MexicoSouthKorea

Differences:

Management Implications:

Use procedures applied toallFormalize businesspracticesAnnounce changespubliclyTreat all cases similarly

Use informal networks tocreate understandingMake changes subtly andprivatelyTreat each case based onits unique circumstances

Exhibit 2.10 Individualism Exhibit 2.10 Individualism versus Collectivism: versus Collectivism:

Differences and Managerial Differences and Managerial ImplicationsImplications

Individualism Collectivism

Focus on "me" or "I"Individual achievementand responsibilityIndividual decisionmaking

Focus on "we"Group achievement andresponsibilityDecision making bygroups

UKCzechRep.

Nigeria Egypt Japan

Differences:

Management Implications:

Use individual incentivessuch a pay forperformancePlan for turnoverProvide for individualinitiative

Focus on group moraleand cohesivenessExpect low turnoverSet group goals

Exhibit 2.11 Neutral versus Exhibit 2.11 Neutral versus Affective: Differences and Affective: Differences and Managerial ImplicationsManagerial Implications

Neutral Affective

Do not reveal thought orfeelingsControl over emotionsadmiredPhysical contact andexpressive gesturesavoided

Feelings and thoughtsreveal verbally and non-verballyEmotional expressionuninhibitedAnimated expression andgesturing admiredTouching is common

Sweden UKCzechRep.

Norway Mexico China

Differences:

Management Implications:

Act under control to showstatusKeep dialogue to the point

Avoid appearingdetached, which suggestsdistanceExpect strongcommitment to positionsTolerate emotionaloutbursts

Exhibit 2.12 Specific versus Exhibit 2.12 Specific versus Diffuse: Differences and Diffuse: Differences and Managerial ImplicationsManagerial Implications

Specific Diffuse

Direct in relationshipsBlunt and precise incommunicationPrincipled moralreasoning

Indirect and subtle inrelationshipsAmbiguous or evasive incommunicationSituation-based moraldecision making

Sweden UKCzechRep.

Norway Mexico China

Differences:

Managerial Implications:

Use of objectives andstandardsSeparate private andbusiness livesGive clear and precisedirections

Attempt continuousimprovementMix private and businesslivesUse ambiguous directionsto give employees latitude

Exhibit 2.13 Achievement Exhibit 2.13 Achievement versus Ascription: Differences versus Ascription: Differences and Managerial Implicationsand Managerial Implications

Achievement Ascription

Use title only whenrelevantSuperiors earn respectthrough job performanceMixture of age and genderin management

Use of titles common andexpectedRespect for superiorshows commitment toorganizationBackground and age mainqualification formanagement

Norway AustriaIreland JapanHongKong

Argentina

Differences:

Managerial Implications:

Emphasize rewards andrespect based on skillsand accomplishmentsSenior level managersdefer to technical andfunctional specialists

Emphasize seniorityUse personal power ofsuperior for rewardsEmphasize the chain ofcommand

Exhibit 2.14 Time Horizon: Exhibit 2.14 Time Horizon: Differences and Managerial Differences and Managerial

ImplicationsImplications

Past/Present Future

Communicationreferences history andorigins of country,business, and familyRespect for past glory andeldersHistory provides a contextfor present actions

Communication refers topotential achievementsPlanning importantPotential for futureadvantage emphasized

HongKong

Israel Russia KoreaHongKong

Differences:

Managerial Implications:

Emphasize and besensitive to history andtraditionAvoid strict deadlines forcompletion of tasks

Motivate by emphasis onopportunitiesSet specific deadlines

Enjoy the momentPlanning seldom resultsin executionImmediate impact mostimportant

Past Present Future

Past and Present Future

Exhibit 2.15 Internal versus Exhibit 2.15 Internal versus External Control: Differences External Control: Differences and Managerial Implicationsand Managerial Implications

Internal Control External Control

Dominate the environmentShow convictionsFocus on self or owngroup

Emphasis on compromiseHarmony and adjustmentis goodAdaptation to cycles

Poland Brazil Greece Ethiopia China

Differences:

Managerial Implications:

Emphasize authorityDominate subordinates

Emphasize patienceBuild and maintainrelationships withsubordinates, equals andsuperiorsEmphasize win- winrelationships

ConclusionsConclusions

•Culture has a variety of levels that affect multinationals

•Models provide starting point to understand culture

•Learning another culture is a never ending process