developing cultural savvy for success in global business: case of china, usa and russia

Developing Cultural Savvy for Success in Global Business:

Case of China, USA and Russia

Global Business Model Innovation: An International Conference

Shanghai Dianji University 60th Anniversary, October 2013

by Dmitry Shtykhno, Ph.D. Dean of the School of Business, Plekhanov Russian University of Economics

Contents • Introduction: most popular questions regarding

managerial issued of cross-cultural decision-making

• Studies of the impact of culture on managerial work values

• Studies of the cultural determinants of learning styles

• Conclusion: convergence, crossvergence and divergence of cultural valuesenhance the cultural compatibility between learner and the learning environment

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Introduction (1)

• With the growth of globalization, cultural sensitivity and understanding in dealing with global complexities involved in conducting business in host countries have been expanding

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Introduction (2) • Culture…

– way of organizing life, of thinking, and of conceiving the underlying assumption about the family, the state, the economic system, and even Man himself (Hall, 1959)

– every aspect of life: know-how, technical knowledge, customs of food and dress, mentality, values, language, symbols, socio-political and economic behavior, indigenous methods of making decisions and exercising power, methods of production and economic relations, and so on (Verhelst, 1990)

– "software of mind“ which povides a guide for humans on how to think and behave; it is a problem solving tool (Hofstede , 2001)


Introduction (3) • An essential skill for managing people and processes

in other nations is "cultural savvy" which is mangers having a working knowledge of the cultural variables affecting management decisions (Risks, 1983)

• Cultural sensitivity or cultural empathy is the recognition and sincerely caring about other people's cultures (Joinson, 1998)

• Cultural awareness enables managers to develop appropriate policies and determine how to plan, organize, and control in a specific international organization (Khairullah, 2013 )


Introduction (4) • Two major issues of developing cultural savvy for

success in global business:

Developing Cultural Savvy for Success in Global Business: Case of China, USA and Russia

the impact of culture on managerial work values (what to teach); cultural

determinants of learning styles (how to teach).

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Impact of culture on managerial work values (1) • As many international companies consider

trying to become global organizations in the sense of having a seamless or borderless approach to organization, the issues of convergent/divergent values becomes more relevant. Those organizations that strive to become global enterprises envision a unified approach to business that transcends cultural differences (Porter, 1986).


• With a global approach to organization, not only must the organization understand the diverse values systems of its multi-local operation, but, if it is to create a seamless/borderless organization, it must now try to integrate these diverse value systems into a common corporate culture (Yip, 1992).

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Impact of culture on managerial work values (2)


Business environment ideology and country culture have been identified as the primary

forces that shape one's values

Convergence theory: the ideology of the workplace

drives values

Divergence theory: country culture, not workplace ideology, drives values

Crossvergence theory: work ideology and country culture interact to create a new and unique value system that is

based on the melding of both cultural and ideological influences

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The Hofstede (1980) typology is often used as a starting point in developing a framework for contrasting the work values of the countries.

Country Power

Distance

Individualism Masculinity Uncertainty

Avoidance

Long Term

Orientation

USA Russia China

40 L

95* H

80* H

91 H

50* M

20* L

62 H

40* L

50* M

46 L

90* H

60* M

29 L

10* L

118 H

H(igh) = top third, M(edium) = medium third, L(ow) = bottom third

* - estimated

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Extreme collectivist

orientation with some

shift away from

collectivist values

towards individualist

values,a change in

emphasis away from

political/social goals

towards economic

goals.

Individualism with

preferences for

equity in which

distributions are

proportionate to

individual

contributions

More "collectivist"

than the USA,

although to a much

lesser degree than

China, a less

deeply-rooted

collectivist

orientation than in

China

Individualism,

capitalism, and income

differentiation

The combination of

collectivism, socialism

and egalitarian pay

practices

Egalitarianism traced to

Confucian principles

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Study of the impact of

culture and ideology on

managerial work values

conducted by David A.

Ralston, David H. Holt,

Robert H. Terpstra and

Yu Kai-cheng (1997)

used well-developed set

of 10 subdimensions

and three higher-order

dimensional continua

that are comparable to

SVS - The Schwartz

Value Survey (Schwartz,

1992) individualism

collectivism 11 of 23



The individualism/collectivism continuum clearly follows the

crossvergence with culture-dominant hypothesis.

The openness-to-change/conservation dimension also

suggests a crossvergence effect while neither culture nor

ideology appears dominant for the openness dimension.

The self-enhancement/self-transcendence dimension is

interesting because in part it supports crossvergence, while in

part supporting convergence.

Russia is more likely to adopt the current Western capitalism

ideology than China.

Nonetheless, that is not to suggest that China will not develop

its own form of capitalism, but more likely one that is uniquely

compatible with the Chinese value system.

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• Study conducted by Jane K. Giacobbe-Miller, Daniel J. Miller, and Vladimir I. Victorov (1999) examines pay values (meaning the perceived fairness and appropriateness of pay allocations within an organization) and allocative behaviors by organizational type in China, Russia and the United States.

• Researchers assume that the introduction of Western managerial systems (particularly pay systems) in both Russia and China create the conditions in which convergence, crossvergence or divergence might occur.

• Results relating to expressed values supported crossvergence theory, whereas results relating to allocative behaviors supported convergence theory for the Chinese managers and crossvergence theory for the Russian managers.

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• Evidence of divergence and crossvergence seems most apparent in allocative behaviors as opposed to expressed values. While both Russian and Chinese managers (regardless of organization type) appear "quite capitalist" in their expressed rejection of equality and need-based rules, Russian managers in state-owned enterprises and Chinese managers in both state-owned enterprises and joint ventures/foreign-owned enterprises allocated the bonus in a collectivist manner.

• In contrast, managers in Russian joint ventures/foreign-owned enterprises and in the United States were significantly more individualistic in their allocations.

• It is also necessary to note that expressed values are different from allocative behaviors.

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• Study of Peter Smith, Mark Peterson, and Zhong Ming Wang (1996) tested assumptions that managers from Asian and Western cultures would differ in the extent to which they relied on specific sources of guidance and support when responding to uncertain work events.

• Managers in the US were found to rely most heavily on their own experience and skills, especially when improving team work or dealing with subordinates. In contrast, Chinese managers were more likely to rely on rules and procedures.

• While US managers reported a low reliance upon peers, the Chinese managers appear to be least likely to rely on their peers.

• All managers also reported a low reliance upon their subordinates, with managers in the US reporting the least amount of reliance upon subordinates.

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• Smith and his colleagues also found differences among the managers in their reactions to the different types of work events.

• The US managers favored their own experiences in the most of event types, but were also likely to rely on their subordinates, particularly in improving teamwork. The US managers indicated a reluctance to involve their superiors in improving work quality or their peers in deciding how to use raw materials more effectively.

• The Chinese managers' reliance on their own experience was generally less consistent and appeared to be viewed negatively in events involving the changing of work procedures or rewarding subordinates for good work. Chinese managers were also not likely to rely on their subordinates when improving teamwork or communicating with senior management, or their peers when changing work procedures.

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Cultural determinants of learning styles (1)


Kolb’s (1984) classification of learning styles is based on the assumption that individual learning can be conceptualized as a circular process consisting of four activity stages.

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• Dirk Holtbrügge and Alexander T. Mohr (2010) in their research of the cultural determinants of learning styles develop hypotheses that relate dimensions of culture to the likelihood that individuals prefer one learning style over another.

• The study reveals a positive influence of individualism on the odds that learners prefer a learning style characterized by active experimentation and abstract conceptualization, that is, Convergence.

• Masculinity was found to have a positive effect on the likelihood that learners prefer a learning style characterized by abstract conceptualization and reflective observation, that is, Assimilation.

• The study provides no clear-cut evidence for an influence of Power Distance, Long-Term Orientation, or Uncertainty Avoidance.

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• It could be argued that individuals with a strong desire to avoid uncertainty prefer abstract conceptualization, as this allows for a reduction in uncertainty.

• At the same time, however, individuals with a very weak desire to avoid uncertainty might also prefer this learning style because abstract concepts may be adapted in a very flexible way to new and unknown situations.

• Thus, individuals on the extreme poles of this cultural dimension may be guided by two different ideals that both favor abstract conceptualization: "The members of cultures that fall in between may be relying on concrete experiences as well to learn since they are not overburdened with ideals"

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Conclusion (1)


• Joint venture partners may rely upon different sources of guidance when handling uncertain work events. Those differences in managerial style may be viewed negatively by joint venture partners, and potentially lead to conflict.

• Whether cultural differences soften as management practices become internationalized or management practices change to adapt to deeply-rooted cultural differences remains to be seen.

• The phenomena of convergence, crossvergence and divergence of cultural values may depend on how deeply held the values are initially; the degree to which the values differ from the "foreign"

ideology being introduced in the workplace.

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Conclusion (2)


• Educators may develop "toolboxes" of approaches to teaching in order to enhance the cultural compatibility between learner and the learning environment.

• Large universities might consider splitting student cohorts and employing different pedagogical methods reflect different learning styles of subgroups. It is necessary to caution against such an approach on the grounds that although individuals may show a preference for a specific learning style, most research shows that students are often multimodal.

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Conclusion (3)


• There is a need to increase learners’ and teachers’ awareness of the influence of cultural values on learning style preference in order to improve their own learning in the sense of metacognition.

• This awareness of the effects of cultural values on one’s own and other’s learning styles may be enhanced through discussion about learning styles, and might improve learning in group work situations in which students are made aware of existing differences in learning styles and are enabled to build on these differences in a synergistic way in order to enhance the overall learning experience of the group.

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Plekhanov Russian University of Economics

sincerely congratulates Shanghai Dianji University

with the 60th Anniversary!

developing cultural savvy for success in global business: case of china, usa and russia

Education

cultural savvy

cultural sensitivity

cultural awareness

cultural compatibility

cultural variables

cultural empathy

global organizations

cultural differences