chapter copyright© 2007 thomson learning all rights reserved 2 culture and multinational management

Chapter

2Culture and Multinational Management

Learning Objectives

• Define culture and understand the basic components of culture

• Identify instances of cultural stereotyping and ethnocentrism

• Understand how various levels of culture influence multinational operations

• Define culture and understand the basic components of culture

• Identify instances of cultural stereotyping and ethnocentrism

• Understand how various levels of culture influence multinational operations

Learning Objectives

• Understand the Hofstede and 7d models • Appreciate the complex differences among cultures

and use these differences for building better organizations

• Recognize the complexity of understanding new cultures and the dangers of stereotyping and cultural paradoxes

• Understand the Hofstede and 7d models • Appreciate the complex differences among cultures

and use these differences for building better organizations

• Recognize the complexity of understanding new cultures and the dangers of stereotyping and cultural paradoxes

What is Culture?

• Pervasive and shared beliefs, norms, values, and symbols that guide everyday life.

• Cultural norms: both prescribe and proscribe behaviors• What we should do and what we cannot do.

• Cultural values: what is good/beautiful/holy beautiful, and what are legitimate goals for life.

• Pervasive and shared beliefs, norms, values, and symbols that guide everyday life.

• Cultural norms: both prescribe and proscribe behaviors• What we should do and what we cannot do.

• Cultural values: what is good/beautiful/holy beautiful, and what are legitimate goals for life.

What is Culture? (cont.)

• Cultural beliefs: represent our understandings about what is true.

• Cultural symbols, stories, and rituals: communicate the norms, values, and beliefs of a society or a group to its members.

• Culture is pervasive in society• Affects all aspects of life• Not all aspects are observable

• Cultural beliefs: represent our understandings about what is true.

• Cultural symbols, stories, and rituals: communicate the norms, values, and beliefs of a society or a group to its members.

• Culture is pervasive in society• Affects all aspects of life• Not all aspects are observable

Culture: Front Stage & Back Stage

• Front stage of culture: easily observable aspect of culture• E.g., Japanese executive bows or North American

robust handshake.• Back stage of culture: only insiders or members of the

culture understand other aspects of culture• E.g., Japanese saying “it’s difficult” and twisting

head to one side really means it’s impossible.

• Front stage of culture: easily observable aspect of culture• E.g., Japanese executive bows or North American

robust handshake.• Back stage of culture: only insiders or members of the

culture understand other aspects of culture• E.g., Japanese saying “it’s difficult” and twisting

head to one side really means it’s impossible.

Three Levels of Culture

1. National culture: the dominant culture within the political boundaries of the nation-state.

2. Business culture: norms, values, and beliefs that pertain to business in a culture.

– Tells people the correct, acceptable ways to conduct business in a society.

1. National culture: the dominant culture within the political boundaries of the nation-state.

2. Business culture: norms, values, and beliefs that pertain to business in a culture.

– Tells people the correct, acceptable ways to conduct business in a society.

Three Levels of Culture (cont.)

• Occupational and organizational culture• Occupational culture: the norms, values, beliefs,

and expected ways of behaving for people in the same occupational group.

• Organizational culture: the set of important understandings that members of an organization share.

• Occupational and organizational culture• Occupational culture: the norms, values, beliefs,

and expected ways of behaving for people in the same occupational group.

• Organizational culture: the set of important understandings that members of an organization share.

Exhibit 2.1: Three Levels of Culture

Cultural Differences and Basic Values

• Three diagnostic models to aid the multinational manager:• Hofstede model of national culture• Global Leadership an Organizational Behavior

Effectiveness (GLOBE) project• 7d culture model

• Three diagnostic models to aid the multinational manager:• Hofstede model of national culture• Global Leadership an Organizational Behavior

Effectiveness (GLOBE) project• 7d culture model

Hofstede’s Model of National Culture

• Five dimensions of basic values• Power distance• Uncertainty avoidance • Individualism • Masculinity • Long-term orientation

Hofstede’s Model Applied to Organizations and Management

• Management practices considered in the discussion of Hofstede’s model include:

• 1. Human resources management• Management selection• Training• Evaluation and promotion• Remuneration

• Management practices considered in the discussion of Hofstede’s model include:

• 1. Human resources management• Management selection• Training• Evaluation and promotion• Remuneration

Hofstede’s Model Applied to Organizations

• Leadership styles• Motivational assumptions• Decision making and organizational design• Strategy

Power Distance

• Power distance concerns how cultures deal with inequality and focuses on• Norms that tell superiors (e.g., bosses) how much

they can determine the behavior of their subordinates

• Values and beliefs that superiors and subordinates are different kinds of people

• Power distance concerns how cultures deal with inequality and focuses on• Norms that tell superiors (e.g., bosses) how much

they can determine the behavior of their subordinates

• Values and beliefs that superiors and subordinates are different kinds of people

Power Distance (cont.)

• High power distance countries have norms, values, and beliefs such as• Inequality is fundamentally good• Everyone has a place: some are high, some are low• Most people should be dependent on a leader• The powerful are entitled to privileges• The powerful should not hide their power

Exhibit 2.2: Managerial Implications for Power Distance

Uncertainty Avoidance

• Norms, values, and beliefs regarding tolerance for ambiguity• Conflict should be avoided• Deviant people and ideas should not be tolerated• Laws are very important and should be followed• Experts and authorities are usually correct• Consensus is important

Exhibit 2.3: Managerial Implications of Uncertainty Avoidance

Individualism/Collectivism

• Focus is on the relationship between the individual and the group

• Countries high on individualism have norms, values, and beliefs such as• People are responsible for themselves• Individual achievement is ideal• People need not be emotionally dependent on

organizations or groups

• Focus is on the relationship between the individual and the group

• Countries high on individualism have norms, values, and beliefs such as• People are responsible for themselves• Individual achievement is ideal• People need not be emotionally dependent on

organizations or groups

Individualism/Collectivism

• Collectivist countries have norms, values, and beliefs such as• One’s identity is based on group membership• Group decision making is best• Groups protect individuals in exchange for their

loyalty to the group

• Collectivist countries have norms, values, and beliefs such as• One’s identity is based on group membership• Group decision making is best• Groups protect individuals in exchange for their

loyalty to the group

Exhibit 2.4: Managerial Implications of Individualism/Collectivism

Masculinity

• Tendency of a culture to support traditional masculine orientation

• High masculinity countries have beliefs such as• Gender roles should be clearly distinguished• Men are assertive and dominant• Machismo/exaggerated maleness in men is good• Men should be decisive• Work takes priority over other duties• Advancement, success, and money are important

• Tendency of a culture to support traditional masculine orientation

• High masculinity countries have beliefs such as• Gender roles should be clearly distinguished• Men are assertive and dominant• Machismo/exaggerated maleness in men is good• Men should be decisive• Work takes priority over other duties• Advancement, success, and money are important

Exhibit 2.5: Managerial Implications of Masculinity

Long-Term (Confucian) Orientation

• Managers are selected based on the fit of their personal and educational characteristics

• A prospective employee’s particular skills have less importance in the hiring decision

• Training and socialization for a long-term commitment to the organization compensate for any initial weaknesses in work-related skills

• Managers are selected based on the fit of their personal and educational characteristics

• A prospective employee’s particular skills have less importance in the hiring decision

• Training and socialization for a long-term commitment to the organization compensate for any initial weaknesses in work-related skills

Long-Term (Confucian) Orientation

• Eastern cultures rank highest on long-term orientation• Value synthesis in organizational decisions• Belief in substantial savings• Willingness to invest• Acceptance of slow results• Persistence to achieve goals• Sensitivity to social relationships• Pragmatic adaptation

Short-Term Orientation

• Must focus immediately on usable skills• Results high employee turnover rates• Can’t assured of a return on any investment in

employee training and socialization • Leaders use short-term rewards that focus on pay and

rapid promotion

• Must focus immediately on usable skills• Results high employee turnover rates• Can’t assured of a return on any investment in

employee training and socialization • Leaders use short-term rewards that focus on pay and

rapid promotion

Short-term Orientation

• Western cultures, which tend to have short-term orientations, value logical analysis in their approach to organizational decisions

• Designed and managed purposefully to respond to immediate pressures from the environment

• Often use quick layoffs of “excess” employees to adjust to shrinking demand for products

• Western cultures, which tend to have short-term orientations, value logical analysis in their approach to organizational decisions

• Designed and managed purposefully to respond to immediate pressures from the environment

• Often use quick layoffs of “excess” employees to adjust to shrinking demand for products

Long-Term Orientation vs. Short-Term Orientation

• The difference between long- and short-term cultures is apparent in the goals companies set in strategic decision making

• Managers in countries (short-term) such as the U.S. want immediate financial returns and want fast, measurable success

• The difference between long- and short-term cultures is apparent in the goals companies set in strategic decision making

• Managers in countries (short-term) such as the U.S. want immediate financial returns and want fast, measurable success

Long-Term Orientation vs. Short-Term Orientation

• Countries with long-term orientations prioritize growth and long-term paybacks

• The long time horizons allow managers to experiment and seek success by developing their “game plans” as they go along

• Countries with long-term orientations prioritize growth and long-term paybacks

• The long time horizons allow managers to experiment and seek success by developing their “game plans” as they go along

Exhibit 2.6: Managerial Implications of Long-term (Confucian) Orientation

GLOBE National Culture Framework

• GLOBE (Global Leadership and Organizational Behavior Studies) involves 170 researchers who collected data from 17,000 managers in 62 countries

• Seven dimensions of GLOBE are similar to Hofstede• Unique dimensions

• Performance orientation • Humane orientation

• GLOBE (Global Leadership and Organizational Behavior Studies) involves 170 researchers who collected data from 17,000 managers in 62 countries

• Seven dimensions of GLOBE are similar to Hofstede• Unique dimensions

• Performance orientation • Humane orientation

Performance Orientation

• Performance Orientation – refers to the degree to which the society encourages societal members to innovate, to improve their performance, and to strive for excellence• E.g., the United States and Singapore have high

scores while Russia and Greece have low scores on the dimension

• Performance Orientation – refers to the degree to which the society encourages societal members to innovate, to improve their performance, and to strive for excellence• E.g., the United States and Singapore have high

scores while Russia and Greece have low scores on the dimension

Exhibit 2.8: Summarizes Some of the Management Implication of Performance Orientation

Humane Orientation

• Humane Orientation – an indication of the extent to which individuals are expected to be fair, altruistic, caring, and generous• Need for belongingness and affiliation is emphasized more

than material possessions, self-fulfillment, and pleasure• Less humane oriented societies are more likely to value

self-interest and self-gratification• E.g., Malaysia and Egypt score highly while France and

Germany have low scores

• Humane Orientation – an indication of the extent to which individuals are expected to be fair, altruistic, caring, and generous• Need for belongingness and affiliation is emphasized more

than material possessions, self-fulfillment, and pleasure• Less humane oriented societies are more likely to value

self-interest and self-gratification• E.g., Malaysia and Egypt score highly while France and

Germany have low scores

Exhibit 2.9: The Management Implications of Humane Orientation

7d Cultural Dimensions Model

• Builds on traditional anthropological approaches to understanding culture

• Culture exists because people need to solve basic problems of survival

• Challenges include• How people relate to others• How people relate to time• How people relate to their environment

• Builds on traditional anthropological approaches to understanding culture

• Culture exists because people need to solve basic problems of survival

• Challenges include• How people relate to others• How people relate to time• How people relate to their environment

7d Cultural Dimensions Model

• Dimensions that deal with relationships include:• Universalism vs. Particularism• Collectivism vs. Individualism• Neutral vs. Affective• Diffuse vs. Specific• Achievement vs. Ascription

7d Cultural Dimension Model(cont.)

• Dimensions dealing with how a culture manages time and how it deals with nature• Sequential vs. Synchronic • Internal vs. External control

Exhibit 2.11: Summary of 7d Model and Issues

Universalism vs. Particularism

• Pertain to how people treat each other based on rules or personal relationships

• Universalistic • Right way is based on abstract principles such as

rules, law, religion• Particularistic

• Each judgment represents unique situation that can be dealt with based on relationships

• Pertain to how people treat each other based on rules or personal relationships

• Universalistic • Right way is based on abstract principles such as

rules, law, religion• Particularistic

• Each judgment represents unique situation that can be dealt with based on relationships

Exhibit 2.12: Managerial Implications of Universalism/Particularism

Individualism vs. Collectivism

• Similar distinctions to Hofstede’s view• Collectivist societies

• People defined by group memberships such as family• Responsibility, achievement, and rewards are group-based

• Individualist societies• People trained to be independent• Assume individual responsibility for success or failure

• Similar distinctions to Hofstede’s view• Collectivist societies

• People defined by group memberships such as family• Responsibility, achievement, and rewards are group-based

• Individualist societies• People trained to be independent• Assume individual responsibility for success or failure

Exhibit 2.13: Managerial Implications of Individualism/Collectivism

Neutral vs. Affective

• Concerns acceptability of expressing emotions• Neutral

• Interactions are objective and detached• Focus is on tasks rather than relationships

• Affective• Emotions are appropriate in all situations

• Concerns acceptability of expressing emotions• Neutral

• Interactions are objective and detached• Focus is on tasks rather than relationships

• Affective• Emotions are appropriate in all situations

Exhibit 2.14: Managerial Implications of Neutral vs. Affective

Specific vs. Diffuse

• Extent to which an individual’s life is involved in work• Specific

• Business segregated from other parts of life• Contracts often delineate relationships

• Diffuse• Business relationships encompassing/involving• Private and segregated space is small

• Extent to which an individual’s life is involved in work• Specific

• Business segregated from other parts of life• Contracts often delineate relationships

• Diffuse• Business relationships encompassing/involving• Private and segregated space is small

Exhibit 2.15: Managerial Implications of Specific vs. Diffuse

Achievement vs. Ascription

• Manner in which society gives status• Achievement

• People earn status based on performance and accomplishments

• Ascription• Characteristics or associations define status• E.g., status based on schools or universities

• Manner in which society gives status• Achievement

• People earn status based on performance and accomplishments

• Ascription• Characteristics or associations define status• E.g., status based on schools or universities

Exhibit 2.16: Managerial Implications of Achievement vs. Ascription

Time Orientation

• How cultures deal with the past, present and future• Future-oriented societies, such as the U.S.,

consider organizational change as necessary and beneficial

• Past-oriented societies assume that life is predetermined based on traditions or will of God

• How cultures deal with the past, present and future• Future-oriented societies, such as the U.S.,

consider organizational change as necessary and beneficial

• Past-oriented societies assume that life is predetermined based on traditions or will of God

Exhibit 2.17: Managerial Implications of Time Horizon

Internal vs. External Control

• Concerned with beliefs regarding control of one’s fate• Best reflected with how people interact with the

environment• Does nature dominate us or do we dominate

nature?• In societies where people believe nature dominates

them, managers are more fatalistic.

• Concerned with beliefs regarding control of one’s fate• Best reflected with how people interact with the

environment• Does nature dominate us or do we dominate

nature?• In societies where people believe nature dominates

them, managers are more fatalistic.

Exhibit 2.18: Managerial Implications of Internal vs. External

Propensity to Trust

• Growing concern with the development of trusting relationships with partners

• Differences among cultures in terms of how and when people trust each other

• Logic presupposes that individualism should be related to low trust

• Individualistic cultures have higher trust relative to collectivist societies

• Growing concern with the development of trusting relationships with partners

• Differences among cultures in terms of how and when people trust each other

• Logic presupposes that individualism should be related to low trust

• Individualistic cultures have higher trust relative to collectivist societies

Exhibit 2.20: Trust in Different Societies

Caveats and Cautions

• Stereotyping: assumes that all people within one culture behave, believe, feel, and act the same.

• Ethnocentrism: occurs when people from one culture believe that theirs are the only correct norms, values, and beliefs.

• Cultural relativism: all cultures, no matter how different, are correct and moral for the people of those cultures.

• Stereotyping: assumes that all people within one culture behave, believe, feel, and act the same.

• Ethnocentrism: occurs when people from one culture believe that theirs are the only correct norms, values, and beliefs.

• Cultural relativism: all cultures, no matter how different, are correct and moral for the people of those cultures.

Conclusion

• Chapter provides understanding of various ways to understand national cultures

• Cultures also exist at different levels• Astute managers can comprehend cultures at the

various levels

• Chapter provides understanding of various ways to understand national cultures

• Cultures also exist at different levels• Astute managers can comprehend cultures at the

various levels

chapter copyright© 2007 thomson learning all rights reserved 2 culture and multinational management

aspects of culture

stage of culture

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observable aspect of

cultural values

cultural norms

various levels of culture

basic components of

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