cross cultural impact on performance management the case of united arab emirates

Daniel Getachew Daba April 27, 2014

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Cross Cultural Impact on Performance

Management the Case of United Arab

Emirates

By

Daniel Getachew Daba

April 27, 2014


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Contents

Introduction ................................................................................................................................... 3

Cultural Dimensions ..................................................................................................................... 4

Culture and Performance Measurement .................................................................................... 6

Dimensions of National Culture of UAE ..................................................................................... 6

Researcher’s Action as Multinational Company Manager in UAE ......................................... 8

Critics of Hofstede’s Cultural Dimension ................................................................................. 10

Conclusion ................................................................................................................................... 10

References .................................................................................................................................... 11


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Introduction Multinational corporations are aggressively expanding their business in the global market by

conducting business globally, which has increased in scope due to the increasing as the

organization operates across national cultural and social boundaries. The main challenges of this

multinationals are acknowledging cultural difference in the host country and manage the

business cohesively in order to achieve objective of the company by enhancing the performance

Oloko and Ogutu (2012).

Nowadays we live in the world where processes of globalization experienced in our day to day

life. In the beginning it was all about business and financial fields, but now the world become

one and unified global network. Peoples can travel easily from one corner of the world to other

corner easily in a very short period of time. There are different international market places where

people can transact using internet technology. These are some kind of transformation and

interrelation of cultures. At the same time we become more and more aware of differences

between cultures.

In any culture there will be authority, bureaucracy, creativity and accountability which deal in

different ways. The internal and external environments of the organizations influenced in

managing human resource in the organizations. In the internal environment organizational

culture is the basis where as in the external environment ownership is one the major issues.

Multinational enterprises which base in the overseas countries but having a plant in United Arab

Emirates, the culture of original country of multinational firms will be linked to the culture of the

host country (UAE).

Managing cross cultural issues in the international context become the hot topic as we are

working in the era of globalization. International organization should identify developing cultural


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challenges and develop practice so as to meet global competitiveness, flexibility and learning

capabilities to maintain a balance where international organizations build up cultural sensitivity

and capability to manage performance Higgs (1996).

According to Jaegar and Kanungo (1990) management attitudes and belief is maintained and

affected by power distance, low uncertainty avoidance high individualism which leads to

negative impact on performance management. Many cultural constraints become the main

challenges for the effective implementation of performance management.

In this paper the researcher will try to focus on answering the impact of national culture on the

performance of the multinational companies operating in United Arab Emirates using Hofstede

cultural dimensions, concept and theories, a researcher himself as a multinational company

manger try to see the aspect of national culture of UAE and also see how to manage this culture

in his business practice to make the business efficient and profitable.

Cultural Dimensions According to Hofstede (1980) culture is defined as “the collective programing of mind which

distinguishes the member of one human group from other”. In recognition to the fact that culture

varies from one society to another. George and Jones (1996) claimed that national culture is the

particular set of economic, political and social values which exist in a given nation.

Based on Hofstede (1984,1991) there are five dimension of national culture which are used as a

framework to evaluate any cultural orientations.

Power Distance: The extent to which the less powerful members of the organization accept the

often unequal distribution of power in the organization and or society. It refers to the degree to


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which nation accepts the power difference among its citizens. According to Hofstede (1991)

power distance is measured using power distance index.

Individualism Verses Collectivism: individualism and collectivism are the most useful and

powerful dimensions in explaining a diverse array of social behavior (Triandis, 1995).

Individualism is the tendency to view oneself as independent of others and to be more concerned

about the consequences oneself of s particular behavior. Collectivism is the tendency to view

oneself as interdependent with selected others, to be concerned about the consequence of

behavior for one’s reference group, and to be more willing to sacrifices personal interest for

good of this group (Thomas,2008).

Masculinity Verses Femininity: is refers to the emotional difference between two genders.

Masculinity index differs with each country based on high gender roles, distinction at work.

Uncertainty Avoidance: is the attribute that describe the extent to which a given society

threatened by ambiguous and uncertain condition and the extent to which the society tries to

avoid them.

Long-term Versus Short-term Orientations: long-term orientation is a national culture

attribute which emphasizes the future, thrift and persistence. On the other hand Short-term

orientation is cultural attributes emphasize on the past and present, respect for tradition, and

executing social obligations.

The above cultural dimensions frame work provided by Hofstede will help the researcher to

examine national culture of United Arab Emirates.


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Culture and Performance Measurement Performance measurement is one element of human resource management. The practice of

human resource management in multinational company operating in host country can be liked

with the host country regulatory requirements since its difficult process and can lead to different

perception and become debatable issue. In most host countries there are legal requirement to

recruit local staff which forced multinational companies to adopt local culture to large extent

(Patterson et.al 1997).

The strong performance management is critical to meet the challenges, promote innovations and

develop better performing teams which leads performance as one organizational culture. A

strong culture of performance cultivates the vision of family belongingness in the company. This

vision will lead the team and departments actively seeking proactive ways to drive values to the

business and promote new level of cooperation in the company.

Dimensions of National Culture of UAE The national culture will be addressed with an emphasis on Hofstede's (1980, 1991) model of

national culture which includes five main dimensions that researchers suggested to explain the

implications of national culture for the organizational performance. Even though Hofstede’s

cultural dimension model has been subjected to methodological and theoretical criticisms by

different scholars, it is still considered to be one of the most relevant and a helpful model that

explains how the national culture of a given society may affect managerial behavior and the

effect of subsequent consequences of this behavior on managerial performance (Mead, 1998).

The power distance dimension: Concerning power distance dimension of Hofstede UAE scores

high power distance (score of 90) which leads higher decision making power is on top

management and the gap between management and employees are very high means that people


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accept a hierarchical order in which everybody has a place and which needs no further

justification. Hierarchy in an organization is shown inequalities among the organization,

dependency relationship between managers and subordinates.

Individualism/collectivism dimensions: According to Hofstede UAE with a score of 25 has

been categorized in a collective society. This implies a close relationship and commitment to the

member of the ‘group’ which can be family, extended family and or extended relationships. In

such collectivist society like UAE due to the strong relationship among member of the group

everyone takes responsibility of fellow members of their group. The hiring, promotion and other

employee benefit packages decision of the company takes in to account being member of the

group, in other word management is management of the group.

Uncertainty avoidance dimension: There is high level of uncertainty avoidance in UAE with

the score of 80 according to Hofstede. They are more focused on strict rule, regulation, and

policies that need to be implemented. In this culture people have an inner urge to be busy, work

hard, precision and punctuality are norms, innovation may be resisted and security is an

important element in individual motivation.

Masculinity/Femininity dimension: UAE scores 52 it indicates the UAE women’s are limited

to rights in executing organizational responsibility and Islamic religion can be the main reason

for this.

Long term orientation/short term orientation dimension: in this cultural dimension UAE has

scored high score for long term orientation where the organization and individuals gives more

attention to values, beliefs and social obligations. Different rules and regulation are subjected to

be followed the social condition of the nation.


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Thus looking to Hofstede cultural dimensions in UAE, we can group the dimensions based on

their relations and can say that combination of high power distance and uncertainty avoidance

led to high law, polices and regulation oriented approach to reduce uncertainties. On the other

hand low level of individualism and medium level of masculinity could led to low level of

involvement of women’s in organizational responsibility.

The information flow within the UAE organizations is highly influenced by the higher power

distance and the collectivist nature of the society.

Researcher’s Action as Multinational Company Manager in UAE As assigned multinational manager in United Arab Emirates, the manager should have to have

enough knowledge and imparted training regarding UAE cultures. Once the manager gets

enough knowledge about the cultural clashes and barriers, he should plan how to implement the

home country culture with adopted local culture for the success of the company.

In order to narrow the gap in power distance the manager should have to take actions in creating

a good friendly relationship among the management and employees of the company by

organizing different events so that employee and management will have an opportunity to

interact each other. Following to creating friendly environment the manager should prepare and

or revise organizational structure in a way that subordinates will be involved in some decision

making activities in connection with their specific responsibility. In addition to that the manager

should put clear principle regarding employee’s equality in the organization irrespective of their

position and also put a Motto “managers are coordinators not punishers”. This will bring

motivation among employees and increase efficiency and better company performance.


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The second important cultural dimension will be collectivism dimension. As it has been seen on

the Hofstede county index United Arab Emirate culture is a collectivist one. Therefore the

manager should have design the standard guideline and policy to make standardized decision of

hiring, promotion and bonus system based on systematic training, expertise, and performance

rather than interpersonal relation among management and employee. In order to enhance the

manager will arrange training specifically related with HR.

The third cultural dimension will be uncertainty avoidance. In a country like UAE, where high

uncertainty avoidance observed, employees are forced to follow strict rule regulation and policy

of the organization which has an adverse impact on creativity, innovation and new findings. The

manager should have to leave some room to encourage peoples to think and do in a better way.

Rules policies and manuals are a guideline of company procedures but it is not the barrier of

innovation and creativity. The employees should feel comfortable in order to do their

responsibility in a better way.by implementing this mentality on the employees of the company

the manager can minimize uncertainty avoidance.

The forth one is masculinity/femininity, UAE has partly between masculinity and femininity

though it is in transition phase, the manager should encourage women’s to higher responsibility.

Finally as UAE is one long term orientation dimension culture country, it will be advantage for

the company since it reflects a dynamic, future oriented mentality, emphasize persistence, and

emphasize thrift, having sense of shame.


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Critics of Hofstede’s Cultural Dimension Hofsteds work has been criticized by different authors; most criticism is focused on

methodological and theoretical perspectives. Among those generalization is one of the

methodological critic’s perspectives. This comes from the fact that Hofstede study was limited to

IBM Corporation. Many researcher’s questioned the validity of generalized result of IBM to

others cultures. The other perspective is about boundedness and subjectivity. Other researcher’s

claims the difficulty of fully understanding the behavior of people in other culture without

growing up in that culture (Yeh 1998).

According to McSweeney (2002) due to Hofstede carrier on marketing and sales department, his

study might affected by specifying only on specific sub culture rather than the organization as a

whole. Merker (1982) added that Hofstede’s respondents were mostly male and that this may

have also affected the results of the study. Using questionnaires as a single data collection

method has also been criticized; a complex subject like culture needs more than one research

instrument to cover all aspects.

Conclusion The study tries to define the 'culture' and the connotations of this concept to the managers of

organizations operating in United Arab Emirates. In the review of the earlier literature and

benefiting from the widely adopted model in the literature; Hofstede model which is used to

better understanding of the national culture, and also used to direct the managers of organization

in UAE for the cultural problems he is anticipating to face and how to adapt the current

westernized model adopted in his organizations to best fit the environment in which they operate.

Hofsted's was adopted in this study, includes five dimensions suggested to better understand the

national culture. The five dimensions of this model include power distance, uncertainty


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avoidance, individualism – collectivism, masculinity – femininity, and future orientation. These

dimensions, based on their popularity in the different literatures, and it is supposed to enhance

our understanding for the national culture and enhance the organizational performance. Even

though, Hofstede model is subjected to criticism by different authors and scholars.

With Regard to UAE organizations the researcher tried to shade light how cross cultural

managers will be successful in handing cultural complexity while exciting international

assignment. Finally the researcher suggests any managers who have taken international

assignment in UAE of organization world be aware of these problems and use this awareness to

handle such cultural issues to enhance the success of their organizations.

References


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Margaret Oloko and Martin Ogutu (2012), Influence of Power Distance and Employee

Empowerment and Multinational Company Performance: A Study of Multinational Corporation

in Kenya: Education Research Journal V. 2 (2):47-61

Malcolm Higgs (1996), Team Performance Management: An International Journal Vol. 2 (1),

MBC University Press

Alfred A. Jaegar and Rabindra Nath Kanungo (1990), Management in Developing Countries

Hofstede, G., (1980), Culture's Consequences: International Differences in Work-Related

Values,

Beverly Hills: Sage, CA

Hofstede, G., (1991), Cultures and Organizations: Software of the Mind. McGraw-Hill, London

Hofstede, G., (1984), Culture’s Consequences: International Differences in Work-Related

Values. Beverly Hills, CA: Sage.

Triandis, H. C.(1995),Individualism and Collectivism, Boulder Co, Westview

David C. Thomas (2008), Cross cultural Management, 2nd Ed, Sage

Malcolm G. Patterson,Michael A West, Rebecca Lawthom and Stephen Nickell (1997),Impact of

People Management Practices on Business Performance, Institute of Personnel and

Development: The Cromwell Press, Wiltshire

Mead, R., (1998). International Management, 2nd edition, Blackwell Publishers Ltd

Yeh, R., (1988), On Hofstede’s treatment of Chinese and Japanese values. Asia Pacific Journal

of Management 6 (1), 149–160

McSweeney, B. (2002), Hofstede’s model of national cultural differences and their

Consequences: A triumph of faith – a failure of analysis. Human Relations

Merker, S.(1982), Geert Hofstede: Culture’s consequences. Behavioural Science 27 (2)


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cross cultural impact on performance management the case of united arab emirates

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