OB in the Cross-Cultural Context Why are cross-cultural issues important? Growing impact of global business

New markets Demand for global services Low cost manufacturing

U.S. management practices not necessarily likely to translate to different cultures

Paradox: may be easier to adjust to a very different culture than to a very similar culture

Why International Management? Important to have a global perspective

Overseas suppliers or markets Low cost production Emerging markets (Eastern Europe, LDC) E-business has no borders Immigrant labor force even in U.S.

Culture critical to global business, yet hardest to understand Based on unspoken values and assumptions Human behavior isn’t logical But, human behavior is very complex

Approaches to International Business

EthnocentricHome countrymethods are thebest

PolycentricHost countrymethods are thebest

GeocentricUse the bestmethods, no matterwhat the source

Basic Principles of Culture What is logical and important in one culture may

seem irrational and unimportant in another In describing cultures, people tend to stress the

differences and overlook the similarities Stereotyping may be inevitable for people who lack

frequent contact with another culture Cultures are not homogenous; differences exist due

to gender, age, socioeconomic status, education Understanding another culture is a journey, not a

goal

Barriers to Cross-Cultural Understanding Cultural chauvinism / corporate

imperialism / ethnocentrism Stereotypes (positive and negative) The highly successful organization may

find it more difficult to adapt

But……. The ethical dilemma Are there common values?

Basic idea of social organization, goal orientation

Personality structure (Big 5) What about cultural convergence?

Cultural evolution Cultural diffusion Immigration and acculturation

What Kinds of Differences Make a Difference? Some specific items:

Language Religion

Business practices and etiquette Different laws Different customs

Culture in general

Language Issues U.S. one of few countries where we don’t

learn a second (or a third) language Languages learned in school often do not

translate to business usage Do you try?

Not in France, not unless you can pronounce it right !

Other countries, yes: it’s a gesture of goodwill But, even if the language is the same, will we

understand? (Britspeak)

Languages of The World

0100200300400500600700800900

1,000

Mill

ion

s of

Sp

eake

rs

Source:http://www.infoplease.com/

World Religions

Christianity Islam Hindu

Chinese Folk Buddhist Judaism

Other

Source:http://www.infoplease.com/

Catholic Protestant

Orthodox Other

Religious Issues Islam:

Ramadan fasting 5 daily prayers (15 minutes or so), even at

work Modest dress for women (including head

scarf) Friday, not Sunday (noon prayers on

Fridays)

Legal Issues Sample of Mexican employment laws

Individual employment contracts required Strict limits on overtime Unionization by facility Full pay for workers while on strike Discrimination covers political doctrine and

social condition

Different Country, Different Customs: Dress and Address Dress

“Casual Days” are a U.S. custom Removing one’s shoes

Addressing Other People Herr und Frau, not first names in Germany Titles (Dr., Professor, “Assistant Vice President”,

etc.) very important everywhere but U.S. Business cards essential in Latin America,

Europe, Japan Personal space: much smaller in Latin

America, Spain, Italy

Different Country, Different Customs: Time Time

Time fluid in Latin America, Spain, Italy Time off work: Germany, France, Scandinavia: 6

weeks vacation, August in the country Africa: everyone attends funerals (impact of AIDS)

Working hours and pace Europe (esp. Germany) isn’t open 24/7 Latin America, Middle East, Japan: take time to

establish relationship before getting down to business

Different Country, Different Customs: Eating and Drinking Drinking

Tea in Japan Coffee in Egypt Vodka in Russia A pint over lunch in the UK

Dietary Restrictions: India: no beef Islamic countries: no pork or alcohol

Perceptions of Corruption

0

2

4

6

8

10

12

Source: Transparency International

Higher score = less corrupt

Economic Freedom

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

Nigeria 3.6

Source: Wall Street Journal

Higher score = less freedom

Cultural Dimensions:Hofstede’s Big 4 Based on survey of IBM employees

worldwide The dimensions

Collectivism - Individualism Power Distance Uncertainty Avoidance Masculinity / Femininity (quality of life)

Weaknesses: Does not include LDCs Data 20 years old

However, recent research confirms this structure

Change in Cultures Hofstede’s data indicates some shift to

individualism, but no change in other dimensions

Disneyland phenomenon That is, surface indicators change, but meaning

does not But….the case of Hong Kong

Management values in Hong Kong intermediate between PRC and U.S.

Indication of flexibility / change?

Collectivism - Individualism Identification with group vs. identification as an

individual Collective cultures:

Think in terms of in-groups and out-groups Life decisions made by group Look after one’s in-group, no matter what

Individualistic cultures Concern for self and immediate family Individual privacy

Association with level of economic development

Collectivism - Individualism: Where

Venezuela Pakistan Taiwan Portugal Greece Brazil India Japan Arab countries

Spain Israel Austria Germany Norway France Canada Great Britain U.S.

Collective…………...……Individualistic

Power Distance The extent to which a culture accepts that

power is distributed unevenly High power distance

People have a place in society, high or low Superiors are to be respected Less trust and cooperation

Low power distance Equal rights for everyone Hierarchies are established for convenience Power can be judged to be legitimate or not

Power Distance: Where

Philippines Mexico India Brazil Hong Kong France Turkey Pakistan Japan

Argentina U.S Canada Australia Germany Sweden Ireland Denmark Israel

High…………………...……...……Low

Uncertainty Avoidance The extent to which a society feels threatened by

ambiguity and uncertainty High uncertainty avoidance

Lots of policies, rules, regulations Hard work valued, time is money Acceptance of authority Conflict avoided

Low uncertainty avoidance Look to common sense Tolerance, constructive conflict Aggression less accepted

Uncertainty Avoidance: Where

Uruguay Belgium Japan France Mexico Israel Italy Austria Arab countries

Germany Switzerland East Africa Canada U.S. India Great Britain Sweden Singapore

High…………………...……...……Low

Masculinity / Femininity (Quality of Life) The extent to which society values typically

“masculine” values, such as assertiveness, and acquisition of things, as opposed to caring for others and quality of life.

Masculine cultures Clear gender roles; machismo Live to work Ambition, success valued

Feminine cultures Sympathy for the unfortunate Work to live People are important

Masculinity / Femininity: Where

Japan Italy Mexico Ireland U.S. Australia Hong Kong Arab countries Brazil

Israel Indonesia France Spain South Korea Portugal Finland Netherlands Sweden

High…………………...……...……Low

…Plus One Confucian Work Dynamic Based on work done in East Asia by

“Chinese Cultural Connection” group Focus on:

Long-term Order Thrift Persistence Respect for tradition

Different Dimensions…Same Result Company provided housing, marriage

brokers, etc. in Asian countries Feminine concern for people? Taking care of the in-group?

Cooperative labor negotiations Japan: collective orientation Netherlands: feminine quality of life

Economic growth and development Europe: Protestant Work Ethic (Individualistic,

High Power Distance, Masculine) Asia: Confucian Work Dynamic

Do National Borders = Cultural Borders? Multiple cultures

Canada Belgium India

Culturally homogeneous areas Scandinavia

Cultural clusters

Cultural Clusters

Arabs

East-Central Europe

Developing Countries Latins

Anglos

Asians Northern Europe

General Expatriate Issues: The Sojourners How many are there?

Nobody really knows Estimated 350,000 or more (estimate from 1996)

Who are they? 87% male Managers Sales, technical, professional

What happens? Estimated 25% to 50% of assignments fail Cost…$50,000 and up

Why do Expatriates Fail? Family problems (60%) Inability to adjust

Lack of flexibility “Culture shock”

Lack of sensitivity to host culture

Culture Shock An emotional and psychological

reaction to the confusion, ambiguity, value conflicts and hidden clashes that occur as a result of fundamentally different ways of perceiving the world and interacting socially between cultures. Disequilibrium

Aspects of Adjustment Sociocultural

Social skills needed to operate in different culture

Psychological Well-being, satisfaction “Culture shock”

What Can Be Done? Selection procedures Organizational support: before, during,

and after assignment TrainingTraining

Few U.S. firms train expatriates (30%) Most European / Asian firms do Different success rates clearly establish

value of training

Training for Expatriates Knowledge-based

Language Cultural differences

Cultural sensitivity General Specific

Include spouse and, if possible, family members

Other Support Mechanisms Mentor or buddy systems Trips home Assistance with schooling and other

family needs Housing / cost of living differentials Security

Safe housing Guards, kidnapping insurance, etc.