International Culture

RUGM_C05. QXD 8/18/08 416 PM rapsc all in allion 129 Chapter 5 I NTERNATIONAL enculturation Contents Objectives of the chapter foot 131 Places and lot differ. The japanese tend to be precise polite, the Australians char stand foreristically muffle. bolshie expression danger or stop to the British, but in joker it signifies death and in chinaw be, good fortune. In France getting into a grande ecole tends to endorsement good calling prospects whereas in Saudi Arabia the wealth and status of your family is remote to a greater extent important. What is flori nicety? 131 The importance of gardening in distinguishable pedigree contexts 133National stereotypes and cay dimensions of civilisation 136 Cross- hea jibelyish centering 144 glossiness in bodiedd in landing field institutions 151 Active Learning slip-up Culture clashing at Pharmacia and Upjohn 130 demesne(prenominal) chore line Strategy in fulfil McDonalds 135 Dan unmatched and Parmalatgoing inter home(a)ist, staying topical anaesthetic anesthetic 149 Real Cases Do non th trend your meishi 154 Sport corporation be local and global Manchester fall in 155 Patterns of global potpourri and the implications of these diversions select been studied from a put of perspectives, by sociologists, psychologists, anthropologists, and political scientists.Here we atomic number 18 concerned with how ethnical diversity and connect differences in the fashion, norms, and expectations of particular chemical groups of employees, theater be make believeors, colleagues, or customers affect prudence finale do and merged organizations. After an introduction to the kinds of business contexts in which ethnical differences do matter, this chapter pass on describe al around typologies of home(a) ethnic differences and discuss the implications of these for international managers. The unique(predicate) objectives of this chapter ar to 1 Define gloss and explain the occurrenc eors that underlie ethnical differences. Show where and why heathenish differences matter to international managers. 3 Explain a physique of frame lends that help key important cultural differences. 4 Examine how firms asshole anticipate and cope with cultural differences. RUGM_C05. QXD 8/18/08 152 PM varlet 130 c return TWO THE milieu OF multinational crinkle Active Learning Case Culture clash at Pharmacia and Upjohn Despite being part of the kindred advanced, industrialized world, Kalamazoo (Michigan, united States), Stockholm (Sweden), and Milan (Italy) ar worlds apart in umteen important shipway. Senior managers ternioning the jointure amongst devil pharmaceutical firms, Upjohn Comp either of he fall in States and Pharmacia AB of Sweden (with operations in Italy), came to wee how meaning(a) these differences were subsequently the merger excessivelyk model in 1995. Swedes take clear up- underlying to the nobleest degree of the month of July for their a nnual vacation, Italians take off puff up-nigh of August. not knowing this, US executives scheduled meetings in the summer only to pee-pee to potbellycel many because their European counterparts were at the beach. As the to a greater extent controlling US firm began to impose its way of doing things on the unseasoned-fashi whizdly acquired European organizations, international relationships became increasingly strained. Neither the Swedes nor the Italians were happy with mpositions such as the do drugs and alcohol testing policy brought in by Upjohn, or the say-so smoking ban. These clashed with local slipway of doing things and the a good deal than unceremonious take a leak milieu that these cultures prefer. Although Upjohn later relaxed many of these bailiwick rules, allowing roughly local practices and tastings to prevail, ill-feeling and a pointedness of resistance had already developed among European colleagues. The additional bureaucracy and the command-and control panache imposed by the the Statesns created more(prenominal) significant problems for the 34,000 employees and managers in Pharmacia and Upjohn Company. The Swedes ere utilise to an open, group-based vogue of management where responsibilities argon devolved managers ar leaveed and not strictly monitored or c regressly managed. Swedish executives overly tend to build up a consensus behind big decisions, getting every ace in the same boat (alla aer i baten) rather than handing armys down the hierarchy. As a tralatitious US multinational, however, Upjohn was more used to tough attractorship and a centralized command-andcontrol structure. Its CEO, Dr. John Zabriskie, cursorily created a strict reporting system, tight budget control, and frequent staffing updates, which clashed with the Swedish rganization style. Swedish managers would leave meetings disgruntled, having been overruled by US executives keen to push their stack of the unified bon ton. The Swedes ow n ship canal of doing things had already clashed with the Italian style of management, chase the takeover of Farmitalia (part of Montedison) by Pharmacia in 1993. Italians be used to a distinctive division between players (and their hale unions) and managers. Their 130 steeper hierarchies melodic phrase the more egalitarian Swedes. Italians besides note a racy nourish on families and leave alone leave ork to tend to sick sexual relations or help with childc be, which the Swedes let down upon. The addition of the Americans from Upjohn to this mix created further cultural confusion. conversation problems, beyond the self-evident language differences, became a real barrier to honest dialogue. You go at that place thinking youre going to streamline the place, said American account H. Corrigan, Pharmacia and Upjohn Vice President for clinical Development, and you leave unspoilt having added five pounds from few wonderful meals. These differences, many of them small bu t important at the local level, quickly began to remove an impact on the verall execution of the merged company. In the months and age following the merger unfore befooln inefficiencies and added follows began to undermine the capableness synergies of bringing together cardinal such companies in the first place. At one level the problems amounted to things like canceled meetings, new organization demands (such as periodic report theme), and a world(a) decline in staff morale. there were too un pass judgment difficulties integrating the IT systems across the various parts of the merged organization. These and divers(prenominal) assortments added an estimated $200 one million million million to the predicted costs of the estructuring, taking the total cost to $800 million. Even more seriously, for a pharmaceutical company heavily dependent on its new drugs pipeline to survive, slow up product launches and the loss of key staff (including the gaffer of R&D at Pharmacia ) had a long-acting-term impact. thither was probably an under-appreciation of these cultural differences, says Art Atkinson, reason Vice President for Clinical Research and Development. Particular problems resulted from the restructuring of the firms global R&D structure. Prior to the merger Upjohn own s wholesome-known names such as Rogaine andMotrin and had annual sales of around $3. 5 billion, but had a dim new product pipeline and slow sales ripening comp atomic number 18d to its bigger competitors. Similar-sized Pharmacia had a more promising pipeline but weak distribution and sales in the US merchandise, the worlds whackingst. These amounted to a pixilated rationale for the merger. Together they could contest the financial top executive and the larger R&D programs of their competitors. However, integrating and re reduceing the various parts of the new R&D structure became a study problem. Rather than place the R&D headquarters in the unite States, Sweden, or Mila n, a ecision was made to establish a new and neutral Londonbased center for the R&D function. This just now added a RUGM_C05. QXD 8/18/08 416 PM Page 131 CHAPTER 5 external kitchen-gardening layer of management and a more complex matrix reporting structure, which further modify key R&D personnel. In 1997, after the stock impairment of the merged corporation had fallen significantly, CEO John Zabriskie resigned. Swede Jan Ekberg, the former head of Pharmacia, took over temporarily and began to rebuild aspects of the merged organization. After acquiring a major(ip) part of Monsanto in 2000, Pharmacia and Upjohn became Pharmacia, which was hen itself acquired by the US giant Pfizer in April 2003. This made Pfizer, tally to its own Annual Report, the number one pharmaceutical company in every region of the World. 11 All this proves is that going global is hard turn. Not all of these problems could take on been foreseen, but a real lack of certainness of cultural differences di d lead to many of the organization difficulties and pack problems with a real impact on the bottom line. Websites www. accenture. com/xdoc/en/ideas/out tactile sensation/1. 2000/maa2. pdf www. pfizer. com www. pfizer. com/are/investors_reports/annual_2003/ re find/index. htm. computer addresss R. Frank and T. M. Burton, Pharmacia & Upjohn Faces Culture Clash Europeans Chafe Under US Rules, Wall Street Journal, February 4, 1997 R. J. Thomas, inconsistent Differences, Accenture Outlook, vol. 1, 2000 and Pfizer, Annual Report, 2003. What kinds of cultural differences matter when organizations from different countries merge? 2 How wholesome do the characteristics described in the case match the respective, stereotypical national cultures of these countries? 3 What could precedential managers cave in done before and after the merger to alleviate some of the problems that resulted from culture clash? Explain why one organization might want to impose some of its ways of doing things o n an other(a)(a), such as an acquired firm or subsidiary. INTRODUCTION The number of workers assiduous by unusual-owned companies has grown significantly over the past 20 years as a result of the expanding activities of foreign affiliates of MNEs around the world. For many population, ii employers and employees, this has brought home the realities of globalization. An estimated 73 million hoi polloi globally (including 24 million in China) now work for foreign companies, nearly three multiplication the number in 1990.Companies such as Motorola, ecumenical Motors, British Petroleum, and General Electric are among the largest private-sector employers in economies such as Malaysia and Singapore. 1 This exploitation multicultural workforce, part of the increasingly global patterns of exchange and fundamental interaction discussed before in this book, gear ups it more and more important to understand how peoples preferences, judgements, and set differ. Understanding intern ational cultural differences allows us to be aware of and adapt to the differences that matter for managers. WHAT IS goal? SocializationThe process of enculturation, or the adoption of the demeanour patterns of the surrounding culture Culture can be defined as the sum total of the beliefs, rules, techniques, institutions, and artifacts that characterize human populations2 or the corporal programming of the mind. 3 Sociologists everydayly talk about the brotherlyization process, referring to the invite of parents, friends, education, and the interaction with other members of a particular friendship as the seat for ones culture. These influences result in learned patterns of way cat valium to members of a given society.As you can see, explanations of culture spay consort to the focus of interest, the unit of analysis, and the disciplinary approach (psychology, anthropology, sociology, geography, etc. ). 131 RUGM_C05. QXD 8/18/08 416 PM Page 132 helping TWO THE ENVIRONMEN T OF INTERNATIONAL BUSINESS accede 5. 1 World population percentages in ground of home region, language, and religion Home region Asia Africa Europe Latin America Former Soviet bloc North America Australia and unseasoned Zealand % 58. 4 12. 4 9. 5 8. 4 5. 5 5. 2 0. 6 language % Mandarin 14. 4 Hindi 6. 0 English 5. 6 Spanish 5. 6 Bengali 3. 4 Russian 2. 8 Portuguese 2. 6 Nipponese 2. 0German 1. 6 Korean 1. 3 French 1. 3 other(a) 54. 4 (approx. 200) Religion Christianity, including Catholics Protestants Orthodox Islam Hinduism Non-religious Buddhism Chinese traditional Primal indigenous Other % 33 20 9 4 22 15 14 6 4 3 3 Sources www. census. gov www. adherents. com. Corporate culture The characterd values, traditions, customs, philosophy, and policies of a corporation likewise, the professional atmosphere that grows from this and affects sort and feat 132 This is significant in that studies of cultural differences adopt a specific definition and dress out of mensurable crit eria, which are always debatable.Research into culture and its impact in business and management studies is passing contentious and should not just be taken at face value, including the studies described below. There is a strong consensus, however, that key elements of culture include language, religion, values, attitudes, customs, and norms of a group or society. Table 5. 1 shows how the worlds population is divided according to geography, language, and religion. actors line is perhaps the more or less important key to savvy culture in world(a) and the specific values, beliefs, attitudes, and opinions of a particular idiosyncratic or group.English is astray certain as the language of business many global institutions and companies eat up adopted English as their official language. For many firms, such as Toyota, NEC, Hitachi, and IBM japan, English-speaking force is a prerequisite for promotion. 4 However, any confidence that speaking the same language removes cultural d ifferences is dangerousit normally just hides them. more(prenominal)over, a reliance on English by British and American managers, and a lack of other language skills, can weaken their ability to empathize with and adapt to other cultures.Religion, connectered to both regional characteristics and language, likewise influences business culture by a ring of shared magnetic core values. Protestants hold strong beliefs about the value of delayed gratification, saving, and investment. The sociologist Max weber, writing in 1904, saw this Protestant work ethic as the look of capitalism during the Industrial Revolution. 5 Rather than spending, consuming, and savouring life now, their religious beliefs prompted the Protestants to look to longer-term rewards (including those in the after-life).There are parallels with the Confucian and Shinto work ethics, which overly view spiritual rewards as tied to hard work and commitment to the fruits of indus accent. incompatible this, a more s toic attitude among some African populations part explains their borrowing of the ways things are, because it is the lead of God (shauri ya Mungu). At the close general level culture can refer simply to the lifestyle and mien of a given group of people, so bodied culture is a term used to characterize how the managers and employees of particular companies tend to behave.But the term is withal used by human resource managers and ranking(prenominal) management in their attempts to proactively shape the kind of behavior (innovative, open, dynamic, etc. ) they hope to nurture in their organizations. Promoting a distinctive corporate culture is also expected to enkindle the sense of community and shared identity that underpins effective organizations. RUGM_C05. QXD 8/18/08 152 PM Page 133 CHAPTER 5 INTERNATIONAL CULTURE THE IMPORTANCE OF CULTURE IN DIFFERENT BUSINESS CONTEXTS Cross-cultural management issues explicate in a range of business contexts.Within person firms, for ex ample, managers from a foreign parent company ingest to understand that local employees from the emcee country whitethorn require different organization structures and HRM procedures. In cross-b put together mergers and acquisitions (M&As), realizing the expected synergies very very much depends on establishing structures and procedures that encompass both cultures in a matchd way. Cross-border joint ventures, alliances, or buyersupplier relationships between two or more firms also require a cultural compromise.Finally, for firms to distribute triple-crownly to foreign customers requires culturally sensitive adaptations to products, serfeeblenesss, trade, and advertising. send off 5. 1 outlines, at the most general level, links between business contexts and particular characteristics of somebodys or groups that are influenced by well-disposed and cultural norms of a particular region. At the face-to-face level in meetings the language and behavior of different peoples alte r and their mutual reasonableness of each others culture will influence the effectiveness and efficiency of communication between them.This influences how wholesome multicultural employments operate at all levels, from strategy setting at the aged level to plant-floor operations. Firms also tend to have different organizational and decision-making practices depending on where they have evolved and which cultures and subcultures they encompass. For firms to build successful alliances and partnerships, or for M&A activities to practise at the company-to-company level, there needs to be an understanding of the organizational look 5. 1 Cross-cultural business contexts 133 RUGM_C05. QXD 8/18/08 152 PM Page 134 PART TWO THE ENVIRONMENT OF INTERNATIONAL BUSINESSEthnocentrism The belief that ones own way of doing things is superior to that of others. differences between them. This covers often every element of corporate organizations from decision-making structures and systems and m anagementlabor relationships to case-by-case employees attitudes toward their work and their employer. Finally, culture influences the behavior and preferences of clients and customers. To sell successfully in a foreign market, a manager needs to adapt his or her product or service to meet the different needs of that particular group of customers.Any renewing in advertising, marketing, product or service features, after-sales support, technical back-up, documentation, etc. , will be partly guided by cultural differences. Failure to do this ends in the kinds of marketing mistakes and communication blunders that be set about marketing folklore. For example, Fords low-cost truck was initially marketed as the Feira to Spanish-speaking people, but this mover ugly old fair sex in Spanish. The Ford Comet, a high-end car, was exchange as the Caliente in Mexico, which is local slang for prostitute. Unsurprisingly neither model did well in these markets. This reinforces the above point a bout the importance of language, but also demonstrates how some of the largest and most watchd companies do not appear to do the most basic cultural due diligence (their homework ) when instauration products and work in foreign markets. The chapter on marketing strategy in this book examines these kinds of issues more closely. Across all of the business contexts in var. 5. 1 ignorance of cultural differences represents a common stumbling block for international managers.Ethnocentrism, the belief that ones own way of doing things is superior to that of others, can also be a major barrier to good international management. The take exception lies in recognizing differences, combining the favours that stem from different styles and approaches, adjusting and adapting to succeed with different people, in different partnerships, and in different markets. ? Active learning kerb follow your answer to Active Learning Case question 1 and make any changes you like. Then compare your ans wer to the one below. 1 What kinds of cultural differences matter when organizations from different countries merge?The definition of culture itself gives some indicators of the kinds of differences that matter. placements from different countries will have developed different beliefs, values, and patterns of behavior based on their underlying national culture. A grand range of differences could be important, including attitudes toward work and workplace practices, managementlabor relations, the decision-making hierarchy, and division of responsibilities. Cross-border M&A often also requires changes to the marketing and branding of products and services as sales are expanded into new markets.Differences in the language, values, and preferences of customers in different countries also need to be taken into account. Culture has always been important Cultural overlap The growing similarity between national cultures, including the beliefs, values, aspirations, and the preferences of c onsumers, partly driven by global brands, media, and common global icons 134 Despite the various patterns and processes of globalization, cultural differences tranquillize remain important. Even with greater common access, via various media and the Internet, to the same brands, joggle icons, and sports stars, differences remain.Terms like cultural convergence or, simply, Americanization (the homogenization of global consumer preferences through the omnipresence of McDonalds, Coca-Cola, and Ford) overstate the similarities between groups of people around the world. (See the case external Business Strategy in Action McDonalds. ) RUGM_C05. QXD 8/18/08 152 PM Page 135 CHAPTER 5 INTERNATIONAL CULTURE multinational Business Strategy in Action McDonalds When Jose Bove, a self-proclaimed leader of Frances antiglobalization movement, was sentenced for vandalizing a McDonalds restaurant in 1999, he claimed to have the backing of the French people.That might have been an overstatement, but 40,000 French people were there to show their support. It was not only the French, however in the mid-nineties McDonalds restaurants were vandalized in about 50 countries. At issue is the ecumenical perception that McDonalds represents a particular friendly Ronald-McDonald-type of US imperialism. tralatitious lifestyles, critics say, are being eroded by McDonalds marketing practices, its value chain system, its fast-food concept, and the unhealthy food itself. Yet, McDonalds bends over backward to blend into local cultures. The company advertises itself to its critics as a lobal company owned and run by local people. Indeed, the franchise system makes it so that McDonalds Japan is run by the Japanese and Israels McDonalds restaurants are run by Israelis. Local business owners choose their menus offerings to fit their culture, find alternative suppliers, and create suitable marketing for their culture. An American in Saudi Arabia might seat single men with families at a McDonalds opening, but a Saudi Arabian owner would know that this is unacceptable and the restaurant will be designed to pacify the culture. In the land of Jose Bove, Asterix, a French comic-strip haracter who stands for psycheistity and ironically symbolizes local resistance to imperial forces, replaced the goofy Ronald McDonald in the companys marketing in the early 2000s. In 1999, French McDonalds went the extra cubic cen condemnationtre to prove how local it was by printing advertisements making fun of US eating habits. In one ad, a large American cowman complains that McDonalds France does not import American call to guarantee maximum hygienic conditions. French restaurants are more fashionably and more comfortably designed than North American ones to create an environment where customers may enjoy longer meals n accordance with French tradition. If they want, customers can order a beer from the menu. In India, where local tastes are very different from those in the unify Stat es, the company crafted an entirely different menu that does not use beef or pork due to the mostly vegetarian population. The Indian Big mack is made of lamb. In Israel, the locally owned McDonalds purchases over 80 percent of its ingredients from local producers, including 100 percent kosher hamburger meat, potatoes, lettuce, buns, and handshake mix. There are no cheeseburgers in Israels McDonalds because dairy products cannot be eaten together with meat.On the other hand, McDonalds does bring its own culture to its foreign operations. In China, where childrens birthdays are not traditionally celebrated, a successful McDonalds marketing strategy encouraged birthday parties at their establishments. Not a bad deal for children, but still a cultural effect from a foreign multinational. More mundane things, such as combo meals, are popularized through McDonalds expansion. By promoting its carbonate beverages in India, the firm is unsettling the countrys tea culture. The companys pre sence creates a cultural exchange, not a one-sided cultural takeover.Beyond reactionary behavior against McDonalds cultural impositions, McDonalds has had to suffer simply for being born in the join States. Just hours after the United States began bombing Afghanistan in 2001 McDonalds restaurants were vandalized in cities in Pakistan and Indonesia and Muslim clerics asked for the ostracise of US products. For activists and cultural protectors, the most frustrating thing is that their calls go unheeded. Owners of McDonalds franchises continuously remind customers that they too are locals, that their employees are locals, and that their suppliers are principally local.In Brazil, some anti-war protestors on their way home will stop at a McDonalds for a bite to eat. Some of McDonalds major troubles, however, are in its most established markets in the United States, Canada, and the UK. Russian and Chinese go-getters might think that a meal in McDonalds puts them in a class above, but in its two major markets of North America and Europe, where the firm derives over two-thirds of all r nonetheless(prenominal)ue, the food is considered unhealthy. Indeed, both Canada and the UK considered imposing a tax on fatty foods on the cause that it was damaging to peoples health and it osts the health-care system a warm amount. The tax is unlikely to be imposed because of a strong occur from poverty groups who argue that this tax would place an un in sequence burden on those who depend on cheap food for their everyday survival. In the United States, the firm is being sued over claims that it misled parents about the nutritional value of its products, jumper lead their children to become obese and unhealthy. McDonalds in the UK reacted by eliminating supersized options from the menu. A set of healthier options has now been introduced inEurope and North America as the company fends off critics in some of its friendliest markets. Sources David Barboza, When Golden Arches Ar e Too Red, White and Blue, raw(a) York Times, October 14, 2001 Tony Karon, Adieu, Ronald McDonald, Time. com, January 24, 2002 Simon Romero, War and Abuse Do Little to Harm US Brands, New York Times, May 9, 2004. 135 RUGM_C05. QXD 8/18/08 152 PM Page 136 PART TWO THE ENVIRONMENT OF INTERNATIONAL BUSINESS Cultures vary and these variations lead to real and significant differences in the ways that companies operate and people work.Moreover, because of globalization more and more firms are coming head to head with the added complexity of doing business globally, which stems from the huge amount of variety in the world that still exists (and arguably will always exist). Before moving on to examine some typologies of global cultures, here is a word of warning. overmuch of this section will describe how various kinds of individual and group behavior can be linked to specific cultural groups and associate these cultural dispositions with different business styles and company structures.A cting on the foothold of cultural stereotypes is highly sensitive and can be problematic. For example, at the simplest level a banker may be able to prove empirically that Pakistanis are more successful than Jamaicans at beginning and running small businesses around the world. Using this discernment as the basis for discriminating against Jamaicans wanting bank loans for business start-ups is not only unethical, but in most countries falls foul of extend discrimination laws. NATIONAL STEREOTYPES AND KEY DIMENSIONS OF CULTURE Culture at two levelsThere are traditionally two different approaches to looking at culture Psychic infinite The psychic or psychological level, which focuses on the internalized norms, attitudes, and behavior of individuals from a particular culture (psychic outdistance is a measure of differences between groups). A measure of the similarity or difference between two cultures also commonly The institutional level, which looks at national (or group) cult ure bodied in defined as the measurable institutions (government, education, and economic institutions as well as in business distance between the home rganizations). market and a foreign market resulting from the perception In this chapter we will primarily discuss the first, culture as shared psychology, with a brief of cultural and business differences reference to national institutional differences at the end. People who are born in, or grew up in, the same country tend to share similar cultural characteristics. Nordstrom and Valhne examined a sample of Swedish firms to understand the cause of psychic distance on market-entry strategies and costs. They ranked 20 particular countries according to a range of national characteristics that contribute to psychic distance and found, as you might expect, that Denmark is closest to Sweden (1/20), the UK comes in at 6/20, Portugal at 15/20, Japan 16/20, Brazil 17/20 and Australia 20/20. Nationality and culture tend to coincide, althoug h nations encompass a wide variety of institutions, religions, beliefs, and patterns of behavior, and distinctive subcultures can always be found at heart individual countries. The only way to make sense of this wide diversity is to characterize distinct cultural groups through simplified national stereotypes.Many studies have attempted to create these stereotypes by mapping and comparing the shared characteristics of managers and employees in different countries. 7 Researchers then examine the effects of key differences on business behavior, organization, structure, and ultimately the performance of companies from different countries. The following describes the milestone studies of this kind in the management field. Hofstedes four dimensions of culture Geert Hofstede is a Dutch psychologist who conducted one of the earliest and known cultural studies in management, on IBMs operations in 70 countries around the world. 136 RUGM_C05. QXD 8/18/08 152 PM Page 137 individualism index CHAPTER 5 INTERNATIONAL CULTURE Power distance index examine 5. 2 Hofstedes spot distance against individuality for 20 countries Source Hofstede, G. (1983). The cultural relativity of organizational practices and theories, Journal of International Business Studies, Fall, p. 92. Copy aright Geert Hofstede. Getting answers to 32 statements from over 116,000 questionnaires, he mapped key cultural characteristics of these countries according to four value dimensions Power distance A cultural dimension that measures the degree to hich less(prenominal) powerful members of organizations and institutions accept the fact that power is not distributed equally misgiving dodging The extent to which people feel threatened by ambiguous situations and have created institutions and beliefs for minimizing or avoiding those uncertainties Individualism The end of people to look after themselves and their immediate family only maleness The degree to which the dominant values of a society are su ccess, money, and substantial things 1 Power distance is the extent to which a culture accepts that power in organizations is distributed unequally.High power distance equates with steep organizational hierarchies, with more unequivocal leading and less employee intimacy in decision making (see Figure 5. 2 for examples). 2 Uncertainty avoidance is the degree to which members of a society feel uncomfortable with risk and uncertainty. High uncertainty avoidance (Japan, Argentina, France) will be reflected in the high priority placed on rituals, routines, and procedures in organizations and society in general. Countries with low uncertainty avoidance (Denmark, UK, India, US) tend to mark flexibility and in positiveity rather than bureaucracy. Individualism is the extent to which people are supposed to take care of themselves and be stimulatedly independent from others (see Figure 5. 2 for examples). 4 Masculinity is the value attributed to achievement, assertiveness, and material success (Japan, Mexico, Germany, UK) as opposed to the stereotypical feminine values of relationships, modesty, caring, and the quality of life (Sweden, Netherlands, Denmark), according to Hofstede. Figure 5. 2 illustrates some of Hofstedes findings using two of the most useful dimensions, power distance against the degree of individualism/collectivism.It reflects some general stereotypes of the countries included, with clear grouping of Australia, UK and US as highly individualistic and less vertical (small power distance) cultures against Mexico, Thailand, and Panama at the other extreme. We will riotous on these definitions and their practical interpretation throughout this chapter. Among his most important contributions, Hofstede provided strong evidence for the significance of national culture over professional role, gender, or race, as a determinant of variation in employees attitudes, values, and behaviors, accounting for 50 percent of the 137 RUGM_C05. QXD 8/18/08 52 PM P age 138 PART TWO THE ENVIRONMENT OF INTERNATIONAL BUSINESS differences his study observed. However, his studies have come in for significant criticism, despite widespread adoption of the four-dimensional framework. one-third common criticisms are (1) that the dimensions developed from data collected between 1968 and 1973 were relevant only for that particular period (2) that corporate cultural and other influences from this one-organization (IBM) study created significant bias (3) that the sole use of attitude-survey questionnaires was not a validated basis for the resulting values and dimensions his study concluded with. Although Hofstede has continued to write on culture, organizations, and management10 it is useful to look more deeply into the work of another known Dutch culture guru. Trompenaars seven dimensions of culture Universalism The uniform application of rules and procedures, regardless of situation, context, or individuals involved Particularism Judging a situation and adjusting rules and procedures according to the specific situation or individuals involved Collectivism The tendency of people to proceed to groups who look after each other in xchange for loyalty sluggish A preference for un aroused, objective analysis of a situation or a decision and for limited displays of emotions and feelings in the workplace Emotional An acceptance of emotion and subjectivity as the bases for some decision making and a preference for definitive displays of emotions and feelings in the workplace Specific A tendency to limit workplace relationships and obligations, including relative status and hierarchical position, to the workplace give out A tendency for workplace relationships and obligations, including relative tatus and hierarchical position, to extend into social situations and activities outside of work 138 Fons Trompenaars built on Hofstedes work by expanding the framework for stereotyping and comparing different national cultures and by focusi ng more on the management implications of cultural differences. Using initial look into involving 15,000 employees in 50 countries, Trompenaars explored the cultural extremes and the incomprehension that can arise when doing business across cultures, even when people are working for the same company. 1 Trompenaars arrived at seven distinctive dimensions of culture and used the questionnaire responses in his study to map a wide variety of countries along a continuum from one extreme to the other within each dimension. The key to understanding this mapping approach is to identify where each country or culture is positioned relative to others on one or more of these dimensions. Relative positioning gives insights into the kinds of conflicts, misunderstandings, and organizational and management problems that are likely to arise when individuals, groups, or firms from these countries interact in any of the ways described above. Universalism versus particularism. In universalistic cultur es rules and regulations are applied in all situations, regardless of particular conditions or circumstances. The example used by Trompenaars refers to a salesman who does not fulfill his monthly sales quota because he was looking after his sick son. Should he be penalized according to standard company regulations or should he be excused because of the particular circumstances? According to Trompenaars findings, Switzerland, Canada, and the United States are among the most universalist. Australia and the UK are also toward this end of the scale.Germany is closer to the center, as is France, but the latter sits on the particularist side of the scale. Korea, Russia, and China are the most particularist of countries. (Note that some of the countries studied by Hofstede, like the strongly particularist Yugoslavia, no longer exist. ) 2 Individualism versus collectivism. This dimension, clearly building on Hofstede, centers on whether individual rights and values are dominant or subordina te to those of the collective society. The most individualist countries are Canada, the United States, Switzerland, and the UK.Among the most collectivist are Japan, Egypt, and India (and Nepal and Kuwait). 3 Neutral versus emotional. This reflects how much emotions are displayed in the workplace. More importantly it indicates whether emotional or subjective (rather than objective) forms of assessment are thought to be the basis for good decision making in organizations. Some organizations emphasize reports, data, and analytical decision making by managers, whereas others feel that opinions, intuition, and gut feelings are thinkable or valid criteria.Predictably the most emotional countries include Italy and France and the least emotional groups (in the workplace at least) are the Japanese, Germans, Swiss, Chinese, and Indonesians. 4 Specific versus diffuse. Do work relationships (such as the hierarchical relationship between a senior manager and a subordinate) exist just in the wo rkplace (are they RUGM_C05. QXD 8/18/08 152 PM Page 139 CHAPTER 5 INTERNATIONAL CULTURE specific), or do they extend into the social context outside the workplace (diffuse)? Here a telling example is whether an employee is willing to help cay a senior managers house over a weekend.Clearly Australian bosses are likely to get a characteristically blunt answer to this request China, Japan, India, and Singapore display highly diffuse relationships, Australia and the Netherlands the most specific. Achievement oriented Where status is earned rather than a right recruitment and promotion opportunities tend to be more dependent on performance, as in a meritocracy Ascription oriented Where status is more of a right than earned recruitment and promotion opportunities tend to be more dependent on seniority, ethnicity, gender, religion, or birth SequentialCultures that view time in a sequential or linear fashion order comes from separating activities and commitments Synchronic Cultures that vi ew events in parallel over time order comes from coordinating multiple activities and commitments 5 Achievement versus ascription. This dimension refers to ones status within organizations, contrasting those cultures where status, credibility, authority, and ultimately power tend to be based on merit (achieved) against those where class, gender, education, or age tend to be the defining characteristics (status is ascribed).Countries where status tends to be ascribed include Egypt, Turkey, and Argentina (and slightly less so, Russia, Japan, and France), and those where it is achieved include Norway, Sweden, and predictably the United States, Australia, Canada, and the UK. 6 Attitudes toward time. Sequential (time as a sequence of events) versus synchronic (several events juggled at the same time) views of time tend to colligate to promptity for meetings and deadlines. Swedes and other northern European cultures tend to be punctual and plan according to specific timetables.Many sout hern European, Latin American, and Arabic cultures see punctuality and chronological precision as far less important. They also tend to naturally cope with a range of issues simultaneously, rather than one by one. 7 Attitudes toward the environment. This dimension reflects the accent mark a particular culture places on peoples relationship with nature and the natural environment. On the one hand some cultures emphasize control and subjugation of environmental forces, whereas others emphasize the need to work with nature, in harmony with the environment.Clearly religious and philosophic differences around the world influence differences within this dimension. Trompenaars seven dimensions have been used in a variety of ways to gain insights into the kinds of problems that might arise in the contexts (face to face, company to company, and company to customer) outlined in Figure 5. 1. In general they indicate the organizational characteristics we can expect from firms based in particu lar countries or rund by certain nationalities. They are also used to measure changes in cultural values and behavior over time.Research shows that in both Japan and China, for example, achievement penchant is on the add-on alongside some elements of individualism. 12 The Japanese are moving aside from a reliance on collectivism in the form of the state, large firms, and group associations and placing more value on personal responsibility and individual performance. In China there is a shift in companies toward performance-related rewards and individual initiative, built on the changing views of the growing urban elite.But there are also wider concerns regarding the social costs as well as the benefits of self-interest. The egg projects nine dimensions of culture More recent research has built on the Hofstede and Trompenaars research. The Global leaders and Organizational Behavior authority (GLOBE) project began in 1992 and continues today. It has involved 150 researchers colle cting data on cultural values and management and leadership attributes from 18,000 managers across 62 countries in the telecommunications, food, and banking industries. 3 In the same way as Hofstede and Trompenaars before them, the researchers place countries along a standard 1 to 7 scale. The GLOBE project, however, ends up with nine key cultural dimensions 1 Assertiveness. The United States, Austria, Germany, and Greece are high Sweden, Japan, and New Zealand are low. 2 Future orientation. A propensity for planning, investing, delayed gratification Singapore, Switzerland, and the Netherlands are high Russia, Argentina, and Italy are low. 139 RUGM_C05. QXD 8/18/08 416 PM Page cxl PART TWO THE ENVIRONMENT OF INTERNATIONAL BUSINESS Gender differentiation. The degree to which gender role differences are maximized South Korea, Egypt, India, and the China are high Hungary, Poland, and Denmark are low. 4 Uncertainty avoidance. A reliance on societal norms and procedures to break predic tability, a preference for order, structure, and formality Sweden, Switzerland, and Germany are high Russia, Bolivia, and Greece are low. 5 Power distance. Russia, Thailand, and Spain are high Denmark, the Netherlands, and Israel are low. 6 Institutional collectivism (individualism vs. ollectivism). Promoting active participation in social institutions Sweden, South Korea, and Japan are high Greece, Argentina, and Italy are low. 7 In-group/family collectivism. A pride in small-group membership, family, close friends, etc. Iran, India, and China are high Denmark, Sweden, and New Zealand are low. 8 Performance orientation (much like achievement orientation). Singapore, Hong Kong, and the United States are high Russia, Argentina, and Italy are low. benevolent orientation Cultures that emphasize helping others, charity, and eoples wider social obligations 9. Humane orientation. An emphasis on fairness, altruism, and generosity Ireland, Malaysia, and Egypt are high Germany, Spain, Fran ce, Singapore, and Brazil are low. As you can see, many of these dimensions match those of Hofstede and Trompenaars, and the overall GLOBE framework is very much an extension of their approach. The GLOBE researchers have examined the HRM implications of these cultural differences for practicing managers and looked at ways to avoid the pitfalls of ignorance and insensitivity. 4 A similar long-running study by the CRANET communicate has focused on European cultural differences and reports similar findings. 15 As with the other cultural mapping studies by Hofstede and Trompenaars, GLOBE has faced some critical appraisal, which helps us understand the strengths and weaknesses of its concluding framework. A recent set of debates has usefully raised some methodological issues associated with these kinds of studies, and provides interesting points of contention we should be aware of, rather than blindly accepting the above kind of research. 6 Applying the national culture frameworks Diffe rent styles of communication and interaction result from the cultural differences listed above. These can lead to workplace misunderstandings, poor interpersonal and intergroup relationships, inefficiency, and higher costs. threesome examples provide some insights into how we can apply the above typologies. US managers, according to all of the above studies, are highly assertive and performance oriented relative to managers from other parts of the world (they come around the sum on all the other dimensions).Their interaction style is characteristically direct and explicit. They tend to use facts, figures, and logic to link specific steps to measurable outcomes, and this is the main focus of workplace interaction. Greeks and Russians are less individualistic, less performance oriented, and show lower levels of uncertainty avoidance (are less driven by procedures) than the Americans. When Russian and Greek managers, employees, customers, suppliers, or public-sector officials interac t with US counterparts, they may well find their approach too direct and results focused.For them communication is likely to be more about mutual learning and an exploration of relevant issues than an explicit hold upment about specific expectations and end results. Similarly, the Swedes may find the US style too aggressive and unfriendly, working against the relationship-building process that for them is a major objective of workplace interaction. The Koreans and Japanese have highly gender-differentiated societies with males tending to dominate decision making and leading most face-to-face communication. The agenda 140 RUGM_C05. QXD 8/18/08 152 PMPage 141 CHAPTER 5 INTERNATIONAL CULTURE Ethnocentric A belief in the superiority of ones own ethnic group the dominance of the homecountry culture in decision making, human resource management, and overall corporate culture in a multinational firm for discussion is likely set by males, and traditional language forms differ according to whether a man is addressing a woman or an older person talking to a younger person, and vice versa. Gender- (and age-)related roles, responsibilities, and behaviors are therefore deeply embedded in language and customs. 7 Poland and Denmark lie at the other end of the continuum on the gender-differentiation dimension. Perhaps even more than other Western managers, their lack of awareness of this cultural difference runs the risk of both embarrassing female employees and offending and alienating senior Japanese male managers. This kind of clash can make negotiations and interaction of all kinds between these groups that much more difficult. Certain kinds of HRM techniques are contradictory for organizations that show high power distance ratings.Companies and management consultancies in the UK, the United States, and northern European countries have developed fairly participative management systems to improve productivity, based on their characteristically low power distance and mon otonic organizational hierarchies. Techniques such as 360-degree feedback systems for developing managementemployee relationships are not likely to work, however, in Mexican, Panamanian, Thai, or Russian organizations, which have high power distance and steep hierarchies.Subordinates are uncomfortable being asked to evaluate senior managers, and managers would not see subordinates as qualified to comment on their performance. More than this, to employees in some countries this kind of consultation can give the plan that senior managers do not know what they are doing The employees may lose faith in senior managements ability and leave None of the above examples means that international managers should (or ever could) entirely change their behavior to suit local values and practices.Like many of the challenges facing managers, cultural sensitivity and cross-cultural effectiveness come from striking a balance between ones own norms, values, and principles and those of the foreigner. The lesson for multinational firms is that ethnocentric corporate cultures and completely standardized HR systems do not work. The key challenge is to adapt to get the best from local differences. ? Active learning check Review your answer to Active Learning Case question 2 and make any changes you like. Then compare your answer to the one below. 2How well do the characteristics described in the case match the respective, stereotypical national cultures of these countries? According to the above frameworks they match reasonably well. The US culture is characterized as individualistic, achievement/performance oriented, and assertive. Most of these traits clash with the feminine (in Hofstedes characterization) values of relationships, modesty, caring, and the quality of life emphasized by the Swedes. Hofstede finds US managers less hierarchical than most cultures, which is not indicated in the PharmaciaUpjohn case. However, as Figure 5. shows, both countries have a low power distance and high individualism rating, relative to other countries, but the United States has slightly higher power distance (steeper management hierarchy) than Sweden. Sweden also has a relatively high uncertainty avoidance ranking, preferring order, structure, and formality, which does not stand out in the case study. Swedes are also high on institutional collectivism but low on family or small-group collectivism. The Italians are the opposite. Unlike the Americans, the Italians are not at all oriented toward achievement (Trompenaars) or performance (GLOBE).They are also more emotional than the Swedes and Americans according to Hofstede and have a relatively low early orientation (GLOBE). 141 RUGM_C05. QXD 8/18/08 152 PM Page 142 PART TWO THE ENVIRONMENT OF INTERNATIONAL BUSINESS The way we do things here the implications of cultural differences for organizations and managers Mapping out a variety of national cultural typologies using the various dimensions of culture described above gi ves us some insights into the kinds of differences that exist among different groups of managers, employees, and organizations.Two key questions about the role of the individual in a firm and the role of a firm in a society from Trompenaars study give us a starting point to explore the management implications of cultural differences. The responses in Figure 5. 3 reflect the degree of support for the particular proposition A or B for each of these questions. Americans clearly display what has been termed (originally by the sociologist Max Weber) a mechanistic and functional view of the firm as an organization (A) and a shareholderdriven, profit-oriented view of this organization in society (although more than half the US vote in Figure 5. was for option B). The Japanese tend to have a more perfect view of the firm, emphasizing the importance of social networks and the obligation of the firm to a wider constituency of stakeholders (although this is a characteristic of traditional Jap an that has been strongly tested in the recent recessionary environment). A wide range of factors within organizations are influenced directly or indirectly by the cultural predispositions of managers and employees. We know from the above studies and a wide range of other research that these factors include The general relationship between employees and the organization their roles and responsibilities, obligations, and loyalties and the link this has with life outside the workplace. Figure 5. 3 Excerpts from Trompenaars cultural attitudes survey Source Hampden-Turner, C. and Trompenaars, F. The Seven Cultures of Capitalism Value Systems for Creating Wealth in the United States, Britain, Japan, Germany, France, Sweden and the Netherlands (New York Doubleday, 1993). 142 RUGM_C05. QXD 8/18/08 152 PM Page 143 CHAPTER 5 INTERNATIONAL CULTURE Hierarchy, power and authority, and the accepted routes to attaining these, including factors that underpin status and credibility in different soc ieties and organizations. The role of formal rules and regulations versus the informal communication, personal networks, and hidden rules of the game. The accepted basis for decision making, including rationale, scientific, mechanistic, and objective versus subjective, tacit, rule of thumb, etc. The degree to which employees act and are treated as individuals or groups and the role of interpersonal relationships. motive and rewards systems. Interaction and communication mechanisms. Work attitudes and the appropriate management of work attitudes have a significant influence on productivity and innovativeness in a company. Managers and employees who are motivated by their core social values to work hard and continually strive to improve their companys products and services and the processes by which they are produced are clearly a source of emulous advantage. It is interesting to note how social norms may drive a strong work ethic despite individual dissatisfaction with workloa d or job responsibilities.This has been shown in several companies between US and Japanese factory workers where the Japanese are found to be more loyal and aligned with company objectives but far less satisfied individually. 18 Table 5. 2 compares interview responses from sample workforces in seven countries. The resulting ranking of what it is that employees value most from their jobs shows that interesting work is what tends to engage most people, beyond everything else. Table 5. 2 Average and intra-country ranking of work goals a seven-nation comparison Work goals Belgium UK Germany Israel Japan Netherlands United StatesOpportunity to learn 5. 8a 7b 5. 55 8 4. 97 9 5. 83 5 6. 26 7 5. 38 9 6. 16 5 Interpersonal relations 6. 34 5 6. 33 4 6. 43 4 6. 67 2 6. 39 6 7. 19 3 6. 08 7 Opportunity for promotion 4. 49 10 4. 27 11 4. 48 10 5. 29 8 3. 33 11 3. 31 11 5. 08 10 Convenient work hours 4. 71 9 6. 11 5 5. 71 6 5. 53 7 5. 46 8 5. 59 8 5. 25 9 Variety 5. 96 6 5. 62 7 5. 71 6 4. 89 11 5. 05 9 6. 86 4 6. 10 6 Interesting work 8. 25 1 8. 02 1 7. 26 3 6. 75 1 6. 38 2 7. 59 2 7. 41 1 line of reasoning security system 6. 80 3 7. 12 3 7. 57 2 5. 22 10 6. 71 4 5. 68 7 6. 30 3 Match between the people and the work 5. 77 8 5. 63 6 6. 09 5 5. 61 6 7. 83 1 6. 17 6. 19 4 Pay 7. 13 2 7. 80 2 7. 73 1 6. 60 3 6. 56 5 5. 27 5 6. 82 2 Working conditions 4. 19 11 4. 87 9 4. 39 11 5. 28 9 4. 18 10 5. 03 10 4. 84 11 Autonomy 6. 56 4 4. 69 10 5. 66 8 6. 00 4 6. 89 3 7. 61 1 5. 79 8 a First row shows sightly rank on a scale of 1 to 10. Second row shows ranking of work goals within each country, with a rank of 1 being most important and 11 being least important. b Source Adapted from Itzhak Harpaz, The Importance of Work Goals An International Perspective, Journal of International Business Studies, vol . 21, no. 1 (1990), p. 81. 143 RUGM_C05. QXD 8/18/08 152 PM Page 144PART TWO THE ENVIRONMENT OF INTERNATIONAL BUSINESS cross-cultural MANAGEMENT Three key areas capture many of the fa ctors covered by the above typologies and cultural stereotypes, where cultural differences can make a significant difference at the company-tocompany and face-to-face levels. These are organization, leadership, and communication (see Figure 5. 4). Organization Organization styles range from organic, informal, or people oriented to systematic or mechanistic, formal, or task oriented, in keeping with some common organizational dimensions described by sociologists throughout history (such as Max Weber and Emile Durkheim).Organizations that operate very much around personal relationships and social networks contrast those that are much more functional and logical. In fact different cultures and different firms display elements of both these characteristics, but the balance varies considerably and can create tensions when groups of people or firms from different ends of the spectrum interact or try to cooperate. As an aid to predicting differences among individuals, groups, or firms, and understanding the significance of these variations, relative differences among countries, organizations, and groups of people are important, rather than any absolute whips.For example, family companies are characteristically guiding, individual oriented but organic. Multinational firms are usually more autocratic and mechanistic. Consulting and professional services firms are often mechanistic and emphasize individual performance and rewards but may also be fairly team oriented. Entrepreneurial new ventures will usually be organic, disorganized, and group oriented. Leadership Leadership styles range from individual oriented, directive, autocratic, top down, or authoritarian to group oriented, participative, democratic, bottom up, or egalitarian.Again, cultural groups and corporations often encompass both kinds of leadership but tend to reflect one dominant style. Individual managers from cultures that score high on the power distance or assertiveness dimensions are likely to be viewed by those from other cultures as autocratic and directive but will tend to view others as indecisive and too compromising. They will not want to spend too much time discussing issues to achieve a consensus. If they also reflect an organic Figure 5. 4 Management dimensions of culture 144 RUGM_C05. QXD 8/18/08 52 PM Page 145 CHAPTER 5 INTERNATIONAL CULTURE or informal (low uncertainty avoidance) culture, this will result in an instinctive or unsystematic decision-making and implementation style, and they might be viewed as an unpredictable autocrat. This contrasts the combination of high power distance and high uncertainty avoidance, which results in a more directive and mechanistic style. Such leaders prefer established formal routines and a command-and-control bureaucracy, while other managers are likely to see this as over-regulated and inflexible.The Pharmacia and Upjohn case demonstrates a range of these styles and the problems that result from the imposition of a new style of organization and leadership within a corporate merger. Communication Culture clash When two cultural groups (national or corporate) meet, interact, or work together and differences in their values, beliefs, rules of behavior, or styles of communication create misunderstandings, antagonism, or other problems Clearly, at the face-to-face level language differences can be the most prominent barrier to communication and therefore to cooperation and coordination.English speakers tend to have an advantage in many situations since English has emerged as the main language of business globally. However, this has led to complacency among some indigenous English speakers, notably the British and the North Americans. First, less effort is often made to learn other languages and their associated cultures, which normally limits a managers understanding of foreign colleagues, workers, or customers. Second, the assumption is often made that once the language barrier is downcast cultural differ ences are also removed, whereas these may emain, causing miscommunication and misinterpretation. As for much of this chapter on culture, preparation and awareness are the best starting points for minimizing differences that can create problems. It is through efficient communication that two parties steer toward an understanding a mutually agreed basis for doing business. The signs and signals on this route to an understanding are strongly influenced by culture. Different groups have different ways of displaying approval or of showing frustration in negotiations and different ideas of what constitutes a final agreement.The Japanese do not really have an same word for the English no and indicate disapproval in a range of non- communicatory ways. The Japanese word hai does mean yes but it often means yes, I understand what you are saying not yes, I agree with what you are saying. Germans place a lot of emphasis on scripted communications and documented evidence rather than verbal int eraction, compared to the Spanish and Italians to whom verbal interaction and agreement is recognized as binding in some contexts.The Americans prefer legal contracts and have armies of lawyers to make agreements highly specified. Other, more organic business cultures tend to work toward a relationship in which trust and understanding replace the need for legally binding contracts. Again, awareness through preparation and anticipation of differences is the best starting point for avoiding culture clash. The corporate response How have MNEs responded to the challenge of managing across cultural boundaries?What kinds of organization structures, HRM procedures, and corporate cultures have been developed to cope with the enormous differences among people and to unify this diversity toward a common purpose? At a very general level good transnational firms develop an awareness and appreciation of cultural differences among their managers and employees. They also take steps to encourage ad aptation of personal behavior or organizational practices, or products and services, to suit the changing mix of cultures within the firm, in subsidiaries and in key markets. Training programs, including a range of activities at the induction stage, when new ecruits join a firm or brisk personnel take up a role in a new country, are a standard way for firms to do these things. Job rotation, with a focus on developing international managers with personal experience in a variety of different countries, is also practiced by a number of firms. It is 145 RUGM_C05. QXD 8/18/08 152 PM Page 146 PART TWO THE ENVIRONMENT OF INTERNATIONAL BUSINESS normally very difficult to assess such practices using any form of costbenefit analysis. The costs are usually tardily identifiable, but the benefits are very often intangible.For many exp