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Why Consider Culture? • MNCs are radically different from export- based firms not least because of their foreign subsidiaries. Not only does physical distance pose a challenge for effective communication, even more so there is the challenge represented by cultural differences.
MNCs have regarded cultural differences as so important that they have preferred to operate as multi-domestics with decision-making, management style and product development highly decentralized. The attitude is that people in the subsidiaries know best and should be allowed to go their own ways.
If foreign subsidiaries are to be integrated for knowledge-sharing purposes, a starting point is an understanding of the mindsets of subsidiary management and employees in terms of their work-related values.
The management challenge for many MNCs is to be able to adapt their organizations to culturally distinct environments without losing organizational consistency.
The Concept of Culture • Culture refers to the systems of values, beliefs, expectations and goals - shared by members of a particular group of people and the ideal that distinguish them from members of other groups.
It is a product of the collective programming of the mind' (Hofstede, 1991), that is, it is acquired through regular interaction with other members of the group.
Cultural differences can be found at many different levels, professional, class and regional, but it is particularly potent at the national level because of generations of socialization into the national community.
As individuals, we generally only become aware of our own culture when confronted by another. However, what we usually observe are the artifacts of cultural dissimilarity - the numerous and often pronounced differences in greeting rituals, dress codes, forms of address and taste.
The underlying system of values is, however, neither readily observable nor readily comprehensible. The core differences in values between cultures go back to questions of what works for ensuring survival in relation to the natural environment.
This method means that cultures can be clustered, thereby pinpointing which cultures are similar enough to make a standardized management approach viable. Two frequently cited contributions are the work of two Dutchmen, Geert Hofstede and Fons Trompenaars.
Classifying National Cultures • Dissecting and explaining any foreign culture is potentially a never-ending exercise. As an alternative to in-depth single-country studies scholars have attempted to classify cultures in relation to one another by using a few, relatively broad fundamental dimensions that are particularly relevant to management practice.
