Culture and Multinational Management

1. 2 Culture and Multinational Management

2. Learning Objectives • Define culture and understand the basic components of culture • Identify instances of cultural stereotyping and ethnocentrism • Understand how various levels of culture influence multinational operations

3. Learning Objectives • Understand the Hofstede and 7d models • Appreciate the complex differences among cultures and use these differences for building better organizations

4. What is Culture? • Pervasive and shared beliefs, norms, values, and symbols that guide everyday life. • Cultural norms: both prescribe and proscribe behaviors • What we should do and what we cannot do. • Cultural values: what is good/beautiful/holy, and what are legitimate goals for life.

5. What is Culture? (cont.) • Cultural beliefs: represent our understandings about what is true. • Cultural symbols, stories, and rituals: communicate the norms, values, and beliefs of a society or a group to its members. • Culture is pervasive in society • Affects all aspects of life • Not all aspects are observable

6. Culture: Front Stage & Back Stage • Front stage of culture: easily observable aspect of culture • e.g., Japanese executive bows or North American robust handshake. • Back stage of culture: only insiders or members of the culture understand other aspects of culture • e.g., Japanese saying “it’s difficult” and twisting head to one side really means it’s impossible.

7. Three Levels of Culture • National culture: the dominant culture within the political boundaries of the nation-state. • Business culture: norms, values, and beliefs that pertain to business in a culture. • Tells people the correct, acceptable ways to conduct business in a society.

8. Three Levels of Culture (cont.) • Occupational and organizational culture • Occupational culture: the norms, values, beliefs, and expected ways of behaving for people in the same occupational group. • Organizational culture: the set of important understandings that members of an organization share.

9. Cultural Differences and Basic Values • Two diagnostic models to aid the multinational manager: 1. Hofstede model of national culture 2. 7d culture model

10. Hofstede’s Model of National Culture • Five dimensions of basic values • Power distance • Uncertainty avoidance • Individualism • Masculinity • Long-term orientation

11. Hofstede’s Model Applied to Organizations and Management • Management practices considered in the discussion of Hofstede’s model include: 1. Human resources management • Management selection • Training • Evaluation and promotion • Remuneration

12. Hofstede’s Model Applied to Organizations and Management (cont.) • Leadership styles • Motivational assumptions • Decision making and organizational design • Strategy

13. Power Distance • Power distance concerns how cultures deal with inequality and focuses on • Norms that tell superiors (e.g., bosses) how much they can determine the behavior of their subordinates • Values and beliefs that superiors and subordinates are different kinds of people

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

15. Exhibit 2.2: Managerial Implications for Power Distance

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

17. Exhibit 2.3: Managerial Implications of Uncertainty Avoidance

18. Individualism/Collectivism • Focus is on the relationship between the individual and the group • Countries high on individualism have norms, values, and beliefs such as • People are responsible for themselves. • Individual achievement is ideal. • People need not be emotionally dependent on organizations or groups.

19. Individualism/Collectivism • Collectivist countries have norms, values, and beliefs such as • One’s identity is based on group membership. • Group decision making is best. • Groups protect individuals in exchange for their loyalty to the group.

20. Exhibit 2.4: Managerial Implications of Individualism/Collectivism

21. Masculinity • Tendency of a culture to support traditional masculine orientation • High masculinity countries have beliefs such as • Gender roles should be clearly distinguished. • Men are assertive and dominant. • Machismo/exaggerated maleness in men is good. • Men should be decisive. • Work takes priority over other duties. • Advancement, success, and money are important.

22. Exhibit 2.5: Managerial Implications of Masculinity

23. Long-Term Orientation • Belief in substantial savings • Willingness to invest • Acceptance of slow results • Persistence to achieve goals • Sensitivity to social relationships • Pragmatic adaptation

24. Exhibit 2.6: Managerial Implications of Long-term Orientation

25. Exhibit 2.7 Hofstede’s Classification of Countries by Clusters

26. Exhibit 2.7 Hofstede’s Classification of Countries by Clusters

27. 7d Cultural Dimensions Model • Builds on traditional anthropological approaches to understanding culture • Culture exists because people need to solve basic problems of survival • Challenges include • How people relate to others • How people relate to time • How people relate to their environment

28. 7d Cultural Dimensions Model(cont.) • Dimensions that deal with relationships include: • Universalism vs. Particularism • Collectivism vs. Individualism • Neutral vs. Affective • Diffuse vs. Specific • Achievement vs. Ascription

29. 7d Cultural Dimension Model(cont.) • Dimensions dealing with how a culture manages time and how it deals with nature • Sequential vs. Synchronic • Internal vs. External control

30. Exhibit 2.8: The 7d Model of Culture

31. Universalism vs. Particularism • Pertain to how people treat each other based on rules or personal relationships • Universalistic • Right way is based on abstract principles such as rules, law, religion • Particularistic • Each judgment represents unique situation that can be dealt with based on relationships

32. Exhibit 2.9: Managerial Implications for Universalism vs Particularism

33. Individualism vs. Collectivism • Similar distinctions to Hofstede’s view • Collectivist societies • People defined by group memberships such as family • Responsibility, achievement, and rewards are group-based • Individualist societies • People trained to be independent • Assume individual responsibility for success or failure

34. Exhibit 2.10: Managerial Implications of Individualism/Collectivism

35. Neutral vs. Affective • Concerns acceptability of expressing emotions • Neutral • Interactions are objective and detached • Focus is on tasks rather than relationships • Affective • Emotions are appropriate in all situations

36. Exhibit 2.11: Managerial Implications of Neutral vs. Affective

37. Specific vs. Diffuse • Extent to which an individual’s life is involved in work • Specific • Business segregated from other parts of life • Contracts often delineate relationships • Diffuse • Business relationships encompassing/involving • Private and segregated space is small

38. Exhibit 2.12: Managerial Implications of Specific vs. Diffuse

39. Achievement vs. Ascription • Manner in which society gives status • Achievement • People earn status based on performance and accomplishments • Ascription • Characteristics or associations define status • E.g., status based on schools or universities

40. Exhibit 2.13: Managerial Implications of Achievement vs. Ascription

41. Time Orientation • How cultures deal with the past, present, and future • Future-oriented societies, such as the U.S., consider organizational change as necessary and beneficial • Past-oriented societies assume that life is predetermined based on traditions or will of God

42. Exhibit 2.14: Managerial Implications of Time Horizon

43. Internal vs. External Control • Concerned with beliefs regarding control of one’s fate • Best reflected with how people interact with the environment • Does nature dominate us or do we dominate nature? • In societies where people believe nature dominates them, managers are more fatalistic.

44. Exhibit 2.15: Managerial Implications of Internal vs. External Control

45. Exhibit 2.16: 7d Percentile Rankings for Selected Countries

46. Exhibit 2.16: 7d Percentile Rankings for Selected Countries

47. Exhibit 2.16: 7d Percentile Rankings for Selected Countries

48. Propensity to Trust • Growing concern with the development of trusting relationships with partners • Differences among cultures in terms of how and when people trust each other • Logic presupposes that individualism should be related to low trust • Individualistic cultures have higher trust relative to collectivist societies

49. Exhibit 2.17: Levels of General Trust in People

50. Exhibit 2.17: Levels of General Trust in People