1. Chapter Copyright© 2007 Thomson Learning All rights reserved 2 Culture and Multinational Management

2. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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. Copyright© 2007 South-Western/Thomson Learning All rights reserved Learning Objectives Understand the Hofstede and 7d models Appreciate the complex differences among cultures and use these differences for building better organizations Recognize the complexity of understanding new cultures and the dangers of stereotyping and cultural paradoxes Understand the Hofstede and 7d models Appreciate the complex differences among cultures and use these differences for building better organizations Recognize the complexity of understanding new cultures and the dangers of stereotyping and cultural paradoxes

4. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 beautiful, and what are legitimate goals for life. 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 beautiful, and what are legitimate goals for life.

5. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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. 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. Copyright© 2007 South-Western/Thomson Learning All rights reserved Three Levels of Culture 1.National culture: the dominant culture within the political boundaries of the nation-state. 2.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. 1.National culture: the dominant culture within the political boundaries of the nation-state. 2.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. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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. 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. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.1: Three Levels of Culture

10. Copyright© 2007 South-Western/Thomson Learning All rights reserved Cultural Differences and Basic Values Three diagnostic models to aid the multinational manager: Hofstede model of national culture Global Leadership an Organizational Behavior Effectiveness (GLOBE) project 7d culture model Three diagnostic models to aid the multinational manager: Hofstede model of national culture Global Leadership an Organizational Behavior Effectiveness (GLOBE) project 7d culture model

11. Copyright© 2007 South-Western/Thomson Learning All rights reserved Hofstede’s Model of National Culture Five dimensions of basic values Power distance Uncertainty avoidance Individualism Masculinity Long-term orientation Five dimensions of basic values Power distance Uncertainty avoidance Individualism Masculinity Long-term orientation

12. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 Management practices considered in the discussion of Hofstede’s model include: 1.Human resources management Management selection Training Evaluation and promotion Remuneration

13. Copyright© 2007 South-Western/Thomson Learning All rights reserved Hofstede’s Model Applied to Organizations Leadership styles Motivational assumptions Decision making and organizational design Strategy Leadership styles Motivational assumptions Decision making and organizational design Strategy

14. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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

15. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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

16. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.2: Managerial Implications for Power Distance

17. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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

18. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.3: Managerial Implications of Uncertainty Avoidance

19. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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

20. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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

21. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.4: Managerial Implications of Individualism/Collectivism

22. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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

23. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.5: Managerial Implications of Masculinity

24. Copyright© 2007 South-Western/Thomson Learning All rights reserved Long-Term (Confucian) Orientation Managers are selected based on the fit of their personal and educational characteristics A prospective employee’s particular skills have less importance in the hiring decision Training and socialization for a long-term commitment to the organization compensate for any initial weaknesses in work-related skills Managers are selected based on the fit of their personal and educational characteristics A prospective employee’s particular skills have less importance in the hiring decision Training and socialization for a long-term commitment to the organization compensate for any initial weaknesses in work-related skills

25. Copyright© 2007 South-Western/Thomson Learning All rights reserved Long-Term (Confucian) Orientation Eastern cultures rank highest on long-term orientation Value synthesis in organizational decisions Belief in substantial savings Willingness to invest Acceptance of slow results Persistence to achieve goals Sensitivity to social relationships Pragmatic adaptation Eastern cultures rank highest on long-term orientation Value synthesis in organizational decisions Belief in substantial savings Willingness to invest Acceptance of slow results Persistence to achieve goals Sensitivity to social relationships Pragmatic adaptation

26. Copyright© 2007 South-Western/Thomson Learning All rights reserved Short-Term Orientation Must focus immediately on usable skills Results high employee turnover rates Can’t assured of a return on any investment in employee training and socialization Leaders use short-term rewards that focus on pay and rapid promotion Must focus immediately on usable skills Results high employee turnover rates Can’t assured of a return on any investment in employee training and socialization Leaders use short-term rewards that focus on pay and rapid promotion

27. Copyright© 2007 South-Western/Thomson Learning All rights reserved Short-term Orientation Western cultures, which tend to have short-term orientations, value logical analysis in their approach to organizational decisions Designed and managed purposefully to respond to immediate pressures from the environment Often use quick layoffs of “excess” employees to adjust to shrinking demand for products Western cultures, which tend to have short-term orientations, value logical analysis in their approach to organizational decisions Designed and managed purposefully to respond to immediate pressures from the environment Often use quick layoffs of “excess” employees to adjust to shrinking demand for products

28. Copyright© 2007 South-Western/Thomson Learning All rights reserved Long-Term Orientation vs. Short-Term Orientation The difference between long- and short-term cultures is apparent in the goals companies set in strategic decision making Managers in countries (short-term) such as the U.S. want immediate financial returns and want fast, measurable success The difference between long- and short-term cultures is apparent in the goals companies set in strategic decision making Managers in countries (short-term) such as the U.S. want immediate financial returns and want fast, measurable success

29. Copyright© 2007 South-Western/Thomson Learning All rights reserved Long-Term Orientation vs. Short-Term Orientation Countries with long-term orientations prioritize growth and long-term paybacks The long time horizons allow managers to experiment and seek success by developing their “game plans” as they go along Countries with long-term orientations prioritize growth and long-term paybacks The long time horizons allow managers to experiment and seek success by developing their “game plans” as they go along

30. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.6: Managerial Implications of Long-term (Confucian) Orientation

31. Copyright© 2007 South-Western/Thomson Learning All rights reserved GLOBE National Culture Framework GLOBE (Global Leadership and Organizational Behavior Studies) involves 170 researchers who collected data from 17,000 managers in 62 countries Seven dimensions of GLOBE are similar to Hofstede Unique dimensions Performance orientation Humane orientation GLOBE (Global Leadership and Organizational Behavior Studies) involves 170 researchers who collected data from 17,000 managers in 62 countries Seven dimensions of GLOBE are similar to Hofstede Unique dimensions Performance orientation Humane orientation

32. Copyright© 2007 South-Western/Thomson Learning All rights reserved Performance Orientation Performance Orientation – refers to the degree to which the society encourages societal members to innovate, to improve their performance, and to strive for excellence E.g., the United States and Singapore have high scores while Russia and Greece have low scores on the dimension Performance Orientation – refers to the degree to which the society encourages societal members to innovate, to improve their performance, and to strive for excellence E.g., the United States and Singapore have high scores while Russia and Greece have low scores on the dimension

33. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.8: Summarizes Some of the Management Implication of Performance Orientation

34. Copyright© 2007 South-Western/Thomson Learning All rights reserved Humane Orientation Humane Orientation – an indication of the extent to which individuals are expected to be fair, altruistic, caring, and generous Need for belongingness and affiliation is emphasized more than material possessions, self-fulfillment, and pleasure Less humane oriented societies are more likely to value self-interest and self-gratification E.g., Malaysia and Egypt score highly while France and Germany have low scores Humane Orientation – an indication of the extent to which individuals are expected to be fair, altruistic, caring, and generous Need for belongingness and affiliation is emphasized more than material possessions, self-fulfillment, and pleasure Less humane oriented societies are more likely to value self-interest and self-gratification E.g., Malaysia and Egypt score highly while France and Germany have low scores

35. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.9: The Management Implications of Humane Orientation

36. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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

37. Copyright© 2007 South-Western/Thomson Learning All rights reserved 7d Cultural Dimensions Model Dimensions that deal with relationships include: Universalism vs. Particularism Collectivism vs. Individualism Neutral vs. Affective Diffuse vs. Specific Achievement vs. Ascription Dimensions that deal with relationships include: Universalism vs. Particularism Collectivism vs. Individualism Neutral vs. Affective Diffuse vs. Specific Achievement vs. Ascription

38. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 Dimensions dealing with how a culture manages time and how it deals with nature Sequential vs. Synchronic Internal vs. External control

39. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.11: Summary of 7d Model and Issues

40. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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

41. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.12: Managerial Implications of Universalism/Particularism

42. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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

43. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.13: Managerial Implications of Individualism/Collectivism

44. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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

45. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.14: Managerial Implications of Neutral vs. Affective

46. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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

47. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.15: Managerial Implications of Specific vs. Diffuse

48. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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

49. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.16: Managerial Implications of Achievement vs. Ascription

50. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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

51. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.17: Managerial Implications of Time Horizon

52. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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. 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.

53. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.18: Managerial Implications of Internal vs. External

54. Copyright© 2007 South-Western/Thomson Learning All rights reserved 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 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

55. Copyright© 2007 South-Western/Thomson Learning All rights reserved Exhibit 2.20: Trust in Different Societies

56. Copyright© 2007 South-Western/Thomson Learning All rights reserved Caveats and Cautions Stereotyping: assumes that all people within one culture behave, believe, feel, and act the same. Ethnocentrism: occurs when people from one culture believe that theirs are the only correct norms, values, and beliefs. Cultural relativism: all cultures, no matter how different, are correct and moral for the people of those cultures. Stereotyping: assumes that all people within one culture behave, believe, feel, and act the same. Ethnocentrism: occurs when people from one culture believe that theirs are the only correct norms, values, and beliefs. Cultural relativism: all cultures, no matter how different, are correct and moral for the people of those cultures.

57. Copyright© 2007 South-Western/Thomson Learning All rights reserved Conclusion Chapter provides understanding of various ways to understand national cultures Cultures also exist at different levels Astute managers can comprehend cultures at the various levels Chapter provides understanding of various ways to understand national cultures Cultures also exist at different levels Astute managers can comprehend cultures at the various levels