Chapter 12 Managing Cultural Differences John S. Hill

Introduction Managing Cultural Differences Conceptual Framework: High- Low Context Cultures Cultural Variations at the Nation State Level Cultural Underpinnings Intercultural Negotiations Organizing International Negotiations

Chapter Outline  A Framework for Understanding Business and Interpersonal Behaviors  Cultural Underpinnings of High-Medium- Low Context Behaviors – The “Whys”  Intercultural Negotiations  Organizing International Negotiations

Table 12.1: Business and Interpersonal Relationships in High, Medium and Low Context Societies (NOTE: generalizations) ContextLowMediumHigh Country/regional examples USA, Swiss Western Europe Asian, Arabic Values,attitudes behaviors Meeting peopleInformalFormal Getting acquaintedFastModerateSlow Relationship depthShallowModerateDeep Relationship trustLittleTrustMuch trust Behavior limitsLegalLegal/socialSocial Lawyer relianceHighModerateLow/zero

Table 12.1 (continued) - ContextLowMediumHigh Business relationshipsArm’s lengthSocial- business mixed Much socializing Mistakes toleranceHighMediumLow Mistakes accountability HighMediumLow Individual competitionEncouragedDiscouragedAnti-social Insider-outsiderLowModerateHigh PatriarchalLowModerateHigh IndividualismHighModerateLow Social class differencesLow/moderateModerateHigh Uncertainty toleranceHigh Low

Table 12.1 (continued): Flexible Stereotype—L-M-H Context Low Medium High LC-FS MC-FS HC-FS LC-FS Low Context flexible stereotype: Most people are low context (national stereotype), but significant pockets of medium context and smaller numbers of high context groups MC-FS Medium Context flexible stereotype: Most people in Western Europe are medium context but some are low context (Germans, Swiss); some are higher context (Greeks, Spanish HC-FS High Context flexible stereotype: National behaviors are rurally- oriented; smaller pockets of medium context behaviors (migrants in transition); minority low context behaviors of urbanites

A Framework for Understanding Business and Interpersonal Behaviors  Low context behaviors  Values and attitudes are associated with capitalist, efficiency-oriented societies. North American and some Western European countries  High context behaviors  Less competitive societies valuing cooperation, harmony and stability. Asia, the Middle East and Latin America  Medium context behaviors  Functioning democratic processes, competition in marketplace, and some movement between social classes. Western European countries

Cultural Underpinnings of High-Medium- Low Context Behaviors—the “whys”  Religion:  “A socially shared set of beliefs, ideas, and actions that cannot be verified empirically yet affects the course of natural and human events—a way of life woven around people’s ultimate concerns.”

Cultural Underpinnings of High-Low Context Behaviors—the “whys”  Polytheistic Religions  Primal religions  Been around for 3 million years  Africa, Australia (Aborigine), SE Asia, Pacific Islands, North and South America (Indian communities); cults and superstitions in west  Tend to be tribally based; passed on orally between generations; relationship with nature; personal, social and cosmic harmony important; ancestor worship

Cultural Underpinnings of High-Low Context Behaviors—the “whys”  Polytheistic Religions  Hinduism  1500BC beginnings; today 1 billion followers  Major influence on Indian culture: via caste system (priest-soldier-merchant-artisan + dalits (untouchables); affects food, social relationships, marriage, conduct (dharma)  Samsara: eternal birth-rebirth until Moksha (release); conduct determines rise up caste system Shinto: Japan’s national religion (600 AD)  Blended with Buddhism, Confucianism, Taoism  Emphasizes tradition, family, nature, cleanliness

Cultural Underpinnings of High-Low Context Behaviors—the “whys”  Monotheistic Religions  Judaism: forerunner of Christianity, Islam via Abraham  Over 13 million followers  Ten Commandments basis of western ethics  Israel-based  Numerous persecutions historically

Cultural Underpinnings of High-Low Context Behaviors—the “whys”  Monotheistic Religions  Christianity (Catholicism, Protestantism, Eastern Orthodox—2 billion followers in Americas & Europe  Spread by Romans in Europe and world via colonization  Protestantism-Capitalism link: productivity/income signs of God’s approval; frugality-industry emphasized; flexible faith  Crucial splits Eastern Orthodox (1054); and Reformation (16 th century Martin Luther)

Cultural Underpinnings of High-Low Context Behaviors—the “whys”  Islam (1.2 billion followers)  7 th century founded by Muhammad in today’s Saudi Arabia  Spread to rest of Middle East and North Africa by military conquest; to Asia via the Silk Road; still Muslims today  5 Pillars: profess the faith; prayers 5 times/day; Ramadan; charity; Mecca pilgrimage  Lifestyle religion: dominates politics, legal systems, social behaviors and education system  Problems with westernization effects on lifestyles

Cultural Underpinnings of High-Low Context Behaviors—the “whys”  Non-Theistic Religions  Buddhism (400 million followers; 1-2 billion influenced)  6 th century founded by Siddhartha Gautama (‘Buddha’)  Guided by 4 Noble Truths and Noble Eightfold Path to individual behaviors (right knowledge, purpose, speech, living etc.)  Emphasizes calmness, wisdom, compassion, spiritualism  Confucianism & Taoism (6 th century, East Asia)  Confucius “greatest single intellectual force” in Asia  Relationships between people and societal harmony: humaneness, love, ‘ideal host’, titles, seniority, respect, ‘arts of peace’  Taoism: act with nature; emotions ‘wasted energy’; no self-assertiveness; complementary forces of yin-yang

Impact of Religion on Societal Behaviors  High context behaviors  Emphasize trustworthiness, interpersonal sociability and societal stability, with the religion emphasizing a sense of community, family unity and nonmaterial orientations  Religion has major effects on lifestyle in most high context societies and tends to emphasize spirituality over all else; very difficult to change

Impact of Religion on Societal Behaviors  Low context behaviors  Christianity does not seem to clash with highly competitive political and economic systems  Social class systems based on income and wealth are incentives to build up economic resources and move up the social hierarchy  Protestantism rewards hard work and thrift; religiosity declines during industrialization

Economic and Political System Effects  As countries industrialize, competitive low- context behaviors diffuse from developed urban centers into rural parts  Traditional village economies much less competitive; less turbulent; more community-oriented  Where governments limit or control outside influences, traditional high-context behaviors remain the norm

Social Forces  Social Class  Systems based on income and wealth; they are fluid and mobile  Hereditary/seniority systems limit social and economic competitiveness  Education  Industrialized countries: education tend to be more technical, scientific  Developing countries: education is often elitest and may be less technological—more arts-oriented

Intercultural Negotiations  How to do face-to-face negotiations with  US businesspeople  Japanese  Latin Americans  Western Europeans  Asians  Middle Easterners  Russian

Intercultural Negotiations  Negotiating with US Businesspeople  Objective, efficient and competitive negotiators  Prefer informality, rationality and detailed contracts  Negotiating with the Japanese  Emphasis on harmony, cooperation, conformism, and long-term business perspective  Key aspects: after-hours sociability, little use of lawyers, patience required, long-term business orientations, renegotiating points, conflict avoiders, use of silence

Intercultural Negotiations  Negotiating with Latin Americans  More outgoing and emotional  Little or no mixing of business with pleasure  The relative unimportance of work  Recognition of social and ethnic distinctions, respect accorded the “Patron”

Intercultural Negotiations  Negotiating with Western Europeans  Low context Europeans emphasize objectivity in business dealings, focusing on contracts. “plain talking”, and efficiency  Medium context nations put more emphasis on relationships, trust, less on lawyers  Key aspects: like procedures, titles; negotiate many points simultaneously; legal contracts part of relationship; looser negotiating postures

Intercultural Negotiations  Negotiating with Asians: like the Japanese  Traditionally based and emphasize personal relationships over written contracts  Respect for the past, importance of the family and people generally (viewed as assets, not costs)  Patience and humility are important; non-emotional  Negotiating with Middle Easterners  Religion (Islam) is paramount; social relationships are all- important; time is not  Avoid conflict situations  Many social formalities and courtesies; hereditary aristocracy are ‘men of respect’

Intercultural Negotiations  Negotiating with Eastern Europeans: The Russian Case  Cautious, tough, and disciplined negotiators  Focus on general agreements  Relationships built on after-hours socializing  Still cautious about western profit motives (though changing)

Organizing International Negotiations  Planning and preparation  Conducting the negotiation  Reaching an agreement  What is a good negotiator?

Organizing International Negotiations  Planning and preparation  Where to negotiate: home country cultural advantage as visitors acclimatize  Assembling the right team: internationally experienced; locals important; maintaining team is important  Preparation: country, company background, clear objectives

Organizing International Negotiations  Conducting the negotiation  Relationship building required in most parts of the world; socializing important  Recognize the power brokers; usually senior people  Show respect, patience at all times  Body language is important  Negotiating style should be known

Organizing International Negotiations  Reaching an agreement  High context cultures take time (often years); often letters of agreement to start  Contracts signify the start of a relationship, but do not define it totally

Organizing International Negotiations  What is a good negotiator?  Negotiation objectives important part of what is planned  Spend more time developing different scenarios and alternatives  Focus on common ground and agreements, not disagreement areas  Long-term issues emphasis  Flexible, not rigid in setting goals  Have no predetermined sequences of points to cover  Take time to build relationships, knows all aspects of proposed agreement, persuades not argues, is conciliatory

Key Points  High-medium-low context cultures are important frameworks but are generalizations  Religion is very important in high context societies  Face-to-face negotiations are culturally-loaded  Cultural understanding paramount in relationship building