1. Chapter Copyright© 2004 Thomson Learning All rights reserved 2 Culture and Multinational Management

2. Copyright© 2005 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© 2005 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 Understand the Hofstede and 7d models Appreciate the complex differences among cultures and use these differences for building better organizations

4. Copyright© 2005 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, 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, and what are legitimate goals for life.

5. Copyright© 2005 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© 2005 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© 2005 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. 1. 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. 1. Tells people the correct, acceptable ways to conduct business in a society.

8. Copyright© 2005 South-Western/Thomson Learning All rights reserved Three Levels of Culture (cont.) 3.Occupational and organizational culture 3.Occupational culture: the norms, values, beliefs, and expected ways of behaving for people in the same occupational group. 4.Organizational culture: the set of important understandings that members of an organization share. 3.Occupational and organizational culture 3.Occupational culture: the norms, values, beliefs, and expected ways of behaving for people in the same occupational group. 4.Organizational culture: the set of important understandings that members of an organization share.

9. Copyright© 2005 South-Western/Thomson Learning All rights reserved Cultural Differences and Basic Values Two diagnostic models to aid the multinational manager: 1. Hofstede model of national culture 2. 7d culture model Two diagnostic models to aid the multinational manager: 1. Hofstede model of national culture 2. 7d culture model

10. Copyright© 2005 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

11. Copyright© 2005 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

12. Copyright© 2005 South-Western/Thomson Learning All rights reserved Hofstede’s Model Applied to Organizations and Management (cont.) 2.Leadership styles 3.Motivational assumptions 4.Decision making and organizational design 5.Strategy 2.Leadership styles 3.Motivational assumptions 4.Decision making and organizational design 5.Strategy

13. Copyright© 2005 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

14. Copyright© 2005 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

15. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.2: Managerial Implications for Power Distance

16. Copyright© 2005 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

17. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.3: Managerial Implications of Uncertainty Avoidance

18. Copyright© 2005 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.

19. Copyright© 2005 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.

20. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.4: Managerial Implications of Individualism/Collectivism

21. Copyright© 2005 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.

22. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.5: Managerial Implications of Masculinity

23. Copyright© 2005 South-Western/Thomson Learning All rights reserved Long-Term Orientation Belief in substantial savings Willingness to invest Acceptance of slow results Persistence to achieve goals Sensitivity to social relationships Pragmatic adaptation Belief in substantial savings Willingness to invest Acceptance of slow results Persistence to achieve goals Sensitivity to social relationships Pragmatic adaptation

24. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.6: Managerial Implications of Long-term Orientation

25. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.7 Hofstede’s Classification of Countries by Clusters

26. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.7 Hofstede’s Classification of Countries by Clusters

27. Copyright© 2005 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

28. Copyright© 2005 South-Western/Thomson Learning All rights reserved 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 Dimensions that deal with relationships include: Universalism vs. Particularism Collectivism vs. Individualism Neutral vs. Affective Diffuse vs. Specific Achievement vs. Ascription

29. Copyright© 2005 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

30. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.8: The 7d Model of Culture

31. Copyright© 2005 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

32. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.9: Managerial Implications for Universalism vs Particularism

33. Copyright© 2005 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

34. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.10: Managerial Implications of Individualism/Collectivism

35. Copyright© 2005 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

36. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.11: Managerial Implications of Neutral vs. Affective

37. Copyright© 2005 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

38. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.12: Managerial Implications of Specific vs. Diffuse

39. Copyright© 2005 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

40. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.13: Managerial Implications of Achievement vs. Ascription

41. Copyright© 2005 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

42. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.14: Managerial Implications of Time Horizon

43. Copyright© 2005 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.

44. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.15: Managerial Implications of Internal vs. External Control

45. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.16: 7d Percentile Rankings for Selected Countries

46. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.16: 7d Percentile Rankings for Selected Countries

47. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.16: 7d Percentile Rankings for Selected Countries

48. Copyright© 2005 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

49. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.17: Levels of General Trust in People

50. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.17: Levels of General Trust in People

51. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.17: Levels of General Trust in People

52. Copyright© 2005 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.